In accordance with our dividend policy, we target a dividend pay-out ratio of around 75% of the underlying net cash income. In 2019, PostNL's underlying net cash income amounted to €135 million (2018: €138 million). The decrease of €3 million is explained by a lower underlying cash operating income of €12 million, offset by €6 million lower net financial expenses and €3 million lower tax expenses.
Year ended at 31 December
Underlying cash operating income
Net financial expense (adjusted)1
Underlying net cash income
In accordance with our dividend policy applicable to the 2019 results, the condition for paying out dividend is a leverage ratio (adjusted net debt/EBITDA) not exceeding ~2. Impacted by the acquisition of Sandd, the leverage ratio at year-end 2019 amounted to 2.6. As such, the condition for paying out dividend was not met. As a result, PostNL will recommend to the Annual General Meeting of Shareholders the payment of a dividend of €0.08 per ordinary share (2018: €0.24), which is equal to the 2019 interim dividend paid in August 2019. After approval by the Annual General Meeting of Shareholders, no final dividend will be distributed. We aim to reduce the leverage ratio to below 2.0 in 12 to (at most) 24 months, and to resume paying dividends thereafter.
We refer the reader to the chapter 'PostNL on the capital markets' for a description of our dividend policy, and the chapter 'Financial statements' for more information on the appropriation of profit.