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tABU DHABI NATIONAL ENERGY COMPANY PJSC (TAQA)
MANAGEMENT’S DISCUSSION AND ANALYSIS
1. Health, Safety and Environment
2. Summary of Results
3. Results of Operations by Business Line
4. Capital Structure and Liquidity
5. Capital Expenditure
This document should be read in conjunction with TAQA’s consolidated financial statements for the period ended 30 September
2023. Within the MD&A we use the terms “the Group”, “we”, and “our” to refer to TAQA.
1. Health, Safety and Environment (HSE)
Period ended 30 September
T&D Generation (1) Oil & Gas (3) Group Total(3)
HSE Overview 2023 2022 2023 2022 2023 2022 2023 2022
Fatalities Number - - - -
Recordable injury rate (RIR)(2) incident/1 million hrs 0.17 0.23 0.27 0.00 1.57 2.14 0.48 0.63
Lost time injury (LTI) Number 5 3 - - 3 10 8 13
Reportable spills Number - - 1 1 15 20 16 21
Reportable spills Volume (litres) - - 100 800 17,840 16,278 17,940 17,078
1) Refers to TAQA operated assets only.
2) RIR includes all recordable injuries (e.g., fatalities, lost time injury, restricted work injury and medical treatment injury)
3) Q3 2022 number of spills in O&G and Group was adjusted end of year to include one retracted spill.
“Safe” is our first value. We put safety above all else and HSE is a fundamental part of TAQA’s business.
A strict set of HSE rules, guidelines, and reporting tools ensure a high level of professionalism and
adherence to regulations is enforced wherever we operate. All members of our workforce are
empowered with the responsibility and authority to stop unsafe work.
Group RIR of 0.48 for Q3 2023 is lower than the Group RIR of 0.63 for the same period in 2022. The
number of Recordable Injuries decreased from 24 to 20 and includes a decrease in LTIs from 13 to 8.
Of 20 recordable injuries reported year to date, 13 occurred in Oil & Gas, 5 occurred in T&D, 1 occurred
in Generation and 1 occurred in the Corporate office. An external specialist safety review across Oil &
Gas has been completed and corrective action plans developed. Work continues in T&D to embed
enhancements from the ongoing safety transformation program, with increased focus on the causes of
significant T&D incidents by an Incident Review Panel. Further improvements have been made through
the deployment of an automated HSE reporting system to encourage HSE reporting and engagement
of key contractors through various HSE focused forums. Leadership visibility has been a key driver of
positive changes in safety culture and efforts continue with frequent senior leadership HSE visits to T&D
sites.
All operations continue to deliver on annual HSE improvement plans with specific focus on contractor
management, leadership engagement, management of short service workers, HSE culture, and control
of work.
Other corporate initiatives include behavioral based safety and leadership programs, introduction of
new global standards within the HSE management system, increased focus on reporting of safety
observations, enhanced quality of HSE incident investigations and effective learnings, and
strengthening of TAQA’s process safety framework.
16 uncontained spills have been reported up to Q3 2023, which is lower than Q3 2022. Total volume
released has increased slightly to 17,940 litres (Q3 2023) versus 17,078 litres (Q3 2022), with a 5,000-
litre crude oil spill reported by Canada in Q2 2023 largely accounting for the increase.
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POWERING A THRIVING FUTURE2. Summary of Results
Three months ended Nine months ended
30-Sep 30-Sep 30-Sep 30-Sep
(AED million, except where indicated) 2023 2022 2023 2022
Transmission network availability % 98.7 98.8 98.4 98.6
T&D Regulated Asset Value (RAV) - - 76,900 75,553
Commercial Availability – Generation 1 % 95.9 98.5 97.9 97.8
Oil & Gas Production 2 mboe/d 97.9 121.1 110.5 123.1
Gross Revenues 12,620 13,998 39,543 39,424
Adjusted EBITDA 3 4,753 5,811 15,271 17,137
Net Income 4 1,560 2,236 15,055 6,519
1) Represents weighted average for all power producing assets based on plant capacity.
2) Includes working interest production from North America, UK and Netherlands, and entitlement volumes from Iraq.
3) Adjusted EBITDA is defined as IFRS earnings before finance costs, net foreign exchange gain/loss, interest income, income tax,
depreciation, depletion and amortization and other gains / (losses).
4) Net income above is share attributable to common shareholders of TAQA.
Operational highlights – Q3 2023
• Generation global commercial availability was 97.9%, compared to 97.8%, marginally higher
versus the prior-year period.
• Transmission network availability for power and water was 98.4%, compared to 98.6%,
marginally lower versus the prior-year period.
• Oil & Gas average production volumes decreased to 110.5 thousand barrels of oil equivalent
per day (boepd), a decrease of 10% compared to 2022. This decrease is mainly due to the
shutdown of operations in Iraq and the natural decline in production of late-life UK assets.
• TAQA continued to receive recognition for its progress on ESG initiatives, with multiple
agencies improving the company's ESG rating.
Financial highlights – Q3 2023
• Group revenues were AED 39.5 billion, unchanged versus the prior-year period as higher pass-
through bulk supply tariffs and transmission use of system within the Transmission and
Distribution segment offset a decline in Oil & Gas revenue.
• Adjusted EBITDA was AED 15.3 billion, down 11%. This fall was led by a decline in contribution
from the Oil & Gas segment on the back of lower realized oil and gas prices and reduced
production.
• Net income (TAQA share) was AED 15.0 billion, an increase of AED 8.5 billion, mainly driven
by a one-off gain of AED 10.8 billion recognised on the acquisition of a 5% shareholding in
ADNOC Gas, in part offset by a one-off AED 1.2 billion deferred tax liability associated with the
introduction of UAE corporate income tax from 1 January 2024. Net income excluding these
one-off items was AED 5.4 billion, 17% lower than the prior period, mainly due to lower
contribution from the Oil & Gas segment.
• Capital expenditure was AED 3.3 billion, 34% higher than the prior year as project execution
picked up pace in the Transmission & Distribution segment.
• Free cash flow generation was AED 10.2 billion, 20% lower compared to the previous year.
The decline was mainly driven by lower contribution from the Oil & Gas segment.
• Gross debt was AED 61.7 billion, unchanged on the amount outstanding at the end of 2022.
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POWERING A THRIVING FUTURE3. Results of Operations by Business Line
Period ended 30 September
Group Consolidated
T&D Generation Oil & Gas 1 Corp. & Elimination Group Total 1
I ncome Statement
(AED millions) 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Total revenues 23,266 20,160 9,650 10,569 6,627 8,695 - - 39,543 39,424
Operating expenses (15,858) (13,460) (3,918) (4,779) (3,065) (3,046) 20 26 (22,821) (21,259)
G&A expenses (926) (811) (201) (182) (155) (142) (326) (291) (1,608) (1,426)
Share of results of
associates & joint
- - 149 397 - - 8 1 157 398
ventures
Adjusted EBITDA 6,482 5,889 5,680 6,005 3,407 5,507 (298) (264) 15,271 17,137
Depreciation, depletion,
and amortization (DD&A) (2,944) (3,090) (3,370) (3,468) (683) (720) 21 22 (6,976) (7,256)
Finance costs (2) (2) (1,219) (1,327) (321) (335) (629) (545) (2,171) (2,209)
Other gains / (losses) 232 149 331 (191) 277 40 10,599 83 11,439 81
Tax (expense) / credit (1,030) - (338) (268) (1,261) (953) 256 46 (2,373) (1,175)
Net profit (loss) 2,738 2,946 1,084 751 1,419 3,539 9,949 (658) 15,190 6,578
Non-controlling interest - - (135) (59) - - - (135) (59)
-
Net profit
2,738 2,946 949 692 1,419 3,539 9,949 (658) 15,055 6,519
(TAQA share)
As at
Group Consolidated
T&D Generation Oil & Gas Corp. & Elimination Group Total
Balance Sheet
30-Sep 31-Dec 30-Sep 31-Dec 30-Sep 31-Dec 30-Sep 31-Dec 30-Sep 31-Dec
(AED millions) 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Property, plant &
e quipment 82,330 82,147 28,246 30,508 5,033 4,811 (6) 4 115,604 117,470
Operating financial
assets - - 8,759 9,170 - - - - 8,758 9,170
Investment in and loans
to associates & joint
797 797 6,310 5,366 - - 301 352 7,408 6,515
ventures
Intangible assets 4,755 4,755 11,001 11,927 82 26 - - 15,838 16,708
Financial assets at fair
value through other
- - - - - - 13,355 - 13,355 -
comprehensive income
Deferred tax assets - 63 63 - 6,217 6,517 96 98 6,376 6,678
Other assets 5,780 4,851 9,124 9,959 2,269 2,350 10,500 7,573 27,634 24,733
Assets classified as held
for sale - - - - - 234 - - - 234
Total Assets 93,662 92,613 63,503 66,930 13,601 13,938 24,246 8,027 195,012 181,508
Liabilities directly
associated with assets
- - - - - 818 - - - 818
classified as held for
sale
Total Liabilities 19,651 17,114 36,383 42,647 16,600 16,723 32,159 27,283 104,793 103,767
Total Equity 74,011 75,499 27,120 24,283 (2,999) (2,785) (7,913) (19,256) 90,219 77,741
1) Presentation of comparative amounts in the Group Consolidated Income Statement were restated to reflect the classification
of Netherlands Upstream business as no longer held for sale as at 30 September 2023
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POWERING A THRIVING FUTURETransmission & Distribution (T&D)
T&D contributed a net profit of AED 2,738 million, a period-on-period decrease of AED 208 million. The
lower margin is primarily due to the recognition of deferred tax liabilities recognised on the enactment
of UAE corporation tax partly offset by improvements from RC2.
Revenue increased by AED 3,106 million to AED 23,266 million, primarily reflecting higher revenues of
AED 2,472 million in pass-through bulk supply tariffs (BST) and AED 453 million in TUOS. Higher pass-
through BST was also the main contributor of the AED 2,398 million increase in operating costs to AED
15,823 million for the period. In addition, G&A expenses of AED 926 million were AED 115 million higher
reflecting higher staff costs and professional services.
Other gains / (losses) improved by AED 83 million due to rising global interest rates driving higher
interest income on bank balances.
Tax expense increased by AED 1,030 million on the initial recognition of deferred tax liabilities, in
respect of Purchase Price Allocation (PPA) adjustments carried on the Group’s statement of financial
position, due to the enactment of corporation tax in the UAE.
Generation
Generation contributed a net income of AED 949 million, an increase of AED 257 million when
compared to the prior year. The bottom-line improvement is a combination of higher gross margins
generated by our domestic fleet and favorable foreign exchange movements offset by a lower share of
profits from our investment in Sohar Aluminium.
Third quarter year-to-date revenues were AED 919 million lower than the comparable period, totaling
AED 9,650 million. Lower revenues are principally attributable to the end of our Red Oak tolling
agreement in the USA in the third quarter of 2022, which contributed AED 829 million in the comparative
period.
Operating expenses reduced by AED 861 million to AED 3,918 million reflecting the ending of the Red
Oak tolling agreement (reducing operating expenses by AED 698 million) and generally lower operating
costs across our domestic and international fleet.
TAQA’s share of results of associates was AED 149 million which was AED 248 million lower than the
comparable period. Lower aluminium prices decreased the contribution from the Group’s investment in
Sohar Aluminium by AED 244 million.
The AED 522 million improvement in Other gains / (losses) is primarily attributable to favorable foreign
exchange movements recognized in Morocco and rising global interest rates driving higher interest
income on bank balances.
Overall tax expense increased by AED 70 million on the initial recognition of AED 168 million deferred
tax liabilities, in respect of Purchase Price Allocation (PPA) adjustments carried on the Group’s
statement of financial position, due to the enactment of corporation tax in the UAE, offset by a lower
current tax charge on lower profitability from our international fleet.
Oil & Gas (O&G)
O&G contributed net income of AED 1,419 million in the third quarter year-to-date, a decrease of AED
2,120 million. The decline is due to lower realized commodity prices and production, partially offset by
higher profits generated by our gas storage facilities.
Revenue for the period was AED 6,627 million, an AED 2,068 million reduction. The average realised
oil price declined to $77.78/bbl in 2023, compared to $89.47/bbl in 2022. Similarly, average realised
gas prices decreased to $5.28/mmbtu from $7.13/mmbtu.
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POWERING A THRIVING FUTUREAverage production decreased to 110.5 mboe/d from 123.1 mboe/d on account of the shutdown of our
operations in Iraq and the natural decline of production from our late-life UK assets. TAQA Atrush
ceased operations in Iraq towards the end of the first quarter of 2023 following the international
arbitration ruling on the Iraq-Turkey oil pipeline dispute which resulted in the closure of the export
pipeline.
Operating expenses of AED 3,065 million for the third quarter year-to-date were consistent with the
prior year's results.
Other gains increased by AED 237 million due to rising global interest rates driving higher interest
income on bank balances.
Tax expenses of AED 1,261 million for the third quarter year-to-date were AED 308 million higher than
the comparative period, despite lower profitability across our portfolio. The relative increase is a result
of deferred tax credits recognised in 2022, attributable to our UK and North American assets, and the
impact of the Energy Profit Levy in the UK, which came into effect in May 2022 at 25% and was further
increased to 35% from start of 2023.
Corporate
Other gains were higher in the first half of 2023 due to the recognition of an AED 10,784 million gain
resulting from the acquisition of a 5% holding of the total issued share capital of ADNOC Gas plc. The
shareholding was received from ADNOC for no consideration in recognition of the long-standing
strategic partnership between the two companies which are working closely to accelerate the energy
transition in the UAE, in areas such as renewable energy and enabling other low carbon solutions. The
AED 10,784 million gain reflects the market value of the stock at the closing price of the first day’s
trading.
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POWERING A THRIVING FUTUREA@A
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4. C a pital Str u ctu re and Liquidity
As at
Group Consolidated Position 30-Sep 31-Dec
(AED million) 2023 2022
Total assets 195,012 181,508
Total equ ity 90,219 77,741
Total debt 61,743 61,705
Net debt-to-capital ratio 1 35% 40%
Unused portion of credit facilities 13,604 13,545
Net cash and cash equivalents 12,385 10,123
Total Available Liquidity 25,989 23,668
1) ‘Net debt’ divided by ‘Total equity’ plus ‘Net debt’ where ‘Net debt’ is ‘Total debt’ less
‘Net cash and cash equivalents’
Capital Structure
TAQA’S capital structure is comprised of 35% debt (December 2022: 40%) based on the consolidated
statement of financial at 30 S 2023
The GrOUp S external sources of Corporate funding include corporate bonds and the GrOUp S reVOlviOQ
credit facility (RCF). These funds have historically been used to fund investment, acquisitions, and
growth within the group. The G subsidiaries are generally funded by project debt, either in the
form of limited or nonrecourse bank loans or project bonds.
The Group ntinues to monitor the total debt position and refinancing options available to ensure the
debt mix optimal level. Please refer to the Maturity Profile
updates on recent debt issuances.
Interest rates for the Group’s project debt, bonds and loans are largely fixed, either contractually or
through nterest rate hedging arrangements. The main exception is TAQA’s RCF , which attracts floating
market rates and therefore expose to Secured Rate (SOFR) borrowing rates.
As our medium and long-term bonds and loans mature, we may be required to refinance the debt at
market rates or utilise other available liquidity. Accordingly, TAQA is partially exposed to nterest rate
risk in both the medium and long term
Aft nsidering the effect of interest rate swaps and embedded derivatives approximately 98% of the
Group s borrowings are at a fixed rate of interest (December 2022: 98%) and the Group’s overall cost
of debt averaged at 4.7% (December 2022: 4.6%)
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POWERING A THRIVING FUTUREThe Group’S total available liquidity on 30 September 2023 was AED 26.0 billion (December 2022: 23.7
billion) m prised of AED 13.6 billion available credit facilities and AED 12.4 billion net cash and cash
equivalents.
A ailable credit facilities mainly comprise of the undrawn portion of the Group’s AED 12.9 billi (USD
3.5 billion) multicurrency revolving credit facility (RCF) with syndicate of 20 banks.
As of 30 September 2023, 10% (AED 6.0 billion) of the Group’s total debt is classified as current
(December 2022: 18%, AED 11.2 billion), based on the carrying value of borrowings. At 31 December
2022, Fujairah Asia Power C y PJSC (FAPCO)
in the restructuring of the international shareholder interests in FAPCO . As a result of the breach the
full amount of the debt was classified as current liabilities in December 2022. Thi matter has been
resolved in the second qua rter of 2023 and the balances re-classified based on the contractua terms
of the debt.
Maturity Profile
The Group’s financial liabilities repayment schedule as at 30 S 2023, based ntractual
undiscounted payments, is as follows:
At the end of September 2023, the Group’S total debt was AED 61.7 billion (December 2022: AED 61.7
billion), unchanged from the prior year end.
In the first quarter of 2023, the Gr ade AED 1.1 billion of scheduled project debt repaym
our domestic and international ass The Group’s AED 3.6 billion Corporate bond also ma
March 2023 and was repaid in full, rt through utilizing AED 2.8 billion of the Group’s RCF.
In the second quarter of 2023, the G essfully issued AED 5.5 billion (USD 1.5
billion) in 5 year and 10 year dual notes id the RCF. The AED 3.7
billion10 year notes (USD 1.0 billion ith a coupon rate of 4.7%
per annum. The AED 1.8 billion 5 y notes (USD 0.5 billi in the form of
bonds with a coupon rate of 4.4% p can subsidiary, Jorf Lasfar Energy
C 5&6 S.A, own a bridge loan of AED 1.2 billi (MAD 3.3 billion), to facilitate the
facility. Overall, the G de AED 2.0 billion of scheduled project debt
repayments in our domestic international assets in the second quarter.
n the third quarter of 2023, the Group made AED 0.8 billion of scheduled project debt repayments in
our domestic and internationa assets. The Moroccan bridge oan was repaid and long-term debt of
AED 2.4 billion (MAD 6.6 billion) was issued with a maturity of 19 . Th debt carries a floating
interest rate and incorporates a cap and collar arrangement designed to mitigate exposure to interest
rate risk. The initial interest rate which is fixed annually within defined nterest rate boundaries, is set
at 4.8% for the period up to Q3 2024.
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POWERING A THRIVING FUTURE5. Capital Expenditure
Period ended 30 September
(AED million) T&D Generation O&G Corporate Group Total
2023 2,354 110 878 - 3,342
2022 1,655 149 686 8 2,498
Capital Expenditure refers to additions to Property, Plant and Equipment, excluding right of use assets.
The Group’s total capital expenditure for the third quarter year-to-date 2023 was AED 3,342 million, a
34% increase to the comparative period last year.
T&D capital expenditure was AED 699 million higher mainly driven by increase in the number of
development projects and projects in execution.
Generation capital expenditure was AED 39 million lower due to lower major plant maintenance in line
with established maintenance programs.
O&G capital expenditure was AED 192 million higher driven by increased drilling, completion, and tie-
in costs in our North American assets.
Jasim Husain Thabet Stephen Ridlington
Group Chief Executive Officer & Managing Director Chief Financial Officer
10 November 2023
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POWERING A THRIVING FUTURE

Sentiment: neutral