00:00Congratulations on the deal. Now, just speaking about the deal, can you give us a little bit of a rationale
00:05behind it?
00:06Why was it made and what are you looking forward to when it comes to the finalization of the acquisition?
00:16Thank you, Abiyah, for having me on the show. Of course, this is a historic day for Adnick Distribution.
00:20Before I dwell into the deal itself, maybe big picture, quickly, Adnick Distribution is a company that has clear strategy
00:27and vision.
00:28And more importantly, a clear track record when it comes to discipline, execution on all its growth ambition.
00:35The last five years out of the 53 years since the inception of the company has been exceptional and seeing
00:40steady growth of the company when it comes to its financial and operational performance.
00:45Now, this deal is historic deal. It's the fourth market that we enter.
00:49This accelerates our ambition to become a global mobility and convenience retailer.
00:54It's in one of Africa's biggest countries, growing economy, the largest in the continent of Africa.
01:01If you recall, in 2023, we've entered Africa from Egypt, from the north, and now getting into Africa as well
01:07from the south.
01:08This gives us a good platform, a good cover of the growth ambition that we have.
01:12This is a very disciplined growth ambition.
01:15We are looking at, upon completion of this transaction, subject to regulatory customary approvals, we will close this deal at
01:23an evaluation of 1 billion U.S. dollars.
01:26We're looking at an EBITDA multiple of six.
01:28This allows us to accelerate our ambition to become a global player.
01:34Now, financially speaking, this company, this transaction is accretive.
01:40This is very important for us.
01:41This is accretive from year one, post-closing.
01:43We are looking at EPS of 6%.
01:45This is going to provide us with 13% EBITDA accretion.
01:49We are looking at an IRR above our typical investment hurdle.
01:53So, all in all, we are very confident.
01:55We've been looking at this deal for nearly two years, and we've studied it from all angles.
01:58And we are satisfied today that this is the right transaction that will allow us to accelerate also our dividend
02:04payout to our shareholders in the future.
02:08Okay.
02:09And, Badiq, how are you planning on funding this deal?
02:11Would it be bonds?
02:12And out of the $1 billion, how much of that would be equity?
02:18Of course, we have a strong balance sheet.
02:20This is a project finance ring fence at SDAC level.
02:23We're delivering a plan in place.
02:27This will not exceed 1.2 net debt to EBITDA.
02:31So, this is a very comfortable place for us to invest in.
02:33And I think we have the right financing instruments in place and no issue in funding this transaction whatsoever.
02:39In fact, our balance sheet will remain healthy.
02:41And we look forward to continue on our disciplined growth strategy as long as we find the right investment opportunity
02:47that will create value to our shareholders.
02:51Okay.
02:52And I was taking a look at your press release this morning.
02:54You mentioned a 28% stake is expected to be sold to a local empowerment partner.
03:01Who do you expect to sell it to?
03:03Are you in discussions with anyone there?
03:07Of course, this is part of our commitment to support the South African economy.
03:12It's in line with the regulation in that country.
03:14We've been talking to a number of the partners.
03:16We are very close to close with one of the partners who will add value and will have a complementary
03:22value add in the partnership moving forward.
03:25Of course, we will make the announcement at the right time.
03:28But this is part of our commitment to this economy and job creation, security.
03:33The management team that will take also over.
03:36We will retain the capacity and the capability there.
03:38And we'll supplement them with also capabilities of adding distribution so that we have the right formula.
03:43That will continue to serve our customers, who are very central to everything that we do and any transaction that
03:48we do.
03:48We put customers first and will continue to do so in South Africa and make sure that they continue to
03:53receive the service that they've been used to over the last 120 years.
03:59And, Bader, just when it comes to the benefits this will provide to the wider ADNOC group, what benefits would
04:05this provide to the wider ADNOC group?
04:07Would it be in storage trading?
04:09What else can you see it helping with?
04:13Of course, let's start with adding distribution.
04:15First of all, of course, we are going to add 580 fuel station to our portfolio.
04:20This is a 55% acceleration in our number of station that we've targeted.
04:24We're going to jump immediately to 1,600 station in one go upon completion of this transaction.
04:29We're going to add 360 convenience stores to our portfolio as well.
04:33And, again, 70% growth to our convenience store business.
04:37We are going to add 3.5 billion liters into our fuel volumes.
04:41And, again, this is also a substantial increase, 20%.
04:44Now, over and above that, this is an opportunity also to create value across the value chain of ADNOC group.
04:51We do have the opportunity also to supply fuel from our sister companies in partnership with the likes of ADNOC
04:59Global Trading.
05:00So there is a complete value proposition that aligns with the quality of partner that ADNOC group and ADNOC distribution
05:08represents in any investment that we've done.
05:10Historically, we've entered the Kingdom of Saudi Arabia.
05:12We've done so also subsequent to that in Egypt and now in South Africa.
05:17That track record confidence in delivery and execution will continue and bring it all to bear to support the investment
05:24that you've made through this agreement with Shell today.
05:31Okay.
05:31And just finally, what is next on the queue for ADNOC distribution?
05:36And what geographies are you interested in?
05:41Absolutely.
05:42We are growing and growing ahead of the business plan and the current five years strategy that we've announced.
05:49The first quarter of this year, we've seen substantial growth in our net income.
05:54We've posted results at 21%.
05:56That momentum needs to continue.
05:58We're growing organically.
05:59We're growing inorganically.
06:01And we'll continue to look at opportunity to invest.
06:04We have the right balance sheet.
06:05We are very disciplined.
06:06We do have our investment thesis, making sure that we have the right regulation.
06:09We have the right ability to add value.
06:11So we continue to find the right opportunity.
06:13What is important for us is that any opportunity has to be value accretive.
06:17It has to be EPS, DPS accretive from day one, from year one.
06:21This is something that you are very committed to.
06:24This deal upon completion will allow us to accelerate our earnings.
06:29And with acceleration for earnings, we can see an opportunity to enhance our dividend payout faster in line with the
06:35dividend policy that we have.
06:36700 million U.S. dollars as a floor or 75%, whichever is higher from our net income.
06:43That opportunity with this transaction could be accelerated toward our shareholders faster.
06:49So growth ambition is there.
06:51The discipline is there.
06:52The execution track record is there.
06:54I think we will continue the same trajectory, but we are very consumed to find the right quality investment, which
07:02we believe this one is the right one for us.
