For Financial Year 2019 (1 October 2018 - 30 September 2019), we will submit a dividend proposal to the Annual General Meeting scheduled for 11 February 2020 of €0.54 per share, which remains in line with our current dividend policy (dividend per share growth in line with Underlying EBITA¹ at constant currency).
From Financial Year 2020 onwards, the Group’s dividend policy will change as follows:
While the new dividend policy is expected to result in lower payouts, the dividend floor guarantees shareholders a minimum payout irrespective of the market environment of the tourism industry and subsequent impacts on Underlying EAT2. Based on TUI’s share price at the end of Financial Year 2019, the dividend floor would represent a dividend yield of 3.3% p.a.
At the same time we are disciplined in maintaining a solid balance sheet and keep our target gross leverage ratio comfortably within the range of 3.0x - 2.25x.
This updated capital allocation framework will provide TUI Group with increased flexibility as it facilitates investments in our strategic initiatives and future growth opportunities, as well as an attractive dividend to shareholders, underpinned by a solid and robust financial structure.
1 We define (Underlying) EBITA as earnings before interest, income taxes and expenses for the measurement of interest hedges, and amortisation of goodwill. Underlying EBITA has been adjusted for gains on disposal of investments, restructuring expenses in accordance with IAS 37, all effects from purchase price allocations, ancillary acquisition costs and conditional purchase price payments, and other expenses for and income from one-off effects. The one-off items carried as adjustments are income and expense items impacting or distorting the assessment of the operating profitability of the segments and the Group due to their level and frequency. These one-off items include major restructuring and integration expenses not meeting the criteria of IAS 37, major expenses for litigation, profit and loss from the sale of aircraft and other material business transactions of a one-off nature.