Philip Green has transformed Arcadia since he took it over

Mr Green owns 92% of the group and will receive �1.2bn for his own investment vehicles - the other 8% is owned by banking group HBOS.

Pre-tax profits at the privately-held group rose to �252.79m ($444.96m), compared to �246.33m last year.

Arcadia's empire includes Top Shop, Dorothy Perkins and Etam.

"Forget the scale of the number," Mr Green told Reuters. "It's on a very conservative basis as a ratio to the cash we generate."

The �1.3bn dividend from Arcadia contrasts with the failure of Mr Green's other business, Bhs, to give out a dividend with its annual results last week.

Midas touch

Operating profits at Arcadia rose 10.1% to �326.1m, but current trading conditions were described as challenging and extremely competitive.

"The cost of doing business is going up," Mr Green told the BBC.

He said business for Britain's clothing retailers was tough due do a combination of the economy and the weather.

And he pointed out that "some clothing is at the same price it was 10 years ago".

When you get to this level of wealth, business becomes a game or a challenge Henk Potts, analyst

During the financial year, the chain added 95 stand-alone stores along with a refubishment programme across the stores costing �65m.

Operational improvements, Mr Green said - particularly in stock control and speed of delivery to stores - helped Arcadia generate over �400m.

"The performance has given us the confidence to both pay the dividend and, more importantly, to continue the high level of investment in the business," said Mr Green.

His �1bn-plus windfall comes only three years after Philip Green paid �850m for Arcadia. He has been described as having "the midas touch".

Another bid?

Now analysts are speculating about how he will spend the cash and whether he will consider another attempt to buy M&S after he lost last year's high profile bid battle.

"When you get to this level of wealth, business becomes a game or a challenge," said Henk Potts of Barclays Stockbrokers.

"I'm sure he still wants to prove that he was right with his offer for M&S last year.

"He walked away from M&S in the end, so maybe this is him saying to shareholders that perhaps they should have taken the offer."

However, Philip Green told the BBC that he did not have any territorial ambitions as yet.

"We are not looking at any business anywhere," he said.