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ANNUAL REPORTANNUAL REPORT2 0 1 2

Table Of

Contents

04 Our Highlights

06 Chairman’s Message

08 Managing Director’s Message

09 Our Vision, Mission and Values

11 Board of Directors

13 Organisational Structure

14 Executive Leadership

16 Our History

17 Our Strategy

20 HSE&Q

21 Our Key Stakeholders

24 Our Major Achievements

31 Our Activities

36 Financial Review

TRANSCO Annual Report 2012 04

OurHighlights

Number of Substations

128

Length of Overhead Transmission Lines (km)

5,831.14

Length of Water Transmission Pipelines

2,831.14

Number of Pumping Stations

56

Annual Quantity, Power Transmitted (GWH)

51,983.44 Annual Quantity, Water Transmitted (MIG)

242,079.08 Maximum Demand/Peak of Power (GW)

9.03 Maximum Demand/Peak of Water (MIGD)

726.26 Annual Revenue, Power (Mn AED)

2,546.27

Total Number of UAE Nationals

257 Total Number of Employees

857

Annual Revenue, Water (Mn AED)

1,804.57

Other Nationalities

36

Capital Expenditure, Power (Mn AED)

3,298.11 Capital Expenditure, Water (Mn AED)

1,029.54 Length of Underground Transmission Lines (km)

731

Our BeliefsOur Beliefs


Chairman’sMessage

TRANSCO’s achievement not only exemplifies good practices but also reminds us that we are well on our way to Operational Excellence.

Greetings,

I am proud to have been part of the 2012 TRANSCO journey where many successes can be highlighted showing our use of tools, preparedness, foresight and strategy; all have led to the growth and high quality operations that we see today. TRANSCO has continued over the past year to provide a level of service to our customers that ranks among the top performing transmission companies in the world. We have achieved this through investing in our network and understanding our stakeholder requirements.

In our commitment to helping ensure translation of the 2030 vision of the Emirate, as developed by the Abu Dhabi Executive Council, we endorse the ideologies for 2030 by bringing significant increases to our Emiratisation programme to attract, develop and retain qualified UAE nationals.

In addition to this drive, our most important goal is the safety of our employees and I am pleased to say that TRANSCO was awarded a RoSPA Gold Award for TRANSCO operations

HSEQ performance; successfully and safely expanded the scope of services provided in the planning, development and operation of water and development and operation of water and electricity transmission assets.

We have also expanded our services to customers in the Northern Emirates so they too now enjoy a level of service that is consistent with that already experienced by those in the Emirate of Abu Dhabi. TRANSCO provides the Emirate with financial and technical benefits, which will continue for many years.

We will be up for the challenges in the future as it is part of our working culture to keep in mind our vision to be one of the leading companies our vision to be one of the leading companies worldwide. I look forward to another year such as the last where we will continue investing in the top talents, latest technology and best practices.

Thank you all for your contributions.

Abdulla Saif Al Nuaimi


Managing Director’sMessage

Recollections of 2012

You will often hear people say that time tends to pass by rather quickly and I have come to realise how true their statements can be.

The significant growth in both electricity and water demand experienced by our customers within the Emirate of Abu Dhabi and those connected to our growing external network is the result of our annual performance improvements. That makes me pleased to say that our staff and external workforce continue to achieve the targets set before them.

The regulated environment of TRANSCO ensures our customers are provided with their requirements. Our continuous reviewing of business procedures is the cornerstone of future key business initiatives. By following through and carrying out our plans, we transitioned into 2012; TRANSCO expansion plans had continued, the network was upgraded and reinforced in the Northern Emirates and Western region.

The practice of long term planning and development paved a way to a 5% increase from last year’s power and water transmission levels. It was our practice with performance standards and provisions, which were designed to safeguard our customers’ interests. That allowed us to remain at the top of our game.

TRANSCO was certified against PAS55 in 2011 and continues to be certified in 2012, to be operating good practice asset management.

We are proud to announce that we are the first utility company in the Middle East to have been recognised by the Institute of Asset Management (IAM) of achieving this award.

We also took the initiative to make all our TRANSCO employees, consultants and contractors’ safety our main concern when we injected the strict compliance to the TRANSCO health and safety regulations in seminars and campaigns. I am also pleased to say through this strenuous campaigning there are almost no incident reports. We shall continue to raise awareness, create and implement updated modules to educate our staff and to prevent hazards.

The management team and I are very keen on being hands-on in promoting teamwork and encouraging innovation as this will greatly contribute to the development of strong ties internally and produce positive output. Strengthening professional relationships and the positive atmosphere has attracted more Emiratis to join our workforce.

As we continue to support and aide ADWEA in achieving their objectives I can’t help but be grateful for a successful and remarkable 2 years.All thanks to each and everyone’s contribution and efforts, it all goes to say that through unified efforts and one common vision great things can be achieved. We look forward to 2013, as it brings higher expectations and more challenges to conquer.

David Copestake


Our Mission,Vision & Values

TRANSCO is a subsidiary of ADWEA & is responsible for developing, operating & maintaining the high voltage power transmission & bulk water transmission networks within the Emirate of Abu Dhabi.

Mission TRANSCO will ensure the availability of an essential public service by transmitting potable water and electricity reliably, securely and safely whilst achieving the optimum balance of performance, risk, cost and sustainable development.

VisionTRANSCO will be Internationally acknowledged as a excellent performing transmission service provider of potable water and electricity and the provision of related services.

Values• Stakeholders Focus

• Teamwork

• Continuous Improvement

• Socially Responsible

Our TeamOur Team


Board Of

Directors

H.E. Eng.Mohammed Bin

Jarsh

Member

ADDC ManagingDirector

H.E. Abdulla SaifAl Nuaimi

Chairman

TRANSCO Chairman

Mr. DavidCopestake

Member

TRANSCO ManagingDirector

H.E. Eng. AbdulazizAbdulrahman

Al Hemaidi

Member

ADWEC ManagingDirector

H.E. MohamedSalem Bin Omair

Al Shamsi

Member

AADC ManagingDirector

TRANSCO Annual Report 2012 14TRANSCO Annual Report 2012 13

ExecutiveLeadership

OrganisationalStructure

Managing Director

NetworkServices

Directorate

ProjectDivision

SupplyDepartment

HR & ADepartment

FinanceDepartment

Business Planning& Performance

Department

HSE & QDepartment

AssetManagementDirectorate

Ahmad Al Mazrouei

FinanceDepartment Manager

Fatema Al Hammadi

Human Resources & Administration

Department Manager

Maha Al NeaimiSupply

Department Manager

Paul RobertsHealth, Safety,

Environment & Quality Department Manager

David CopestakeManaging Director

Saif Al QubaisiProjects Division

Manager

Salem Al HarthiNetwork Services

Director

Asma AlfalasiBusiness Planning

& Performance Department Manager

Dr. Najib Dandachi

Asset Management Director

Our CompanyOur Company


OurHistory

Creation of a New Sector

In 1998 Law (2) was passed by the Government of Abu-Dhabi concerning the regulation of the water and electricity sector. On January 1st 1999, Abu-Dhabi Water and Electricity Authority (ADWEA) was set up as an entity wholly owned by the Government and responsible for making sure that its group of companies were set up and running; prior to that the Water and Electricity Department (WED) was the responsible body. ADWEA are responsible for being the focal point between the Government and the group companies, with TRANSCO being the transmission & despatch arm of the sector and the distribution elements then being controlled by Abu Dhabi Distribution Company (ADDC) and Al Ain Distribution Company (AADC).

Before TRANSCO was established, transmission was managed by the Abu Dhabi Water & Electricity Department (WED). During this time market demand for water and electricity transmission grew rapidly, placing enormous pressures on the network to deliver faster and more advanced services.

In response to this need, Abu Dhabi Transmission & Despatch Company (TRANSCO) was established as a legal entity on January 1st, 1999.

Abu Dhabi Transmission & Despatch Company (TRANSCO) was established as a legal entity on January 1st, 1999.


OurStrategyThe strategy map helps to address key challenges, by articulating the strategy through a series of cause and effect relationships across different perspectives.

• Enablers; What intangibles do we need?

• Internal Processes; What internal processes must we excel in?

• Customer; What are the expectations of our customers?

• Value; What is our ultimate purpose and goal?

The priorities on the strategy map represent the answers to these questions. In addition, strategic themes are introduced to highlight a high level strategic objective to tie the map together and focus the organisation on

arriving at the strategic destination.

• Growth and Sustainability; maintaining and continuously enhancing the long-term viability of the businesses and ensuring sustainability

• Customer Focus; building on the services currently provided to customers by focusing on value-added services

• Operational Excellence; streamlining the end-to-end processes from generation to distribution and standardising these processes across all the operating companies

• Performance Driven Organisation; supporting all the other themes with respect to organisational development, communication, human capital, Emiratisation, culture and strategy execution.

Contribute to ensure sustainable service delivery ofwater & electricity to support the vision of Abu Dhabi

Optimising despatch and operational costsContribute to ensure sustainable service delivery of water & electricity to support the vision of Abu Dhabi

Effect seamless timely delivery of quality water& electricity

Managing our relationship more effectively with our customers

Rationalise operational processes to minimisewhole-life unit cost

Developing a better understanding of customersneeds

Complement & support UAE development

Improve project lifecycle managementMore accurate & flexible network planning tocontribute to risk mitigation

Promote compliance to health,safety, environment &quality requirements & seek continuous improvementManage Assets more Effectively & Efficiently

Evolve HR practices to enablethe organization

Enhancing the image of TRANSCOto support the vision & the business

Use technology innovatively tosupport the business

Contribute to the Goverment’sEmiratisation goals

Strategy Map

Consistent high quality delivery of services to current & future customers over the long term

Growth & Sustainability Customer Focus

Performance Driven Organization

Operational Excellence

Value Customer Internal Process Enablers


HSE&Q

It is the goal of the TRANSCO Senior Management, to make HSEQ part of the day-to-day decisions and activities of all its employees, including its Contractors and Consultants.

We care

When it comes to the safety and wellbeing of all employees in TRANSCO, our Consultants and Contractors ensures that all safety precautions are in place at all times while we go through our daily operations, maintenance of networks, and construction of new assets. Our dedicated team are there all day, all week, every month throughout the year to make sure that our precautionary measures are observed by everyone on site.

TRANSCO Polices, Procedures and Systems are there to protect these employees from any danger and it is therefore vital that these are systematically employed across all our operations without confusion, doubt or differing interpretation. This is the philosophy behind our shared goal for HSEQ; “It is the goal of the TRANSCO Senior Management, to

make HSEQ part of the day-to-day decisions and activities of all its employees, including its Contractors and Consultants. By making HSEQ a normal daily automatic factor within all our decisions and activities, we can, all together, achieve world class compliance & performance”.

Highlights

• The TRANSCO 5th HSEQ Week, on Hazard and Near Miss Reporting, involving our Consultants and Contractors

• TRANSCO Awarded a RoSPA Gold Award in 2012 for Transco Opertaions HSEQ performance


Our KeyStakeholders

Key Stakeholders

IWPP

Embedded customers

Company employees

Stakeholders Needs

Reliable and safe provision of power and water transmission services

Compliance with defined license requirements in order to safeguard customer and consumer’s interests.

To efficiently manage and build the transmission network in order to provide the required level of service at lowest cost.

Minimising the adverse environmental impact of the sector and improving sustainability by reducing demand.

Unconstraint access to the electricity and water transmission network

Providing timely settlement and demand data

Reliable and safe provision of power and water transmission services

Maintaining the skills and competencies of staff and providing career development opportunities to the Emirati workforce,

Nature of Engagement

Formal interconnection agreements into the distribution company’s networks and a commitment to provide an uninterrupted transmission service.

Compliance with performance standards and provision of information designed to safeguard the customers interests by ensuring quality and cost effectiveness of service.

As the ultimate asset owner the government requires that TRANSCO develop a transmission network that meets its strategic need for power and water services at lowest cost.

TRANSCO and the sector have an important part to play in achieving the government’s environmental objectives both at an operational level and supporting education and awareness campaigns.

Connection and interface agreement to provide an uninterrupted and unconstrained transmission service.

Party to relevant codes that governance operations of the sector.

Formal interconnection agreements into the customer site and a commitment to provide an uninterrupted transmission service.

Provision of career development and training with the opportunity for progression and enhancement for UAE Nationals. Maintaining / developing a workforce able to deliver the companies objectives.

Our Major AchievementsMajor Achievements


Our MajorAchievements

Asset Performance Department has been the cornerstone in supporting TRANSCO on the Asset Management journey. . .

Enhanced Asset Performance ProceduresAsset Performance Department has been the cornerstone in supporting TRANSCO on the asset management journey by developing key asset strategies and procedures in line with our business vision and objectives. These strategies and procedures have created a systematic way of planning, executing and analysing maintenance activities and performance of assets thereby enabling TRANSCO to evaluate the condition of the installed assets and propose replacement, refurbishment or maintenance enhancement of these equipment.

Planning Participation with Consultancies and Financial OwnershipTRANSCO’s planning function has taken responsibility for front-end consultancy activities leading to final design concept and project scope definition, this ensures clarity of project concept definition and a robust scope of work prior to embarking on project procurement and implementation activities, along with aiming

to ensure the value engineered design concept remains the optimal solution to address needs. This approach then enables TRANSCO to deliver a clear design concept and scope of work, thereby minimising the need for variations orders.

220/33kV Substation at Umm Al OuoshThe 220/33kV Substation at Umm Al Ouosh in Al Ain area was built to feed the residential and agricultural loads in Umm Al Ouosh. The substation was built with double bus bar 220kV GIS with 7 bays (2 Sections, 2 OHLs feeder bays, 3 transformer feeder bays, bus coupler, 2x140 MVA power transformers, double bus bar 33kV GIS with 26 bays (10 outgoing cable feeder panels, 10 outgoing OHLs feeder panel, bus coupler and bus bar metering earthing panel, bus sectionaliser and bus bar metering earthing panel, 2 station transformer feeder panels, 2 transformer incomer feeder panels).The substation was successfully energised on 21-06-2012.

Umm Al Ouosh Substation


Following on from our successful accreditation to PAS55 requirements in October 2011, the company continued its improvements with enhanced scoring at the surveillance audit held in October 2012.

PAS55 & ISO:55000Following on from our successful accreditation to PAS55 requirements in October 2011, the company continued its improvements with enhanced scoring at the surveillance audit held in October 2012. We continually strive to develop ourselves and the capabilities of the company. We are now looking at the next step in our Asset Management maturity and successful accreditation to ISO:55000. This will be a challenge for us, as the standard is still under development, of which, we are actively contributing to. A working group has been set up to look at our performance against the required standard and to develop an action plan for achievement ISO:55000 accreditation.

Successfully Commissioning of Shams1 Solar Power Plant to Power NetworkTRANSCO Power Projects proudly commissioned the works required for Shams 1 solar power plant integration into the power network and managed the energis–ation of the mentioned iconic project that reflects Abu Dhabi strategic plan for sustainable energy. Shams 1 solar power plant is a 100MW plant based on concentrated solar power (CSP) technology located in Madinat Zayed in Western Region of Abu Dhabi. Shams 1 is one of the largest solar project in the world and first of its kind in the Middle East.

Oman CIGRE ConferenceOn the 12th to 14th November 2012, a GCC CIGRE conference was held in Muscat, Oman. This conference was an opportunity to exchange ideas, knowledge and understand the latest developments within the Power industry. TRANSCO continues to contribute and learn from the conference discussions. This year we contributed 6 papers to the discussions, as below:

• Challenges in systems operations with renewable generation in ADWEA power network. This paper was joint winner of the best paper award.

• Introduction of risk management within TRANSCO

• A novel approach to utilised DSM and smart grid initiatives for power system operations.

• Smart economic despatch enhancements for ADWEA real time despatching.

• Developing new strategies to assess the potential of human errors in ADWEA power systems.

• Effects of terminal connections, noise and core magnetism on sweep frequency response analysis of transformers.


Shams1 Solar Power Plant


GCCIA and Oman InterconnectionsTRANSCO / GCCIA and Oman Interconnections were placed into commercial operation during 2011. This historic event has proven TRANSCO readiness against operational challenges of meeting demands of other interconnected utilities while maintaining a safe, secure, and reliable power supply. TRANSCO has achieved an excellent operation performance where there were no records of interconnection interruptions during 2012.

Crisis Management Training ProgramWith the objective of ensure readiness of our local staff in handlimg critical and strategic post responsibilities such as Despatch center engineer, TRANSCO has conducted a crisis management training program during 2012. This training program was directed to enable critical operations to be undertaken solely by UAE National Employees in the case of a significant threat to the UAE and loss of the expat workforce.

400/220/33kV Grid Station at ICADThe 400/220/33kV Grid station will be a nodal point to transmit power from power stations to Abu Dhabi and is currently supporting the load requirement at ICAD and Mussafah area. The grid station was built 3x500MVA, 400/220kV transformers and 6x220/33kV, 100MVA transformers. The ICAD 400/220/33kV grid station was connected by 2x400kV double circuit OHL from ICAD and Mussafah 400kV grid stations and by 2x200kV double circuit OHL from GIC and Central 220/33kV substations.

The grid station was fully commissioned on 17-07-2012.

PrimaveraTRANSCO had been working on the integration of Primavera and GIS systems. This will support the business by providing a complete visibility of TRANSCO’s capital investment program and enhancing the planning decision making processes.

With the objective of ensure readiness of local staff to handle critical and strategic post responsibilities such as dispatch center engineer, TRANSCO has conducted a crisis management training program during 2012.


Grid Station at ICAD

TRANSCO Annual Report 2012 29 TRANSCO Annual Report 2012 25

As part of TRANSCO expansion projects in Northern Emirates, 400/132kV grid station at Fujairah city had been successfully energised on 24-12-2012 and was commercially available for delivering power to the consumers from 25-12-2012.

Contractors/Consultants Performance EvaluationContractors/consultant’s performance evaluation has been finalised for all projects completed/PAC issued in year 2011, there was 58 power projects and 5 water projects. Contractors/consultant’s performance evaluation report has been formally communicated to all contractors/consultants through presentations in July 2012. Also, summarized presentations and letters were sent to all attendees for their feedback and comments.

400/132kV Grid Station at Fujairah CityThe 400/132kV grid station at Fujairah city was built with a capacity of 3x500MVA, 400/132kV transformers, 11 numbers of 400kV bays and 23 numbers 132kV bays to receive the power from F1 and F2 Power Plants.

Further the power from 400/132kV Grid station at Fujairah City will be transmitted to the 132/33kV substations at Sudah port and Al Hayl which are under construction by TRANSCO and to the 132/33kV Substations at Gurfa, Masafi, Munay, Fujairah Main, all owned and operated by FEWA. The Power is distributed to industrial and domestic loads in Northern emirates by FEWA through FEWA 33kV network.

The grid station was successfully energised on 24-12-2012

Installing Solar Cooling System for LDC Building in Collaboration with TAQATRANSCO in collaboration with TAQA are working to install 27 MCT collectors from Chromasun at the TRANSCO LDC Building. The building is presently air-conditioned by conventional electrically driven screw type chillers, which have significant peak power demands on hot days. The project will see the installation a solar-driven system to supplement building air-conditioning load and offset its peak electrical consumption with clean renewable energy. The project is aligned with UAE strategic plan of reducing CO2 emissions that encourage utilising sustainable resources.

132/11kV MRKT SUBSTATION AT W2The 132/11kV substation at W2 was built as replacement to the existing 30-year-old 132/11kV substation.

The 132/11kV substation was built with 9 bays of 132kV GIS, 66 bays of 11kV GIS, 4x40MVA transformers and all other related equipment including civil works and building services.

The grid station was fully commissioned on 12-02-2012.

Grid Station at Fujairah City


Our ActivitiesOur Activities


OurActivities

“Wadhef Emarati” Campaign, March

TRANSCO participated in the “Wadhef Emarati”

campaign that was organised by the Higher College of

Technology. The campaign aimed to increase students’

awareness of job opportunities and help them plan

their future career. The campaign also aimed to assist

employers in attracting talented young Emiratis and

provide the needed support and training so they

become a key driver to the wheel of development and

construction in the United Arab Emirates.

TRANSCO Sponsors the Autism Sports Day, April

It is in TRANSCO’s importance to highlight and care for this group and help them to become more engaged within the community. Therefore, TRANSCO has contributed with such activities through the Sports Day held by the TRANSCO Sports Committee at Al-Jazeera club, Abu-Dhabi. TRANSCO was proud to receive an award and recognition for its service when presented with a token of appreciation from the Gulf Autism Centre.

TRANSCO Strategic Event, October

As part of the Strategic Plan 2013 – 2017 launch,

TRANSCO held its 2nd Strategic Event in October.

The agenda for the evening included a 2-minute

film, professionally created for TRANSCO that

gave an insight to the company and its role in the

community. This was followed by a motivational

speech by the chairman that paved the way for

the managing director to begin his presentation.

The evening did not end there, as the festivities

were just about to begin. The event included a

dinner, awarding team members of different

projects, raffle draw, and a wonderful show of

sand art.


TRANSCO Participating in the ADWEA Group Leadership Retreat, April

TRANSCO participated in the ADWEA and its group

companies strategic leadership retreat to review

the 2013-2017 strategic plan for the power and

water sector of Abu-Dhabi and the UAE. The

2-day event took place in April. Delegates from

ADWEA, AMPC, TRANSCO, ADWEC, AADC and

ADDC gathered for this retreat in order to discuss

strategic matters that would contribute to the

sector moving in unison towards a common goal;

also making sure there was a direct contribution

to the Abu-Dhabi Vision 2030.

Transco Al Ain takes part in open-day organized by the Technical secondary school, NovemberAt the invitation of the Technical Secondary school, the public relations section at Transco Al Ain has participated in the open-day organized by that school. During the event, Transco Al Ain highlighted its role to the visitors, including students and their parents.

Training Plan came to a close, November

The 2012 training plan came to a close with “Leadership Retreat”, an experiential training program with a main focus of communication and teamwork. The purpose of the training is to bring TRANSCO’s employees together in an experiential training program. The training was a chance for employees to meet on a different level and in different circumstances to increase the understanding among them, as well as strengthen their team and communication skills. In addition to being a great opportunity of fun and entertainment, leadership retreat provided a platform for employees to reflect on their strategies and develop new ideas. The training was customised to TRANSCO’s requirements in terms of its strategies and need of an increased teamwork and communication between the different division/department managers and senior employees.

GCCIA Visit to TRANSCO, December

A delegation from Gulf Cooperation Council Interconnection Authority (GCCIA) visited TRANSCO to meet with the Business Planning & Performance Department and learn from their experiences in the development and implementation of the TRANSCO strategy. The visit started with a warm welcome of the guests, followed by a presentation on TRANSCO’s approach to strategy development and execution. Then the GCCIA representatives presented their current approach to strategic development for their own organisation with the objective of receiving feedback and discussion. The agenda concluded explaining TRANSCO’s successes in communications.

Financial ReviewFinancial Review


Independent Auditors’ Report to the Shareholder of Abu Dhabi Transmission & Despatch Company PJSC

Report on the Financial Statements

We have audited the accompanying financial statements of Abu Dhabi Transmission & Despatch Company, PJSC (“the Company”), which comprise the statement of financial position as at 31 December 2012, and the statement of comprehensive income, statement of changes in equity and statement of cashflows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Resposibility for the Financial Statements

Management is responsible for the preparation of these financial statements in accordance with International Financial Reporting Standards and the applicable provisions of the articles of association of the Company and the UAE Commercial Companies Law of 1984 (as amended), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from materials misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Internationals Standards on Auditing.Those standards require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresi the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of materials misstatement of the financial statements, whetherdue to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the pupose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the auditevidence we obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the accompanying financial statement present fairly, in all material respects, the financial position of the Company as of 31 December 2012, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Report on Other Legal and Regulatory Requirements

We also confirm that, in our opinion, the financial statements include in all material respects,the applicable repquirements of the UAE Commercial Companies Law of 1984 (as amended) and the articles of association of the Company, proper books of account have been kept by the Company, proper books of account have been kept by the Company, an inventory was duly carried out and the contents of the report of the Board of Directors relating to these financial statements are consistent with the books of account. We further report that we have obtained all the information and explanations which we required for the purpose of our audit and, to the best of our knowledge and belief, no violations of the UAE Commercial Companies Law of 1984 (as amended) or of the articles of association of the Company have occured during the year which would have had a material effect on the business of the Company or on its financial position.

Signed by:Richard MitchellPartnerErnest & YoungRegistration No. 44625 April 2013Abu Dhabi


2012 2011

Notes AED ‘000 AED ‘000

ASSETS

Non Current Assets

Property, plant and equipment 8 43,652,007 41,315,920

Prepaid costs 360 437

43,652,367 41,316,357

Current Assets

Inventories 9 256,761 203,628

Amounts due from related parties 10 16,751,628 14,751,295

Prepayments and other assets 11 47,012 41,522

Bank balances and cash 19,029 1,939

17,074,430 14,998,384

Total Assets 60,726,797 56,314,741

EQUITY AND LIABILITIES

Equity

Share capital 12 5,991,417 5,991,417

Proposed increase in share capital 13 2,112,978 2,112,978

Proposed dividend 14 2,341,989 1,658,043

Statutory reserve 15 1,280,353 1,051,261

Legal reserve 15 1,280,353 1,051,261

Retained earnings 1,832,736 2,341,989

14,839,826 14,206,949

Loan from Abu Dhabi Water and Electricity Authority 17 29,183,451 24,591,155

Total Equity 44,023,277 38,798,104

Non-Current Liabilities

Term loan from Abu Dhabi Water and Electricity Authority 18 8,202,071 8,623,448

Employees’ end of service benefits 19 85,540 81,764

Deferred income – grant 20 1,218,370 1,281,592

Deferred income – connection fees 8,696 8,964

Contractors’ payable and accruals 21 1,946,407 2,358,738

11,461,084 12,354,506

Current Liabilities

Accounts payable 23 472,622 647,867

Amounts due to related parties 24 2,177,435 2,183,026

Accruals 25 1,579,658 1,406,034

Retentions payable 22 949,231 861,714

Deferred income – grant 20 63,222 63,222

Deferred income – connection fees 268 268

5,242,436 5,162,131

Total Liabilities 16,703,520 17,516,637

TOTAL EQUITY AND LIABILITIES 60,726,797 56,314,741

The attached notes 1 to 28 form part of these financial statements.

Abu Dhabi Transmission & Despatch Company PJSC Statement of Comprehensive IncomeFor the year ended 31 December 2012

2012 2011


Revenues

Service and connection charges for

transmission of water and electricity to:

Abu Dhabi Distribution Company and

Al Ain Distribution Company 3,751,833 4,012,422

Service Charges for transmission of water and electricity to:

Federal Electricity and Water Authority 348,754 380,449

Sharjah Electricity and Water Authority 186,945 242,871

Electricity and Water Authority – Bahrain - 14,856

Others 268 268

3 & 4 4,287,800 4,650,866

Cost of sales

Staff costs (300,705) (303,282)

Repairs, maintenance and consumables used (100,166) (95,542)

Depreciation 8 (1,322,575) (1,113,046)

(1,723,446) (1,511,870)

GROSS PROFIT 2,564,354 3,138,996

Provision for slow moving and obsolete inventories 4,529 (19,922)

Administrative and other expenses 6 (150,822) (143,759)

Finance costs 7 (206,833) (123,999)

Other income 5 79,692 76,171

(273,434) (211,509)

PROFIT AND COMPREHENSIVE INCOME FOR THE YEAR 2,290,920 2,927,487

Abu Dhabi Transmission & Despatch Company PJSC Statement of Financial PositionAs at 31 December 2012

FinancialReview


Loan from

Abu Dhabi

Proposed Government Water and

Share increase in Proposed Statutory Legal Retained of Abu Dhabi Electricity

capital share capital dividend reserve reserve earnings account Total Authority Total

AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ’000 AED ‘000 AED ‘000 AED ‘000 AED ‘000

Balance at 1 January 2011 5,991,417 2,112,978 856,187 758,512 758,512 1,658,043 (11,447) 12,124,202 21,428,063 33,552,265

Dividend paid - - (856,187) - - - - (856,187) - (856,187)

Profit for the year - - - - - 2,927,487 - 2,927,487 - 2,927,487

Transfer to statutory reserve - - - 292,749 - (292,749) - - - -

Transfer to legal reserve - - - - 292,749 (292,749) - - - -

Proposed dividend (note 14) - - 1,658,043 - - (1,658,043) - - - -

Movement in government of Abu Dhabi account (note 16) 11,447 11,447 11,447

Movement in loan from Authority - - - - - - - - 3,163,092 3,163,092

Balance at 31 December 2011 5,991,417 2,112,978 1,658,043 1,051,261 1,051,261 2,341,989 - 14,206,949 24,591,155 38,798,104

Dividend paid - - (1,658,043) - - - - (1,658,043) - (1,658,043)

Profit for the year - - - - - 2,290,920 - 2,290,920 - 2,290,920

Transfer to statutory reserve - - - 229,092 - (229,092) - - - -

Transfer to legal reserve - - - - 229,092 (229,092) - - - -

Proposed dividend (note 14) - - 2,341,989 - - (2,341,989) - - - -

Movement in loan from Authority - - - - - - - - 4,592,296 4,592,296

Balance at 31 December 2012 5,991,417 2,112,978 2,341,989 1,280,353 1,280,353 1,832,736 - 14,839,826 29,183,451 44,023,277

Abu Dhabi Transmission & Despatch Company PJSCStatement of Changes In EquityFor the year ended 31 December 2012


Abu Dhabi Transmission & Despatch Company PJSCStatement of Cash FlowsFor the year ended 31 December 2012

2012 2011


OPERATING ACTIVITIES

Profit for the year 2,290,920 2,927,487

Non- cash adjustments to reconcile profit for

the year to net cash flows:

Depreciation 8 1,322,575 1,113,046

Release of deferred income – grant 20 (63,222) (63,222)

Release of deferred income – connection fees (268) (268)

Employees’ end of service benefits 19 8,620 10,494

Property, plant and equipment written off (net) 8 3,785 13,664

Capital spares used during the year 8 2,614 -

Provision for slow moving inventory (4,529) 19,922

Working capital adjustments:

Inventories (44,302) (12,014)

Amounts due from related parties (3,658,375) (3,683,472)

Prepayments and other assets (5,413) 6,160

Amounts due to related parties (5,593) (1,155)

Accounts payable, retentions and accruals 85,896 707,983

Employees’ end of service benefits paid and transfers 19 (5,523) (16,574)

Net cash flows from operating activities (72,815) 1,022,051

INVESTING ACTIVITY

Purchase of property, plant and equipment

including additional advances paid during the year (3,668,684) (5,004,865)

Net cash flows used in investing activity (3,668,684) (5,004,865)

FINANCING ACTIVITIES

Term loan from Abu Dhabi Water and Electricity, net 18 (421,377) (302,345)

Contractors’ payable and accruals (412,330) 1,115,921

Loan from Abu Dhabi Water and

Electricity Authority – equity 17 4,592,296 3,163,092

Net cash flows from financing activities 3,758,589 3,976,668

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 17,090 (6,146)

Cash and cash equivalents at 1 January 1,939 8,085

CASH AND CASH EQUIVALENTS AT 31 DECEMBER 19,029 1,939

Abu Dhabi Transmission & Despatch Company PJSC Notes to the Financial Statement

As at 31 December 2012

1 CORPORATE INFORMATION

Abu Dhabi Transmission & Despatch Company PJSC (“the Company”) is a Private Joint Stock Company registered and incorporated in the United Arab Emirates (“UAE”) and is engaged in the transmission of water and electricity from the generation and desalination plants to the distribution networks in the Emirate of Abu Dhabi, Dubai Electricity and Water Authority, Federal Electricity and Water Authority and Sharjah Electricity and Water Authority and certain other GCC countries.

The Company is a wholly owned subsidiary of Abu Dhabi Power Corporation which is a wholly owned subsidiary of Abu Dhabi Water and Electricity Authority (“the Authority” or “ADWEA”) which was established pursuant to the provisions of Law No. 2 of 1998, concerning the regulation of the Water and Electricity Sector. The Company is also governed by its Water and Electricity Transmission and Despatch license (“the license”) issued by the Regulation and Supervision Bureau.

The Company’s registered head office is at P.O. Box 173, Abu Dhabi, United Arab Emirates.

The financial statements of the Company for the year ended 31 December 2012 were authorised for issue in accordance with a resolution of the Board of Directors on 25 April 2013.

2.1 BASIS OF PREPARATION

Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and applicable requirements of the UAE Commercial Companies Law of 1984 (as amended).

The financial statements have been prepared on a historical cost basis.

The financial statements have been presented in UAE Dirhams (“AED”), which is the functional currency of the Company. All values are rounded to the nearest thousand (AED ‘000) except when otherwise indicated.

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The accounting policies adopted are consistent with those of the previous financial year, except for the following new and amended IFRS and IFRIC interpretations effective as of 1 January 2012:

- IAS 12 Income Taxes (Amendment) – Deferred Taxes: Recovery of Underlying Assets

- IFRS 1 First-Time Adoption of International Financial Reporting Standards (Amendment) – Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters

- IFRS 7 Financial Instruments : Disclosures – Enhanced Derecognition Disclosure Requirements

The adoption of the above standards and interpretations is as follows:

IAS 12 Income Taxes (Amendment) – Deferred Taxes: Recovery of Underlying Assets

The amendment clarified the determination of deferred tax on investment property measured at fair value and introduces a rebuttable presumption that deferred tax on investment property measured using the fair value model in IAS 40 should be determined on the basis that its carrying amount will be recovered through sale. It includes the requirement that deferred tax on non-depreciable assets that


are measured using the revaluation model in IAS 16 should always be measured on a sale basis. The amendment is effective for annual periods beginning on or after 1 January 2012 and has no effect on the Company’s financial position, performance or its disclosures.

IFRS 1 First-Time Adoption of International Financial Reporting Standards (Amendment) – Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters.

The IASB provided guidance on how an entity should resume presenting IFRS financial statements when its functional currency ceases to be subject to hyperinflation. The amendment is effective for annual periods beginning on or after 1 July 2011. The amendment had no impact to the Company.

IFRS 7 Financial Instruments: Disclosures - Enhanced Derecognition Disclosure Requirements

The amendment requires additional disclosure about financial assets that have been transferred but not derecognised to enable the user of the Company’s financial statements to understand the relationship with those assets that have not been derecognised and their associated liabilities. In addition, the amendment requires disclosures about the entity’s continuing involvement in derecognised assets to enable the users to evaluate the nature of, and risks associated with, such involvement. The amendment is effective for annual periods beginning on or after 1 July 2011. The Company does not have any assets with these characteristics so there has been no effect on the presentation of its financial statements.

The adoption of the above standards and interpretations did not have any material effect on the financial performance or position of the Company.

2.3 SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosures of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the statement of financial position date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Impairment of inventories

Inventories are held at the lower of cost and net realisable value. When inventories become old or obsolete, an estimate is made of their net realisable value. For individually significant amounts this estimation is performed on an individual basis. Amounts which are not individually significant, but which are old or obsolete, are assessed collectively and a provision applied according to the inventory type and the Company’s policy for inventory provisioning.

Impairment of property, plant and equipment

Management determines whether there are any indications of impairment to the net carrying values of property, plant and equipment on an annual basis because of the difference between the duration of contracted cash flows and accounting depreciation of assets. This requires an estimation of the value in use of the cash generating units. Estimating the value in use requires the Company to make an estimate of the expected future cash flows and also choose a suitable discount rate in order to calculate the present value of those cash flows.

Useful lives of property, plant and equipment

Management of the Company determines the estimated useful lives of its property, plant and equipment for calculating depreciation. This estimate is determined after considering the expected usage of the asset or physical wear and tear. Management reviews the residual value and useful lives annually and the future depreciation charge would be adjusted where management believes that the useful lives differ from previous estimates.

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue recognition

Transmission use of system charges

Revenues comprise the transmission use of system charges from licensed and unlicensed activities. Revenue from licensed activities represents the system charges made to Abu Dhabi Distribution Company and Al Ain Distribution Company (wholly-owned subsidiaries of the Abu Dhabi Water and Electricity Authority) for the delivery of water and electricity from the generation and desalination plants to the distribution networks for the year. Revenue from unlicensed activities represents the system charges made to other Emirates and certain other GCC countries.

Licensed activities and unlicensed activities from shared assets

Revenue for the transmission use of system charges is subject to the maximum allowed revenue and price control as regulated by the Regulation and Supervision Bureau (the “Bureau”) in accordance with the Company’s licence and certain correspondence relating to Price Control (PC) as agreed between the Company and the Bureau.

Unlicensed activities from solely dedicated assets

The service charges for the transmission of water and electricity from solely dedicated assets are based on the specific transmission charge calculated with reference to the costs associated with the relevant dedicated assets.

In all cases, revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

Connection fees

Connection fees are recognised on a systematic basis over the term of the respective customer contracts unless they represent a separately identifiable service and satisfy other criteria for upfront recognition to the statement of comprehensive income.

Leases

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset.

Company as a lessee

Finance leases, which transfer to the Company substantially all of the risks and benefits incidental to ownership of the leased item, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in the statement of comprehensive income.


Leased assets are depreciated over the useful life of the asset. However if, there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognised as an expense in the statement of comprehensive income on a straight line basis over the lease term.

Property, plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Such cost includes the cost of replacing part of the plant and equipment when that cost is incurred and borrowing costs for long-term construction projects if the recognition criteria are met. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the statement of comprehensive income as incurred.

Depreciation is provided on all property, plant and equipment, other than capital work in progress and is calculated on a straight line basis over the estimated useful life of the asset as follows:

Buildings over 10 - 39 years

Plant and machinery (including plant spares) over 10 - 39 years

The cost of spare parts held as essential for the continuity of operations and which are designated as capital spares is depreciated on a straight-line basis over the estimated remaining operating life of the plant and equipment to which they relate. Spare parts used for normal repairs and maintenance are expensed when issued.

The carrying amounts are reviewed at each statement of financial position date to assess whether they are recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable amounts, assets are written down to their recoverable amounts, being the higher of their fair values less costs to sell and their value in use.

An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the assets (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognized.

The asset’s residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively if appropriate.

Capital work in progress

Capital work in progress is included in property, plant and equipment at cost, on the basis of the percentage completed at the statement of financial position date. The capital work in progress is transferred to the appropriate asset category and depreciated in accordance with the Company’s policies when construction of the asset is completed and the asset commissioned.

Impairment of non-financial assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs to sell and its value in use and is determined

for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

Borrowing costs

Borrowing costs that are directly attributable to the design, development, procurement and construction of each part of a plant up to the date when all activities necessary to prepare each part of the plant for its intended use are complete, are capitalised as part of capital work in progress. Borrowing costs in respect of completed parts of the plant are recognised as an expense in the period in which they are incurred.

Financial assets

Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial assets at initial recognition.

Financial assets are recognised initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way purchases) are recognised on the trade date, i.e. the date that the Company commits to purchase or sell the asset.

The Company’s financial assets include bank balances and cash, amounts due from related parties and certain other assets.

The subsequent measurement of the Company’s financial assets, except for cash and cash equivalents, are carried at amortized cost.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such financial assets are carried at amortised cost using the effective interest rate method less impairment. Gains and losses are recognised in the statement of comprehensive income when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

The Company assesses at each statement of financial position date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). If a write-off is later recovered, the recovery is recognised in the statement of comprehensive income.

Financial liabilities

Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments


in an effective hedge, as appropriate. The Company determines the classification of its financial liabilities at initial recognition. Financial liabilities are recognised initially at fair value and in the case of loans and borrowings fair value of the consideration received less directly attributable transaction costs.

The Company’s financial liabilities include term loan from ADWEA, accounts payable, accruals, retentions payable, amounts due to related parties and certain other liabilities.

Loans and borrowings

After initial recognition, financial liabilities of the Company are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the statement of comprehensive income when the liabilities are derecognised as well as through the amortisation process.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Fair value of financial instruments

The fair value of financial instruments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the statement of financial position date. For financial instruments where there is no active market, fair value is determined using valuation techniques. Such techniques may include using recent arm’s length market transactions; reference to the current fair value of another instrument that is substantially the same; discounted cash flow analysis or other valuation models.

Inventories

Inventories are stated at the lower of cost, determined on the basis of weighted average costs, and net realisable value. Cost are those expenses incurred in bringing each item to its present location and condition.

Net realisable value is based on replacement cost.

Cash and Cash Equivalents

For the purpose of the Cash Flow Statement, cash and cash equivalents consist of cash in hand and bank balances.

Accounts Payable and Accruals

Liabilities are recognised for amounts to be paid in the future for goods or services received, whether or not billed by the supplier or not.

Provisions

Provisions are recognised when the Company has present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Employees’ End of Service Benefits

The Company provides end of service benefits to its expatriate employees. The entitlement to these benefits is based upon the employees’ final salary and length of service subject to completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment.

With respect to its national employees, the Company makes contribution to Abu Dhabi Retirement Pensions and Benefits calculated as a percentage of the employees’ salaries. The Company’s obligations are limited to these contributions, which are expensed when due.

Deferred Income - Grant

Deferred income represents the value of property, plant and equipment received as a grant and is recognised as income over the period necessary to match them with the related costs of property, plant and equipment which they are intended to compensate, on a systematic basis.

Foreign Currencies

Transactions in foreign currencies are recorded at the rate ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the statement of financial position date. All differences are taken to the statement of comprehensive income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.

2.5 FUTURE CHANGES IN ACCOUNTING POLICIES – STANDARDS ISSUED BUT NOT YET EFFECTIVE

Standards issued but not yet effective up to the date of issuance of the Company’s financial statements

are listed below:

• IAS 1 Financial Statement Presentation – Presentation of Items of Other Comprehensive Effective

date: 1 July 2012.

• IAS 19 Employee Benefits (Revised) Effective date: 1 January 2013.

• IAS 28 Investments in Associates and Joint Ventures (as revised in 2011) Effective date: 1 January

2013.

• IAS 32 Offsetting Financial Assets and Financial Liabilities - (Amendments) Effective date: 1

January 2014

• IFRS 1 Government Loans – (Amendments) Effective date: 1 January 2013

• IFRS 7 Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities

Effective date: 1 January 2013.

• IFRS 9 Financial Instruments: Classification and Measurement Effective date: 1 January 2013.

• IFRS 10 Consolidated Financial Statements Effective date: 1 January 2013.

• IFRS 11 Joint Arrangements Effective date: 1 January 2013.

• IFRS 12 Disclosure of Involvement with Other Entities Effective date: 1 January 2013.

• IFRS 13 Fair Value Measurement Effective date: 1 January 2013.

• IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine Effective date: 1 January 2013


In the opinion of management, the adoption of the above standards and interpretations in the

future periods will have no material impact on the financial position or performance of the

Company.

Annual improvements May 2012

These improvements will not have an impact on the Company, but include:

IFRS 1 First-time Adoption of International Financial Reporting Standards

This improvement clarifies that an entity that stopped applying IFRS in the past and chooses, or is

required, to apply IFRS, has the option to re-apply IFRS 1. If IFRS 1 is not re-applied, an entity must

retrospectively restate its financial statements as if it had never stopped applying IFRS.

IAS 1 Presentation of Financial Statements

This improvement clarifies the difference between voluntary additional comparative information

and the minimum required comparative information. Generally, the minimum required comparative

information is the previous period.

IAS 16 Property Plant and Equipment

This improvement clarifies that major spare parts and servicing equipment that meet the definition of

property,plant and equipment are not inventory.

IAS 32 Financial Instruments, Presentation

This improvement clarifies that income taxes arising from distributions to equity holders are accounted

for in accordance with IAS 12 Income Taxes.

IAS 34 Interim Financial Reporting

The amendment aligns the disclosure requirements for total segment assets with total segment

liabilities in interim financial statements. This clarification also ensures that interim disclosures are

aligned with annual disclosures.

These improvements are effective for annual periods beginning on or after 1 January 2013.

3 SERVICE CHARGES FOR TRANSMISSION OF WATER AND ELECTRICITY

Licensed activities and unlicensed activities from shared assets

The service charges for the transmission of water and electricity are based on the revised Price Control

4 (PC4) which covers the period 2010 to 2013. In determining the transmission charges, PC4 includes

a provisional allowance for future capital expenditure as well as an adjustment for PC2 (2003 to 2005)

capital efficiency and correction for PC3 allowance and actual capital expenditure. Capital efficiency

for PC3 (2006 – 2009) will be addressed, along with actual PC4 capital expenditure, in PC5 which

commences in 2014.

Unlicensed activities from solely dedicated assets

The service charges for the transmission of water and electricity from solely dedicated assets are based

on the specific transmission charge calculated with reference to the costs associated with the relevant

dedicated assets.

2012 2011 2012 2011 2012 2011

AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000

Service and connection charges for

transmission of water and electricity to:

Abu Dhabi Distribution Company and

Al Ain Distribution Company 3,751,833 4,012,422 - - 3,751,833 4,012,422

Service charges for transmission of water and electricity to:

Federal Electricity and Water Authority 338,224 369,727 10,530 10,722 348,754 380,449

Sharjah Electricity and Water Authority 186,945 242,871 - - 186,945 242,871

Electricity and Water Authority – Bahrain - 14,856 - - - 14,856

Others - - 268 268 268 268

4,277,002 4,639,876 10,798 10,990 4,287,800 4,650,866

Licensed activities and

unlicensed activities

from shared asset

Unlicensed activities

from solely

dedicated asset

Total

2012 2011


Release of deferred income – grant (note 20) 63,222 63,222

Miscellaneous income 16,470 12,949

79,692 76,171

The licensed activities represent the service charges for the transmission of water and electricity

within the Emirate of Abu Dhabi and are charged to Abu Dhabi Distribution Company and Al Ain

Distribution Company.

The unlicensed activities represent the service charges for the transmission of water and

electricity to Federal Electricity and Water Authority and Sharjah Electricity and Water

Authority and are charged to Abu Dhabi Water and Electricity Company and certain other

GCC countries.

4 REVENUES

Revenues from licensed and unlicensed activities are allocated between revenues from

shared assets and solely dedicated assets as follows:

5 OTHER INCOME


8 PROPERTY, PLANT AND EQUIPMENT continued

2012 2011

AED ‘000 AED ‘000

Property, plant and equipment at net carrying amount 42,797,989 40,299,430

Advances to contractors 854,018 1,016,490

43,652,007 41,315,920

6 ADMINISTRATIVE AND OTHER EXPENSES

7 FINANCE COSTS 8 PROPERTY, PLANT AND EQUIPMENT

8 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at year end consist of the following:

Capital work Plant and Capital

in progress Buildings machinery spare parts Total

AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000

2012

Cost:

At 1 January 2012 12,897,385 118,091 38,088,918 114,404 51,218,798

Additions 3,880,126 170 3,784 3,884,080

Capital spare parts - - - (3,386) (3,386)

used during the year

Transfers (5,737,098) - 5,737,098 - -

Material returns - - (4,302) - (4,302)

Adjustments to projects - 7,124 (59,369) - (52,245)

capitalised in prior years

Asset retirement - - (5,921) - (5,921)

At 31 December 2012 11,040,413 125,385 43,760,208 111,018 55,037,024

Depreciation:

At 1 January 2012 - (19,734) (10,867,554) (32,080) (10,919,368)

Capital spare parts 772 772

used during the year

Depreciation charge - (4,135) (1,318,783) 343 (1,322,575)

for the year

Asset retirement - - 2,136 - 2,136

At 31 December 2012 - (23,869) (12,184,201) (30,965) (12,239,035)

Net carrying amount:

At 31 December 2012 11,040,413 101,516 31,576,007 80,053 42,797,989

2011

Cost:

At 1 January 2011 10,904,222 116,481 35,318,070 114,404 46,453,177

Additions 4,758,358 - 2,355 - 4,760,713

Transfers (2,751,531) - 2,751,531 - -

Material returns - - (12,395) - (12,395

2012 2011

AED ‘000 AED ‘000

Financial charges - ADWEA 206,833 123,999

2012 2011

AED ‘000 AED ‘000

Administrative service charges from ADWEA 47,273 50,404

Insurance 20,237 17,747

Software support services 20,097 12,381

Hire of vehicles and other services from

Al Wathba Company for Central Services 5,918 3,946

Management and technical consultancy fees 16,879 13,218

License fee 8,963 5,634

Laboratory charges 3,648 3,982

Fines and penalties 1,122 -

GCC grid operating fees 13,319 12,010

Other expenses 13,366 24,437

150,822 143,759


8 PROPERTY, PLANT AND EQUIPMENT continued

Adjustments to projects capitalised in prior years represent the amount adjusted to the costs of

the projects following the issuance of the final acceptance certificates and finalization of the

project.

Material return relates to excess inventory on site returned to the stores upon completion of a

given project.

Borrowing costs amounting to AED 89.5 million have been capitalised during the year (2011: AED

178.6 million). These relate to financial charges made by the Authority which are directly attributable

to capital work in progress.

9 INVENTORIES

Cost of inventories recognised as expense is AED 8,381 thousand (2011: AED 9,183 thousand).

10 AMOUNTS DUE FROM RELATED PARTIES

Amounts due from related parties are neither past due nor impaired.

11 PREPAYMENTS AND OTHER ASSETS

12 SHARE CAPITAL

13 PROPOSED INCREASE IN SHARE CAPITAL

2012 2011

AED ‘000 AED ‘000

Consumables 357,023 307,308

Provision for slow moving and obsolete inventory (100,262) (103,680)

256,761 203,628

Capital work Plant and Capital

in progress Buildings machinery spare parts Total


Adjustments to projects - 1,610 29,357 - 30,967

capitalised in prior years

Written off (13,664) - - - (13,664)

At 31 December 2011 12,897,385 118,091 38,088,918 114,404 51,218,798

Depreciation:

At 1 January 2011 - (15,978) (9,759,223) (31,121) (9,806,322)

Depreciation charge - (3,756) (1,108,331) (959) (1,113,046)

for the year

At 31 December 2011 - (19,734) (10,867,554) (32,080) (10,919,368)

Net carrying amount:

At 31 December 2011 12,897,385 98,357 27,221,364 82,324 40,299,430

2012 2011

AED ‘000 AED ‘000

Abu Dhabi Power Corporation 2,000 2,000

Abu Dhabi Water and Electricity Authority 16,749,628 14,749,295

16,751,628 14,751,295

2012 2011

AED ‘000 AED ‘000

Prepaid housing rent 21,089 21,187

Prepaid insurance cost 6,501 2,070

Other prepayments and assets 19,422 18,265

47,012 41,522

Authorised, issued and fully paid

2012 2011

AED ‘000 AED ‘000

599,141,700 shares of AED 10 each 5,991,417 5,991,417

2012 2011

AED ‘000 AED ‘000

Funding for projects approved by WED prior

to 1 January 1999 2,112,978 2,112,978


In accordance with Resolution No. 20, session 4/2004 of the Executive Council of the Emirate of Abu

Dhabi, the Finance Department of the Government of Abu Dhabi has committed to fund all ongoing

water and electricity projects approved by the Water and Electricity Department (WED) prior to 1.

January 1999 against increasing the Government of Abu Dhabi shareholding in the share

capital of the Authority. Accordingly, the Authority has resolved to increase its shareholding

in the Company (through its wholly owned subsidiary, Abu Dhabi Power Corporation) by the

amount of funding made by the Authority in respect of projects relating to the Company

which were approved by the WED prior to 1 January 1999. In view of the above, funding

of projects approved prior to 1 January 1999, previously included in amounts due to the

Authority has been classified as proposed increase in share capital pending completion of

all legal formalities.

The proposed share capital will be added to share capital once all legal formalities in connection with

the increase in the share capital is completed.

14 PROPOSED DIVIDEND

The Board of Directors has proposed a cash dividend of AED 2,341,989 thousand (2011: AED

1,658,043 thousand) for the year 2012. The proposed dividend is subject to the approval of

the shareholder at the Annual General Meeting.

15 RESERVES

Statutory Reserve

As required by the U.A.E. Commercial Companies Law of 1984 (as amended) and Article 34 of the

Articles of Association of the Company, 10% of the profit for the year is transferred to a statutory

reserve. The Company may resolve to discontinue such transfers when the reserve equals 50% of the

share capital. The reserve is not available for distribution.

Legal Reserve

In accordance with Article 34 of the Articles of Association of the Company, 10% of

the profit for the year is transferred to a legal reserve. The Company may resolve to

discontinue such annual transfers when the reserve totals 50% of the share capital or

in accordance with a resolution taken to this effect by the shareholders at the Annual

General Meeting upon the recommendation of the Board of Directors. This reserve may

only be used for the purposes recommended by the Board of Directors and approved by

the shareholders.

16 GOVERNMENT OF ABU DHABI ACCOUNT

During the year ended 31 December 2011, the account of the Government of Abu Dhabi

amounting to AED 11,447 thousand was transferred to Abu Dhabi Water and Electricity

Authority. This balance represents transactions made by the Government of Abu Dhabi on

behalf of the Company prior to January 1999 but recorded in the Company records during

1999.

17 LOAN FROM ABU DHABI WATER AND ELECTRICITY AUTHORITY

The above loan is interest free and is unsecured. No terms of repayment have been specified for the

loan and it is subject to the terms of repayment as resolved by the Board of Directors of the Company

and the Authority.

18 TERM LOAN FROM ABU DHABI WATER AND ELECTRICITY AUTHORITY

The Shuweihat Project funding was financed by ADWEA through bank borrowings, The loan

carries a variable interest rate of LIBOR plus 0.37% to 0.70%. The finance costs reclaimed

by ADWEA consist only of the actual interest incurred by ADWEA on these borrowings.

The Other projects funding are financed by ADWEA through bank borrowings. The borrowings

carry interest rates which vary between 2% and 4.48%. The finance costs reclaimed by

ADWEA consist only of the actual interest incurred by ADWEA on these borrowings.

19 EMPLOYEES’ END OF SERVICE BENEFITS

Movements in the provision recognised in the statement of financial position are as follows:

2012 2011

AED ‘000 AED ‘000

Funding for projects approved after

1 January 1999 at 1 January 24,591,155 21,428,063

Funding during the year 4,592,296 3,163,092Loan at

31 December 29,183,451 24,591,155

2012 2011

AED ‘000 AED ‘000

Shuweihat Project funding 181,939 545,816

Other projects funding 8,020,132 8,077,632

Total 8,202,071 8,623,448

2012 2011

AED ‘000 AED ‘000

Balance as at 1 January 81,764 87,223

Provided during the year 8,620 10,494

Amounts capitalised during the year 679 621


19 EMPLOYEES’ END OF SERVICE BENEFITS continued

20 DEFERRED INCOME - GRANT

Deferred income relates to the fair value of assets granted by Emirates CMS Power Company PJSC,

Taweelah Asia Power Company PJSC, Shuweihat CMS International Power Company PJSC, related

parties, the Private Department Al Ain and Arabian Power Company, a related party in accordance

with agreements dated August 2000, April 2005 and May 2005, the decision of Abu Dhabi

Executive Council dated 15 August 2005 and agreement dated 12 February 2006 respectively.

The movement on the deferred income account during the year was as follows:

21 CONTRACTORS’ PAYABLE AND ACCRUALS

The above amount represents liabilities with respect to certain projects which will be ultimately funded by the Government of Abu Dhabi and accordingly will be transferred to equity on settlement.

22 RETENTIONS PAYABLE

Executive Council dated 15 August 2005 and agreement dated 12 February 2006 respectively.

The movement on the deferred income account during the year was as follows:

23 ACCOUNTS PAYABLE

Construction creditors are settled in accordance with the terms of the contractual agreement with

contractors which is normally 60 days.

24 AMOUNTS DUE TO RELATED PARTIES

25 ACCRUALS

2012 2011

AED ‘000 AED ‘000

End of service benefits paid (5,523) (8,052)

Transferred to ADWEA - (8,522)

Balance as at 31 December 85,540 81,764

2012 2011

AED ‘000 AED ‘000

Balance at 1 January 1,344,814 1,408,036

Income recognised for the year (note 5) (63,222) (63,222)

Balance at 31 December 1,281,592 1,344,814

The above is disclosed in the statement of financial position as follows:

Non-current liabilities 1,218,370 1,281,592

Current liabilities 63,222 63,222

1,281,592 1,344,814

2012 2011

AED ‘000 AED ‘000

Contractors’ payable, retentions and accruals 1,946,407 2,358,738

2012 2011

AED ‘000 AED ‘000

Retentions 949,231 861,714

2012 2011

AED ‘000 AED ‘000

Construction creditors 472,622 647,867

2012 2011

AED ‘000 AED ‘000

Amounts due in less than one year

Al Wathba Company for Central Services - 5,591

Union Water and Electricity Company 2,177,435 2,177,435

2,177,435 2,183,026

2012 2011

AED ‘000 AED ‘000

Contract accruals 1,464,671 1,304,609

Leave benefit entitlements 12,124 11,481

Other accruals 102,863 89,944

1,579,658 1,406,034


26 RELATED PARTY TRANSACTIONS

Related parties represent holding companies, associated companies, i.e. other subsidiaries

of Abu Dhabi Power Corporation and Abu Dhabi Water and Electricity Authority and

Government of Abu Dhabi, directors and key management personnel of the Company and

entities controlled, jointly controlled or significantly influenced by such parties. Pricing

policies and terms of these transactions are approved by ADWEA, the Company’s ultimate

holding company.

Transactions with related parties included in the statement of comprehensive income are as follows:

Balances with related parties that are disclosed in the statement of financial position as follows:

Other balances and transactions with related parties included in the statement of financial position

are disclosed in notes 8, 10, 16, 17, 18, 20, 24 and 25.

The transmission charges relating to FEWA, SEWA and EWA (Bahrain) are settled by Abu Dhabi Water

and Electricity Company, a wholly owned subsidiary of ADWEA.

Compensation of Key Management Personnel

The remuneration of directors and other members of key management during the year was as follows:

The activities of the Company are carried out from premises and equipment constructed on land leased

from the Government of Abu Dhabi at no cost.

27 CAPITAL COMMITMENTS

The authorised capital expenditure contracted but not commenced with at the statement of financial

position date amounts to approximately AED 8.5 billion (2011 : AED 7 billion).

28 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company’s principal financial liabilities comprise amounts due to related parties and accounts

payable. The main purpose of these financial liabilities is to raise finance for the Company’s operations

and to finance the progress on ongoing capital projects. The Company has various financial assets such

as amounts due from related parties and cash which arise directly from its operations.

It is, and has been throughout 2012 and 2011 the Company’s policy that no trading in derivatives shall

be undertaken.

The main risks arising from the Company’s financial instruments are cash flow interest rate risk,

liquidity risk, foreign currency risk and credit risk. The Board of Directors reviews and agrees policies

for managing each of these risks which are summarised below.

2012 2011

Other Other

Sales Expenses Sales Expenses

AED ‘000 AED ‘000 AED‘000 AED ‘000

Parent

Administration service charge from ADWEA - 47,273 - 50,404

GCC grid operating fees - 13,319 - 12,010

Financial charges - 206,833 - 123,999

Other related parties

Revenues

Transmission of water and electricity

to Abu Dhabi Distribution Company (ADDC) 2,869,954 2,995,018 -

Transmission of water and electricity

to Al Ain Distribution Company (AADC) 881,800 1,017,404 -

Transmission of water and electricity to

Federal Electricity and Water Authority (FEWA) 348,755 380,449 -

Transmission of water and electricity to

Sharjah Electricity and Water Authority (SEWA) 186,945 242,871 -

Transmission of water and electricity to GCC - 14,856 -

Cost of sales

Repairs, maintenance and other

related costs from ADDC, AADC,

Al Wathba Company for Central Services and others - 49,155 - 55,751

Administrative and other expenses

Hire of vehicles from Al Wathba Company for Central Services - - - 3,946

2012 2011

AED ‘000 AED ‘000

Bank Balances

Bank balance with government owned bank 18,795 1,688

2012 2011

AED ‘000 AED ‘000

Short-term benefits 11,749 11,296

Employees’ end of service benefits 262 254

12,011 11,550


Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate

because of changes in market interest rates.

The Company’s exposure to the risk of changes in market interest rates relates primarily to the

borrowings from ADWEA with floating interest rates.

Policies for managing risk relating to its variable interest borrowings are established and followed by

the ultimate parent company, ADWEA.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates,

with all other variables held constant, of the Company’s profit for one year.

Credit Risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument

leading to a financial loss.

The Company mainly renders its services to related parties.

With respect to credit risk arising from the other financial assets of the Company, which

comprise cash and cash equivalents, the Company’s exposure to credit risk arises from de-

fault of the counterparty, with a maximum exposure equal to the carrying amount of these

instruments.

Liquidity Risk

The Company limits its liquidity risk by monitoring its current financial position in conjunc-

tion with its cash flow forecasts and close communication with its parent (ADWEA) on a

regular basis to ensure funds are available to meet its commitments for liabilities as they

fall due.

The table below summarises the maturities of the Company’s undiscounted financial li-

abilities at 31 December, based on contractual payment dates and current market interest

rates.

Currency Risk

Management considers that the Company is not exposed to significant currency risk. The

majority of their transactions and balances are in either UAE Dirhams or US Dollars. As the

UAE Dirham is pegged to the US Dollar, balances in US Dollars are not considered to represent

significant currency risk.

Capital Management

The primary objective of the Company’s capital management is to ensure that it maintains a

healthy capital ratio in order to support its business and maximise shareholder value and to

ensure that it maintains adequate public funding from the Authority to support its operations

and quality of service.

The Company manages its capital structure and makes adjustments to it, in light of changes

in economic conditions and close discussion and coordination on its objectives and strategy

with its parent. To maintain or adjust the capital structure, the Company may adjust return on

capital to shareholder or increase its capital. No changes were made in the objectives, policies

or processes during the years ended 31 December 2012 and 31 December 2011. Capital

comprises share capital, proposed increase in share capital, retained earnings, reserves, and

loan from Abu Dhabi Water and Electricity Authority included within equity and is measured at

AED 44 billion (2011: AED 38.8 billion).

Effect on profit

AED ‘000

2012

+100 increase in basis points (6,964)

-100 decrease in basis points 6,964

2011

+100 increase in basis points (7,629)

-100 decrease in basis points 7,629

Less than 3 to 12 1 to 5

3 months months years > 5 years Total


At 31 December 2012

Term loan from - - 7,540,222 1,135,034 8,675,256

Abu Dhabi Water and Electricity Authority

Amounts due to related parties - 2,201,193 - - 2,201,193

Accounts payable 472,622 - - - 472,622

Retentions payable - 949,231 916,330 - 1,865,561

Total At 31 December 2011 472,622 3,150,424 8,456,552 1,135,034 13,214,632

Term loan from

Abu Dhabi Water and Electricity Authority - - 8,408,980 1,296,466 9,705,446

Amounts due to related parties - 2,183,026 - - 2,183,026

Accounts payable 647,867 - - - 647,867

Retentions payable - 861,714 710,338 - 1,572,052

Total 647,867 3,044,740 9,119,318 1,296,466 14,108,391

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