bpost NV/SA (BPOST) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to all of you, and thank you for joining us. I'm pleased to be here to present you bpost Group's Updated Strategy and Attuned Capital Allocation. I assume you already had the opportunity to read through the materials, which we have posted this morning on our website. Leen Geirnaerdt, our group CFO; and myself will first walk you through the presentation, and we'll then afterwards, take your questions. We are operating in a new, less predictable reality. We have to cope with a number of exogenous factors, that we can't control fully, of which digitization is a major one and offering opportunities and threats. Mail volume is continuously declining and accelerating as a result of this digitization. Excluding COVID-19, we were expecting a volume decline for 2020, between minus 9% and minus 11%. And year-to-date September, we were at minus 12.2%. Consequently, our adjusted EBIT has declined over the last 3 years, with 2020 also expected below the level of 2019. At the same time, digitization strongly drives further e-commerce penetration and adoption. Global e-commerce is expected to reach more than EUR 500 billion by 2024, and this with a projected average growth rate of plus 12% between 2019 and 2024. We just need to accelerate our transformation to further drive our business mix shift. The whole purpose is to be able to compensate the mail volume decline, which is structural, irreversible and becoming less predictable as to speak. So we want to compensate by growth in parcels and logistics. And the outlook there is promising. Last-mile delivery of parcels is a competitive industry, but we have as bpost a strong position, and volumes continue to grow as Belgium is still catching up with European neighbors in terms of the e-commerce penetration. In e-commerce logistics, we observed growing demand which has translated into our numbers as seen in our year-to-date 2020 results end of September. We have embarked on an important multiyear transformational journey. To counteract the decline in profitability of our mail division. This, as I said, due to mail volume declines and despite ongoing adoptions of our delivery model. We are establishing prominent positions in the parcels and e-commerce logistics space. In Europe, we will continue to drive profitable growth in last-mile delivery of parcels, Belgium and Netherlands, and we will further develop our e-commerce logistics activities. And this specifically with Radial and Active Ants as main pillars. In the U.S., we are encouraged by the recent developments on Radial's turnaround. And we truly believe this business is now set to be a growth driver within our group. COVID-19 has indeed boosted e-commerce and our second and third quarter results showed us that. This showed us also that an accelerated business transformation is looking promising for bpost Group. In order to respond to the evolving customer needs and lay strong foundations for a viable future, bpost concluded a comprehensive review of the group's strategic vision. This is aimed at successfully driving the company's business transformation with staying financially disciplined, and creating sustainable shareholder value. We want to be your trusted guide to connect in a changing road. Our mission statement is as following. We, the engaged employees of bpost Group, take care of relations and transactions in an evolving physical and digital world. We built on our knowledge of society, customers and technologies. We create sustainable value for our worldwide customers and shareholders. The mission translates our purpose. The connect component of our purpose refers to our mission to take care of relations and transaction. The changing world refers to an evolving physical and digital world. And finally, the trusted guide refers to our knowledge of society, customers and technologies. As you can see, we have translated our vision into 7 ambitions, putting the company at the heart of society, while accelerating our omni-commerce activity in Belgium and internationally. In the following slides, we will explain each of divisions with their milestones, together, with some concrete projects to realize those. These visions and milestones make the bpost Group strategy concrete, accelerate its transformation into an omni-commerce group and this close to society while remaining an efficient mail provider in Belgium. The first ambition of our CONNECT 2026 strategy is to be the trusted partner for brands, enabling them to successfully grow their omni-commerce activities. And this true growing omni-commerce revenues and EBIT, growing revenue from digital services in omni-commerce, such as Radial order management, or payment, tax and fraud systems. Serving brands in e-commerce logistics and this with at least 2 different value chain services. And serving leading U.S. brands in Europe or leading Europe brands in the U.S. through a joint vision at Radial North America and Europe. I want to highlight that we are having a clear focus on brands, besides e-commerce players and platforms. I'm now on Slide 7. And here, we want to continue turning Radial into a leading omni-commerce service providers with healthy financial performance. This to our service offering Radial both in North America and also in Europe, is covering all aspects of the e-commerce value chain post the click the customers do to purchase. We offer a one-stop shop for our clients, and we foster cross-selling between the different services. Our ambitions here are to generate revenue growth by successfully supporting existing clients, e-commerce growth, increase the share of clients trusting us with multiple services and attract and service new clients that are leaders in their product or service segments. To succeed, Radial North America will implement 5 specific initiatives. First, the functional organization will be transformed into a client-centric one that is organized around client accounts. A cross-functional and agile accounting will proactively, efficiently resolve issues in a coordinated way. We also make sure that it's easy for a client to navigate at interface with Radial as a company. And finally, the team will generate insights to the benefit of the clients businesses. The second initiative concerns targeting the emerging brands segment to optimize available fulfillment space. Currently, Radial has pockets of open space across its fulfillment centers, and those could fit small brands. We will drive, therefore, an adapted sales and marketing approach to target those customers. The third initiative is about scaling up radial order management for the benefit of all entities of our group. Radial is now working on a go-to-market strategy for ROM building on flexibility to support and scale up or down based on evolving market conditions and customer behaviors, cross-selling of ROM to existing Radial clients, using other services and leveraging clients' references for building brand recognition. The fourth initiative concerns modernization and automation of the operations through the use of robotics. This will lead to productivity gains of over 10% in certain cases. Automation also reduces the risk exposure and costs linked to overall hiring needs. Scalable technology will help Radial to be flexible and also well positioned to capture peaks also in the coming years. And finally, Radial also wants to leverage synergies between its different entities, and further rightsize the SG&A expenses. This will be achieved, among others, through integrating landmark for all radio clients into the service offering, streamlining different systems, and implementing labor management systems for fulfillment and increasing automation in billing process. I'm now showing you the slide with our 2 main growth engines of e-commerce logistics in Europe. Radial's business model and service offering is very similar to what we have in the U.S. So we are targeting mainly medium to large clients, and we are already active for the moment in 5 European countries and this through 6 commercial fulfillment sites. The ambition is to grow mainly organically in the countries where we are already present or in countries marked by flexible and low-cost labor and with easy access to Germany. This organic expansion can be complemented by targeted bolt-on M&A. On the other part, Active Ants with state-of-the-art technology and a high level of automation has just opened a second site in the Netherlands. We are planning to grow organically with active ends by opening 2 new sites per year in other European countries outside the Netherlands to reach 8 sites internationally by 2026. It was already announced that a new site will open next year in Germany and in Belgium. This brings me to the Slide #10, where we lay out our joint vision by 2026 for e-commerce logistics, North America and Europe, meaning transatlantic. Our ambition in both geographies is to implement an organizational structure and governance that facilitates decision-making and execution, converge the Radial fulfillment model with streamlined operations and KPIs and to improve and align technology to support cross-border development. For that purpose, several joint working streams have been kicked off, and these are about joint client development, across the Atlantic, Commercial effectiveness support where tools, methodologies, bitching and pricing will be adapted for large clients. The transfer and cross sharing of fulfillment and carrier management methodologies is a third work stream. And finally, our teams on both sides of the Atlantic will jointly develop technologies such as Radial order management. As mentioned already, all these initiatives will support our 2026 ambition to grow omni-commerce revenues and EBIT. The second ambition of our vision of CONNECT 2026 strategy is to make Belgium a top-notch omni-commerce country. And this is true supporting Belgian SMEs to embrace e-commerce and to increase their online business. By offering the best customer experience and this for senders and for receivers. The expectations of customers and citizens are continuously changing. And we want to continue to respond to these behaviors, evolutions through better communication and digital guidance as well for senders as for receivers. While the Belgian consumer has found his or her way to e-commerce boosted by COVID-19 this year. Belgian e-commerce has still a historic [ goal lack ] compared to our neighboring countries. We, as bpost Group, want to be the natural partner for the Belgian economy to set the pace to e-commerce growth for the commerce. An initiative that already seduced more than 800 SMEs is every business online, which you can see here on this slide. We enable their small businesses to jump into e-commerce and to do that in less than 30 minutes. The third ambition of our CONNECT 2026 strategy is to be recognized as a new and innovative company offering exciting customer experiences. This is true, a fundamental shift from a senders to a receivers perspective, and thus, as a result, even better serve the sender, creating innovative and exciting customer experiences to increase our NPS, Net Promoter Score, and this per business line year-on-year, co-creating and testing new solutions and features with clients, in fully operational -- in a fully operational innovation center and implement them together with our clients afterwards. And having 5 million users within the Belgian bpost app and this by the end of 2022. Historically, bpost Group's prime focus was on serving B2C customers or senders. With the new digital world, the focus is shifting from a sender's perspective to a receiver's perspective. And this, as I said before, to even better serve the sender. In that shift, we need to take into account important societal evolutions. Generations, why is that an alpha, they think mobile, they think convenience and they compare. By conquering their hearts and capturing their thoughts and wishes, we can strengthen our position towards the companies that these generations want a service from. At the same time, this will give us the ideas and the creativity to find new services and will allow us to outperform competition. So our digital transformation strategy is built on knowing better the residentials -- residential customers, the receivers. This will result in an attractive value proposition towards our business customers. For this, 4 innovative tracks will result in creating exciting customer experiences and will, as such, lead to higher NPS scores. First, we will build global digital knowledge on our customers, be it now senders or receivers. By collecting and grouping all fulfillment, cross-border and last-mile data, we will be able to have superior insights on our customers. By servicing our customers via a global customer engagement center, where digital is the first interaction channel, we will offer a complete end-to-end service. Secondly, we will make digital the first interaction medium with our customers in Belgium. We want to have, as I said, 5 million active users within the Belgian bpost app and this by end of 2022. And we will add a digital component to all our mail products currently. Thirdly, technology is inherent part of the day-to-day operational activities and guarantees the right to play for all entities. So as said before, an agile innovation center will involve our employees in innovation and our customers in the design of new products and services. Digital twins and flow control towers will give real-time information on the performance of our operations and provide supply chain solutions for our fulfillment businesses. Finally, new digital lines and opportunities will complement our omni-commerce revenue streams. There, we are currently investigating different solutions. Besides an improved and renewed customer experience, these tracks will bring us digital revenues and EBIT within the Mail & Retail business unit, and this as an alternative to the declining mail EBIT. I already mentioned Radial's initiatives in modernizing and automating operations through robotics. Technological innovation plays an important role and not only at Radial, but also clearly, we see also clearly the benefits of the state-of-the-art technology at Active Ants, for example. Automation reduces the risk exposure and costs linked to overall hiring needs to the bpost Group and our clients, and it allows to capture additional productivity gains. We are currently piloting robots in the picking process and working with handheld scanners that benefit from use -- user-interface enhancements. Just to name a few examples of the technological innovations we are working on in omni-commerce. Let's move to the fourth ambition of our CONNECT 2026 strategic vision. This concerns our numbers and our financial health. We want to create sustainable, long-term profitability while ensuring sufficient investments for our business transformation beyond mail. Leen will do a deep dive on capital allocation later on. But first, I would like to highlight our intentions to reinvent and roll out the mail and parcel supply chain in Belgium, based on the expected market evolution, combining agility, costs and service quality. And to decrease overhead of bpost Group with 1% per annum on total revenue. In 2019, bpost decided to adapt its distribution model, towards an alternating distribution model as a next step in mitigating the increasing distribution costs while continuing to maximize the synergies between mail and parcels. Mid-March of this year of 2020, all distribution rounds have successfully transited towards the half and half model in one big bang. From March till now, the implementation of the new model has also helped us to absorb the huge Parcels volumes increase as a result of the COVID-19 crisis. In September 2020, we gradually started reorganizing the mail rounds, distribution office by distribution office. In these reorganizations, we are taking volume changes linked to COVID into account. And I'm, of course, referring to the explosion in parcel volumes. As well as the expected further decline in mail volumes. We must say that due to COVID-19 crisis, we have a slight delay in the implementation of these reorganizations, however, we still expect to create full savings to be visible and this by the end of 2023. COVID-19 has also demonstrated that the drivers behind a further review and fine-tuning of our operating model are more valid than ever. Indeed, we have seen mail volume decline accelerating during the COVID's crisis. And at the same time, we saw parcel volumes exploding. Much of this uplift in parcel volumes is considered to be structural and long term. Next to the changes in volumes, we also need to consider and safeguard profitability where we need to protect our cash cow mail business and work on lifting margins in the parcel business. Also, market demanding is quickly changing and this, especially in e-commerce where customers are asking more flexibility, such as same-day delivery, evening delivery and Sunday delivery. Customers are also expanding the range of goods ordered online that we have seen very clearly during COVID-19. This impacts the size and the weight of the parcels. And we also see a clear trend towards more orders during peaks, such as the end of year period we are in currently. Finally, overall market trends come into the picture as well, and I'm mainly referring here to considerations with respect to sustainability. While ADM, the Alternative Distribution Model, serves as well now, these aforementioned drivers imply that we might have to implement a new fundamental network redesign as early as 2022 or 2023. It's clear that we will not last that long with the ADM. Therefore, a project called Delta has been launched in September. And this project aims at defining, agreeing and implementing a new operating model in Belgium, covering all parts of the operations and all products based on expected market evolutions and this combining agility, cost and service quality. The goal is to maximize EBIT, minimize CapEx and increase our asset utilization. We will realize this by, first, taking into account our social responsibility as one of the largest employers in Belgium. Bearing in mind constantly evolving customer demands from both senders and receivers. And also, we want to respond to sustainability and other market and social trends. The Delta project team has been asked to develop scenarios from scratch. And the objective is to finalize the vision of the future Belgian operating model in the first half of 2021 and prepare as of then, the implementation of first pilots in 2022. The mail portfolio is under pressure as a result of accelerating mail volume decline. Our Mail strategy wants to achieve, however, the following objectives. We want to slow down the transactional mail revenue decrease. We want to stabilize or even increase advertising mail revenue, and we want to create additional revenue compensation through new, and mostly, digital revenue streams or digital-supported revenue streams. The strategy consists of 3 tracks detailed on this Slide 20. First, through several concrete projects, we will position mail in the digital world as a specific product. Example -- examples include, for example, e-registered and digital stamp solutions, among others. Besides those, we will become a trustworthy data player in Belgium, thereby, of course, taking care and respecting the GDPR rules. We are also looking to launch new solutions in the public sector. European license plates and fines management are examples of successful projects that we have implemented in the past. Secondly, the second track for the mill, we are implementing a sales and marketing performance program. With a rejuvenated commercial dynamic, we try to organize regular top-to-top meetings with each of our top customers and plan as such, systematic interactions with the others also. Our new value propositions built on a new sales story to visit advertisers with powerful and tangible examples of campaigns and results on investment. To enable this, we need to adapt our organization to rework our customer segmentation and targeting so as to focus on maximum growth potential customers. We are, therefore, reinforcing and also training the sales teams accordingly. Performance management will also play an important role in this setup. New Desk Board approaches will drive further sales performance. Finally, the third track, we want to continue to use the price lever, especially within transactional mirror, thereby, of course, respecting all the regulatory price limits and the regulatory price cap. At the same time, we tried to slow down the volume decline by building a preference management platform for receivers and pushing for split billing. Now I'm come to Project One, which was the second element in this vision. It targets a group-wide overhead efficiency. The intent is to be able to self-finance our business transformation maximally. As bpost is transforming from a traditional mail company into an omni-commerce player competing against other 3PL players, cost consciousness, becomes more than ever important. It needs to be embedded in every layer of our organization. It should not be the one or the other. We need to find a way to do both. Building new ways of doing things and abandoning old ones that have lost their value. We need to focus heavily on value-driven spending. And it should be part of our DNA with the ambition to reduce cost revenue ratio with 1% every year. As part of our strategy, we have, therefore, launched project called One, with a focus on simplifying end-to-end processes to make bpost a simpler and future-proof organization and this by looking into an adapting end-to-end processes and encouraging cross-business unit corporation. Secondly, cost clearing or cleaning or hygienic cost revision. This is where the self-financing comes into the picture. We will refocus the available resources where possible to support as much as possible the business transformation. And finally, promoting intermobility focuses on reorientation of our staff to jobs within the highest added value thereby limiting external recruitment needs. The fifth ambition of our CONNECT 2026 strategy vision is to be a reference sustainable and planet-friendly company. And this, we want to be through being fully active in several Belgian cities with sustainable city logistics for zero-emission in city centers. Also by decreasing the total carbon footprint by 20% in 2030, and this compared to 2017 at group level. Deploying 50% of events by 2030, also at group level and having an external certification by a reference entity for clients and investors. Bpost Group is already recognized as one of the forerunners when it comes to sustainability. Sustainability, however, within Bpost Group is not only planet. We also have a societal role to fulfill when it comes to people and proximity or cohesion in society. And as you can see, our 3 CSR pillars are embedded in the United Nations sustainability development goals. We have set up a clear sustainability road map, which we want to continue to play the leading role when it comes to creating value for planet and society. We have recently launched our materiality assessment exercise to identify those topics related to sustainability that are important for the future of our company and all its stakeholders. When we talk about leading role in societal responsibility, we are also saying innovation. We are creating a city blueprint in order to become the preferred operator for sustainability, B2C city deliveries. Phase I, which relates to defining the blueprint has been launched in Netherland earlier this year during the summer. As from 2021, we target to gradually roll out our emission-free last-mile model and this to several cities in Belgium. This will establish bpost's position as the preferred city operator in dense, urban areas since we expect to be the only last-mile zero-emissions delivered. Let's move now to the sixth ambition of our strategy. This one is we want to be an important contributor to social cohesion in society, and the preferred partner for public services in a changing world. This we want to do through creating additional paid neighborhood and proximity services, and retaining the existing services to public authorities, including modernization of them. Social cohesion in our society can be fostered through imagining new neighborhood and proximity services. Our network of post offices offers a very important proximity network of physical presence and this on the whole Belgian territory. Building on its strengths, our retail offices can become more than just a post office. In a leave no one behind societal approach, offering services such as the identification and authentication of people or offering basic banking services to name a few examples. The second area where we could play a role is offering new care and in-home services. In our western society, the number of elderly people is growing fast. However, people want to live at home and this as long as possible. To enable this, many services and products will have to be delivered at home 24/7. These initiatives will bring us solutions, revenues and EBIT within the Mail & Retail business unit as an alternative to the declining e-mail -- to declining mail EBIT. I'm now on Slide 28, where I will spend some time on the contracts that we have with the State regarding the services of general economic interest. These are important services to further foster cohesion in our Belgian society. These contracts can be split in 2 big buckets. On the one hand, the management contract details a couple of services that we provide for which we get compensated. These include the retail network, cash at counter services, election meal and also cash payment of pensions at home. On the other hand, we have 2 press concessions, we have a contract for delivery of newspapers at home, and a contract for delivery of magazines at home. The compensation that we receive for all 3 contracts together amounts to approximately EUR 270 million on an annual basis. Initially, both the management contract as well as the press concessions run from 2016 until the end of 2020. We are currently discussing with the Minister a 1-year extension of the sixth management contract. Beyond that horizon, it is our intention, and we want to engage in a 7 management contract that will include adjustments to and also modernization of the services. For example, basic banking services could be strengthened in our post-office network, and we could also imagine new innovative public services to support isolated, vulnerable or digitally disadvantaged citizens. The press concessions have already been extended in December 2019, by the Belgian Federal Council of Minister, and this for a period of 2-years until the end of 2022. And this, at the same conditions as those prevailing in 2020. The notification procedure to the European Commission is still ongoing with no decision expected before the second quarter of 2021. The future of these concessions beyond 2022, will define -- will be defined by our new government in place now. On the next slide, you see the universal service obligation. Today, we don't get any compensation for being the universal service providers. That would only be the case if and when the USO would become a financial burden on bpost. Today, the USO is granted until the end of 2023 through a management contract. Based on the revised postal law applicable since February 2018, the management contract stipulates a toolbox of measures, which grants a certain flexibility to the Belgian government and the universal service provider to avoid the universal service from becoming a net financial burden. In that respect also, Project Delta, which I explained before, aims at reinventing the operating model and -- that has been launched in September, and this to contribute to remaining cost efficiency in the USO. Let's now move to the last ambition of our strategy. This ambition is to be an inclusive organization, offering life learning experiences and this to launching bpost Academy to upskill and reskill bpost employees. It's also through developing a human capital and diversity plan at group level, and also setting up one group, one team, one spirit, one bpost group culture that lives through all the companies in the bpost Group. With bpost academy, we are launching an ambitious dual learning program. One of our core competencies is the development of our labor force. With this track, we'll be offering, also later on, the service to other companies. And here, I want to hand over the word to our CFO, Leen Geirnaerdt, on the capital allocation subject.

Thank you, Jean-Paul. Good to see you all, not live, that's not possible. We've met a couple of times, talked a couple of times. And you were all waiting for the new dividend policy, and the day has come that we can explain it. I'll connect it with the full capital allocation since, indeed, I think that's extremely important, given everything what Jean-Paul just explained, how does it connect to the numbers? What does it mean for us is bpost being financially looking forward in the future? I want to highlight in this number parts, 2 things, and it has already been highlighted. What is in the end, the financial goal is that we seek to more than compensate the EBIT loss from declining mail volume throughout the trajectory of '21 to '26. We will do that. And something is extremely important for us that throughout our capital allocation, our credit rating is our primary consideration, so we want to strive to remain investment grade. And I'll explain a bit more why we want to do that. Jean-Paul indicated at the beginning of the presentation, when you look at bpost and you simplify it, actually, you see 2 kind of businesses. We have the traditional Mail & Retail and on the other hand, we have Parcels & Logistics. We've all found out the recent years that they have very opposite dynamics. And that also means that they will require going forward, different levels of investments in the course of the business transformation. It will be fueled by higher investments that Parcels & Logistics, they will deliver increasingly a higher EBIT contribution to Bpost group. And so to compensate for the decline that we see in Mail & Retail. In the left side, what you see on the graph is different kinds of inflection points because we know the inflection point is there. It's a reality. But it's really hard to predict when exactly that will happen. Why? Because it's also subject to different exogenous factors, think of macroeconomics, also now in the midterm with COVID-19, what exactly will happen on the midterm in the economics? The mail volume decline that we were talking about, how fast will that digitization really go? How fast will e-commerce grow? So when we make up a long-term plan, we see that inflection point, but there are various assumptions that can vary very quickly. That's also that -- and that's in contradiction to what bpost was used to and also in the Capital Markets Day of 2018 rather than giving a long-term group guidance and year-by-year, we have chosen that every year, we will come back to you with an outlook, explain where we are in the trajectory and does no longer give a real long-term plan as was the case in the past. Every company and bpost definitely not being an exception, has various stakeholders, each of them with very different perspectives. Of course, we believe that throughout a business transformation, we have to balance out those perspectives. And that's also possible because we know that in the end, everything is aligned. I think today with everything which Jean-Paul has been saying, but the key message is that with the choices that we make in capital allocation is that we want to lay a strong foundation for bpost going forward. It's all about a viable and a sustainable future for the group. This will maximize value creation for all stakeholders in the long term. We have, as you know, an important societal role to play, think about securing long-term employment that we do. Also, and it was explained before, making sure that we deliver good quality of service, both in Parcels, but especially also in our universal service obligations. At the same time, we need and we want to meet also the expectations of our investors, of our analysts, of our shareholders. And that's as to regard on sustainable returns on the investment that they have made in bpost. All those, we have to try to capture in what is now the capital allocation. And the next slide gives a scheme of that capital allocation. And like I indicated before, there is a starting point. The starting point is to enable a business transformation while being financially disciplined. There's no such hard thing as making transformation, wasting money. And then suddenly, you encountered that probably you're not so financially sound. It's something that we amply discussed, and we have a too big responsibility to all of our stakeholders to do that. So given that we are now investment grade, we rated A by Standard & Poor's. We think that's not only a good starting point, but also our goal going forward to remain investment grade. Since the matrices, which are taken into account there, help us to assure that we are financially sound. As you know, net debt to EBITDA, it should be preferably less than 2, and secondly, the funds from operations, like it's calculated by Standard & Poor's to net debt, it should be above 30%. The second part on the slide about capital sources. As you realize there, we are looking in first instance at internal financing. In other words, we're looking at the cash that is generated by our businesses. In the cash flow from operations, we have 2 main items. We have the cash that we generate by doing our business, the EBIT generation, and we have 2 different items there, 2 dynamics. We have the mail volume decline, which has a negative impact on the one hand. On the other hand, we have the development in e-commerce logistics, the growth that we see in parcels and all of the enhanced plans that Jean-Paul just explained, not only in e-commerce, not only in parcels, also in the mail business and in our role into society. Then the second part is about working capital needs. We explained already before. If you look at bpost, we see in that business transformation, also a big shift in our working capital. Typically, everything what we did was actually prepaid. Think about the invoice from the state. Think, on the other hand, if you buy a stamp, it's also prepaid. And we're moving to a more normal company who invoices their customers and who pay on normal payment terms. So that's something that we have to take into account that the coming probably 2 years, that shift will be there. We also have that particular item in Radial U.S., we've always been very open about that. The business that we call the payment business. And that also is planned that it will shift. We will move from the payment business bit by bit also that they will simply ask to invoice for the services, but also there are normal payment term. From that part from the cash flow from operations, we cannot move to capital allocation. That we were doing a business transformation, I think you all know. What is a difference now is that we clearly see, actually, thanks to what we've noted in 2020, that we have to accelerate our business transformation. So our capital allocation framework balances investing in that quote, returning cash to shareholders while remaining financially disciplined. And that's exactly what you see when we move then to the bucket of capital allocation. Invest in growth. It will be mainly organically. So the CapEx will be the main item. It will be for growth and maintenance, but of course, mainly for growth to foster EBIT growth. Yes, we will also look into bolt-on M&A, this to grow Radial Europe at a faster pace. And both for CapEx and for the bolt-on M&A, we will not do the investments blindly. We have installed a governance in which we look at very specific financial metrics and also a clear decision-making governance so that we are sure that within the different business units, we allocate the money properly to the best projects. And then the next use is, of course, shareholder rewards. It's called a dividend because if you look at bpost, we've always been a dividend-yielding company. And we still have the ambition that throughout the business transformation, we do provide our shareholders with cash returns, but we want them to be sustainable. Next to that, what we are doing here with the CONNECT 2026 is growing long-term shareholder value, and the boat will indeed create a very nice reward for our shareholders. If then, we still have cash buffers, then we could accelerate further. So additional growth CapEx, additional M&A, for sake of completeness, we also mentioned, yes, at a given point in time, we could look at additional shareholders' returns. I think our dividend policy will also allow that in last instance, and eventually, there could also be debt reduction, but in that sequence. Then moving indeed to the dividend policy. At the left side is the dividend policy like we used it since the IPO. It was 85% of BGAAP, and I think it served us well. It suited the profile of a mail company. Now, going forward, it's not suitable anymore. I think if you looked into the numbers of 2019, you could see that after dividend payments, we were cash negative, which is, for a company and business transformation, not the right thing to do, we have to be sure that we have a sustainable future ahead of us. So that's indeed why we decided to update our dividend policy, and we will move forward to IFRS net profit, and we have a range of 30% to 50%. Like I indicated why? Because it should be sustainable in the long run. It offers us flexibility. We have the range in which we can choose, and it leaves us the headroom to maneuver throughout the business transformation. That has a bit to do with the inflection points that I was talking about. We can adapt easily how to pay the dividend when things go faster or they would slow down. Another change is -- and it goes a bit with Jean-Paul saying in, one, we have really ahead of us that we want to simplify bpost, and we thought also that the opportunity is now there, that we will no longer pay an interim dividend, but only once and that annual dividend payment will be like in other companies after our shareholders meeting in the month of May. On this slide, we summarize the rationale of the new dividend policy. It is aligned with bpost Group vision and the strategy. Since it offers us the required flexibility to drive our business transformation, while also sharing the benefits of future growth with our shareholders. This policy is linked to bpost's Group performance. So we shift from BGAAP to IFRS. So it's closer to the group numbers that we also always present to you in our quarterly updates. And it is sustainable from a cash flow perspective, which we find extremely important and also from a balance sheet perspective. So again, financial discipline is a priority in this business transformation. With regard to our investments, like I indicated, we have a rigorous governance process put in place. And we also look at consistent and thorough applications of return metrics. Like we indicate there, when we look at the business case, the projects they must at least be beyond 2% of their WACC. We also review backwards, I think that's important there because making a business case, everything on paper is very patient. But also when we realize the business case, we also check if indeed that business case was a viable one according to our rules. The projects will be prioritized in line with the strategic items that we just discussed. We will optimize between growth and maintenance CapEx and also they are looking far more in what is future-proof and what is not. So to conclude, of this framework as presented today, we believe that this attuned capital allocation and also the new dividend policy, it strikes the right balance between investing in growth, giving shareholder return and staying financially disciplined. We are convinced that this will maximize the value creation for all stakeholders over the longer term. And now I give back to Jean-Paul for concluding remarks and happy to have your questions afterwards.

Okay. Thank you, Leen. This brings me to the conclusion of this strategy and capital allocation update. The launch of CONNECT 2026 is a mind shift for our company for at least 4 main reasons. Firstly, it will allow us to continue to reinvent our company in order to put customer centricity even more at the heart of everything we do. This anticipating the evolving needs of the customers is what drives us and motivates us to create value for them. Secondly, it will allow us to invest in our omni-commerce logistics activities and accelerate growth in these activities. This is our main engine of growth. Thanks, in particular, to the great opportunities offered by Radial and also Active Ants in this e-commerce logistics world. Active Ants, for example, we'll be opening a number of new sites per year in European countries, as I said before, and this including in Belgium. Thirdly, our new strategic vision, more than ever, puts the spotlight on our societal role. And this by underlining our willingness to develop new services. And this very important as a planet-friendly and inclusive organization. As it is mentioned, clearly, in our CONNECT 2026 vision, bpost Group wants to be your trusted guide to connect in a changing world and this for customers, employees, citizens, companies, shareholders and governments. And last but not least, the launch of this ambitious strategic vision sets the guidance for a sustainable future for bpost Group and all its employees, those who give the best of themselves every single day for our company. With this, we are happy to conclude and now to get over to your questions. I ask the operator to open the lines, please.

[Operator Instructions] The first question comes from the line of Frank Claassen from Degroof Petercam.

Three questions, please. First of all, on your Capex, do you think that your overall CapEx will go up in coming years due to more investments in PaLo and less in mail? And could you quantify that maybe related to a sort of percentage of revenues? And more or less, the similar question on your working capital needs, you indicated that you anticipate higher working capital needs. Could you quantify that and also maybe give some kind of target what working capital could be as a percentage of revenues? And then finally, a question on your Delta project, just to get a bit more understanding, but is it only about redefining your mail networks? Or does also the parcels networks come into play? And how does that interrelate to each other?

Okay. Thank you. I will start with the last one and then go to the CapEx, and then the rest I will leave to Leen. The Delta project looks to the distribution network to make it clearer. And the distribution network means the distribution of all products, so mail and parcel. So it's not a pure project looking only at mail distribution network, but at the combination of the 2 and to find there the best solution. With reference to your question on CapEx we had planned CapEx up to EUR 200 million for 2020. In view of COVID, we have limited that to -- we took action to limit it to EUR 150 million. We did spend, for example, in 2019, EUR 162 million. For the years to come, we believe that we will still need and will still be having CapEx needs of around EUR 200 million for the years to come. So this is clear that it will be around that amount for our business transformation. Leen?

Yes. And then the working capital. Perhaps I want to add something to what I said in the presentation in the shorter term. As you know, during this year, we have been extremely prudent also on how we manage our working capital. So that means that in the fourth quarter and the first quarter already, we will see unwinding of working capital because of that purpose. So we had extended payment terms also the measures allowed by government to pay later on taxes, et cetera. We have profited thereof. And I think in total, the amount is quite considerable that we see unwinding. It will be -- if I'm not -- was not mistaken, about EUR 90 million spread over that period. But you will also see, if you look at the September presentation, it's where we were ahead of it. So if we announce that, that's only because, indeed, we took that extra brand aware as to speak to assure that we would have liquidity at the start of the crisis, we were not aware what exactly would happen. Then indeed, going forward, there will be the shift in the needs if we meet the assumptions in our long-term plan that will take about 2 years, and then it will follow a revenue percentage. So I cannot answer your question on what it will be in the first 2 years, probably. But we will be indeed from being paid upfront to normal payment terms, which will be between 30 and 45 days. And so of course, that will also have its impact and also the payment business of Radial, there we will see that it will unwind. I want to remind you that we said I think already for 2 years that the latter would probably be about EUR 50 million. But actually, the customers stayed longer with us than expected, so that EUR 50 million is still to come. Also there, we expect in part already in the fourth quarter and the rest probably in the course of next year.

The question comes from the line of Marc Zwartsenburg from ING.

Yes. Thank you for the presentation and my questions. A couple questions from my side. First of all, on the mail business. You mentioned that there will be some cost savings kicking in as we go to the full effect in 2023. Could you give us a bit of an indication of how much cost saves we should expect for the Mail & Retail segment? And connected to the Mail & Retail, also discussing the 7 major contracts that should kick in, say, 2022. BESIDES THE adjustments and modernization of services, can you give us an indication what you expect in terms of compensation from the state? Will that go down or will we remain roughly flattish because you will add some more services to it, that will be in retail? And then on your EBIT, not really files, but also there's a bit of guidance on the inflection point. I will take it correctly, if you say that on average over the 2021 till 2026 period, on average, the EBIT should be higher for the average over that period than a starting point of saying 2020, is that how we should read it? And that the inflection point that will -- first on GAAP and income output on average over that period, we should have a higher average than what we've seen or expecting currently from consensus on 2020. That will be my first question. I might come back later.

Okay. So on the first question, perhaps, on the savings on the Mail business, also there -- I try to be consistent, and indeed we will not give detailed numbers on what the savings will be. I think we explained very well the goal. It is to save cost, to be more efficient and that efficiency relates to how we work with our people and with our real estate and with all of our capital expenditure. So I think that's the main item. The alternative distribution model was rolled out this year. That is still ongoing, is delivering its benefits. I think what we said in the past, we are delivering on. The Delta project is actually because we want to be prepared for the next step and we know that mail will continue to decline. We've seen this year very clearly how fast parcels will grow. So the Delta concept goes probably even beyond cost savings. It's about efficiency, but also how we can grow with that growth of parcels while remaining indeed the mail provider in Belgium. The project started in September. I think it's well underway, but far too early to give any indications on what exactly it will bring us to terms of cost savings only. As to the management contract, and sorry, Marc, but your MiFID line is that I recall, I said it last time, too. But I think you talked about the 6 management contract. And that your question was, what will it do as to numbers. We are still in discussions with government. I think discussions are going well. Probably you're asking the question because the last time that we negotiated, indeed, we lost a part of that income. I think now we are having indeed also given our strategy, we had a clear ambition to serve as much as possible within that 6 management contract. We're looking at modernizing it. So actually, we do everything it takes to deliver that to the government and to the Belgian states and to the citizens of Belgium, what they need and that may also have a positive impact on the revenues going forward.

And maybe I can add on that, that it's not when the former management contract was negotiated, there was also an evaluation, okay, what are the services that are expected from the state? And what are the compensation that links to that services? So we're going to renegotiate a 7th management contract. We have 1 year for that. And it's clear that you have read in our strategy that we want to look at exploiting or exploring new services, maybe other ones would stop, maybe new ones would come. Of course, there will be costs linked to that. So it will be -- it could be an increasing of revenue, but it's not sure yet. So that's discussions that will be ongoing in the coming months on the 7th management contract. But there's always -- it's not just, I would say, revenues. There's always revenues that are linked to specific services we would like to deliver to the citizens of the country. And as far as the EBIT is concerned, I think you made a relatively good evaluation. The purpose is to more than compensate the loss of EBIT from the mail volume decline in the coming years and this to reach a certain level in 2026. It's difficult to predict exactly year-on-year, and that's also why we do not do it. We can do that year after year, but that's really what we mentioned and what we want to reach and what the target is more than compensate on an average by -- for the whole period, I would say.

And the starting point to 2020?

Yes.

Yes.

And maybe one thing on the management contract. Could the reason that the compensation could go up if you add more services? Is that also possible?

Yes.

The next question comes from the line of Marco Limite from Barclays.

So my first question is about Radial Europe. And I was wondering if you are still thinking at Radial Europe as a kind of Pan-European logistic operator? Or with this new strategy, you are trying to focus a little bit more on Belgium as well for your fulfillment business in order to provide one-shop service in Belgium, given that clearly, you do also last-mile delivery in Belgium. My second question is about going back a little bit on your Delta project. And I was wondering if you have got already in mind a sort of pipeline for your sorting centers openings. And if you've -- so if you have got already a plan on how much more capacity you pretty much need over the next years. My third question is a quick one. If you can just confirm if you are not going to pay a dividend in 2020, so the next dividend payment will be in May 2022? And fourth question, also a very quick one. When you say that you are thinking about the disposal of non-core assets, just wondering what you refer to. Is that just real estate or also some minor businesses?

You take the last two and I will take the first two.

Yes, okay. So indeed, on the non-core assets, and I realized that in the presentation, I didn't even mention it, whereas I think it's an important item that we do an assessment of our portfolio of assets. And I realize, Marco, why you say, is it what is it the buildings? Because in the past, it has always been the buildings. I think now with this strategic update, it's quite obvious that we don't only look at what do we do in the future, but also where do we stop in the future. So that's also why we will be looking at our subsidiaries at the businesses that we do, the different kind of activities. And indeed, look, do they fit this strategy, do they deliver EBITs, also very important? Do they deliver cash? And what does it mean going forward? So indeed, we might consider disposing assets, and we also mean indeed disposing subsidiaries or activities. On the dividend, yes. So we reconfirm we're not planning to pay a dividend on 2020. As you may recall, when we announced it, we said due to COVID-19, we want to preserve for the balance sheet and to invest on the longer term. With this strategy, you now understand that was deliberately chosen because, indeed, I think for COVID-19 we are managing while to be a bit modest even. But of course, the plans for the future are there. So that also means that being prudent on COVID-19 on the one hand, we also want to be very sure that we can invest in this business transformation. So your interpretation is correct, that would imply that the first dividend would be paid after 2021 after the shareholders' meeting of 2022.

Okay. On your question on the Delta project, it's maybe -- was maybe not very clear around the Delta project. Also includes looking at the sorting centers because that I feel is your question. We did had already sorting center capacity increase planned in the coming 2 to 3 years. This was already decided, I would say, before the end of year, peak of this year. And the second, I would say, COVID weighed here in Belgium with a lockdown of shops. But we have planned to review that plan beginning of next year, also involve our customers and then involve our customer centers to see what their predictions are. It's a little bit difficult now. It's end of year peak. It was end of year peak with a lockdown. So we really want to look at what their provisions are for 2021 and see if the plans we had need to be adapted brought forward or any other creative solutions that we could develop to make sure that we can, even better than this time, go for parcel -- correct parcel delivery for the end of year peak next year. And who knows and hopefully not, but for other lockdowns, as we have experienced in 2020. So yes, sorting centers is part of that. There was already a plan of investing in new sorting centers or sorting facilities, not necessarily new buildings because we still have space, and that's different to our colleagues, I would say. They, most of the times, build new buildings. But it would be a little bit wrong usage of CapEx if we would start building a new building. If we have an existing building space that becomes free of, yes, the lowering mail volume and the sorting of mail. With respect to Radial Europe and also your question a little bit on that for Belgium, it is clear, I think, from the strategy and from what we told you that the years to come, we will definitely focus on the development of our omni-commerce logistics pillar in Europe, be it with Active Ants, where we clearly want to have 2 new sites per year, or with Radial. It's clear that we focus on Europe here and that we're going to make. We have a bigger plan that is ready. But we have now -- we will now take the time to detail it, to discuss it with the Board and to come to a clear plan in the coming months of what we exactly are going to do to reach this target and to make it a bigger -- I would say, a bigger business in Europe on e-commerce logistics. And of course, I mean, if there's opportunities in Belgium, we definitely will not pass by. We will definitely also include that because it's our home base, I would say. And as you know, and as I told before, Active Ants is going to open next year in Belgium. So that's already a first stick in the ground, I would say, in our home country.

The next question comes from the line of Najet El Kassir from Bank of America.

Just three questions form me. First is, have you seen an acceleration in the mail volume decline from your previous long-term guidance, 9%, that you give at the last Capital Market Day on the pandemic? Secondly, what parcel -- what level of parcel growth do you expect? And when would you expect the parcel EBIT contribution would surpass mail? And last but not least, if you can give any color in terms of what you're seeing since in November and early December in terms of mail and parcel volume, please?

With respect to the mail volume decline, I think it's very difficult to predict. We gave you the figures until end of September. We think that we will continue to have, yes, high single-digit mail volume decline in the coming years. But yes. It's very difficult to predict, but we believe that this will be the case, high single-digit mail volume decline in the coming years. So a little bit in what we had expected also for 2020. On the parcel growth, well, it's also there, it's much more unpredictable than it was in the past years, I would say. It has to do with COVID, it has to do with the change also or the shift of consumers going to the online shopping. And we have planned to, as I said before, and also for our Delta project, we have planned to look together with our customers, what do they expect for the coming years with our customers and centers. And that's really the purpose to the beginning of next year. And to get more view on, okay, what is now exactly to be expected. It's clear that we are on a higher curve, as I said before, it's definitely that in Belgium, we really catched up versus our, I would say, neighboring countries versus the rest of Europe, that's for sure. And we will stay at a certain higher level. And yes, I believe that this higher level, it will continue to increase in a normal way. But is there still -- and that will be your question, I think, is there still a higher increase than what we normally would expect in the normal evolution of e-commerce? Well, that's very difficult to predict. It depends maybe also on what will happen on the physical commerce. Will the physical commerce decrease? Will it further -- what will happen after the COVID crisis? Will there more shops being closed? Definitely, not temporarily and all that kind of stuff. So it's -- that's why we want to do that together with the retailers, together with our customers to look, okay, how can we better and even better-than-before predict the future and help them and help also the consumers.

And that also answers, in part, your next question. When will parcel surpass mail? If I take parcels and the e-commerce and you look at our third quarter, we were already there. But of course, 2020 is so particularly a year that we don't know what future will bring. We've seen that indeed in the third quarter, actually, mail held up pretty strong. Which is, of course, the crux in the entire long-term plan of bpost. So that is something that we cannot predict. We are at a higher curve of e-commerce growth that we can see. But what will be the new normal? Also, that is difficult to predict. And that makes the fact that we cannot be more precise than that we just said that we want to compensate over that time. November, December, we discussed, but we decided not to give a trading update, so I cannot answer your question, unfortunately. So we'll have to meet on that one in February.

The next question comes from the line of Lotte Timmermans from ABN AMRO.

One question left, please. A question on project Delta and parcel capacity. More specifically, could you indicate how many parcels you deliver currently at the capacity per day and to what number you expect to increase this trough the project?

On the second part of the question, it's difficult to say. I answered before that we want to evaluate that together with our customers beginning of 2021. It's clear that we want to increase the capacity year-on-year. And that is also in the press. We have last week, we have beaten several days' records, and we have been distributing parcels of more than 660,000 in a day, so -- which is very special and impressive. And I would say it didn't work -- it did work well. So it's not yet, I would say, the ultimate limit we can handle but all systems continue to run and to work well. So that's the current level. Of course, we think we need to increase that level also definitely by the end of year peak of next year. Nobody can, of course, foresee and with the vaccine coming on our way, it might be that, yes, there is not, I would say, a second or a third wave volume that would be at the end of next year, together with the end of year peak as we have had it today. But the general regular every year increase we will start from this 660,000, let's say, which is the highest volume we handled now and with success, and that we add on that another interesting percentage to see that we are sure for the coming years and probably after that as well.

Could you also say your capacity? So you said 660,000 was the record high. I saw that in the press, indeed. What was the max capacity you can handle?

Well, I mean, it's difficult to say a number, but I think there is still some room depending on the way you distribute during the day. We distribute now twice a day. As you know that as from next year, we also do tests, we'll do tests and pilots to distribute much more also on Sunday. So all that will increase the capacity. So I think sorting centers still have some room. There is still some time that we could use during the day to further sort. And we also had a temporary sorting facility put in place next to the 2 new ones that we had invested during summer, which you have been informed of. And those 2 new ones were for 100,000 parcels more or less. In a normal timing, a normal timing for me means a certain time frame during the day. Of course, if you go exploiting that more and further on, this is definitely a possibility to increase even beyond that 660,000.

The next question comes from the line of Sumit Mehrotra from Societe Generale.

So the first one, really, the simple one, what do you plan to do with the distributable reserves that were there earlier, used to neutralize the exceptional costs? And then really some questions on what exactly are you doing in project Delta, which is different from what could have been done earlier. So it could be some operational details, if you could provide what exactly are you looking at in project Delta here? And lastly, an update on Radial U.S. future would be good to have. Last year, we had got some idea of what the potential earnings contribution from Radial U.S. could be. But now do you think -- what do you think about this business now? That's about it.

You take Delta, first. And I will take the [indiscernible]

Yes, I will take Delta, first. Well, it's a bit difficult to say. A lot of details on Delta because there are so many scenarios, we ask them to look at. So I can be here talking for half an hour, I would say, but that's not the purpose. It's definitely, as I said, they have been asked to work on scenarios from scratch, meaning, forgetting the way we work today and forgetting also the way things go today. They also have to take care of, okay, what our customer expectations in a number of times, your mail is being delivered at home. This is different than what the expectation of a customer is with respect to parcels. Is going to look at how can we further optimize the usage of our assets, our buildings by using more time during the day, buildings or fleet. Today, we have a certain period of the day that fleet is used, that buildings are used. Can we do there more with the same assets? Can we take other times during the day? As I said before, the Sunday delivery is part of that. Today, Sunday, our fleet and our buildings in the distribution network are not used. So using them also on a Sunday means that gives certain efficiency on using of our assets. And yes, they are also very technical and very detailed operational reviews of why would we still do things in a certain way or through a certain channel before it goes to, I would say, the end consumer or before it goes to a pickup point. Also, there are elements in Delta that have been -- that will be looked at. And please do not forget the part, which we discussed on sustainability. Also there in the projects of Delta, they have to take into account an increase of parcel lockers in cities, which I feel that which we get a lot of reactions, of people being -- and I think the future generation will be even more than before, looking at what is now sustainable. And the question could be is home delivery everywhere at every time of the day within very limited timings, is that a sustainable way of doing, yes, I would say, e-commerce distribution. I get a lot of reactions of people saying, these parcel lockers are sustainable because I passed by them anyway or what we do in Mechelen, for example. We have a very broad network of parcel lockers within walking distance of customers. So -- and that's, of course, for parcels that are not, I would say, the big fridges or ovens or so on, that's another way of delivering at home. So I think, yes, Delta is looking at everything and fitting it also within the strategy we have and making it -- the combination between mail and parcels. And the question from one of your colleagues was also, okay, when in the volumes, it's also difficult to see, and there's still much more letters every day than there are parcels. And -- but I always say, if we compare it in volume, in physical volume, it's, of course, different. So also there, using our real estate more than once a day, as we do now during the end of year peak is creating efficiency on that side, instead of building or increasing our real estate square meters.

And then perhaps Radial U.S. So Capital Markets Day. I have the numbers here in front of me. So then it was announced that the EBITDA goal would be EUR 100 million to EUR 120 million by 2022, that was pre-IFRS 16 so excluding then the pre-IFRS depreciation of about EUR 50 million, that would bring us at about EUR 50 million to EUR 70 million by 2022. Again, we will not give long-term goals precisely. But I think for Radial U.S., it's a good question and the answer is also good. I think we can state that we are on track. So if we look at the results of this year, how they accelerated throughout the year, thanks to the growth of e-commerce, which is there to stay, we indeed see that we are on track to get to those numbers, which were included also in our initial business case. So quite important, indeed. Then your question on distributable reserves. And if I may be a bit educational for everybody listening in is if indeed, we changed our dividend policy to IFRS net profit but you're absolutely right. In the end that is bpost NV, the Belgian company that pays out the dividend. So the size of the distributable reserves is important. If you look at our numbers of end of December 2019, we have ample reserve there indeed to pay those dividends. And also in the trajectory that we have ahead of us, we have taken that into account that we would indeed still built on our distributable reserves to be able to pay out that dividend. Your question on exceptional costs, I think, I may translate that as what if there are noncash impacts, being it IAS 19, for instance, you can have particular noncash items. I think since we have provided a range of 30% to 50%, indeed, we can look -- or we can remediate that in due course when it would happen. Because I understand the concern to have some stability in there and also the Board realizes that.

So just to be clear, you continue to build on those reserves, they still exist, yes?

The reserves on the BGAAP, they exist. They leave us room to pay dividends going forward. And of course, with the dividend policy being based on profit, we will also add on distributable reserves. So there should not be an issue.

The next question comes from the line of Henk Slotboom from The Idea.

One question with regard to the expansion of Radial and Active Ants in Europe. I can see the unique element of Active Ants, set the focus on small medium share and the medium-sized webshops. And in case of Radial, is it fair to say, what is the big differentiator there vis-à-vis, for example, existing players like Ingram Micro or DHL? Is it the omni-channel thing? Or -- and maybe you can tell something, and you said in your introduction that you will have 6 different facilities of Radial throughout 5 European countries in Europe already. Can you give me some background on how the operations there are going? How do you build that up? Do you build it up from scratch? Do you buy an existing operation? How long does it take before it generates a decent return? Perhaps some color there, please? And that's my question.

I think the first answer from my side, and Leen, if you want to add, go ahead. We explained you a little bit the difference between the model of Radial and the model of Active Ants. The Radial model is much more focused on big customers and big brands. You've seen in our strategy that this is one of our main visions to be a partner of brands. It's clear that Radial is already in those 5 countries, in 6 facilities, and we are building with bigger brands. And we also have, let's say, that salespeople are heavily working on creating a pipeline. So that's the organic growth. And as we said before, we will also be looking in our detailed plan that we are making for that growth of omni-commerce logistics in Europe. We will also be looking at M&A possibilities to further grow that part of our business. And it's clear that also we further want to increase the cooperation between transatlantic cooperation, as you have seen in the presentation, and this is linked to customers, I would say, worldwide brands, bringing U.S. brands, which we serve there also serve them in Europe and vice-versa. If we serve brands in Europe that we also try to serve them in the U.S. as far as those brands, of course, are active in the U.S., but even if they would not be active, we could play a role there. That counts also for, okay, if we would have Belgian brands helping Belgian companies to export to other countries in Europe. And last but not least, of course, we will also look at the technology usage, which is already being done today for our customers by Radial in Europe, but to also enhance and even further increase that usage and find the right customers that can be served by this.

[Operator Instructions] And another question has just come through. This comes from the line of Marc Zwartsenburg from ING.

Yes. A couple of follow-ups. First of all, on the acquisitions you bought on. Could you give us an indication of the maximum size in terms of cash out potentially? That's one. And then on the -- going back again on the SGIs. You also mentioned there that dependent on the financial burden, you will get some conversation from the state. But yes, how long are we to the usual becoming a financial burden for bpost in that '21, '26 period? And then maybe on the Mail & Retail, final one, previously, you've given that the fee guidance in terms of savings that 5% on an annual basis on top of the attrition. Is that still a valid target? Or is that now off the table? That's it for now.

Operator, can you open up for Marc to repeat the last question?

Yes, Marc, your line is un-muted.

Yes. The last question was about the FTEs for Mail & Retail. On the previous Capital Market Day, you provided this target to reduce the number of mailmen by that 750 FTEs, it was around 5% of the 50,000. Is that target still valid? Or is that let go, currently?

It -- perhaps important to say that everything was set at the former Capital Markets Day is by definition no longer valid unless you reconfirm it. And I think, again, I have to refer to the project Delta. What we see as to our FTE evolution and also what is included in our strategy, yes, mail will go down, but parcels go up. You will understand that if we deliver 660,000 parcels a day, that's done by a lot of people, and we also have to hire additional people, so perhaps not for mail, but for the parcels. And that's very nice. If you look from it from a stakeholder perspective, to be able to ensure, indeed, long-term employment. So I think coming up with a number and disconnecting it with our operations as a whole, that would not be wise. And that's also what makes Delta so particular that we look at the Belgian operations as a whole, mail and parcels together, and see how we have to install that from an operational side. So indeed, we can no longer confirm that. We can only confirm what we said as our financial goal, that we do everything to compensate for the loss in EBIT decline on mail with the other businesses. So of course, if we install an operating model, it will be one which is sound and which delivers EBIT.

I can say that this is work in progress. As I said before, we have, I would say, a framework where we want to go to. And we are currently looking at the market, the European markets in the specific business. And we'll further detail our plans, including M&A, and that will be discussed with the Board in the first quarter of 2021 before we move forward. But it will definitely -- I think, our ambition will definitely need M&A to compensate, as we said before.

And be fast enough. But it will be within the framework of the capital allocation. And then I refer again to the starting point. So it will be, as we are able to generate cash ourselves, that we will also do some acquisitions. And in first instance, is our bolt-ons.

Yes, that's for us. The purpose that, yes, there is no compensation needed in the coming years. And that's the purpose on that USO, which you also have seen in the presentation, if I'm not wrong. So that's also why we have the project Delta, for example.

There are no further questions in the queue, so I'll hand back over to your host for any closing remarks.

Perhaps if I may go first. Today was an important day for bpost. It was something that we have been worked on since Jean-Paul actually arrived. So happy that you can all join us. And it's also very important day because actually everything which was prepared, has been done by Saskia Dheedene. And unfortunately, it is her last event. I think you will all agree with me, that Saskia, Head of our Investor Relations, has done a tremendous job at bpost for the last 6 years. She has been Investor Relations. So she has lived with you all of those crucial items of a company that was sky-high in EBIT and in dividend. A company that bit by bit has to face the mail volume decline, organized Capital Markets Day, unfortunately, come with some profit warnings, but she did it always with her natural style, very precise, very transparent. And I can talk from Jean-Paul and myself, Saskia, we will miss you. We wish you all the best in the future and you are very good at what you're doing. I also want to announce that it's also said, I think, in the strategy, how important we think that within bpost, we can promote people, there is a person responsible for treasury called Antoine Lebecq. He's French speaking. And in the future, he will [indiscernible] in the future. As of first of January, he will take over the responsibility for Investor Relations from Saskia. He's now currently working with the banks. So he's already very oriented outside, so already responsible for part of our financial stakeholders. And I think he does it extremely well. So I'm confident that he will also be a very complement to our team and to all of you. But again, Saskia, thanks a lot for the corporation. I really enjoyed working with you.

Okay. From my side, I can also close. And first of all, also thank you to Saskia. It was also a pleasure for me to work with her. And I wish her all the success in her new future. And to all of you, thank you for attending this webcast. Thank you for your valuable and a lot of questions. It's always very nice to hear that and to be able to -- as much as possible to answer to them. I would say, stay safe. Let's talk next year. And in the meantime, happy holidays. Bye.

Happy holidays. Thanks a lot. Buh-bye.