Philip Green, Arcadia and the fastest £1bn in corporate history

"All is good," Mr Green declared, his grin audible barely one week after falling sales and profits at his Bhs chain prompted some harsh comparisons with a rejuvenated Marks & Spencer. With the payout, the retailer waltzed into the corporate record books, trumping the £1bn dividend scooped by the steel magnate Lakshmi Mittal last year.

It takes to £1.6bn the total he has paid himself since buying Bhs and Arcadia five years ago - even if he did forgo his regular dividend from Bhs last week. Quite a return on his original stake of just £89m from his own bank account to buy both businesses.

The windfall overshadowed a record year at Arcadia, the Topshop-to-Evans clothing group that Mr Green bought from its shareholders for £850m in 2002. Five of his seven brands increased profits, boosting operating profits before goodwill by 10 per cent to £326.1m. Topshop, the chain beloved by teenagers and trendy mums alike, was top of the pack with a 13 per cent improvement in profits to £102m. The operating margin hit 18.4 per cent, 50 basis points up on the previous year and, in Mr Green's own words, "at the top of the UK".

The news was announced to Arcadia staff at a special breakfast meeting yesterday morning at 8.30. Peter Cummings, Mr Green's banker at HBOS, was there, but his wife, Tina, unusually was not because she has the flu. "It's been a day of celebration," Mr Green said.

At a time when profits warnings are raining down on the retail sector and corporate dividends are under pressure, there was just one question in the City yesterday: how did he do it? Especially given that sceptics spent the past week carping that the only reason Mr Green didn't pay himself any cash from Bhs was because his bankers wouldn't let him.

The answer isn't rocket science, even if it does leave Arcadia with £807m of net liabilities on its balance sheet. Mr Green simply tapped his bankers for more money - money, he says, that "isn't stressed money, it's not high-yield bonds or mezzanine debt but simply bank debt at a sensible cost of capital". The £1.3bn total (which includes his other shareholder, HBOS's, £100m share for its 8 per cent stake), includes the £500m dividend the group declared last year but never got round to paying.

The payout is being funded by an extra £1.1bn debt - debt that is financed against its assets and cash flow, Mr Green points out. "It is three times our ebitda [earnings before interest, tax, depreciation and amortisation], which is pretty conservative stuff," he says. All basic venture-capitalist stuff, he adds. Even for a multibillionaire (his family's fortune, most of which is in his wife's name, is valued at about £5bn), he concedes that it's a lot of cash. "I accept that the quantum is big. But in terms of multiples of cash, it's not that aggressive." That said, he claimed not to have drawn up a wish list of how to spend it. Had he wanted more cash, he could have mortgaged any number of his properties but he did not do this. "Our piggybank is pretty full at the moment," he adds.

The 53-year-old Monaco resident, who has a 12-seater Gulf Stream jet, a yacht moored on the Côte d'Azur and likes to throw a good party (Beyoncé sang at his son's three-day bar mitzvah bash earlier this year), is often feted as the classic rags-to-riches story. But the son of a Croydon-based electrical retailer was educated at Carmel College in Berkshire, often described as a Jewish Eton. The colourful entrepreneur left school at 16 with no qualifications and went straight into the trade, starting by selling shoes for a friend of his father's.

His hands-on retail style is borne out of the wheeler-dealer approach to business that has secured him his place at the top of today's high street. (Three in five women wear his clothes.) Early on he decided that there was no point just buying and selling armloads of stock when it would be more lucrative to buy and sell businesses.

His first real coup was in the mid-1980s when he bought Jean Jeannie for £65,000 and sold it six months later for £3m. In his time he has also owned Sears, Olympus Sports and Shoe Express. He has been linked with far more businesses, from Safeway to Woolworths and J Sainsbury. And of course, M&S.

Mr Green's bold, arguably brash, style earns him his fair share of critics. Or more than his fair share, as he likes to claim. Those he has failed to win over like to point the finger by saying he grows profits only by holding a gun to his suppliers' heads, ruthlessly stripping out costs and not bothering to invest to grow the business. They argue that there is only so much profits growth that can be squeezed out of a business, sitting back to await his comeuppance.

Mr Green prefers simply to see himself as "efficient". This is how he turns the stock quickly in his shops, how he manages to keep that operating margin so high. "I've given everybody at Arcadia an entrepreneurial spirit," he says, of the changes he has wrought at the group, adding: "We don't have a lot of ranting and raving, we just get things done. They can have an answer to a question in 20 minutes."

With M&S on the mend and off his radar, the City is agog to find out who Mr Green will train his sights on next. "We'd be crazy to look at anything at the moment," he concedes, "but after Christmas ..." he trails off, being uncharacteristically enigmatic. Otherwise, how will he top his own dividend record?