Adnoc Distribution shareholders approve proposal to increase dividend

The company will pay out 20.57 fils per share for 2020, a 7.5% increase on the previous year

Adnoc Distribution refurbished 100 of its Adnoc Oasis convenience stores in 2020. Image courtesy of Adnoc Distribution

Shareholders of Adnoc Distribution approved a proposal to increase the company's dividend by 7.5 per cent for 2020 and to maintain a similar pay-out for the next two years.

Investors agreed to a Dh1.285 billion ($350 million) pay-out for the second half of 2020, bringing the full-year dividend to Dh2.57bn, or 20.57 fils per share. They also agreed to a policy to pay out at least the same amount in 2021 and 2022, with dividends in future years reverting to a minimum of 75 per cent of distributable profits.

The UAE's biggest fuel distributor said the dividend policy approved recognised its strong financial position at the end of last year, as well as its "confidence in its growth prospects and cash-flow generation ability".

“We continue to lead the UAE’s fuel and convenience market, supported by our stable margins on retail fuel, the largest convenience store network in the country, and a brand name strongly associated with national pride,” said Dr Sultan Al Jaber, chairman of Adnoc Distribution.

Despite the pandemic, Adnoc Distributionopened 64 new stations last year. Courtesy Adnoc Distribution

The company made a net profit of Dh2.43bn in 2020, a 13 per cent increase on the prior year despite a 24 per cent fall in revenue to Dh16.13bn as movement restrictions were put in place during the year to halt the spread of Covid-19. The company finished the year with Dh2.8bn of cash and cash equivalents and a further Dh2.8bn in unutilised credit facilities.

Despite the pandemic, it opened 64 new stations last year, a ten-fold increase on 2019. This included 38 of its 'Adnoc On the Go' model, which have a smaller footprint allowing it to offer fuel and retail in areas where traditional stations were not practical. It also increased its presence in Dubai by opening 20 new stations and refurbished 100 Adnoc Oasis convenience stores.

Adnoc Distribution also doubled the amount of free floating shares on the Abu Dhabi Securities Exchange to 20 per cent following a block placing of 1.25 billion shares, valued at $1bn, with institutional investors.

The company's shares offer "a combination of low exposure to oil price volatility, predictable and healthy cash flows, strong growth potential and an attractive dividend policy”, Dr Al Jaber told shareholders at the meeting.

"Adnoc Distribution is well placed to continue building on recent success, in the UAE and beyond, in the year ahead and remains on track to reach [an earnings] target of at least $1 billion by 2023”, acting chief executive Ahmed Al Shamsi said.