Proposed dividend of QR 0.35 per share
Proposed cash dividend distribution equivalent to72.1% of net profit • cash throughout the group of QR 1.5 billion
DOHA, QATAR - Mesaieed Petrochemical Holding Company ("MPHC" or "the group"; QE: MPHC), a subsidiary of Qatar Petroleum partially floated on the Qatar Exchange, and one of the region's premier diversified petrochemical conglomerates with interests in the production, distribution and sale of olefins, polyolefins, alpha olefins and chlor-alkali products, announced its financial results for the four-month period ended December 31, 2013 with a net profit of QR 0.6 billion.
In comments issued to the Qatar Exchange after the group's first Board of Directors meeting for 2014, H.E. Dr. Mohammed Bin Saleh Al-Sada, Minister of Energy and Industry, Chairman of Mesaieed Petrochemical Holding Company, stated, "At the outset, and on behalf of the Board of Directors, I would like to thank His Highness the Emir, Sheikh Tamim Bin Hamad Al-Thani, for his generosity and support both before and throughout the IPO of Mesaieed Petrochemical Holding Company. It is due to His Highness' support that we are able to announce these first published results of Mesaieed Petrochemical Holding Company, and declare a dividend.
"MPHC registered a net profit of QR 0.6 billion for the four-month period ended December 31, 2013, and the Board of Directors proposed a cash dividend of QR 0.4 billion, or QR 0.35 per share. This proposed dividend is equivalent to 72.1% of net profit. And, in line with the continuous support and directions from His Highness the Emir, Sheikh Tamim Bin Hamad Al-Thani, it was recommended that the shareholders as of the close of trading on the last trading day before the group's first post-IPO annual general assembly meeting will be entitled to receive a dividend relating to the four-month period ended December 31, 2013 despite the fact that MPHC was only listed on February 26, 2014."
Consolidated Financial ResultsCommenting on the financial results, Mr. Khalid Al-Subaey, Chief Coordinator, Mesaieed Petrochemical Holding Company, stated, "Net profit for the four-month period to December 31, 2013 was QR 0.6 billion. This period was marked by relatively stable market conditions and operations - utilisation rates remained strong and no major shut-downs were noted. Profits were also aided by the supply of competitively-priced ethane feedstock and fuel gas under long-term supply agreements with Qatar Petroleum. And, cash across all group companies increased by
QR 0.2 billion during the four-month period to a total of QR 1.5 billion."
The main activity of MPHC is to act as a holding company. The group consists of six companies, with three of them directly held: MPHC holds 49.0% of the issued share capital of each of Qatar Chemical Company Limited Q.S.C ("Q-Chem") and Qatar Chemical Company II Limited Q.S.C
("Q-Chem II"), and 55.2% of the issued share capital of Qatar Vinyl Company Limited Q.S.C. ("QVC"). Both Q-Chem and Q-Chem II each have a single, wholly-owned subsidiary, while Q-Chem II also has an effective ownership of 53.85% of Ras Laffan Olefins Cracker Company Limited. The group's facilities are all based within the State of Qatar, and are primarily engaged in the production of olefins, polyolefins, alpha olefins, and chlor-alkali products.
Elaborating on the combined revenue performance of Q-Chem / Q-Chem II, Mr. Al-Subaey said, "The business unit recorded revenue of QR 1.2 billion for the four-month period ended December 31, 2013, with polyolefins constituting 62% of revenue, alpha olefins almost 26% and the remainder attributable to ethylene and other minor products. During the period, circa 148,000 MT of polyolefins and 65,000 MT of alpha olefins were produced at utilisation rates of 112% and 99% respectively, broadly in line with historical averages." No shut-down days were noted during the period.
Combined EBITDA for the period was QR 0.7 billion with an EBITDA margin of 61.2%. The creditable margin can be largely attributed to a low operating cost base due to the supply of competitively-priced ethane feedstock by Qatar Petroleum. Net profit for the period was QR 0.6 billion and net profit margin was 46.7%, with the difference between net profit and EBITDA primarily due to current and deferred taxes (QR 0.09 billion) and depreciation (QR 0.07 billion).
Total assets of the combined Q-Chem / Q-Chem II business unit as at December 31, 2013 were
QR 7.1 billion, and cash and cash equivalents before dividends to MPHC was QR 1.2 billion. Total debt was QR 1.9 billion, with the entire balance due by Q-Chem II, while the combined companies' cash realisation ratio was well-over 100%.
Revenue from the sale of chlor-alkali products for the four-month period was QR 0.3 billion. Commenting on the supply to QVC of ethylene, the joint venture's primary feedstock, Mr. Al-Subaey stated, "Production of the company's chlor-alkali products - caustic soda, ethylene dichloride, vinyl chloride monomer and hydrochloric acid, was supported by the supply of competitively-priced ethylene from Qatar Petrochemical Company ("Qapco") and market-priced imported ethylene, in line with the joint venture's production requirements. The average production utilisation for the period was 95%, 93% and 99% for the EDC, VCM and caustic soda facilities respectively, within the historical 90% to 100% range."
Net profit recorded during the period was QR 0.04 billion, with a net profit margin of 12.3%, while EBITDA was QR 0.07 billion and EBITDA margin 21.6%. During the period, QVC wrote off a total of QR 0.02 billion attributable to certain capitalised costs, and continued to benefit from competitively-priced fuel gas for electricity generation supplied by Qatar Petroleum.
QVC's total assets as at December 31, 2013 was QR 1.4 billion, with cash and cash equivalents before dividends to MPHC accounting for QR 0.3 billion. The company's cash position was aided by a creditable cash realisation ratio of over 100%, minimal CAPEX of only QR 0.01 billion, and having no outstanding debt during the period. "QVC, like Q-Chem and Q-Chem II, is a business with the ability and track record of generating strong operating cash flows," remarked Mr. Al-Subaey. "Each of the group companies has generated operating cash flows of at least 200% of net profits during this period. In conjunction with the low planned capital expenditure program and low debt levels, this is key to the group's generous and progressive dividend distribution policy that seeks to maximise the dividend payout ratio."
Production Shut-Down TimetableThe latest major planned down-time schedule for the first quarter of 2014 is as follows:
Product 2014, Q1
HDPE 0 days
NAO / 1-Hexene 0 days
NAO / 11 Fractions 0 days
Caustic Soda 34 days
EDC 34 days
VCM 43 days
This shut-down schedule is indicative of current plans only, and actual down-time may vary from the latest plan.
Group Taxation StatusFurther to Qatari Tax Law Number 21 of 2009 and Law Number 20 of 2008 and the listing of MPHC on the Qatar Exchange with effect from February 26, 2014, the share of profits from the group's joint ventures attributable to Qatari public shareholders shall be exempt from income tax.
Group Dividend Policy
The Board of Directors approved a group dividend policy confirming that MPHC aims to maximise the percentage of net profit paid as a cash dividend while maintaining adequate liquidity for the group's capital investments, working capital and financing needs, and the principles of financial prudence. Dividends proposed by the Board of Directors are subject to general assembly approval.
Proposed Dividend DistributionWith respect to the proposed dividend, H.E. Dr. Al-Sada commented, "In line with the continuous support and directions from His Highness the Emir, Sheikh Tamim bin Hamad Al-Thani, shareholders of Mesaieed Petrochemical Holding Company at the close of trading on the last day of trading before the group's first post-IPO annual general assembly meeting will be entitled to receive a cash dividend from MPHC's profits for the four months ended December 31, 2013 despite the fact that MPHC was only listed on February 26, 2014.
"In consideration of the group dividend policy, the Board of Directors is pleased to propose a cash dividend for the four months ended December 31, 2013 of QR 0.4 billion, equivalent to a payout of QR 0.35 per share and representing 3.5% of the nominal value. This proposed dividend distribution represents 72.1% of the group's profits, clearly indicating the Board of Director's intention for the group to pursue a progressive and generous dividend distribution policy."
ConclusionIn concluding remarks, H.E. Dr. Al-Sada, said, "The close of this first financial period marks the beginning of a new era for MPHC and the State of Qatar. The Board of Directors and senior management look forward to the future with confidence in the sound competitive advantages of the group and strong government support.
"On behalf of the Board of Directors, I would like to once again thank His Highness the Emir, Sheikh Tamim Bin Hamad Al-Thani, and His Highness the Father Emir, Sheikh Hamad Bin Khalifa Al-Thani. A word of appreciation is also extended to the senior management and staff of the group companies for their hard work and dedication."
-Ends-
For more information about this press release, email mphc@qp.com.qa or visit www.mphc.com.qa
Disclaimer:
The companies in which Mesaieed Petrochemical Holding Company QSC directly and indirectly owns investments are separate entities. In this press release, "MPHC" and "the group" are sometimes used for convenience in reference to Mesaieed Petrochemical Holding Company QSC.
This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Mesaieed Petrochemical Holding Company QSC. All statements other than statements of historical fact are deemed to be forward-looking statements, being statements of future expectations that are based on current expectations and assumptions, and involve known and unknown risks and uncertainties that could cause actual results, operations and business performance or events impacting the group to differ materially from those expressed or as may be inferred from these statements.
There are a number of factors that could affect the realisation of these forward-looking statements such as: (a) price fluctuations in crude oil and natural gas, (b) changes in demand or market conditions for the group's products, (c) loss of market share and industry competition, (d) environmental risks and natural disasters, (e) changes in legislative, fiscal and regulatory conditions, (f) changes in economic and financial market conditions and (g) political risks. As such, results could differ substantially from those stated, or as may be inferred from the forward-looking statements contained herein. All forward-looking statements contained in this presentation are made as of the date of this presentation.
Mesaieed Petrochemical Holding Company QSC, its Directors, officers, advisors, contractors and agents shall not be liable in any way for any costs, losses or other detrimental effects resulting or arising from the use of or reliance by any party on any forward-looking statement and / or other material contained herein. Mesaieed Petrochemical Holding Company QSC, its joint ventures and associated companies are further in no way obliged to update or publish revisions to any forward-looking statement or any other material contained herein which may or may not be known to have changed or to be inaccurate as a result of new information, future events or any reason whatsoever. Mesaieed Petrochemical Holding Company QSC does not guarantee the accuracy of the historical statements contained herein.
General Notes:
Mesaieed Petrochemical Holding Company's accounting year follows the calendar year. No adjustment has been made for leap years. Where applicable, all values refer to Mesaieed Petrochemical Holding Company's share. Values expressed in QR billions and percentages have been rounded to 1 decimal point. All other values have been rounded to the nearest whole number. Values expressed in US $'s have been translated at the rate of US $1 = QR3.64.
DEFINITIONS
Cash Realisation Ratio: Cash Flow From Operations / Net Profit x 100 • Debt to Equity: (Current Debt + Long-Term Debt) / Equity x 100 • Dividend Yield: Total Cash Dividend / Closing Market Capitalisation x 100 • EDC: Ethylene Dichloride • EPS: Earnings per Share (Net Profit / Number of Ordinary Shares outstanding at the year end) • EBITDA: Earnings Before Interest, Tax, Depreciation and Amortisation • Free Cash Flow: Cash Flow From Operations - Total CAPEX • HCL: Hydrochloric Acid • HDPE: High Density Polyethylene • NAO: Normal Alpha Olefins • NaOH: Caustic Soda • MT / PA: Metric Tons Per Annum • Payout Ratio: Total Cash Dividend / Net Profit x 100 • P/E: Price to Earnings (Closing market capitalisation / Net Profit) • Utilisation: Production Volume / Rated Capacity x 100 • VCM: Vinyl Chloride Monomer
ABOUT MPHC:
Mesaieed Petrochemical Holding Company Q.S.C. ("MPHC") was incorporated as a Qatari joint stock company on May 29, 2013 with an agreed effective date for the transfer of Qatar Petroleum's previous shareholding in the joint ventures of September 1, 2013. The registered office is located at P.O. Box 3212, Doha, State of Qatar. The main activity of MPHC is to act as a holding company: (i) Q-Chem is currently owned by MPHC (49%), Chevron Phillips Chemical International Qatar Holdings L.L.C. ("CPCIQH") (49%) and QP (2%), and has one wholly-owned subsidiary, Q-Chem Distribution Company Limited, which engages in the sale and distribution of all of Q-Chem's products through agency agreements with Muntajat and Chevron Phillips Chemical International Sales, Inc. ("CPCIS"); (ii) Q-Chem II is currently owned by MPHC (49%), CPCIQH (49%) and QP (2%), and has one wholly-owned subsidiary, Q-Chem II Distribution Company Limited, which is engaged in the sale and distribution of all of Q-Chem II's products through agency agreements with Qapco and CPCIS, and an effective ownership interest of 53.85% in a joint venture, Ras Laffan Olefins Cracker Company Limited, which supplies ethylene to Q-Chem II; and (iii) QVC, which was incorporated in 1997 as a joint venture, and is currently owned by MPHC (55.2%), Qapco (31.9%) and QP (12.9%).
CONTACT DETAILS:
Name Mr. Khalid Al-Subaey
Title Chief Coordinator
Company Mesaieed Petrochemical Holding Company QSC
Telephone Number (974) 4013-2080
Fax Number (974) 4013-9750
© Press Release 2014
