The Abu Dhabi National Energy Company, also known as Taqa, posted a net profit increase of about fivefold for the second quarter as it continued to benefit from higher, stable energy prices.
Net profit attributable to equity holders for the three months ending June 30 surged to Dh168 million, the company said on Thursday in a regulatory filing to the Abu Dhabi Securities Exchange, where its shares are traded.
Taqa's improvement in performance is due to "higher operational efficiencies" across the oil and gas as well as the power and water business, said Taqa chairman Saeed Al Hajeri. The company was “well positioned for growth" and Taqa is set to deploy its international expertise on new initiatives "with a focus on power", where it anticipates strong demand in the coming years, especially in the Middle East and North Africa region, he said.
Taqa, which has utilities regulator Abu Dhabi Water and Electricity Authority as a majority stakeholder, swung back to profit last year after posting a record Dh22 billion loss in 2016 on the back of deterioration in the value of assets in North America, Europe and Iraq. Adwea helped steady the firm back into profitability last year by transferring land valued at Dh18.7bn from its own power and water sites, thus swallowing the entire loss of equity value itself.
In its latest quarterly results, Taqa cited the recent handover of management control of its Indian entity Himachal Sorang Power Limited to Greenko East Coast Power Projects for a Dh86m gain as having contributed to its higher profits. The company also reported gains on the sale of land relating to oil and gas assets.
Around 50 per cent of Taqa’s five-fold increase in profit for the second quarter was largely due to the “one-time gain” from the India deal, which “will not continue in the upcoming quarters,” said Vijay Valecha, chief financial analyst at Century Financial Brokers.
“The robust operational and financial performance of the utility sector coupled with sustained cost efficiencies contributed to 50 per cent of the profits,” he added.
He expected the Abu Dhabi firm to sustain its performance on the back of steadier oil prices, but anticipated a slight dip in profit numbers over the coming quarters.
Net profit for the first six months of the year, meanwhile, saw a 148 per cent increase to Dh278m for the same period last year.
Taqa, which has operations in Iraq, Canada and Europe, said revenues remained almost flat year-on-year, with Dh4.26bn registered for the three-month period ending June 30, compared with a year earlier.
Stagnant revenues were mainly due to flat performance from its oil and gas assets. This performance was offset by higher revenue from its utilities sector, which rose to Dh2.43bn for the second quarter, compared with Dh2.38bn a year earlier. Higher fuel and gas storage as well as other operating revenues also contributed to its total revenue for the period.
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Taqa’s big earner remains its power and water business, which includes assets in the UAE, India, Morocco, Ghana as well as the US, which delivered steady income.
A higher oil price environment has helped buoy the operator’s profitability across assets in Europe, according to Saeed Al Dhaheri, the company’s acting chief operating officer.
Taqa, which earlier this year transformed its Eider platform in the North Sea to a utility in a bid to extend the life of its fields in the northern hydrocarbons basin, said it would work to continue to revive productioni in the area.
“That means deploying our expertise to extend the life of our oil and gas assets in Europe, and harnessing unconventional technologies and allocating greater capital to the production of liquids in North America,” said Mr Al Dhaheri.
Long-term financing costs for the firm were lowered following the completion of a $1.75bn dual-tranche bond issue in April, which was 4.7 times subscribed.
The company’s cash flow for the first half stood at Dh3.4bn, with liquidity remaining strong at Dh14.6bn, including Dh4bn in cash and cash equivalents, with Dh10.6bn in undrawn credit facilities.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Dirham Stretcher tips for having a baby in the UAE
Selma Abdelhamid, the group's moderator, offers her guide to guide the cost of having a young family:
• Buy second hand stuff
They grow so fast. Don't get a second hand car seat though, unless you 100 per cent know it's not expired and hasn't been in an accident.
• Get a health card and vaccinate your child for free at government health centres
Ms Ma says she discovered this after spending thousands on vaccinations at private clinics.
• Join mum and baby coffee mornings provided by clinics, babysitting companies or nurseries.
Before joining baby classes ask for a free trial session. This way you will know if it's for you or not. You'll be surprised how great some classes are and how bad others are.
• Once baby is ready for solids, cook at home
Take the food with you in reusable pouches or jars. You'll save a fortune and you'll know exactly what you're feeding your child.
The White Lotus: Season three
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Points to remember
- Debate the issue, don't attack the person
- Build the relationship and dialogue by seeking to find common ground
- Express passion for the issue but be aware of when you're losing control or when there's anger. If there is, pause and take some time out.
- Listen actively without interrupting
- Avoid assumptions, seek understanding, ask questions
Dr Afridi's warning signs of digital addiction
Spending an excessive amount of time on the phone.
Neglecting personal, social, or academic responsibilities.
Losing interest in other activities or hobbies that were once enjoyed.
Having withdrawal symptoms like feeling anxious, restless, or upset when the technology is not available.
Experiencing sleep disturbances or changes in sleep patterns.
What are the guidelines?
Under 18 months: Avoid screen time altogether, except for video chatting with family.
Aged 18-24 months: If screens are introduced, it should be high-quality content watched with a caregiver to help the child understand what they are seeing.
Aged 2-5 years: Limit to one-hour per day of high-quality programming, with co-viewing whenever possible.
Aged 6-12 years: Set consistent limits on screen time to ensure it does not interfere with sleep, physical activity, or social interactions.
Teenagers: Encourage a balanced approach – screens should not replace sleep, exercise, or face-to-face socialisation.
Source: American Paediatric Association
F1 2020 calendar
March 15 - Australia, Melbourne; March 22 - Bahrain, Sakhir; April 5 - Vietnam, Hanoi; April 19 - China, Shanghai; May 3 - Netherlands, Zandvoort; May 20 - Spain, Barcelona; May 24 - Monaco, Monaco; June 7 - Azerbaijan, Baku; June 14 - Canada, Montreal; June 28 - France, Le Castellet; July 5 - Austria, Spielberg; July 19 - Great Britain, Silverstone; August 2 - Hungary, Budapest; August 30 - Belgium, Spa; September 6 - Italy, Monza; September 20 - Singapore, Singapore; September 27 - Russia, Sochi; October 11 - Japan, Suzuka; October 25 - United States, Austin; November 1 - Mexico City, Mexico City; November 15 - Brazil, Sao Paulo; November 29 - Abu Dhabi, Abu Dhabi.
