ADNOC Distribution increases dividend for 2019 to $650mn and 2020 to $700mn

ADNOC Distribution 2019 dividend rises by 63% over prior year

ADNOC Distribution board of directors during the company’s general assembly.
ADNOC Distribution board of directors during the company’s general assembly.

Shareholders of ADNOC Distribution approved a significant increase in the company’s dividend policy in recognition of the company’s strong financial performance and cash position in 2018, as well as its confidence in the company’s strong growth prospects and cash flow generation ability going forward.

Under the new policy, the company will increase its annual dividend payment, starting in 2019, as follows: (i) an annual dividend for fiscal year 2019 of $650mn, equivalent to $0.052 per share and a 63% increase compared to 2018; (ii) an annual dividend for fiscal year 2020 of $700mn, equivalent to $0.056 per share, a 75% increase compared to 2018; and (iii) a minimum pay-out of 75% of distributable profits from 2021 onwards.

ADNOC Distribution will continue to pay half of the annual dividend in October of the relevant year and half in April of the following year.

Backed by a long-term, sustainable growth plan and supported by a solid balance sheet and strong cash flow generation, the new policy reflects the shareholders’ trust in the company, following its robust financial performance in 2018, during which the company reported $0.58bn in net profit, an increase of 18% from 2017.

ADNOC Distribution shareholders also approved a second and final dividend payment of $200.14mn ($0.016 per share) for the year ended 31 December 2018. This dividend payment comes on top of an initial $200.14mn ($0.016 per share) dividend payment for the year, which was paid in October 2018, resulting in a full-year dividend of $0.4bn ($0.032 per share), consistent with ADNOC Distribution’s commitments to its shareholders at the time of its initial public offering (IPO).

Dr Sultan Ahmed Al Jaber, ADNOC Distribution’s chairman, said: “ADNOC Distribution’s impressive 2018 performance illustrates the company’s strong financial position, with an enhanced level of profitability, healthy margins, and strong cash flow generation. The new dividend policy approved today demonstrates our commitment to our shareholders and our confidence in the company’s future prospects and growth strategy.”

“As we expand the ADNOC Distribution business, we will continue to look at both organic and inorganic growth options to deliver ambitious, but disciplined growth that delivers attractive returns.”

ADNOC Distribution delivered on its 2018 commitments, opening 19 new stations, which contributed to increases in revenue and EBITDA of 16% and 22%, respectively. Highlights of ADNOC Distribution’s performance in 2018 include: (i) opening of 17 new service stations in the UAE, including the company’s first three locations in Dubai; (ii) opening of the company’s first two service stations in the Kingdom of Saudi Arabia; (iii) launch of ADNOC Flex, a new approach to fuel services where customers have the choice of how they re-fuel; (iv) revitalisation of the company’s ADNOC Oasis convenience stores and implementation of a landmark agreement with the world-class retail brand Géant to rebrand and reformat 13 convenience stores as Géant Express stores; (v) and successful implementation of cost-efficiency measures across operating expenses and capital expenditures.

Saeed Mubarak Al Rashdi, ADNOC Distribution’s acting chief executive officer, commented: “ADNOC Distribution is operating from a position of strength. Our balance sheet is strong, and we continue to generate significant cash flow. We have an extremely compelling investment proposition that we expect to continue into 2019 and beyond with up to $300mn of CAPEX earmarked for further growth 2019.

“We successfully implemented our 2018 strategy by providing more choice to our customers, improving our convenience store offering, and being more cost efficient. In addition, we focused on transforming our internal structures, processes and culture to ensure that we harness all of our employees to drive high performance and sustainable growth.”

At the general assembly, shareholders also approved a plan to allow ADNOC Distribution to implement a share buyback scheme. The option, which remains subject to approval of the UAE Securities and Commodities Authority (SCA), would allow ADNOC Distribution to buy back up to 62.5mn shares, equivalent to 5% of its free float, during a twelve-month period, should it choose to do so.

Approval of the share buyback reflects the board’s opinion that the stock is trading below levels consistent with its view of the company’s growth prospects. If implemented, advance notice of the plan would be announced in accordance with SCA regulations.

ADNOC Distribution will be holding capital market days in London and New York on 7 and 8 May, at which further details of its growth strategy will be presented.

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