Analysis

Tabreed announces 2010 financial results

UAE utilities company positioned for growth based on region’s demand for water-cooling infrastructure

Abu Dhabi-based utilities firm National Central Cooling Company (Tabreed) is to refinance AED 2.6 billion with its lenders, it reported following the release of its 2010 full financial results.

For the 12 months ending December 31, 2010, total revenue increased by 31% to AED 1023.7 million and net profit, excluding the non-cash impairment declared for 2009, increased by 147% to AED 146.3 million over the same period in 2009.

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13

The number of Tabreed new cooling plants that were delivered last year

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Its bank lenders have unanimously approved the principal terms of an agreement to refinance AED 2.63 billion of liabilities and to extend Tabreed a new AED 150 million revolving credit facility.

The approved refinancing will convert Tabreed’s existing short-term bilateral and syndicated bank debt facilities into a consolidated facility with an extended tenor and lower total cost of borrowing, giving Tabreed long-term flexibility to deliver its business plan.

Tabreed has also secured an additional AED 400 million in short-term financing from Mubadala Development Company, in the form of an amendment to the current AED 1.3 billion bridge loan. This bridge loan will provide Tabreed with funding while the company completes its recapitalisation programme.

Tabreed’s wholly-owned subsidiary, Gulf Energy Systems, was the biggest contributor to the results reflecting completion of several projects and progress on others including Sowwah Island”

“Today’s [February 10] announcement is significant not only because of the strong fullyear unaudited results for 2010, but also because the approval of terms of the refinancing by our bank lenders is a decisive step towards the successful recapitalisation of Tabreed. The board and management of Tabreed are pleased to have reached this significant milestone and the company continues to work hard with all stakeholders to close the recapitalisation programme,” Tabreed’s managing director Khaled Al Qubaisi said.

Sector performance

Last year, 13 plants and two plant expansions came online adding 155,800 of gross capacity and bringing Tabreed’s gross total installed cooling capacity to 541,525 TR across 49 plants.

Tabreed’s core business of chilled water produced revenues of AED 753.3 million, an increase of 73% when compared to AED 435 million in the same period in 2009. Gross profit increased to AED 320.6 million from AED 165.8 million in the same period the year before.

“The management and staff improved operational performance by refocusing on the core chilled water business. This has resulted in improved overall profitability and has positioned the company for growth given the region’s demand for cooling infrastructure,” said Tabreed’s CEO Sujit Parhar.

The company’s contracting segment recorded revenues of AED 132.3 million, a decrease of 26% when compared to AED 178.2 million over the same period in 2009, with gross profit of AED 31.1 million compared to AED 23.1 million in the 12 months of the previous year. The increase in gross profit was due to less uncertainty around costs to complete as projects reached completion. Tabreed’s wholly-owned subsidiary, Gulf Energy Systems, was the biggest contributor to the results reflecting completion of several projects and progress on others including Sowwah Island.

Meanwhile, Tabreed’s manufacturing segment reported revenues of AED 95.9 million, a decrease of 34% when compared to AED 145.3 million in the same period in 2009, while gross profit fell to AED 28.2 million compared to AED 45.5 million in the same period of 2009. This decline was attributed to reducing order books and an increase in competition at Tabreed’s 60%-owned subsidiary, Emirates Pre-insulated Pipes Industries.

Tabreed’s services segment, involved in the design and supervision of building electrical and mechanical works, reported revenues of AED 76.3 million, a decrease of 9% compared to AED 83.7 million in the same period in 2009, while gross profit decreased to AED 48.4 million compared to AED 51.6 million in 2009.

FINANCIAL HIGHLIGHTS, 2010

•Total revenue increased by 31% to AED 1023.7 million, compared to AED 783 million in the same period in 2009

•Gross profit increased by 53% to AED 426.4 million, compared to AED 278.1 million in the same period in 2009

•Net profit, excluding the non-cash impairment declared for 2009, increased by 147% to AED 146.3 million, compared to AED 59.2 million in the same period in 2009

•Chilled water revenue for the period was AED 753.3 million, a 73% increase over the same period in 2009

•Basic and diluted earnings per share were AED 0.15, compared to AED (1.22) in the same period in 2009

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