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Tabreed second quarter 2010 consolidated financial results

Chilled Water Business Drives Strong Profit Growth.

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August 16, 2010 2:04 by



National Central Cooling Company PJSC (‘Tabreed’), the Abu Dhabi-based utility company, today released its second quarter consolidated financial results. For the six months ended 30 June 2010, total revenue increased by 16 per cent to AED 432.3 million and net profit increased by 83 per cent to AED 86.8 million over the same period in 2009. Excluding minority interests, Tabreed’s share of profits was AED 80.7 million compared to AED 30.1 million in the previous year. The results were driven by strong growth in the Company’s core business of chilled water as new plants and customers came online.

Financial Highlights – Six months ended 30 June 2010

Total revenue increased by 16 per cent to AED 432.3 million, compared to AED 373.8 million in the same period in 2009 Gross profit increased by 16 per cent to AED 197.5 million, compared to AED 170.9 million in the same period in 2009 Net profit increased by 83 per cent to AED 86.8 million, compared to AED 47.4 million in the same period in 2009 reflecting certain non-cash finance gains associated with the Company’s 2008 Convertible Sukuk Excluding these non-cash finance gains net profits increased by 3% Chilled water revenue for the period was AED 285.3 million, a 94 per cent increase over the same period in 2009. This is attributable to an increase in chilled water sales as new plants and customers came online Basic and diluted earnings per share doubled to AED 0.04 per share

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Sujit S. Parhar, Tabreed’s CEO, said:

“Tabreed’s focus on business fundamentals and the ongoing recapitalization program is repositioning the Company for growth. Our strategy has been to focus on the core business of chilled water, and these robust first half results reflect growth in the Company’s chilled water business and improved operational efficiencies. Going forward, these factors, combined with a diversified customer base, long-term contracts, a stable cost structure and strengthened corporate governance, will provide the foundation for continued growth. ”

Khaled Al Qubaisi, Tabreed’s Managing Director said:

“The results of the first six months of 2010 demonstrate the hard work of everyone at Tabreed, and the improvements made by the management team under the direction and supervision of the Board. We will continue to build the platform to achieve the Company’s objectives of improving performance, increasing profitability and maximizing returns. Completing our recapitalization program will give Tabreed the right balance sheet for growth, and today’s announcement towards the capital reduction is an important step in this process. Tabreed remains a pioneer within the district cooling industry, able to offer bespoke solutions to the often complex cooling requirements of our customers.”

Second Quarter 2010 Highlights:

Following the addition of four new plants in the first quarter of 2010, a further four plants with a combined capacity of 27,525 TR were added in the second quarter 2010. This brings Tabreed’s total installed cooling capacity to 449,625 (gross) TR across 44 plants, compared with 34 plants and a cooling capacity of 352,100 TR a year ago. The four plants added in the second quarter were:

Al Kifaf – 10,000 TR Rashidiya – 7,500 TR Jebel Ali – Jumeirah – 5,626 TR Jebel Ali Industrial – 4,000 TR

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A further 8 plants are under construction along with 2 planned expansions, of which 5 plants and 1 expansion are expected to come online in 2010. The capacity addition for 2010 is estimated at 148,300 (gross) TR.

Chilled Water

Tabreed’s core business of chilled water produced revenues of AED 285.3 million, compared to AED 147.2 million in the same period in 2009. This performance was driven by new plants and new customers coming online. Gross profit increased to AED 130.1 million from AED 75.6 in the same period the year before.

Contracting

The Company’s contracting segment recorded revenues of AED 104.7 million, compared to AED 93.7 million over the same period in 2009, with gross profit of AED 22.7 million compared to AED 14.6 million in the first six months of the previous year. Tabreed’s wholly owned subsidiary, Gulf Energy Systems, was the biggest contributor to the results reflecting further progress with the Sowwah Island and Shams projects.

Manufacturing

Tabreed’s manufacturing segment reported revenues of AED 41.5 million compared to AED 116.7 million in the same period in 2009, while gross profit fell to AED 13.2 million compared to AED 41.9 million in H1 2009. This decline was due to reducing order books at Tabreed’s 60 per cent owned subsidiary, Emirates Pre-insulated Pipes Industries.

Services

Tabreed’s services segment, which is involved in the design and supervision of building electrical and mechanical works, reported revenues of AED 38.5 million compared to AED 45.4 million in the same period in 2009, while gross profit fell to AED 32.6 million compared to AED 40.1 million in the first half of 2009. The change reflects the regional real estate slowdown that affected the services division, which includes Ian Banham & Associates, l2l and Cooltech.

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Update on Recapitalization Program:

Since Tabreed’s shareholders approved a recapitalization program for Tabreed on 30th May 2010, the Company has continued to make progress on the program. Tabreed announced today its intention, subject to regulatory approval, to reduce the Company’s share capital through the cancellation of approximately 970,000,000 shares. The cancellation of shares will be on a pro-rata basis at a ratio of 5:1. Each shareholder will retain one share for every five shares it holds, and the remaining shares will be cancelled. The percentage holding in the Company of each shareholder will be the same after the capital reduction as before, subject only to minor adjustments as fractional shares will not be issued.

The proposed cancellation of shares through a capital reduction is a key component of Tabreed’s recapitalization program. Tabreed has submitted the capital reduction proposal to the Emirates Securities and Commodities Authority for approval and will provide further updates to shareholders in due course.



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