David Jones Limited (DJS) announced that the Board of Directors has resolved to reinstate the Company's Dividend Reinvestment Plan (DRP) on a non-underwritten basis for the period FY07 to FY09 inclusive.
The monies raised from the DRP will be utilised to fund the costs associated with the three new stores that the Company announced on 20 July 2006, it will be opening in Burwood, Chermside and Doncaster.
The reinstatement of the DRP is expected to provide a cash injection of between $15 million - $20 million per annum over the next three years (on a non-underwritten basis). This is in line with the expected cost of funding the three new stores. The Board of Directors suspended the Company's DRP in June 2003 as part of the Strategic Review, with the intention that excess cash would be returned to shareholders.
David Jones Chairman Mr. Robert Savage said, “The Board and I remain committed to, and reiterate our intention that excess cash generated by the business will be returned to shareholders over time, in the most efficient manner. We are also committed to delivering ongoing dividend growth. “The three new stores are all high value stores and are the result of a unique opportunity that arose following the recent industry restructure within the Australian Department Store sector. All three stores will support earnings growth post FY08.
“Our decision to reinstate the DRP for the three year period to fund the new stores, is basedon management's analysis that contribution from these stores will be Earnings per Share (EPS) accretive and will more than offset the dilutive impact of reinstating the DRP. As such, on a net basis, shareholder value will be enhanced and all shareholders will be better off,” Mr Savage said.