Abu Dhabi’s ADNOC Distribution approves $350m interim cash dividend for H1 2021

Abu Dhabi’s fuel and convenience retailer ADNOC Distribution announced that its board of directors has approved an interim dividend payment of Dhs1.285bn (10.285 fils per share) to shareholders for the first six months of 2021.

The amount of $350m is the first payment in what is expected to be a full-year 2021 dividend payment of Dhs2.57bn (Dhs20.57 fils per share), consistent with the company’s dividend policy.

The #ADNOCDistribution Board of Directors approved an interim dividend payment to shareholders for the first six months of 2021 of AED 1.285 billion. This is the first payment in what is expected to be a full-year 2021 dividend payment of AED 2.57 billion. pic.twitter.com/ZTatf1ouBF

— ADNOC Distribution (@ADNOCdist) October 2, 2021

This would translate to a 4.9 per cent annual dividend yield for 2021 (based on a share price of Dhs4.16 as of September 30, 2021). As per the company’s approved policy, the second and final dividend for 2021 is expected to be paid in April 2022, subject to the board of directors’ recommendation and shareholders’ approval, official news agency WAM reported.

Since its IPO, the company has consistently increased cash payback to its shareholders with dividend of Dhs1.47bn for 2018, Dhs2.39bn for 2019 and Dhs2.57bn for 2020.

The company reiterated its dividend policy for 2021 during its General Assembly meeting in March, with dividend of Dhs2.57bn, and announced an amendment to its dividend policy for 2022, setting a minimum of Dhs2.57bn dividend for 2022 (compared to minimum 75 per cent of distributable profits as per previous policy).

Read: UAE’s ADNOC Distribution changes share dividend policy

Since its IPO in 2017, ADNOC Distribution has continued on its growth strategy, opening new locations across Dubai and Saudi Arabia; improving its convenience store experience with upgraded locations across the UAE, and the launch of its points-based rewards programme.

Read: Abu Dhabi’s ADNOC Distribution to acquire 15 fuel stations in Saudi for $10m

Bader Saeed Al Lamki, chief executive officer, ADNOC Distribution said: “Today, ADNOC Distribution shares offer an attractive value proposition to shareholders and investors with a combination of low exposure to oil price volatility, predictable and healthy cash flows, strong growth potential and an attractive dividend policy that offers high payback visibility.

“With our resilient business model, we are confident in our ability to pay an attractive dividend to our shareholders, while also maintaining significant capacity to deploy capital through a disciplined investment strategy, aimed at continuing our efforts to expand our fuel station network, as well as investing in our non-fuel and international business expansion.”

As of June 30, 2021, ADNOC Distribution maintained cash and cash equivalents (including term deposits) of Dhs3.9bn, unutilised revolving credit facilities of Dhs2.8bn, retained earnings of Dhs1.995bn and net debt to EBITDA of 0.46x.

In the first six month of 2021, the company had an EBITDA of Dhs1.528bn and net profit of Dhs1.15bn. During H1 2021, 12 new service stations were opened and 24 convenience store were refurbished in the UAE and it also received no objection certificates from the General Authority for Competition in Saudi Arabia to acquire 35 stations in the kingdom.

In May 2021, ADNOC placed an additional 3 per cent of ADNOC Distribution’s share capital (valued at $445m), increasing free float further to 23 per cent. It also issued approximately $1.195bn of senior unsecured bonds (the “Exchangeable Bonds”) due 2024, exchangeable into existing shares of ADNOC Distribution, constituting approximately 7 per cent of the registered share capital of ADNOC Distribution under certain conditions.

Read: Abu Dhabi’s ADNOC Distribution to raise approximately $1.64bn via combined share, bond offering

ADNOC Distribution was included in the MSCI emerging markets index from May 27, 2021.

Read: Abu Dhabi’s ADNOC Distribution to join MSCI emerging markets index on May 27