KATHMANDU ANNUAL REPORT  2013 3 James Strong AO. James died in March 2013 and the  recognition he received from the business, sporting, arts  and the wider community reflected his position as an  outstanding Australasian of his generation. Kathmandu was  very privileged to have had his leadership and guidance  during our formative years as a listed company. In May, we  were very pleased to announce the James Strong Memorial  Project in his honour, which will provide additional education  funding to benefit children in the Solu Khumbu, one of the  most remote parts of Nepal. This project is being initiated  in association with the Australian Himalayan Foundation, an  organisation that James and Kathmandu have worked with in  recognition of the source of our heritage as an outdoor brand. available to Kathmandu. The starting point for this is our re- organised UK business, where we are focused on online selling  and the introduction of Kathmandu product to the market in  other web based channels rather than further store rollout. Our  experience in the UK and the performance of that business unit  will be an important benchmark for your Board in the pathway  to further expansion of the Kathmandu brand globally. We are continuing to budget for a substantial capital  expenditure programme with a focus on delivering our store  network plan, including a planned programme for store  refurbishment and replenishment, along with investment in  systems improvements. Over the past year we completed a  record number of new and re-located store projects, and we  have invested in the capability to continue this pace of store  network expansion as we work towards a target of at least  170 stores in Australia and New Zealand. Additionally, we have  a substantial investment continuing in systems development,  in particular on the retail platform, to integrate with compatible  applications such as our online engine. Our planning and  prioritisation for systems upgrades will place us in a strong  position to pursue strategic expansion opportunities for the  Kathmandu brand.  I have had the privilege to act as Interim Chairman for the  period since James’ death, and your Board expects to be  in a position to announce the appointment of an additional  independent Director at our Annual General Meeting. The  Board again thanks Kathmandu’s Chief Executive Officer,  Peter Halkett, and his team for the results achieved by the  Company in FY2013. The Kathmandu team successfully  support and deliver the growth opportunities we target year  after year, in a working and business environment where  change is the norm rather than the exception. This reflects  their capabilities and commitment to the long term success  of our brand. The Directors have declared an increase in the final dividend  to 9 cents per share, which with the 3 cents interim dividend  makes a total payout for the year of 12 cents per share, a 20%  increase on the previous year. The final dividend will be fully  imputed for New Zealand shareholders, and fully franked for  Australian shareholders.  Your Board believes there are sound reasons to remain  confident about Kathmandu’s prospects for continued growth.  The New Zealand economy is in relatively good shape, and  despite the recent slow-down in the Australian economy,  we consider most Australian consumers spending money  in our category are still benefitting from a relatively strong  exchange rate and they retain reasonable confidence in  general. Economic indicators globally are more positive than  a year ago, even if that improvement is relatively small.  This dividend reflects the growth in earnings per share, and  represents a payout ratio of over 54%, which is in the middle  of the payout range previously advised by the Board.  Whilst it is pleasing to be writing this report after such  a successful year, it is also very sad to recognise that it  coincided with the tragic loss of our founding Chairman,  We believe that the Kathmandu brand has the opportunity and  genuine potential to develop a significant global presence in the  outdoor, travel and adventure market. However we are still very  clear that the short term key growth strategy remains to invest  and grow Kathmandu’s business and brand in the Australasian  market. We anticipate a solid performance again next year as  Kathmandu maintains its pre-eminent position as the brand of  choice for outdoor, travel and adventure customers in Australia  and New Zealand. John Harvey Chairman Perth, Australia OUTLOOK  DIVIDEND  PEOPLE  CAPITAL INVESTMENT