In accordance with our dividend policy, we aim to pay a progressive dividend which develops substantially in line with the development of our operational performance. The condition for paying out dividend is a leverage ratio (adjusted net debt/EBITDA) not exceeding ~2. We target a dividend pay-out ratio of around 75% of the underlying net cash income. This pay-out ratio reflects a healthy balance of dividing the free cash flow between investing in growth and allowing our shareholders to benefit from our business performance. Shareholders are offered the choice to opt for cash or for shares.

In financing the transaction with Sandd and the additional integration costs, PostNL expects to temporarily exceed the leverage ratio target. In line with its dividend policy, PostNL will not pay dividend during the integration period and as long as the leverage ratio exceeds ~2. PostNL aims to reduce the leverage ratio below the 2.0x target in 12 to maximum 24 months and to resume paying dividends thereafter.

Following the acquisition of Sandd that closed on 22 October 2019, the leverage ratio at the end of 2019 amounted to 2.6. PostNL proposes a dividend of €0.08 per ordinary share for 2019 (2018: €0.24), which is equal to the interim 2019 dividend that was paid in August 2019. This will be proposed to the Annual General Meeting of Shareholders to be held on 14 April 2020. No final dividend will be distributed.

At 21 February 2020, the Board of Management, with the approval of the Supervisory Board, adopted a new dividend policy that is to be applied on any profits over the financial year 2020 and subsequent years thereafter (until adjusted). This policy is available on PostNL’s corporate website and will be discussed during the Annual General Meeting of Shareholders.