TAQA announces full year 2016 financial results, completion of Transformation Programme

March 30, 2017
Short description: 
TAQA today announced its financial results and operational highlights for the financial year ended 31 December 2016

  • Completes successful Transformation Programme with AED 13.2 billion in savings
  • TAQA to pursue growth and value creating opportunities, with focus on Power & Water
  • Additional equity offsets oil and gas impairments and strengthens balance sheet

ABU DHABI, United Arab Emirates – Abu Dhabi National Energy Company PJSC (TAQA), a leading global energy company headquartered in Abu Dhabi with operations in 11 countries worldwide, today announced its financial results and operational highlights for the financial year ended 31 December 2016.

TAQA has completed its two-year Transformation Programme which delivered cumulative savings of AED 13.2 billion, including a capital expenditure reduction of AED 8.6 billion from 2014 to 2016. Additionally, TAQA has delivered a 25% reduction in global headcount with over 1,000 positions reduced across its global operations.

TAQA's 2016 full-year results have highlighted the operational efficiency gains and financial savings achieved through the Transformation Programme, most notably through:

  • Record power generation of 93,246 gigawatt hours (GWh)
  • Limited Oil & Gas production decline despite 70% reduction in Oil & Gas capex
  • Significant reduction in Oil & Gas unit operating costs, down 33% compared to 2014
  • Successful refinancing of AED 6.4 billion in maturing bonds at lower rates

The company has booked a post-tax impairment of AED 16.9 billion, primarily related to its Oil & Gas assets, in response to the lower commodity price environment. This contributed to a Net Loss of AED 19.0 billion for the financial year 2016, with a pre-impairment Net Loss of AED 2.1 billion. The impairment is a one-time non-cash charge, and has no impact on TAQA's ability to meet its obligations, including its ongoing debt service obligations.

TAQA has also completed the transformation of its balance sheet. This was achieved through several measures, including the utilisation of certain land areas on which TAQA's UAE power and water plants are located. The privatisation of Abu Dhabi's power and water assets has unlocked significant long-term value which has been utilised by TAQA through signing a land lease agreement valued at AED 18.7 billion as of 31 December 2016. The valuation of the land lease rights was undertaken by two international, independent valuation experts. A previous agreement with a related party regarding TAQA's Oil & Gas assets is no longer in effect.

Commenting on the announcement, His Excellency Saeed Mubarak Al-Hajeri, Chairman of the Board of Directors, said: "The successful delivery of the Transformation Programme has significantly reshaped the business, making TAQA a more efficient and focused organisation. In addition, the recent additional equity now provides TAQA with the solid foundation to capitalise on future opportunities and achieve greater success. The land lease also avoids any share recapitalisation or dilution of the existing shareholders, and provides a greater opportunity for TAQA shareholders to realise long-term value from their investment."

TAQA's Power & Water portfolio includes assets in the UAE, United States, Ghana, India, Morocco, Oman and Saudi Arabia. In 2016 the division achieved record operational and financial performance, generating 93,246 gigawatt hours (GWh), up 2% on 2015 and EBITDA of AED 6.7 billion driven by strong operational performance.

Following the completion of the two year Transformation Programme, TAQA's Oil & Gas assets in Europe and North America are operating more efficiently and are positioned to create additional value when pricing improves. TAQA is also the operator of 30,000 boed facility in the Kurdistan region of Iraq, is expected to deliver first oil in 2017.

Financial highlights:

  • Total revenues of AED 16.1 billion, a decrease of 17% on previous year (2015: AED 19.3 billion), driven primarily by the impact of lower commodity prices and volumes.
  • Cash cost savings of over AED 1 billion during 2016 driven by Transformation Programme.
  • EBITDA of AED 8.5 billion (2015: AED 9.6 billion) primarily as a result of lower oil and gas revenues. EBITDA for TAQA's power and water division remained stable at AED 6.7 billion (2015: AED 6.7 billion) driven by strong performance of UAE and Africa businesses.
  • Net loss of AED 19.0 billion driven by AED 16.9 billion impairment primarily related to Oil & Gas assets in response to lower commodity prices. Recognised as a one-time non-cash charge with no impact on ability to meet obligations including ongoing debt service obligations.
  • Free cash flow of AED 7.3 billion, an increase of 25% (2015: AED 5.8 billion) due to effective cost management as well as capex reductions.
  • Total liquidity of AED 14.9 billion, including AED 3.8 billion in cash and cash equivalents and AED 11.1 billion of undrawn credit facilities.
  • Ratings agencies reaffirm A3 (Moody's) and A (Standard and Poor's) ratings in line with continued Abu Dhabi Government support.
  • Transformation Programme Update:

  • Cumulative savings of AED 13.2 billion in two year period (2014 to 2016).
  • Cumulative capital expenditure reduction of AED 8.6 billion in two year period.
  • Operational Highlights: Power & Water

    • Record operational performance, generating 93,246 gigawatt hours (GWh) in the year.
    • Industry top quartile performance by global technical availability factor metrics.
    • UAE operations produced 66,652 GWh of electricity and 257,169 million imperial gallons of desalinated water, continuing to deliver the vast majority of water and electricity requirements of Abu Dhabi.
    • Expansion of the Fujairah F1 water desalination was completed in December 2015 and delivered positive net income in 2016, benefiting from the increase in capacity by 30% to 130 million imperial gallons per day.
    • The Jorf Lasfar power plant in Morocco, which accounts for half of the country's power supply, produced 15,317 GWh in 2016 and achieved an availability factor of 92.5%.

    Operational Highlights: Oil & Gas

  • Production volumes of 137,300 barrels of oil equivalent per day (boed) in 2016, a decrease of only 5% on 2015 (145,300 boed) despite substantial 70% reduction in capital expenditure.
  • North American assets produced 80,800 boed with an ongoing focus on ensuring safe operations, cost control and the efficient deployment of capital. Investments targeted core operations in Central Alberta due to its scalability and high capital efficiency.
  • European assets produced 56,500 boed, negatively impacted by North Sea platform maintenance. There was a 16% reduction in European per-barrel operating costs compared to 2015, and a reduction of almost 32% when compared to 2014.
  • Iraq project on track - 30,000 boed Kurdistan Atrush facility, operated by TAQA, completed in 2016 with first oil expected in 2017.
  • Commenting on the results, Saeed Al Dhaheri, acting Chief Operating Officer, said: "While challenging macroeconomic conditions in the oil and gas industry continue to impact performance, the completion of a two-year business Transformation Programme initiated to combat lower commodity prices, generating AED 13.2 billion in cost savings while maintaining safe and reliable operations, is a clear demonstration of our commitment to delivering sustainable efficiencies. This more competitive and resilient TAQA, built around our commitment to strong operational performance and safety in our core industries and boosted by the equity contribution related to our UAE power and water assets, is well placed to pursue further growth and value creating opportunities with a long-term focus in our core sector of Power & Water."

    Mohammed Al Ahbabi, acting Chief Financial Officer, said: "We have aggressively reduced our capital expenditure and cash costs, in our efforts to achieve cash flow neutrality despite low commodity prices. We are pleased that external markets recognised these efforts as we successfully raised AED 6.4 billion to refinance maturing bonds at competitive rates despite challenging industry conditions. We continue to maintain our strong rating and liquidity position with the long-term objective being to deleverage the company. The net impact of the equity contribution and the impairment taken in relation to our Oil & Gas assets, is major step in that process."

    - ENDS -

    TAQA media relations:
    Allan Virtanen
    Direct: +971 2 691 4894
    Mobile: + 971 56 685 2717
    allan.virtanen@taqaglobal.com

    Further Full Year Financial Results 2016 information can be found here: https://www.taqaglobal.com/investors/fy-2016-financial-results