The Lemon Fool

· Total adjusted retail operating profit4 £1,386m, +16.6% at constant rates

· UK & ROI adjusted operating profit £1,318m, +16.5% due to higher sales and lower COVID-19 costs, part offset by YoY effect of last year's £249m business rates relief (repaid in H2 last year)

· Central Europe adjusted operating profit £68m, +18.6% due to lower COVID-19 costs & higher YoY mall income

· Bank adjusted operating profit £72m, returning to profit following last year's increase in potential bad debt provision

· Retail free cash flow5 £1,543m, +93.6% inc. higher profit, lower pension contribution & c.£400m working capital phasing

· Net debt2,5 reduced by +£1.7bn since February reflecting strong cash flow

· Adjusted diluted EPS6 11.22p, +54.0% reflecting higher retail profits and return to profitability for Tesco Bank

· Interim dividend of 3.20p, in line with prior year; aligned to policy at 35% of last year's full year dividend

· Strong first half performance leading to increased full year profit expectations: adjusted retail operating profit now expected to be between £2.5bn and £2.6bn

And later;

The interim dividend was approved by the Board of Directors on 5 October 2021 and has not been included as a liability as at 28 August 2021. It will be paid on 26 November 2021 to shareholders who are on the Register of members at close of business on 15 October 2021.

A dividend reinvestment plan (DRIP) is available to shareholders who would prefer to invest their dividends in the shares of the Company. For those shareholders electing to receive the DRIP, the last date for receipt of a new election is 5 November 2021

CAPITAL ALLOCATION AND LAUNCH OF ONGOING SHARE BUYBACK PROGRAMME.

We have conducted a detailed review of our capital allocation framework, focusing in particular on the appropriateness of our leverage target, on the application of our dividend policy and on our ability to return surplus cash to shareholders. This review has resulted in two changes.

First, we will use a simpler measure of Net debt*/EBITDA when assessing leverage for the purpose of capital allocation targeting a range of 2.8 to 2.3 times, consistent with a solid investment grade credit rating. The inclusion of the IAS 19 pension deficit within the total indebtedness ratio used previously created material volatility which could not be accurately predicted and has no bearing on our near-term cash obligations or our long-term, unwavering commitment to our pension scheme members.

Second, we are confirming that it is our intention to pay a progressive dividend - i.e. we will aim to grow the dividend per share each year, broadly targeting a pay-out of around 50% of earnings.

Capital expenditure will remain between £0.9bn and £1.2bn per year.

Our refreshed capital allocation framework is as follows:

1. Reinvest in business and customer offer

2. Maintain a solid investment grade balance sheet

3. Pay a progressive dividend

4. Consider inorganic growth opportunities that may arise

5. Return surplus cash to shareholders

Dividend:

The interim dividend has been set at 3.20 pence per ordinary share, in line with the prior year and aligned to our policy of setting the interim dividend at 35% of the prior year full-year dividend. The interim dividend was approved by the Board of Directors on 5 October 2021. It is our intention to pay a progressive dividend going forward - i.e. we will aim to grow the dividend per share each year, broadly targeting a pay-out of around 50% of earnings.

funduffer wrote:I think if Sainsbury's are bought out by private equity, I might swap to Tesco.

Looks like they are back on track after the woes of the past few years.

FD

idpickering wrote:I hold both TSCO and SBRY, and tbh, I might be inclined to do as you're considering too, should a buy out of SBRY come to pass. Also tbh, I'd be sorry to lose them if it was to happen.
Ian.

monabri wrote:I see one of Sainsburys outlets is having problems!

https://www.express.co.uk/news/uk/15007 ... -islington

Basil...Basil?

eets's a hamster!!