The Arab Petroleum Investments Corporation (APICORP), a multilateral development bank established in 1975 by the 10 member states of the Organization of Arab Petroleum Exporting Countries (OAPEC), has announced its full year consolidated financial results for the period ending 31st December 2015.
APICORP continued to perform strongly, with total income increasing to $162.04 million in 2015 compared with $156.28 million in 2014 and net profit before provisions growing to $124.38 million from $118.51 million for the previous year.
The company maintained its prudent approach, setting aside an investment provision of $16.78 million, which was slightly higher than in 2014 and reflects continuing geopolitical and economic uncertainty in several parts of the MENA region. This resulted in an adjusted net profit of $107.60 million for 2015, compared with $105.03 million in the previous year.
As of 31st December 2015, total assets were $5.65 billion and shareholders’ equity increased to $1.91 billion.
During the year, APICORP continued to implement its strategy of rebalancing its lending and equity investment portfolios, through increasing the level of equity investments. This saw APICORP make a significant investment in Saudi Mechanical Industries (SMI), in addition to APICORP’s participation in TAQA’s capital increase. Total direct equity investments, were $922.53 million as of 31 December 2015, 6.5 per cent higher than 12 months previously.
The year 2015 also witnessed the establishment of a $3 billion Sukuk programme, followed by the successful placement of a five year $500 million Sukuk in October 2015. Becoming a regular issuer of Sukuk in global markets represents a significant strategic step for APICORP, and positions the company’s credit alongside its multilateral development banks peers.
In February 2015, APICORP participated in a successful $200 million refinancing arrangement for National Petroleum Services Group (NPS) – APICORP’s stake is 29 per cent in conjunction with HSBC, Emirates NBD and Al Hilal Bank.
Net interest income for the year came in at $44.91 million, 12 per cent higher than in 2014, a better yield and better return on capital, testimony to a highly effective management of the loan book and a reduction in funding costs.
APICORP’s balance sheet remains robust, with significant liquidity of $995 million and a very healthy capital adequacy ratio of 28.65 per cent. This was supported by a report issued by Moody’s in October 2015, which pointed to APICORP’s strong capital adequacy, which is well above regulatory requirements, and which stated that its relatively low leverage, solid track record of profitability, and increasingly diverse equity investments, all contribute to the agency’s view on APICORP’s “high intrinsic financial strength”.
In recognition of this financial strength and to reflect its long-term confidence in the company’s growth prospects, APICORP’s Extraordinary General Assembly has approved to increase the company’s subscribed share capital to $2 billion. It also declared a dividend payable to the company’s shareholders of $40 million in respect of 2015.
Commenting on the results, APICORP’s Chairman, Dr Aabed bin Abdulla Al Saddoun, said, “APICORP has continued to perform strongly and has made excellent progress in implementing a five year strategy designed to achieve a stable balance between lending and equity investment. APICORP has grown both income and profits year on year, which, in the context of a continuing low oil price and geopolitical tensions in several parts of the region, is a thoroughly creditable performance. APICORP raised more than $1.5 billion of new finance, and launched its Sukuk programme aiming at diversifying the company’s funding sources and reducing its overall cost of financing.”
“We can also point to a healthy pipeline of potential investments. Volatile markets often unearth attractive opportunities and we are actively examining a number of them. We also refer back to our annual report “MENA Energy Investment Outlook – Big plans in uncertain times”, which notes that $289 billion of investment has already been committed to projects under execution in the region, while an additional $611 billion worth of development is planned. Against such a backdrop, an organization such as APICORP has every reason to be optimistic. As we look forward to the remainder of the year and beyond, we are under no illusion as to the challenges of the current economic environment. However, we believe we offer our investors, our lenders and our borrowers a stable and secure means of achieving suitable returns. Our unrivalled industry knowledge, financial strength, track record, strong management and risk profile are all reasons for them to place their trust in us and have confidence in our ability to deliver,” he added.
