Q2 2023
MANAGEMENT’S
DISCUSSION &
ANALYSIS
For the period ended
30 June 2023ABU 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 June 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 June
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 0.27 0.17 0.41 - 1.83 1.69 0.63 0.51
Lost time injury (LTI) Number 5 - - - 3 4 8 4
Reportable spills Number - - 1 1 11 11 12 12
Reportable spills Volume (litres) - - 100 800 11,734 8,429 11,834 9,229
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) TAQA Group and O&G Q2-2022 RIR was updated based on a revised manhour calculation providing a more accurate representation
of contractor hours worked
“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 0.63 for Q2 2023 is higher than the Group RIR of 0.51 for the same period in 2022. The
number of Recordable Injuries increased from 13 to 17, which includes an increase in Lost Time Injuries
(LTIs) from 4 to 8 in 2022 and 2023 respectively.
Of 17 recordable injuries reported to date, 11 occurred in Oil & Gas, 5 occurred in T&D and 1 occurred
in Generation. 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 programme.
All operations continue to deliver on annual HSE improvement plans, with demonstrable increased
reporting of leading and lagging indicators using HSE reporting tools, and review of preventions based
on trends. Specific improvement focus remains in areas including 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.
12 uncontained spills have been reported in 1H 2023, which is similar to 1H 2022. Total volume released
has increased to 11,834 litres (1H 2023) versus 9,229 litres (1H 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 Six months ended
30-Jun 30-Jun 30-Jun 30-Jun
(AED million, except where indicated) 2023 2022 2023 2022
Transmission network availability % 98.3 98.9 98.2 98.4
T&D Regulated Asset Value (RAV) - - 77,530 76,813
Commercial Availability – Generation 1 % 98.8 97.6 98.7 97.5
Oil & Gas Production 2 mboe/d 114.0 121.4 117.0 124.1
Gross Revenues 13,665 13,013 26,804 25,426
Adjusted EBITDA 3 5,207 5,713 10,517 11,326
Net Income 4 1,923 2,312 13,495 4,283
1) Represents weighted average for all power producing assets based on plant capacity.
2) Includes working interest production from North America and Europe, 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 – 1H 2023
• Generation global commercial availability was 98.7%, compared to 97.5% in the prior year, with
the UAE plant performance in particular contributing to the increase.
• Transmission network availability for power and water was 98.2%, compared to 98.4%,
marginally lower versus the prior-year period.
• Oil & Gas average production volumes decreased to 117.0 thousand barrels of oil equivalent
per day (boepd), a decrease of 6% 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.
Financial highlights – 1H 2023
• Group revenues were AED 26.8 billion, 5% higher than the prior-year period, primarily due to
higher pass-through bulk supply tariffs and transmission use of system within the Transmission
and Distribution segment.
• Adjusted EBITDA was AED 10.5 billion, down 7%. 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 13.5 billion, an increase of AED 9.2 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 3.9 billion, 9% lower than the prior period, mainly due to lower
contribution from the Oil & Gas segment.
• Capital expenditure was AED 2.1 billion, 17% higher than the prior year as project execution
picked up pace in the Transmission & Distribution segment.
• Free cash flow generation was AED 6.4 billion, 23% 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 FUTUREStrategic highlights
One of the most significant highlights for TAQA’s growth story is that it has announced entering into
definitive agreements to acquire Sustainable Water Solutions Holding Company (SWS Holding). SWS
Holding will add approximately AED 16 billion to TAQA’s existing asset value and is highly
complementary to TAQA’s existing portfolio, creating a vertically integrated player adding strong
capabilities in high-quality water treatment solutions to the Company’s expertise. It also operates under
the same regulatory controls set by the Abu Dhabi Department of Energy (DoE), which governs TAQA’s
transmission and distribution assets in the UAE.
The Generation business line had a productive first half of 2023, underscored by its steady growth and
expansion in the UAE and abroad. In the second quarter, the Company announced the financial closing
for the Mirfa 2 Reverse Osmosis Desalination Plant (M2 RO). TAQA is taking a leading stake in the
project company holding a 60% share, and, delivering on its ambitions to expand its operations and
maintenance (O&M) capabilities, TAQA will also take a 40% stake in the O&M company for the project.
The plant will have a capacity of 120 million imperial gallons per day (MIGD) of potable water and will
use highly efficient RO technology, a critical part of TAQA’s ESG strategy to reduce its emissions by
2030 and its growth strategy to significantly increase the share of RO in its portfolio.
Delivering on its promises to add up to 15 GW of power capacity internationally, TAQA announced a
strategic partnership with the Government of Uzbekistan to explore opportunities for investment in the
country’s power sector. These opportunities will include new and existing plants as well as associated
infrastructure. As part of the implementation agreement, TAQA is looking to develop a greenfield 1.5
GW gas-fired power plant, an additional 3 GW of capacity in other gas-fired power plants and
transmission and distribution infrastructure. The 1.5 GW greenfield project would be located close to
the Talimarjan power complex where TAQA has already announced an investment into privatising two
gas-fired power plants.
In the Transmission and Distribution (T&D) business line, TAQA and ADNOC announced a AED 8.8
billion strategic project which will provide sustainable water for ADNOC’s onshore operations. TAQA
and ADNOC will each hold a 25.5% stake in the project, which will be a centralised seawater treatment
facility and transportation network for ADNOC’s onshore operations and will deliver 110 MIGD of nano-
filtered seawater.
Earlier in July, the DOE issued its final decision on the new regulatory control mechanisms following a
review of the regulatory controls applicable to the sector. The announcement on the second period
regulatory control (RC2) set the revenues of approximately AED 50 billion for Transmission &
Distribution’s UAE operating businesses: Abu Dhabi Transmission and Despatch Company
(TRANSCO), Abu Dhabi Distribution Company (ADDC), and Al Ain Distribution Company (AADC), for
the period from 2023 to 2026, excluding pass-through costs.
Internationally, TAQA made its first Transmission & Distribution investment outside of the UAE with an
investment of AED 113 million into Xlinks First Limited. Xlinks will use the funding for the development
of plans to lay the world’s longest high-voltage direct current (HVDC) subsea cables between the UK
and Morocco to transport renewable power to the UK. This investment builds on TAQA’s HVDC
experience with one project already under construction with ADNOC in Abu Dhabi, whereby ADNOC’s
offshore platforms will be connected to Abu Dhabi’s onshore grid. TAQA is committed to supporting the
energy transition with investments in transmission infrastructure critical to accelerating the transition.
In April, TAQA completed a dual tranche USD 0.5 billion 5-year and USD 1.0 billion 10-year bond
offering which included its first ever company-issued green bond. The unsecured notes were
oversubscribed by more than 10 times with demand coming from international investors.
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POWERING A THRIVING FUTURE3. Results of Operations by Business Line
Period ended 30 June
Group Consolidated
T&D Generation Oil & Gas1 Corp. & Elimination Group Total
I ncome Statement
(AED millions) 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Total revenues 15,569 13,236 6,450 6,502 4,785 5,688 - - 26,804 25,426
Operating expenses (10,614) (8,779) (2,704) (2,884) (2,150) (1,844) 14 14 (15,454) (13,493)
G&A expenses (616) (503) (123) (123) (103) (101) (191) (173) (1,033) (900)
Share of results of - - 192 292 - - 7 1 199 293
associates & joint
ventures
Adjusted EBITDA 4,339 3,954 3,815 3,787 2,532 3,743 (170) (158) 10,516 11,326
Depreciation, (1,952) (2,024) (2,244) (2,319) (470) (479) 15 15 (4,651) (4,807)
depletion, and
amortization (DD&A)
Finance costs (2) (2) (816) (898) (218) (223) (401) (364) (1,437) (1,487)
Other gains / (losses) 145 106 210 (114) 166 30 10,605 83 11,125 105
Tax (expense) / credit (1,030) - (266) (181) (930) (748) 211 36 (2,015) (893)
Net profit (loss) 1,500 2,034 699 275 1,080 2,323 10,259 (388) 13,538 4,244
Non-controlling - - (43) 39 - - - - (43) 39
interest
Net profit 1,500 2,034 656 314 1,080 2,323 10,259 (388) 13,495 4,283
(TAQA share)
As at
Group Consolidated
T&D Generation Oil & Gas 1 Corp. & Elimination Group Total
Balance Sheet
30-Jun 31-Dec 30-Jun 31-Dec 30-Jun 31-Dec 30-Jun 31-Dec 30-Jun 31-Dec
(AED millions) 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Property, plant & 82,333 82,147 28,999 30,508 5,088 4,811 (1) 4 116,419 117,539
equipment
Operating financial - - 9,054 9,170 - - - - 9,054 9,170
assets
Investment in and 797 797 6,204 5,366 - - 359 352 7,360 6,515
loans to associates &
joint ventures
Intangible assets 4,755 4,755 11,309 11,927 38 26 - - 16,102 16,708
Deferred tax assets - 63 63 - 6,295 6,517 100 98 6,458 6,678
Financial assets at fair - - - - - - 11,820 - 11,820 -
value through other
comprehensive
income
Other assets 5,914 4,851 9,925 9,959 2,381 2,584 7,251 7,573 25,471 24,733
Total Assets 93,799 92,613 65,554 66,930 13,802 13,938 19,529 8,027 192,684 181,508
Total Liabilities 18,928 17,114 40,992 42,647 16,538 16,723 28,635 27,283 105,093 103,767
Total Equity 74,871 75,499 24,562 24,283 (2,736) (2,785) (9,106) (19,256) 87,591 77,741
1) Pesentation of comparative balances were restated due to classification of Netherlands Upstream business as no longer held
for sale as at 30 June 2023
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POWERING A THRIVING FUTURETransmission & Distribution (T&D)
T&D contributed a net profit of AED 1,500 million, a period-on-period decrease of AED 534 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 higher transmission use of system (TUOS) charges.
Revenue experienced an increase of AED 2,333 million to AED 15,569 million, primarily reflecting
higher revenues of AED 1,884 million in pass-through bulk supply tariffs (BST) and AED 340 million in
TUOS. Higher pass-through BST was also the main contributor of the AED 1,835 million increase in
operating costs to AED 10,614 million for the period. In addition, G&A expenses of AED 616 million
were AED 113 million higher reflecting higher corporate recharges.
Other gains / (losses) improved by AED 39 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 656 million, an increase of AED 342 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.
Half year revenues were AED 52 million lower than the comparable period, totaling AED 6,450 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 321 million in the comparative period. This loss was
substantially offset by higher revenues generated across our domestic and international fleet, with a
1.2% improvement in commercial availability fueling the strong results.
Operating expenses reduced by AED 180 million to AED 2,704 million reflecting the ending of the Red
Oak tolling agreement (reducing operating expenses by AED 286 million) and generally lower operating
costs across our domestic and international fleet (AED 87 million). These cost savings were offset by
higher fuel prices impacting our Morocco assets by AED 193m.
TAQA’s share of results of associates was AED 192 million which was AED 100 million lower than the
comparable period. Lower aluminium prices decreased the contribution from the Group’s investment in
Sohar Aluminium by AED 190 million, which was partly compensated for by AED 80 million profit from
our investment in Masdar.
The AED 324 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 85 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.
The AED 836 million increase in ‘Investments in and loans to associates & joint ventures’ reflects loans
advanced to Masdar in the first half of 2023.
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POWERING A THRIVING FUTUREOil & Gas (O&G)
O&G contributed net income of AED 1,080 million in the half-year of 2023, a decrease of AED 1,243
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 4,785 million, an AED 903 million reduction. The average realised oil
price declined to $74.61/bbl in the first half of 2023 compared to $90.83/bbl in the first half of 2022.
Similarly, average realised gas prices decreased to $5.47/mmbtu from $8.26/mmbtu.
Average production decreased to 117.0 mboe/d from 124.1 mboe/d on account of the shut down of our
operations in Iraq and the natural decline of production from our late-life UK assets, which was
compensated for by higher output from our North American operations. 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.
Operating expenses of AED 2,150 million were AED 306 million higher primarily due to year on year
movement of provisioning across the O&G business and higher gas storage activity.
Other gains increased by AED 136 million due to rising global interest rates driving higher interest
income on bank balances.
Tax expenses were AED 211 million higher due to 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, and higher
profits generated during the period from our gas storage facilities in Europe.
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 whichare 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 FUTURE4. Capital Structure and Liquidity
As at
Group Consolidated Position 30-Jun 31-Dec
(AED million) 2023 2022
Total assets 192,852 181,508
Total equity 87,899 77,741
Total debt 61,660 61,705
Net debt-to-capital ratio 1 37% 40%
Unused portion of credit facilities 13,584 13,545
Net cash and cash equivalents 10,090 10,123
Total Available Liquidity 23,674 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 37% debt (December 2022: 40%) based on the consolidated
statement of financial position values as at 30 June 2023 and includes fair value adjustments.
The Group’s external sources of Corporate funding include corporate bonds and the Group’s revolving
credit facility (RCF). These funds have historically been used to fund investment, acquisition and growth
within the group. The Generation subsidiaries are generally funded by project debt, either in the form
of limited or non-recourse bank loans or project bonds.
The Group continues to monitor the total debt position and refinancing options available to ensure the
debt mix and cost of debt is at an optimal level. Please refer to the ‘Maturity Profile’ section below for
updates on recent debt issuances.
Interest rates for the Group’s project debt, bonds and loans are largely fixed, either contractually or
through interest rate hedging arrangements. The main exception is TAQA’s RCF, which attracts floating
market rates and therefore is exposed to Secured Overnight Financing 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 interest rate
risk in both the medium and long term.
After taking into account the effect of interest rate swaps, 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 FUTURELiquidity
The Group’s total available liquidity on 30 June 2023 was AED 23.7 billion (December 2022: 23.7 billion)
comprised of AED 13.6 billion available credit facilities and AED 10.1 billion net cash and cash
equivalents.
Available credit facilities mainly comprise of the undrawn portion of the Group’s AED 12.9 billion (USD
3.5 billion) multicurrency revolving credit facility (RCF) with a syndicate of 20 banks.
As of 30 June 2023, 12% (AED 7.3 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 Company PJSC (FAPCO) was in breach of a loan covenant due to a delay 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. This matter has been resolved
in the second quarter of 2023 and the balances re-classified based on the contractual terms of the debt.
Maturity Profile
The Group’s financial liabilities repayment schedule as at 30 June 2023, based on contractual
undiscounted payments, is as follows:
At the end of June 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 Group made AED 1.1 billion of scheduled project debt repayments in
our domestic and international assets. The Group’s AED 3.6 billion Corporate bond also matured in
March 2023 and was repaid in full, in part through utilizing AED 2.8 billion of the Group’s RCF.
In the second quarter of 2023, the Group successfully issued an aggregate AED 5.5 billion in 5 year
and 10 year dual tranche senior unsecured notes and repaid the RCF. The 10 year notes (AED 3.7
billion) were issued in the form of green bonds with a coupon rate of 4.7% per annum. The 5 year notes
(AED 1.8 billion) were issued in the form of conventional bonds with a coupon rate of 4.4% per annum.
In addition, our Moroccan subsidiary, Jorf Lasfar Energy Company 5&6 S.A, drew down a bridge loan
of AED 1.2 billion, to facilitate the refinancing of its senior loan facility. The bridge loan is expected to
be repaid in the third quarter and replaced with long term debt, once the refinancing is complete. Overall,
the Group made AED 2.0 billion of scheduled project debt repayments in our domestic and international
assets in the second quarter.
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POWERING A THRIVING FUTURE5. Capital Expenditure
Period ended 30 June
(AED million) T&D Generation O&G Corporate Group Total
2023 1,373 66 639 - 2,078
2022 1,187 123 465 8 1,783
Capital Expenditure refers to additions to Property, Plant and Equipment, excluding right of use assets.
The Group’s total capital expenditure for the first half of 2023 was AED 2,078 million, a 17% increase
versus the comparative period last year.
T&D capital expenditure was AED 186 million higher mainly driven by an increase in the number of
development projects and projects in execution.
Generation capital expenditure was AED 57 million lower due to lower major plant maintenance in line
with established maintenance programs.
O&G capital expenditure was AED 174 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
11 August 2023
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POWERING A THRIVING FUTURE

Sentiment: positive