Adnoc Distribution’s market cap up to Dhs44 billion by end of last month

Adnoc Distribution’s market cap surged to Dhs44 billion by the end of September, 2020, a 40 per cent up compared to its market value on its date of listing back in 2017.

The increase in the market capitalisation comes after a significant rise of 23.15 per cent in the value of the company’s share to Dhs3.57 from Dhs2.90 on the date of listing, according to the data released by the Abu Dhabi Securities Exchange (ADX), where the company’s equities are traded.

As the company’s positive performance persists, the shareholders continue to reap significant dividends that resulted in ratcheting the value of its share deals to Dhs5.64 billion over the first nine months of 2020 thanks to the strategy adopted by the company’s management which has rendered it among the very few listed firms paying out dividends more than once per year.

In March, Adnoc Distribution’s shareholders approved a second and final dividend payment of Dhs1.194 billion (9.55 fils per share) for the year ended December 31, 2019. The payment came on top of an interim dividend that was paid in October, resulting in a full-year dividend of Dhs2.39 billion. In 2020, the dividend will increase 7.5 percent to Dhs2.57 billion as per the company’s policy.

The company boasts a robust financial profile. On September 14, 2020, Abu Dhabi National Oil Company (Adnoc) announced that it has successfully completed a placement to institutional investors of 1.25 billion shares in Adnoc Distribution. This represents 10 per cent of Adnoc Distribution’s total share capital. With that additional 10 per cent placement, valued at $1 billion, the company’s free float will increase to 20 percent, contributing to improved liquidity of Adnoc Distribution shares.

Adnoc Distribution announced recently the approval of an interim dividend payment to its shareholders for the first six months of 2020 of Dhs1.285 billion (10.285 fils per share), equivalent to $350 million.

This is the first payment in what is expected to be a full-year 2020 dividend payment of Dhs2.57 billion (Dhs20.57 fils per share), reflecting a 7 per cent increase compared to last year’s dividend of Dhs2.39 billion (19.10 fils per share).

During its General Assembly meeting in March 2020, the company announced an amendment to its dividend policy for 2021 onwards, setting an Dhs2.57 billion dividend for 2021 and a dividend equal to at least 75 per cent of distributable profits from 2022 onwards, subject to the discretion of the Board of Directors and the approval of shareholders.

Adnoc Distribution expects to continue to pay half of the annual dividend in October of the relevant year and half in April of the following year. The new dividend policy demonstrates the company’s strong record of progressively increasing its dividends to its shareholders. As per the approved policy, the second and final dividend for 2020 is expected to be paid in April 2021, subject to the Board of Directors’ recommendation and shareholders’ approval.

Despite the challenging operating environment, the company has accelerated delivering on its strategic smart growth plans by opening 37 new stations in the UAE, as at end of September 2020, a seven times increase in new station openings when compared to last year, and remains on-track to deliver 50-60 new stations by full year 2020, including 20-25 new stations in Dubai.

Commenting on the financial results, Ahmed Al Shamsi, Acting CEO of Adnoc Distribution, said, “Our progressive dividend policy demonstrates our commitment to our shareholders as we advance our strategic priorities of steady and sustainable growth, enhanced customer experience and attractive capital returns for our shareholders.

“With our resilient business model offering stable and predictable cash flows and low exposure to oil price volatility, we are confident in our ability to pay a generous 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, with a focus on the Dubai market, as well as investing in our non-fuel and international business expansion.”

Adnoc Distribution maintains a strong balance sheet and remains well positioned to expand both its domestic and international portfolio in line with its smart growth strategy. As at 30th June, 2020, Adnoc Distribution held Dhs2.4 billion in cash and cash equivalents (including term deposits) and Dhs2.8 billion in its unutilised revolving credit facilities.

Although the COVID-19 pandemic caused unprecedented market conditions in the first half of the year, the company demonstrated a resilient and steadfast focus on smart growth, delivering a 7.6 percent increase in underlying EBITDA for the first six months of 2020, compared to the first half of 2019.

WAM