Taqa’s Q1 net falls 47% on forex losses and higher taxes

Abu Dhabi National Energy Company (Taqa) has announced an almost halving of its Q1 net profits as foreign exchange losses and higher taxes for its operations in the UK North Sea bit into the listed company’s bottom line.

In a statement posted on the Abu Dhabi Exchange, Taqa said its Q1 net profits stood at Dh152m compared with Dh287m in the same quarter of last year. “TAQA’s profit before tax was 11 per cent higher year-on-year, dampened by the effect of foreign exchange losses along with lower derivative gains. Net profit after minority interests was Dh152m, versus Dh287m in Q1 2010, due to an increase in taxes for operations in the UK North Sea,” the oil and gas firm which is majority-owned by Abu Dhabi government, said.

“In mid-March, the UK government announced changes to the tax regime for the UK North Sea which were backdated to January 1, 2011. This contributed to a 53 per cent year-on-year increase in tax, negatively impacting net profit after minority interests,” the firm said in the statement.

The decline in profits came despite a 15 per cent increase in Taqa’s revenues, from Dh4.8b in Q1 2010 to Dh5.5b in the most recent quarter. “Taqa has made a solid operational start to 2011, with strong performance from our power and water business and a higher contribution from our oil and gas assets due to a combination of improved commodity pricing and increased production,” said Abdulla Saif Al-Nuaimi, chief executive and managing director of TAQA.

“These positive results also reflect our increased footprint, where new assets – such as Fujairah 2 – are beginning to contribute additional revenues. We continue to be focused on operational excellence and efficiency right across our business to ensure we deliver the maximum value possible,” he added.

The firm’s total revenues from its oil & gas business line, including gas storage and other income, increased from Dh2.6b to Dh3b for Q1 2011. “This 14 per cent increase was primarily driven by the increase in crude oil prices, partially offset by lower North American natural gas prices,” the company said.

Revenues from power and water, another major business line for the company, excluding supplemental fuel income, increased from Dh1.5b in Q1 2010 to Dh1.7b in Q1 2011. “This 13 per cent increase was primarily driven by the contribution from Fujairah 2, which was transferred to Taqa in the third quarter of 2010 and fully commissioned in January 2011,” the firm said. Supplemental fuel income increased 23 per cent year-on-year due to higher use of additional fuel supplies at Taqa’s domestic power plants.

“We remain fully committed to our focused strategy that will enable us to continue building Taqa into a global energy company. As evidence of this, our major organic growth projects in the Netherlands and Morocco have reached significant milestones, while those in Ghana and India have made good progress. In particular, the expected receipt of permits in the Netherlands for operating and constructing Bergermeer in May has enabled us to this week launch the open season for longer-term capacity and start planning the next stage in this flagship project’s development,” said Carl Sheldon, general manager of Taqa.

Taqa’s cost of sales for the period increased 8 per cent from Dh3.2b to Dh3.5b. Within this, operational expenses, excluding fuel and gas storage expenses, reduced 3 per cent.

“Depreciation, depletion and amortization increased 16 per cent, reflecting Taqa’s increased asset base,” the firm said.

The company was hit by a lawsuit in September, after its former chief executive sued IT in a US court, alleging he was forced out for trying to stop "kickbacks, bribery, accounting fraud and corruption" at the energy firm.

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