Abu Dhabi National Oil Company for Distribution PJSC (ADNOCDIST) Earnings Call Transcript & Summary

Good day, and welcome to the ADNOC Distribution Fourth Quarter Full Year 2020 Earnings Call. Today's conference is being recorded. There are no media on the call today. At this time, I would like to turn the conference over to Faisal Al Azmeh, please go ahead.

Good morning, and good afternoon, everyone. This is Faisal Azmeh from Goldman Sachs. I'd like to welcome you all to ADNOC Distribution's Fourth Quarter 2020 Results Conference Call. And it is my pleasure to host the company's executive management team on the call today. And without further delay, I'll now hand it over to Athmane Benzerroug, the Chief Investor Relations Officer. Athmane, please go ahead.

Thank you, Faisal. Thanks for organizing the event. So good afternoon, ladies and gentlemen, and welcome to the ADNOC Distribution Conference Call for the Fourth Quarter and Full Year 2020 Results. In today's call, we will take you through the key highlights of Q4 and full year 2020. We will then discuss in detail our growth strategy update and financial performance and finally move on to the outlook for 2021. We will then answer any questions you may have at the end of this presentation. Let me start with -- let -- please allow me to reiterate our cautionary statement regarding forward-looking statements. So this presentation includes forward-looking statements relating to our business. Important factors that could cause actual results to differ materially from our expectations are detailed in the international offering memorandum relating to our IPO and in other investor communication, all of which are available on our website. I direct everyone to our website to read the full text of this disclaimer and other important information. Let me start with the executive summary with the 2020 key highlights. We now take you through the 2020 key highlights, and our CEO and CFO would provide further insights on our strategy and the financial performance. ADNOC Distribution demonstrated a resilient performance and accelerated delivery of its smart growth plan in 2020, despite market uncertainty caused by the COVID-19 pandemic. Since the end of June 2020 and following the initial COVID impact on transport mobility, the company retail fuel volume, which account for more than 65% of our total volume, continue to show steady recovery. Our retail volumes have recovered around 92% in Q4 2020 compared to Q4 2019. Despite lower volumes compared to last year, our EBITDA increased by 12% in 2020 compared to 2019. Excluding the impact of one-offs and further provisioning, the underlying EBITDA has grown by 32% year-on-year in 2020. This solid growth was driven by higher retail fuel margins, as you know; market share gain in Dubai; management initiatives to increase margin; enhance customer experience; and optimize our operating expenses. Secondly, we have accelerated the delivery of our growth plans, and this was expected since last year by the market. Our fuel station network in the UAE has increased by more than 15% to 445 stations by the end of 2020 compared to the end of 2019. This represents 10x higher rate new stations delivery compared to 2019 levels. If you look now at our convenience stores, the network has grown by around 23% to 326 stores. Our key priority in the UAE remains Dubai where we are gaining incremental volumes and EBITDA. We have now 26 stations in Dubai compared to only 6 stations at the end of 2019. In addition to the UAE expansion, we accelerated our expansion in Saudi Arabia, and we are now signing a definitive agreement to acquire 35 stations in line with our ambitious international growth strategy. As part of the company's ongoing transformation, we also remain committed to reducing our operating costs and ensuring our continued competitiveness globally. Finally, we are committed to deliver attractive long-term shareholder returns underpinned by our progressive dividend policy that offers high dividend visibility to our shareholders. For 2020, we expect to pay $700 million. The company has already paid an interim dividend for the first 6 months in October 2020, and the Board has recommended to pay second half dividend by -- in April 2021. So we are talking about AED 0.1028 per share subject to the shareholder approval at the upcoming AGM on the 16 March of 2021. The company's dividend -- 2021 dividend policy is set to continue with a dividend of $700 million. Yesterday, our Board further recommended amendments to the dividend policy to enhance visibility of shareholder return, proposing a minimum of $700 million dividend for 2022 compared to a minimum 75% of distributable income as per the current policy, and the dividend equal to at least 75% of distributable profits from 2023 onwards. This proposal will be presented to the company's shareholders at the upcoming AGM on 16th of March. If approved, this will provide secured and predictable payback to shareholders until April 2023. Amendment in dividend policy recommended by the Board recognizes the company's strong financial position, and Mohamed Al Hashimi will describe in a couple of minutes, our confidence also in the cost prospect on the cash flow generation ability going forward for ADNOC Distribution. Despite current market conditions, our company remains confident and steadfast in delivery of its strategic commitment at sustainable returns for its shareholders. Finally, in 2020, a key milestone for ADNOC Distribution shares has been achieved with doubling free flow to 20%, after our parent company, ADNOC, sold 1.25 billion ADNOC Distribution shares through a $1 billion institutional placement on the 14th September last year. Following this transaction, ADNOC Distribution shares have witnessed a significant increase in trading activity on the ADNOC Distribution Stock Exchange. Also, increase in free float now makes us eligible for a potential inclusion in MSCI and FTSE EM Indices, likely in Q2 and Q3 of this year. This is expected to further diversify our shareholder base and bring passive inflows into ADNOC Distribution shares, ranging between $200 million to $220 million as per the analyst estimates. Just to put things into perspective, this represents more than 20% of 2020 trading activity. I will now hand over to Ahmed for an update on our growth strategy and its progress so far. Over to you, Ahmed.

Thank you, Athmane. Can you hear me? Hello?

We can.

Okay. Thank you, Athmane, and good afternoon, and good morning, everyone. Thank you for joining us today. I hope everyone staying safe and healthy. As you can see, this slide shows overview of growth strategy progress since beginning of 2020. We set ambitious growth targets for 2020. And we've not only met, but exceeded guidance in terms of both new station openings and convenience store refurbishments. In 2020, we opened 64 new stations in the UAE, including 20 in Dubai, compared to our guidance of 50 to 60 new stations in the UAE. We also exceeded our C-stores digitalization target of 80 to 90 by refurbishing 100 C-stores. In addition, we demonstrated strong commitment to grow in international markets by signing agreements to acquire 35 stations in the Kingdom of Saudi Arabia. To provide further color on our growth, let me begin with our Fuel business, which includes our retail and commercial customers. As mentioned, we opened 64 stations in the UAE in 2020, including 27 in Q4 2020. This takes total fuel stations we operate in the UAE to 445 stations. We remain focused on value assertive and underpenetrated Dubai market by opening 20 new stations in 2020. We have now 26 stations in Dubai by the end of 2020, which is 4x more than the level compared to end of 2019. Dubai is delivering as per our plans with double-digit growth in fuel volumes sold in 2020, driven by new station openings. We expect our Dubai expansion to contribute meaningfully going forward as full impact of our 2020 station openings become visible in 2021, and as we open more stations this year. Since we increased LPG cylinder prices in Abu Dhabi and in Northern Emirates at the end of July 2020, we are on track to realize our guidance of additional close to $20 million annualized EBITDA from this initiative. Finally, international expansion remains integral to our growth strategy, and we reaffirmed our commitment to grow in international markets by announcing a signing of definitive agreement at the end December 2020 to acquire 15 stations in Saudi Arabia. Yesterday, we announced signing of 2 more definitive agreements to acquire a total of 20 more stations in Saudi Arabia. With the acquisition of 35 stations in the Kingdom for a total purchase price of $25.5 million, our network would increase from 2 stations at the end of 2019 to 37 stations upon completion of these transactions, which are subject to pending regularity (sic) [ regulatory ] approvals. Our targeted IRR is at least 15% in each of these transactions, in line with what we promised to the market for all our investments. Following closing of the transactions, we expect increase in EBITDA contribution of these stations as ADNOC Distribution is qualified to receive higher fuel margin, i.e. SAR 0.15 on gasoline versus SAR 0.09 currently. And SAR 0.05 in diesel versus SAR 0.035 currently. In addition to the 31 stations that were operational in 2019, 3 stations were recently opened end of 2020, and 1 station will open in Q1 2021. These 4 stations are expected to contribute additional 50 million liters and EBITDA of approximately $1 million, at higher fuel margin. We expect to create further value from these acquisitions by refurbishing them in line with ADNOC Distribution's world-class brand standards. And staff will be trained to adhere to the company's renewed service excellence to offer high-quality retail service to customers, including convenience stores. Finally, we are currently evaluating several more opportunities to accelerate profitable and disciplined growth in Saudi Arabia to unlock further value to our shareholders. I will now move to our non-fuel retail business. We opened 62 new convenience stores in UAE in 2020, leading to increase in our key store network to 326 as of 31st of December 2020. We have seen a strong momentum in revitalization of our convenience stores and successfully refurbished and modernized 100 Oasis convenience stores in 2020, or around 40% of our total number of C-stores that we operated at the end of 2019. Our customer-centric focus is an integral part of our digital transformation strategy, which aims to offer superior customer experience through various initiatives as below. Firstly, we announced an enhancement of our loyalty program, ADNOC Rewards in July by introducing points-based system. This makes it the fairest loyalty program of its kind by a fuel provider in the region. The program reached significant milestone of having more than 1 million registered customers in the fourth quarter of 2020. Secondly, our online home delivery service of more than 1,700 products from our Oasis convenience stores has also been received very well by our customers, and we have expanded it for more than 100 C-stores. As a result of our various customer-centric initiatives, such as improved category management, the introduction of fresh food and premium coffee offerings and driven by changing customer shopping behavior during pandemic, average gross basket size increased by around 18.8% year-on-year in 2020. I will now hand over to Ahmed Al Hashemi to present the highlights of our financial performance. Over to you, Mohamed Al Hashimi.

Thank you, Athmane, thanks, Ahmed. Good morning, and good afternoon, everyone. So I will now take you through our financial performance in 2020. So obviously, as all of you are aware, it's been a very, very challenging operating environment, but ADNOC Distribution has demonstrated resilient financial and operational performance in 2020. Our revenue decreased by 24.4% compared to 2019. Now this was driven by both lower fuel volume, lower nonfuel revenues as well as lower oil prices in 2020 compared to 2019. On the flip side, the 2020 gross profit increased by 16.2% compared to 2019. This, of course, was driven by higher retail fuel margin, as the retail fuel pump prices did not fully comply with the fuel supply cost, which is linked to the crude oil prices as well as the refined product pricing in that. Our 2020 EBITDA is USD 868 million, which is an increase of 12.3% despite the negative impact of $146 million of one-off expense. These one-off expenses were somewhat offset by inventory gains of $27 million in 2020 compared to the inventory gains of $33 million in 2019. Our one-off expenses. The one-off -- sorry, just having a bit of audio trouble. Give me a second. The one-off expenses during the quarter were mainly as a result of prudent approach, which I'm convinced, puts the company in a resilient position for profitable growth ahead. Given the materiality of these one-offs, let me provide a bit more detail on what exactly we booked during 2020. So USD 52 million was capital work in progress. This was a CWIP write-off. So what we've done? Since I joined the company, they did finance function in October, one of the first activities was the comprehensive review of the capital working profit, and we took a prudent decision to write-off legacy assets from the balance sheet. And these are assets which are not being utilized as a result of the organization upgrading to smart technology, smart technology-enabled fueling and payment options, which we have undertaken in order to offer increased customer convenience and safety in light of the impact from COVID-19. That's one of the factors. The second one was roughly $23 million. This is staff restructuring cost. The full amount was booked in the third quarter of 2020. As part of our OpEx optimization initiative, we booked nonrecurring staff restructuring costs, which of course leads us to a higher operating expenditure. Now we expect benefits of this restructuring to be visible going forward. This should lead to a meaningful reduction in our staff costs. This, of course, remains a major [ operating practice ] Continuing on the material one-offs, there were USD 19 million that we provisioned on trade receivables in light of the current environment, which places an undue amount of pressure on some of our customers. So in light of that, we booked about USD 19 million in total, of which USD 1.7 million was booked in the fourth quarter of 2020. In addition to that, we've got about [ $52 million ] (sic) [ USD 52 million ] of other one-offs, of which about USD 2.9 million was booked in the fourth quarter of 2020. Now these included additional pension cost contribution that we need to make on behalf of our employees, business transformation cost, as well as COVID-19 related expenses. Moving on to the underlying EBITDA, which we define as EBITDA, which excludes gains or losses in inventory as well as one-off remain strong. So the underlying EBITDA demonstrated growth of 31.6% in 2020. And fourth quarter alone was 51.6% higher compared to the same period last year. So the growth was driven by higher fuel retail margins, of course, but also supported by like-for-like OpEx savings. The 2020 net profit is USD 662 million. This is a 9.7% increase when compared to 2019. Besides the higher EBITDA, this was offset by higher depreciation as well as lower interest income. Now let me briefly walk you through the key operational highlights for 2020. In 2020, our total fuel volumes decreased by 10.5% year-on-year. This was mainly due to an impact of COVID-19 that started hitting us in March 2020. Retail fuel volumes declined by 11.8% in 2020, compared to the same period last year. On the commercial side, the fuel volumes decreased by 8% year-on-year. Total fuel volume for the fourth quarter of the year increased by 2.3% compared to Q3 2020. Retail fuel volumes increased by 1.6% as compared to the prior quarter, but still remain 8.3% below fourth quarter 2019. Now this is impacted by ongoing Abu Dhabi border restrictions, many organizations continuing to allow remote working as well as schools remaining closed or not consistently open while the challenges from COVID-19 continue to impact the economy. On the commercial fuel side, our commercial fuel volumes were down in the fourth quarter of 2020 by 5.2% year-on-year. This, of course, was mainly driven by a lower uplift from our strategic aviation customers. These are government customers. On the nonfuel business, our nonfuel transactions decreased by 33.7% in 2020 compared to 2019, mainly due to COVID-19 led decline in customer visits. That was one factor. Compared to 2019, another factor was the absence of vouchers that we used to give out when customers paid AED 10 for assisted fueling. That of course ended in November 2019. So the bulk of 2020, what we're seeing is lower customer visits into the store, once again due to the impact from COVID-19 as well as what we think is the absence of vouchers. However, the average gross basket size has seen growth and increased by 18.8% year-on-year in 2020. We believe this is driven by changing consumer shopping pattern during the pandemic. So the customers are visiting us less frequently, but when they do, they buy more during each visit. This was also supported by our customer-centric initiative, like improvement in category management as well as convenient features like online delivery. Let's move on to gross profit performance by sector. The 2020 gross profit increased by 16.2%, driven by: one, the retail segment gross profit, which increased by 28.3% year-on-year. This was driven by the fuel retail business, which posted strong operating performance with gross profit growth of about 38.4% year-on-year. This was, of course, was on the back of higher retail fuel margins as the retail pump prices, what I mentioned earlier, did not fully fall in line with the crude oil prices as well as the refined product pricing impact as well as due to the reduction in fuel costs following the renegotiation of our fuel supply contract, which was effective from November 2019, when we ended Flex. On the nonfuel retail gross profit side, this was impacted by lower transactions as a result of COVID-19 lockdown restrictions and as I mentioned a few moments ago, due to the absence of voucher redemption after implementing free assisted fueling. On the commercial business side, the gross profit was negatively impacted due to lower volumes and one-off, whereas 2019 included one-off recovery. Moving downward, segment-wise EBITDA performance. As I mentioned before, our 2020 EBITDA increased by 12.3%, despite the $146 million of one-off expenses that I discussed a few moments ago. The retail EBITDA increased on the back of higher retail margins offset, however, by lower fuel volume, decline in nonfuel profit as well as the increase in the one-off OpEx. Our 2020 commercial EBITDA declined, once again, due to lower volumes and other one-offs. On the flip side, in 2019, on the commercial side, the 2019 EBITDA included one-off recovery and reversals. The unallocated EBITDA, as you can see on the slide [Technical Difficulty] the CWIP write-off, as covered earlier. Moving on to the OpEx update. If we look to our operating expenses, the total OpEx increased in 2020 by [Technical Difficulty]. This was mainly due to one-off expenses as it relates to staff restructuring costs; additional pension cost contribution, which we have to make on behalf of our employees; expenses that we could not have planned for because of the COVID-19 pandemic and related complexities; OpEx related to growth, which, of course, is directly affiliated with our network expansion as we expand the network, the OpEx continues to grow; as well as the cost of additional staff, given that we have now, since November 2019, ended Flex, and we offer free assisted fueling to all our customers, free of charge price. Having said that, however, we had seen good momentum in cost optimization initiatives in 2020. We've accelerated, and we are on good track, and the benefit of cost reduction initiatives taken throughout the year are now visible with like-for-like OpEx savings of $15 million year-on-year in 2020 after the company -- the organization achieved USD 100 million over 2018 and 2019. This further reduction is mainly as a result of optimization in staff costs as well as decrease in general and admin expenses. While we -- as an organization, while we have been diligently focused on the nature of our response to the COVID-19 pandemic, ensuring the safety and the well-being of our staff and customers, the transformation effort that we have initiated in 2020, we have discussed with the market, we'll continue to ensure that the operating costs are market competitive, and ADNOC Distribution remains well positioned to deliver on our future growth ambitions. Looking at the cash position. So looking at the cash generation, we generated free cash flow of USD 195 million in 2020, driven by strong cash flow operations of course. And our cash position reduced in 2020 compared to end of 2019 due to negative working capital movements, higher capital expenditure and, of course, the dividend payments. In line with our guidance and plans to continue with our expansion strategy, we have spent a higher amount of capital expenditure, totaling up to USD 266 million in 2020. Now this is approximately twice the amount we spent in 2019. So 80% of our capital expenditure is growth oriented. This is of course driven by the higher number of new stations that we continue to build and open. On the net debt-to-EBITDA ratio side, as of December 31, 2020, this ratio was 0.85. This is an increase from 0.26 at December 31, 2019. But of course, we remain well below 2x as for our commitment. So at this point, let me hand it back over to the Athmane to summarize our 2021 outlook. Over to you, Athmane.

Thank you very much, Mohamed. So allow me to update you now on the outlook and the strategic priorities for this year. After a strong financial performance in 2020 and accelerated delivery of our strategic growth plan, we expect the momentum to sustain in 2021, driven by, first of all, the delivery of 70 to 80 new stations across our domestic and international network. Of these, 30 to 35 new stations are expected in the UAE, of which 12 to 18 in Dubai. In Saudi Arabia, we expect to add 40 to -- sorry, to 45 new stations, of which 35 are already announced through acquisitions, and we expect, therefore, 5 to 10 organic build out to be completed in 2021. Our guidance does not include potential new M&A opportunities we are currently evaluating. Secondly, our -- we expect fuel volumes to grow compared to 2021, driven by progressive recovery as vaccine roll out allowed ease in mobility restrictions and also driven by the contribution from significantly higher number of new stations delivered in Dubai in 2020 and expected volumes from Saudi Arabia. Third, in our nonfuel business, we expect to refurbish 40 to 60 more C-stores this year, in line with our target to refurbish our entire store C-store network by 2022-2023. Four, after making a significant progress in our OpEx optimization initiative in 2020, we remain committed to achieve further operational excellence and pursue incremental savings of around $25 million in 2021 and around $85 million over 2021, 2023. So our guidance remains unchanged. So in 2021, finally, we expect CapEx of around $250 million to $300 million, reiterating our commitment to deliver smart growth and offer best-in-class services to our customers. This -- we will now end the presentation, and we are open to any questions. The only thing I wanted to add, sorry, is that we remain confident that we will deliver our long-term strategic commitment to reach at least $1 billion EBITDA target by 2023. We are also confident to sustain attractive dividend returns by strong balance sheet and confidence in our cash flow generation capability, while retaining sufficient cash to support the growth in both domestic and international markets. So this concludes today's presentation. We are happy now to take any questions you may have. Thank you.

[Operator Instructions] We can take our first question from Sashank Lanka from Bank of America.

I have 3 questions, if I may. The first question is on the volume growth guidance for 2021. You obviously are opening new stations, both in the UAE and outside. So is there any guidance that you can give us in terms of percentage growth that you expect in 2021? That's my first question. The second question is, you did mention that in the Saudi expansion, you expect 31 out of 35 new stations to see an EBITDA margin uplift due to the new fuel margins in the country. So can you give us some guidance around how much that number could be? And finally, I just wanted to understand on your fuel retail margins, you obviously saw very high margins this year, all inventory around AED 0.70 to AED 0.75 per liter versus AED 0.40 or AED 0.45 that you saw over the last 2 years. So how should we be thinking of fuel retail margins going into 2021?

Okay. Thank you very much, Sashank. So let's try to take question by question. So I'm going to start with the volume expectations and volume guidance. What we can tell you is, first of all, that in the month of Jan 2021, the trend in fuel volumes is broadly similar to Q4 2020, i.e., down 8% to 10% compared to last year. So it's difficult to provide specific guidance for 2021 at this stage given ongoing uncertainties regarding movement restrictions, and you are aware of the restrictions within the UAE. However, we are anticipating our fuel volumes to grow compared to 2020, particularly led by progressive recovery towards the second half of this year. So we will update the market when the situation will be normal, and we will have no longer restrictions in movements. Can you just repeat again your second question, sorry?

Yes. So if I understand correctly, you mentioned in your Saudi expansion, I think, EBITDA for 4 stations after the new margins that have come in, right, into effect, whereas you said, you expect an EBITDA margin uplift from the other 31 stations from the new retail margins -- fuel retail margins. So I was wondering if you could quantify with a number and how much that could be? Because I think we have the 2019 EBITDA for those stations.

Okay. Mohamed, or Ahmed, do you want to answer? Or I can take it? It's up to you.

Can you -- no, I'm happy to answer. Can you just clarify the last part of the question for me, please?

Yes. So my question is in terms of the EBITDA margin uplift from the 31 stations out of the 35 stations from the new fuel retail margins in Saudi, I think, which came into effect in 2019, how much do you see the EBITDA margin uplift?

For the new stations that were opening in KSA, you're saying what is it that we should expect to see from the 40 to 45 stations that we're saying we're going to open over the course of the year in KSA? What is the uplift in EBITDA we should expect to see in 2021? Is that correct?

Yes, yes.

Okay. So look, as we covered as part of the presentation, we're going to see uplift in margins. If you see what the stations have sold because they were operational in 2019, they've sold about 300 million liters fuel volume, and they generated an EBITDA of $3 million. These are the acquired -- almost acquired 35 stations. Now if you look at ADNOC Distribution, what changes when we acquire, when we complete the acquisitions, the margin that these stations enjoy at present, that is SAR 0.09. What happens when we complete acquisition ADNOC Distribution, the margin will go up to SAR 0.15 for gasoline and from SAR 0.035 to SAR 0.05 for diesel. And this of course happens only after we close the transaction. So what does that mean in terms of gross profit on the 31 stations? Once we close the transaction, you should see an uplift between 43% to 67%, depending on the fuel mix.

Thank you, Mohamed. What's your last question, Sashank?

Yes. So the last one is the guidance on fuel retail margins for 2021?

Look, we -- again, we don't provide any guidance regarding the margins. But as you know, we have a minimum guaranteed margin from the Ministry of Energy, similar to the 2 other players, i.e. ADNOC and Emirates. And we have, on the top of that, a backstop guarantee from our main shareholders. That provides us a minimum margin. In 2020, like similar to 95% of regulated market, the situation that we have witnessed in the UAE is that the new shop inventory has kept some prices stable. These have allowed the players, a few retail players, to be able to provide 100% services during the COVID pandemic situation. And we have been open 24 hours around the clock, making sure that we provide the necessary support to the economy. So going forward, so these kind of -- this kind of margin for 2020 are exceptional. We make roughly 40 sales margin on average -- I am going to make it simple. On all -- on average in terms of gross profit margin per liter, which is very high, first of all, and this is guaranteed. Last year, we had the margin that was close to 70 -- 0.7. So going forward, if you look just at the recent pump prices, they're still stable. We don't know what will happen tomorrow. What we -- and this is really up to the Ministry of Energy. And this is what we can tell you. That said, there is a minimum guarantee margin that provides clear visibility on our cash generation. And I guess this is the most important thing that we need to highlight here. Perhaps our CEO or CFO want to add anything on what I just said, please feel free.

Just facing some difficulty in the voice here. And I'm assuming you guys are talking about the fuel retail margins. If that is the case...

Yes, the government want...

Let me just compare fares, right?

Yes, the question is more regarding the outlook on these margins after exceptional margins we got in 2020.

Clear. So ministry says that you retail pump prices on a monthly basis based on oil prices and overall stability of prices annuity markets. With increasing oil prices as we have seen over the last few months, margins would be narrowing. However, given COVID situation across the world is still unfolding, so difficult to provide guidance on the outlook.

We have another question from Nick Stefanou from Renaissance Capital.

It's Nick Stefanou from Renaissance Capital. I've got 3 questions, please. Just the first one is, going back to Saudi, it seems that there is quite a bit of a difference in terms of like throughputs and profitability between the start of the 2 transactions, the December one and the one yesterday. Is that the case? Because it seems that you kind of like paid a bit more for this site you bought yesterday. And then how should I be thinking about your EBITDA per site? It looks like now it's something like $100,000 to $200,000 per year EBITDA per site. But should I assume that with the uplift in margins, it could go to $250,000 per site. That's the first question. And second question is with regard to the dividend. Congratulations on, I mean, making a bit more firm for the next couple of years. I'm just trying to understand the sense of what kind of EBITDA level would you be targeting? Are you going talking about increase to that dividend. So for example, would you be making an increase to the dividend at maybe $1.1 billion EBITDA? Because I think even if you do reach like $1 billion of EBITDA, it doesn't necessarily mean that this would translate to a materially high dividend. And then the last question is on India. Can you give us an update on what's going on with that LPG expansion you're trying to do there?

Okay. Thank you, very much. Just, I'm sorry, I could just answer very quickly, and I'll give the floor to Mohamed Al Hashemi. I guess, look, the differential in the transaction multiples, which are anyway very attractive, I guess that's what I need just to highlight here. If you look at the EBITDA multiple that we have acquired these stations, it's roughly between, I would say, close to 6x EBITDA, which is a great achievement that we -- that our many teams have been able to reach today. If you look at the potential value creation on the top of this, if you look at 31 stations, which is more than 85% of these stations in part at the moment, the kind of margins that uplift -- that our CFO was mentioning earlier. So there is clearly an upside for the story. And if you look just at the Saudi players, listed in Saudi, you're going to see that the EBITDA is above 10x. So clearly, there is hidden value that we're going to crystallize through these acquisitions. Second part of the answer regarding the Saudi acquisition. The valuation reflects the EBITDA contribution, and some of the new stations we acquired with the second transactions are large stations with high throughput and are also qualified for higher fuel margin. So this is the answer. Mohamed, if you want to add anything? If not, we can go to the second question. Up to you?

Sure, sure. I don't think we have anything significantly further than what I explained in the last question on the same topic, right? So 35 stations, as I said, 31 of those operational in 2019, selling 300 million liters, EBITDA of $3 million. When it comes to the 31 stations, the margin goes up from SAR 0.09 to SAR 0.15. As far as what we're expecting to see, we were ready to dispose the gross profit on these 31 stations. The uplift should be between 43% to 67%, depending on the fuel mix. For EBITDA of $3 million in 2019, once we complete the acquisition, we expect that to go up. How much? Well, we can tell you the gross profit between 43% to 67%. Now the other 4 stations, we're ready to disclose a bit more bottom level detail there. The 4 stations that we've also acquired, taking us to a total of 35. 3 have been opened in December of 2020; 1 opened in the first quarter of this year, not long at all -- not long ago. So these 4 stations, once the acquisition is completed, about roughly 15 million liters in terms of volumes sold and an EBITDA of approximately USD 1 million in 2021.

That's the combined, right?

That's right -- I'm sorry, that's what?