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

Ladies and gentlemen, hello, and welcome to the ADNOC Distribution Q2 2021 Analyst and Investor Call. My name is Maxine, and I'll be coordinating the call today. [Operator Instructions] I will now hand you over to your host, Athmane Benzerroug, Chief Investor Relations Officer, to begin. Athmane, please go ahead when you're ready.

Thank you very much. So good afternoon, ladies and gentlemen, and welcome to the ADNOC Distribution conference call for the second quarter and half year 2021 results. I have with me Bader Lamki, our Chief Executive Officer; and Mohamed Al Hashimi, our Chief Financial Officer. Before we begin, I would like to acknowledge that we experienced a technical issue at the beginning of the trading session this morning. So we worked quickly with the ADX to resolve this within 90 minutes and to minimize any disruption and inconvenience. Moving on to today's call, we will take you through the key highlights of H1 2021 and outlook. We will then discuss in detail our growth strategy update and financial performance. We will then answer any questions you may have at the end of this presentation. Before we begin, please -- next slide, please. So before we begin, please allow me to reiterate our cautionary statements regarding forward-looking statements. This presentation includes forward-looking statements relating to our business. Important factors that could cause actual results to differ materially from our expectations are deferred in the international offering memorandum relating to our IPO and in our other investor communications, 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. So I would like to provide you with a summary of the company's key achievements in H1 2021, and the progress we have made in delivering on our 2021 macro strategy. Our CEO and CFO will provide further insight on our strategy and financial performance. ADNOC Distribution continues to offer an attractive value proposition with the combination of a resilient business model, growth potential and a highly visible and predictable dividend policy. In H1 2021, the company delivered a strong financial performance, demonstrating its resilient and agile business model and the progress being made in delivering on its smart growth strategy. Let me begin with business resilience. The company's fuel volumes continue to see progressive recovery towards pre-COVID levels with 96% volume recovery in Q2 and H1 2021 compared to 90% recovery at the end Q4 2020. This gradual recovery is an indication of improving consumer sentiment following the successful vaccination drive across the UAE. In addition, we continue to see incremental volumes from our Dubai stations together with a proactive set strategy in our corporate business. Despite ongoing expansion in H1 2021, the company already realized around 70% of its 2021 targeted like-for-like OpEx savings of $25 million. In terms of smart growth now. In H1 2021, we continue to build on our 2020 momentum and made significant progress on our domestic and international expansion. The company remains on track to deliver on its 2021 growth targets to open 30 to 35 stations in the UAE, including 12 to 18 locations in Dubai and 40 to 45 stations in Saudi Arabia. We also continue to deliver on our promise to bring modern digitally enabled retail convenience for customers and communities. In line with our ambitious nonfuel retail strategy, we refurbished 24 convenience stores in the first half of the year to offer fresh store layout and new food offerings, further enhancing the shopping experience for our customers. In 2021, we plan to refurbish a total of 40 to 60 stores. Finally, ADNOC Distribution offers attractive long-term returns to shareholders, underpinned by its progressive dividend policy that offers high visibility of cash returns. So the dividend policy approved by our Board and shareholders recognize the company's strong financial position and demonstrates their confidence in growth prospects and cash flow generation ability going forward. The dividend policy set 2021 dividend at $700 million, offering 4.7% yield. We expect to pay $350 million cash dividend for the first half of 2021 in October 2021, subject to the Board's approval. For 2022, dividend is set at minimum $700 million. And for years thereafter, dividend is set at a minimum of 75% of distributable profits. These dividend payments are again subject to the approval by the Board and shareholders. I would also take this opportunity to highlight that ADNOC, who is a major shareholder of ADNOC Distribution, has successfully placed 10% of the company's share capital in September 2020, doubling free float to 20%. More recently, in May 2021, ADNOC placed additional 3% of the company's share capital increasing free float further to 23%. This has allowed a significant increase in trading liquidity of ADNOC Distribution shares on the Abu Dhabi Stock Exchange. Following the higher free float and trading liquidity, ADNOC Distribution shares were included in the MSCI EM in May 2021, and we expect [indiscernible] milestone in the coming months with a potential FTSE EM inclusion in September 2021. This will further enhance the company's investment appeal and visibility among global investors, attracting more foreign inflows into ADNOC Distribution shares. I will now hand over to our CEO, Bader Lamki, who will walk you through an update of our growth strategy. Bader, over to you, please.

Thank you, Athmane, and good afternoon, good morning, everyone. Thank you for joining us today. I'm delighted today to be speaking with you, as I marked close to 100 days in my role as a CEO of ADNOC Distribution. For those who don't know my background, my expertise is in the oil and gas sector, clean energy and utility sector. And most recently, I had been the CEO of the National Central Cooling Company, Tabreed, which is a publicly listed company in the DFM. Since its IPO in 2017, ADNOC Distribution has been on a journey. Our cultural transformation, as a leading retail company, ensures we have a clear focus on profitable growth and capital discipline. I'm pleased to share with you that we'll continue to accelerate delivery of our growth plans and transform the fuel stations experience into a modern retail destination, which offers comprehensive fuel and nonfuel services for all our customers. While we will continue to meet energy needs of our customers and communities, we must do so sustainably and make our business more resilient and lead the UAE and the world energy transition towards a low carbon future. Our digital transformation strategy and IT modernization remains a key enabler. A key enabler for us to continue increasing efficiency and optimizing our resources. In Q2, we completed the successful upgrade of our enterprise resource planning system to -- which will further strengthen our operational efficiencies and processes. We have a very promising future with significant opportunities ahead. Today, I want to run with you our further progress -- update you on the further progress of our growth strategy. I think before I do so, I would like first to reiterate our commitment to the health and safety of our employees, customers and all stakeholders, which remains our key priorities at all times. Supporting the nation's ongoing fight against CoVID-19, ADNOC Distribution has assured that all health and safety measures are maintained. And in H1 2021, the company became the first fuel retail in the world with 100% of its frontline staff to be vaccinated, something that we're extremely proud of. It's an incredible achievement as we continue in our commitment to the nation's recovery from this pandemic. Coming back to our strategy. I'll begin first by outlining the key pillars for growth starting with our fuel business, which includes retail and commercial. With the addition of 12 new stations in H1 2021, our fuel network has grown by 13% compared to H1 in 2020. We maintain a leading marketing position in the UAE in the UAE retail fuel network. And now we are operating probably 457 fuel stations in UAE as of 30th of June of this year. We remain focused on adding value for both customers and shareholders. And the underpenetrated Dubai market is an integral part of this. In the first half of this year, we opened five new stations in Dubai, which means our stations network in the emirates has increased from 26 service station at the end of 2020 to 31 stations by the end of June 2021. We are continuing to gain market share in Dubai, a key market of growth with high double-digit growth fuel volume driven by new station operating. We have seen growth materializing from management initiatives in our commercial business. What I can share in this regard, we have seen an increase in sales in the bulk LPG, supported by strict enforcement by government authorities to control gray market activities. Secondly, profitability of our LPG cylinder business has also increased following last year's decision to increase the prices of LPG cylinders, prices that had not changed in close to 20 years. We continue to see a potential of USD 20 million incremental EBITDA contribution from this initiative on a yearly basis, as guided previously. Thirdly, our commercial sales team is proactively managing the dynamic pricing in order to grow our market share in gas oil fuel sales through spot deals as well as bringing new corporate customers. Finally, international expansion remains an integral to our growth strategy. And we are well positioned to harness international growth opportunities. We have now received no objection certificate from the General Authority of Competition in the Kingdom of Saudi Arabia to acquire 35 stations. These deals were announced previously in December 2020 and in February 2021 in three transactions. Beyond these 35 stations, we are continuing to explore further opportunities to expand in the Kingdom of Saudi Arabia, Egypt and other international markets as long as they meet our commercial investment guidelines. Moving on to our second pillar of growth strategy is the nonfuel retail business. We have opened 14 new convenience stores in the United Arab Emirates in the first half of this year. Our network increased by 18% year-on-year to 340 C-stores as compared -- as at 30th of June 2021. After a strong momentum in the revitalization of our convenience stores in 2020, the pace of our program has continued in the first half of 2021 with refurbishment of 24 convenience stores. We aim to offer a superior experience through various customer-centric initiatives such as a modern and digitally enabled environment, improvement in our t category management, the introduction of high-margin fresh food and premier coffee products. On the back of these initiatives, we saw increase in convenience stores margin by circa 450 bps to 31.7%. While average gross basket size is down in the first half of this year compared to last year, this comes after a 20% increase in 2020, which was driven by a change in customer behavior during the highest of the pandemic. Customers were visiting less frequently but buying more in a single transaction. With a strong rebound in nonfuel transactions this year, we are seeing normalization of this trend. Having said that, gross basket size is still 18% higher than prepandemic close, supported by superior nonfuel proposition. We have also maintained our focus to provide increased level of convenience to customers through our partnership with delivery services such as Talabat and Carriage, which allows customers to order from more than 1,700 ADNOC Oasis products from over 100 convenience stores across United Arab Emirates. Lastly, we are also expanding other nonfuel services. This year so far we have opened new vehicle inspection centers and continue to look at options to further expand nonfuel services at more locations. ADNOC Rewards, the UAE's first customer loyalty program from a fuel provider continue to grow as well. We launched a new partnership with Etisalat Smiles, which allows members of both platforms to cross-exchange points and maximize benefits. We also added 18 new partners to the reward program in the first half of this year, bringing the total number of partners to 40 and offering members even more deals and discounts from some of the UAE best leisure and entertainment brands. ADNOC Rewards has now more than 1 million registered users as of end of first quarter -- first half of this year and approximately 17 million transactions since the launch of the program, something that we're extremely proud of. To further encourage users -- to further encourage use of the reward program and to drive an increased customer spending, a number of offers and promotional campaigns were activated in stores at stations, aiming to further enhance customer experience and offering a range of added value incentives that meet a wide range of customer taste and interest offering more with every visit to an ADNOC service station. I will now hand over to Mohamed to present the highlights of our financial performance. Mohamed, over to you.

Thank you, Ath. Thanks, Bader. So first of all, good morning, and good afternoon, everyone. I'm going to take you through our financial performance for the first half of the year. So we've demonstrated strong financial and operational performance in the second quarter as well as the consolidated first half of the year with strong EBITDA and net profit growth. Now this comes despite normalization of fuel retail margins and it demonstrates progress on our key pillars of growth. That's fuel volume recovery, market share gain in Dubai, and in improvement in our margins across businesses, and lastly reduction in our operating expenditure. First half of the year, H1 2021 revenue increased by 16.9% year-on-year. Now this was driven by fuel volumes growth, higher selling prices, of course, as a result of higher crude oil prices and recovery as well in our nonfuel revenue. So the total gross profit increased by 4.2% in the first half of 2021 compared to the same period of last year. Again, this was mainly driven by nonfuel retail and commercial segments, partially offset by a decline in the fuel retail gross profit. Now I'm going to elaborate further on that on the business wise performance in the next couple of slides. First half 2021 reported EBITDA, USD 416 million, marks an increase by 21.8%. Again, this is driven by higher gross profit as well as increased operational efficiencies. We also reported lower negative one-off items of USD 18 million in the first half of the year. Of course, the first half of last year, 2020 was negatively impacted by a total of $46 million of one-off items. Now this related to additional pension costs as well as the COVID-19 expenditure, in addition to additional prudent provisioning on trade receivables and write-off of capital work in process. So the underlying EBITDA. Once we exclude inventory gains, losses, one-offs, decreased by 1.5% in the first half of this year when compared to the same period last year. Once again driven by lower retail fuel margins. If you recall, the fuel retail business gross profit margin was exceptionally high throughout the last 9 months of last year. Now this was clearly benefiting from stable retail pump prices despite the decline in oil prices and our fuel supply costs. However, as we stated earlier, this started to normalize since February of this year, after the increase in oil prices. So the retail pump prices are now closely following movement in oil prices, and we're recording regulated guaranteed retail fuel margins. H1 2021 net profit was USD 314 million. This is an increase of 26.6% compared to the first half of last year. Of course, this is because of the higher EBITDA. Let me briefly walk you through the key operational highlights for the second quarter and the first half of the year. H1 2021, the total fuel volumes increased 9% year-on-year, while our total volumes are still down by about 4% compared to pre-COVID levels, that is if we do a comparison to the first half of 2019. We're still seeing quarter-on-quarter improvements driven by improving consumer sentiments as well as the contribution from our new device stations. For the retail fuel volumes, which comprised almost 68% of our total fuel sales in the first half of the year, increased by 14.8% year-on-year in the first half of 2021, and 43.4% year-on-year in second quarter of 2021. On the commercial side, the fuel volumes were down by 1.6% year-on-year in the first half of the year. And this was mainly due to lower uptake from our strategic aviation customers, but this was partially offset by growth in the corporate fuel volumes. This growth was driven by increase in gas oil sales on the back of a proactive sales strategy to gain more and more spot deals. On the nonfuel business side, the transactions increased by 3.9% year-on-year in the first half of the year. And on a quarterly basis, 39.7%, driven by significant recovery compared to last year and supported by the expansion in our C-stores, car wash and the vehicle inspection centers in the nonfuel retail side. As mentioned by the CEO, the average gross basket size declined by about 6.6% year-on-year in the first half of the year, but remain quite higher than the levels we saw in 2019. In the first half of the year this year, we continue to see benefits of our nonfuel strategy, our C-store revitalization program, with improvement in our C-stores gross margin to 31.7% in the first half of the year versus 27.2% first half of last year. To move on to the gross profit performance by segment. Our first half 2021 gross profit increased by 4.2%, driven both by commercial as well as the nonfuel retail businesses. For the retail segment, gross profit decreased by 2.4% year-on-year. This was driven by lower fuel retail business gross profit, as I explained earlier. However, this has been partially offset by volume growth, inventory gains of USD 53 million as well as recovery in the nonfuel side of the business. The fuel retail gross profit declined by 5.9% year-on-year despite volume growth and inventory gains. This was mainly due to lower margins. Our nonfuel retail gross profit, which increased by 26.9% in the first half of the year was driven by a strong recovery compared to last year. Last year, of course, we were heavily impacted by the lockdown restrictions, but the improvement in the margins of our C-store business equally supported by the nonfuel -- also supported the nonfuel gross profit growth. The convenience stores business margin improved as a result of better product mix. And as the CEO mentioned earlier, the introduction of high-margin fresh food and coffee products, which is, of course, part of our revitalization program. On the commercial business side, gross profit increased by 23.7%. This was driven by higher corporate volumes and margins. Of course, last year, first half of 2020 is heavily negatively impacted by one-off items of about USD 6 million. On the EBITDA by segment side. As I mentioned earlier, the first half of the year 2021 EBITDA has increased by 21.8%, as you can see. On top of higher gross profit, OpEx optimization, lower one-off expenditure has supported the growth of the EBITDA. On the Retail side, the first half of the year, EBITDA increased by 5.3% year-on-year despite lower gross profit margin in fuel retail, but helped and driven mainly by reduction in operating expenditure. On the commercial side, the EBITDA growth was driven by higher gross profit, lower operating expenditure and for the sake of comparison, the first half of last year also included negative one-offs, as I explained earlier. Now once we exclude the inventory gains or losses, however, this year, we're looking at gains as well as one-offs, the underlying EBITDA was marginally down due to lower retail fuel margins. Let's have a look at the operating expenditure side, our total OpEx decreased by 7% year-on-year in the first half of the year. Now once we exclude depreciation, our cash OpEx decreased by 9.9% year-on-year in half 1 -- in H1, and by 13.1% in the second quarter. Now this demonstrates benefits extracted from management initiatives to increase efficiency across all our businesses. Of course, we remain committed to reducing operating expenditure. As a result, we've realized like-for-like operating expenditure savings of $7 million in the second quarter of the year. Now this is after we realized $10 million during the first quarter of the year. This puts us in a strong position to achieve our full year target for operating expenditure savings. The full year target of course is USD 25 million. This reduction in like-for-like OpEx was mainly due to optimizing and staffing costs, which, of course, remains a major piece of our total operating expenditure. Now while we have been diligently focused on our COVID-19 response, ensuring the safety and the well-being of our staff and our customers, the transformation efforts will continue to ensure that operating costs are market competitive, and the company, ADNOC Distribution, remains well positioned to deliver on our future growth ambitions. Let's move on to the cash side. Looking at cash generation, the company generated free cash flow of USD 680 million in the first half of the year. Of course, this was driven by strong cash flow from operations as well as positive working capital. Now on the positive working capital movement side, this resulted mainly due to increase in dues to related parties. The increase was resulting from higher fuel purchases,as well as the higher value of fuel purchases, which comes from a oil price environment, where the prices are consistently rising. Now this was partially offset by increase in inventories as well as increase in dues from related parties. In line with our guidance and plans to continue with our expansion strategy, we've spent, so far this year, capital expenditure of USD 80 million in the first half of the year. We maintained a strong balance sheet at the end of 30th of June 2021. Our net debt-to-EBITDA ratio of 0.46 multiple remains well below 2x as per our commitment. I'm going to hand it back over to the CEO.

Thank you, Mohamed. Before opening the floor to Q&A, I would like to reiterate our outlook for ADNOC Distribution. We remain committed to pursue our expansion plans in a disciplined manner, deliver an enhanced customer experience, further optimize our operation to become a leading, cost-efficient fuel retailer and generate sustainable value creation for our shareholders. Our domestic and international expansion momentum seems likely to sustain in 2021. In our convenience stores business, 60% -- nearly 60% of our C-store network that was operational at the end of 2019 will be refurbished by the end of 2021. This will put us in a better position to reap the benefits of our initiatives that offer superior customer journey and in-store experience, coupled with high-margin products. We are confident of achieving growth in our convenience stores business once the UAE economy recovers fully from the impact of the pandemic. We are also confident that we will sustain an attractive dividend payback backed by a strong balance sheet and confidence in cash flow generation capability while retaining sufficient cash to support our growth. This concludes today's presentation. We are happy to take any questions that you may have.

[Operator Instructions] Our first question comes from Nick Stefanou from Renaissance Capital.

It's Nick Stefanou from RenCap. I've got a couple to ask for me. Just one for Bader. You joined just recently, and it's probably still early days, but I was wondering if you could comment about your thinking about the company's current strategy, especially in relation to the energy transition? And is this something in part that you'd like to change or improve going forward? And the second question is from nonfuel sales. So I know you guys tried this, I don't know, call it the experiment a couple of years back to remove assisted fueling, which of this something that made sense. Back then, I remember what happened was that you had some issues with competition, a lot of the customers decided to go to some competitors. I was just wondering why didn't you keep that strategy in Abu Dhabi, where you don't have any competition? And maybe switch back to the old model with -- or the current model in the Northern Emirates?

Well, thank you for the question. So I'll respond to the first question when it comes to the energy transition and the direction of the company. Coming from Masdar myself and coming from Tabreed, we are quite active on the energy transition dialogue and also the sustainability point. Coming into ADNOC Distribution, I'm pleased to know that the group has a strong commitment to playing an active role in this space. I think as the company directional, we try to play our part as well, promoting energy efficiency where they needed necessary and doable. We definitely are agile and resilient to adapt to new more efficient operating models. And in fact, we do have also the strategy in making of the EV -- adaptation of EV. We will definitely communicate more on this front as our plans mature. But by and large, all in all, ADNOC Distribution is part of a wider group, and we definitely believe in the energy transition and the role and the contribution to each player in their respective sectors to support the energy transition that is also spearheaded by the Ministry of Energy of the United Arab Emirates so we are not in isolation of this topic and definitely have a role to play and that will become even more and more solid as our plans mature in the coming chapter of ADNOC Distribution. As per the second question on the previous experience on self-fueling, if I got your question correctly, perhaps the CFO, who has been here at the time, has also part of that experience with him and I maybe invite him to comment on this. Mohamed?

Sure. Thanks, Bader. Look, it's a good question. At the time that we explained when that decision was taken to remove Flex whereby we charge AED 10 for full service, that was taken after discussions directly with our customers, focus workshops, working groups, where we called our customers in, conducted many -- hundreds of these workshops. Overwhelmingly, the feedback that had come back was, if we want to grow, particularly in markets where we do not dominate like Dubai, Northern Emirates, it was important to retain our customers. And this was a very critical point on which we were losing the goodwill from the customers. They did not like it. They did not like the AED 10 charge, and the competition was not charging it. Now turning around and saying, where I have competition in the market, we're going to charge you nothing. Come to Abu Dhabi, where we are an effective monopoly, if we charge you $10, that would seem exploitative. And we did not want to be viewed as such. Same customers that fuel up here, majority of them also come to us in Dubai, in Northern Emirates. So it's important to regain our customers, to regain that goodwill and address an extremely painful pain point, so to speak, for our customers. It was important that we took it off across the board. Now financially, we lost the revenues that resulted from Flex and from charging that fee, but over the long run, I showed to our customers that we are a customer-centric organization. And if this was something that was absolutely bothering our customers, we decided to take it off. And that helped out, especially, again, as I said, as we continue to grow in Dubai and Northern Emirates.

Okay. I hear you. But the one was thinking of it is how about that discount as opposed to kind of like a surcharge for someone who would then choose to pay by himself as to say, way to pushing in convenience store so that they might buy something else as well, maybe coffee or chocolate and boost up your nonfossil fuels like in addition. And also it is where you could also be using some of the G&A potentially from lower like employees. Is this something you guys have examined?

Yes, absolutely. I mean these are all good options. I mean, I like what I'm hearing. But I can assure you, before we decided to drop this, we explored multiple options. Could we return this value back in different forms? It's value accretive. And the bottom line was customers just did not like it. They did not like the fact that combination did not charge it, we were charging it, irrespective of what happened with those coupons we gave them. So you fuel up, you pay the $10, you get a coupon, you go inside, you pick up three products. Besides to point, the fact that we were charging for something that competition wasn't charging, they just did not like it. And after listening to our customers, we just decided to pull it out. Now trying other options, similar to Flex, any time you leave yourself, i.e., the company, at a disparity with your competition, it's a risk. It's a risk in that it could be perceived better than competition, but equally, it could be received as worse than competition. You come into the station, you fuel up and there's no other nuances, complexities, propositions that you have to deal with. It's free. You pay for the fuel and you go on. It's as simple as that. So that's why, even though we had explored multiple options, the best decision at the time was to completely drop it. And in retrospect, it's been a good decision.

Our next question comes from Vijay Harpalani from Al Tayer Group.

I've got a couple of questions. So the first question relates from ADNOC Rewards since -- I mean, that program has gained a lot of fraction with more than 1 million registered users now. What is the long-term strategic plan for monetizing that particular program? Like I noticed at Etisalat, there, on the Smiles program, right? And now after achieving scale and partnering with different counterparties, they actually have put in place monetization plan. Do you have similar plans for ADNOC Rewards? That's my question number one. The second question is with reference to vehicle inspection and servicing business. I mean that part of the business is very fragmented if you see the market. Do you have any plan to consolidate that type business basically to gain more customers? Is it lucrative enough?

On the Reward side, again, the #1 objective for us to launch that program to be the first fuel provider in the UAE to launch a rewards program. Our objective was to provide better customer experience. When people come in, they sign up, they get offers; as a result, targeted offers to these customers. And a second, not secondary, but a second primary objective was to increase stickiness. Gives them a reason not just to come to us when you're in Abu Dhabi, where there's monopoly, but also come to us in Dubai in the Northern Emirates and stack up the points. Do we have any plans short or long term to monetize that data that immense amount of data that we're building up where we get to know our customers? And the simple answer to that is no, not at the moment. But we have objectives in mind. Those objectives are being that customer stickiness, and an enhanced customer experience when they come to our stations.

If I may respond to the vehicle inspection, the mark that you've made, it's an important contributor to our financials and EBITDA. And definitely, we see synergy playing a role in this space. The question, I believe, was about running this in a -- consolidating this business. And this -- the answer is of twofold. One, we do run it from an ADNOC Distribution point of view as a portfolio. Hence, it is consolidated on a more leadership within the company, and then we look at it as a portfolio of vehicle special centers, trying to extract synergies where possible on manpower and resources and some, what you call it, maintenance and equipments and supply chain-related aspects in support of this pillar -- vertical. Having said that, in actual sense, the -- it is fragmented in practical sense, given the nature of the Federation of the United Arab Emirates. The vehicle inspection centers are adjacencies to the license registration of vehicles in this nation. And each Emirate has its own regulation and also custodians of this activity, so we deal with Abu Dhabi police, we deal with Dubai Police and so on and so forth, Sharjah, Ajman, so on and so forth of the other Emirates of their own regulatory framework or regulatory entities that governs this sector. And we are definitely working in close collaboration with them by default by the nature of the setup of the local Emirates entity that managing the vehicle registration with vehicle inspection centers that are adjacent to them. It is fragmented in that sense. But from a company perspective, we have a consolidation within other distribution. We drive synergies in the supply chain and equipments and resources and so on and so forth, so the value there is -- we continue to try to extract the maximum value by managing the same as a portfolio of centers under our belt.

The next question comes from Alowi AliMirah from Morgan Stanley.

I have two questions. First, in your opening remarks, you mentioned in terms of the like-for-like recovery in terms of volume, 96%, I think you said. The remaining 4% when we think we'll achieve it, does it require international flights to be open or some other factors domestically such as schools and other factors? So that's my first question. My second question, in terms of the Saudi market. Could you please give us an update on what you're seeing now inside the market now, you have more than the two stations that you had, specifically in terms of the competition and your ability to expand given that the fragmented market now that the high margin, et cetera, they can negotiate higher prices?

Yes, I can start from the volumes, perhaps. Just regarding the recovery, the 96% recovery. Your question is around the potential 100% recovery. I guess that one of the key levers is the higher mobility within the UAE, and this is what we expect towards H2 2021, the fact that schools also will open, people will be back to the office. And also the fact that we expect the mobility restriction is following the rapid vaccination and hosting of the Expo event to be held in October 2021 and also the contribution from the Dubai stations. So then giving you a target of a guidance for 2021 full year is something that it's difficult to provide as a specific guidance. But just to give you a flavor, you have some sense of how we are looking at the potential recovery going forward. Do you want to add anything, Mohamed, perhaps?

Yes. No, that's it Bader. Let me just address one last part real quick. So yes, there is still a 4% roughly [indiscernible] versus 2019. And look, so long as schools remain out, so long as the work from home option is still going on, which both those factors are very much in place, at least within UAE, there is a border between Abu Dhabi and the other Emirates. So it's mobility 100% back on now. Do we expect that 4% to be filled up until mobility returns back to 100%? Perhaps, Yes. We're not there yet.

Can you -- just a quick follow-up on that. In terms of mobility, how do you track it? Is it Google Maps and Apple, et cetera? Or there's other where you track it?