kathmandu annual report 2012 3 our capability to sell and service customers globally and  growing our online business in the uK is a first step in  this strategy. We intend to invest further to support the  international growth opportunity for Kathmandu that this,  and other related channels will provide us.  the 50% to 60% range during the period in which capital  expenditure also runs at a similar ratio. the Board thanks Kathmandu’s Chief executive officer,  peter Halkett and his team for the result achieved by the  Company in a challenging year. It is pleasing to be writing  this report with a positive outlook for our team domiciled in  Christchurch after the challenging last two years, and the  opening of our new Zealand distribution centre in august  was a highlight in the recovery now underway in our home  city. We continue to grow the depth and competency of our  team in all the countries that Kathmandu operates in, and  we welcomed a number of them as shareholders for the  first time this year under our long term incentive plan. our  future growth is being supported by a diverse and talented  team of people.  Kathmandu’s product range growth in the past two years  has supported sales growth over that time. Investment  in new and innovative product will always be a focus, but  our strategy in the near term will be to align our ranging  to our store network and the variations that we have in  the regions we sell to and the formats of those stores. at  the same time we expect inventory levels (units and $)  will grow in line with overall sales growth, as compared to  the lift in levels in FY2012 and FY2013 that were primarily  range growth related. the uplifted three year capital expenditure programme  that was initiated last year has involved substantial  investment in enlarged and improved distribution facilities,  the establishment of a new office in Melbourne for our  australian domiciled support team, and completion of the  targeted portion of the rollout of the new brand identity  to our stores. the bulk of planned physical infrastructure  investment that is not directly related to our store network  is now complete, but we will be investing greater amounts  in store refurbishments and relocations going forward, as  well as new store rollouts. our investment in improved  information systems continues, with our prime focus now  being on enhancing the customer experience in store and  online and ensuring we have the foundation to be able to  deliver to the global market. the Directors are again recommending a final dividend  of 7 cents per share, with the 3 cents interim dividend  making a total payout for the year of 10 cents per share.  the final dividend will be fully imputed for new Zealand  shareholders, and fully franked for australian shareholders.  this dividend represents a payout ratio of 57% and the  Board continues to expect the payout ratio will remain in  the economic prospects both globally and in australasia  have to be viewed with real caution. our approach to  the uK exemplifies the care that your Board is taking in  future expansion, but there is no change to your Board’s  view that the Kathmandu brand has genuine potential to  be a significant global presence in the outdoor travel and  adventure market. We are very clear that in the short term  our key strategy remains to invest to grow the business  and build the Kathmandu brand in the australasian market.  It is essential that we both grow profitably and maintain  our strategic competitive advantage, and we will thus  ensure our investment in growth opportunities continues  to focus primarily on this market where we know we can  deliver further profit growth. We expect this investment,  in conjunction with effective management of operating  expenses, will result in an improved performance next year  and further develop the wider capabilities the Company  requires in order to pursue new growth opportunities for Kathmandu. newmarket, auckland Victoria street, auckland James strong Chairman diVidend outlook capital inVestment  people