Tabreed Financial Analysis Project

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Financial Analysis Report

National

Central

Cooling

Company PJSC

TABREED
Course Title:

ACCT 601
Accounting for Senior Managers

Submitted to: Dr. Peter B Oyelere


Submitted by: Group Number 1:
Ashraf Kuzmar

201370291

Fatima Al Mazrouei 201370298


Omar Al Amoodi
Sara Kayoum
Cohort Number:

Cohort 23

201370227
200202209

National Central Cooling Company Tabreed Group 1 Cohort 23

Submitted Date:

Thursday, December 12, 2013

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National Central Cooling Company Tabreed Group 1 Cohort 23

Contents
Introduction....................................................................................4
Tabreed Company Background......................................................5
Tabreed Vision, Mission & Values................................................6
Mission:....................................................................................6
Vision:......................................................................................6
Values......................................................................................6
Facts & Figures............................................................................7
District Cooling System...............................................................7
Tabreed Operations........................................................................8
The Major Milestones..................................................................8
Tabreeds Projects in UAE:.........................................................10
Tabreeds Projects Outside UAE:...............................................11
Tabreeds Subsidiaries..............................................................12
Tabreed Competitors.................................................................14
Recent Significant Events............................................................16
2011 Significant Event: Recapitalization program involving up to
AED 3.1 billion of long term funding from the Mubadala development
company.............................................................................................16

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National Central Cooling Company Tabreed Group 1 Cohort 23


2012 Significant Event: Conversion of the unpaid amounts
under the Subordinated loan facility with Mubadala Treasury Holding
Company into Mandatory Convertible Bonds (MCBs).........................17
Shareholders.............................................................................17
Tabreed Plans First Cash Dividend in 8 Years as U.A.E.
Recovers..........................................................................................17
Financial Overview.......................................................................20
Auditors Report Analysis..........................................................20
Historical Highlights 2009-2012................................................21
Operating Efficiency..................................................................22
FINANCIAL STATEMENT ANALYSIS.................................................25

Liquidity measures............................................................26

Activity measures..............................................................29

Profitability measures........................................................33

Financial leverage measures.............................................35

4 years Comparison Financial Statements for Tabreed.............36


The financial situation in the 3rd quarter of the current year
(2013) and comparing it to the same period last year (2012):..........37
Conclusion....................................................................................39
Appendix A...................................................................................40
Bibliography.................................................................................42

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National Central Cooling Company Tabreed Group 1 Cohort 23

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National Central Cooling Company Tabreed Group 1 Cohort 23

Introduction
National Central Cooling Company PJSC Tabreed, together with its
subsidiaries, delivers cooling solutions to residential, commercial,
private sector and government mainly in the United Arab Emirates. It
operates in two business segments, Chilled Water and Value Chain
Business.
The Chilled Water segment is the
core business of the company and is
builds,
installs,

maintains,
operates,

assembles,
and

sustains

cooling and conditioning systems.


This segment also distributes and sells chilled water for use in cooling
system technologies.

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National Central Cooling Company Tabreed Group 1 Cohort 23


The Value Chain Business is non-core business of the Tabreed company.
It is involved in the construction of secondary networks; produce and
manufacture of pre-insulated water pipes; and the sale of the
components related to the chilled water industry. Also it provides
infrastructure, and civil contracting
services to the cooling

industry,

water treatment, engineering, design


and

supervision

consultancy

services. As well as for water, gas,


and electricity services such as water quality, mechanical services and
metering and billing services for cooling chilled water usage.

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National Central Cooling Company Tabreed Group 1 Cohort 23

Tabreed Company Background


The company was established in 1998 and is based in Dubai, while the
headquarter is located in Abu Dhabi. Tabreeds shares are listed on the
Dubai Financial Market (DFM) and it is a member of the DFM General
Index. The issued capital is 659,063,447 AED and the revenue (as of
December 31 2012) was AED 1.12 billion with cooling capacity of over
830,000 Refrigerated Tons. Tabreeds number of employees is 550
employees. National Central Cooling Company PJSC is a subsidiary of
Mubadala Development Company PJSC.

Tabreed was commissioned by the UAE


Government
cooling

to

plant,

construct
Its

district

providing

cooling

solutions to key infrastructure projects first in the UAE, and later, across the
GCC. District cooling helps reduce costs
to

owners

protecting

and

governments,

also

the

environment

by

decreasing carbon dioxide emissions.

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National Central Cooling Company Tabreed Group 1 Cohort 23

Tabreed Vision, Mission & Values

Mission:
We harness the most efficient technology and utilize our
extensive experience to deliver reliable and energy efficient
utilities that generate sustainable long-term returns for our
stakeholders. As the region's preferred provider of cooling
solutions, we focus on our customers' needs and deliver
comfort, value and service to all the communities we serve.1
Vision:
As an integral part of the region's growth, we will be the
leading utility company, delivering and operating district
cooling infrastructure, while creating sustainable value for
our shareholders as we maintain the comfort of the
communities we serve.2

1 Tabreed website, http://www.tabreed.ae/

2 Tabreed website, http://www.tabreed.ae/


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National Central Cooling Company Tabreed Group 1 Cohort 23


Values
Our corporate values underpin how we operate our business
and interact with all our stakeholders.3

3 Tabreed website, http://www.tabreed.ae/


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National Central Cooling Company Tabreed Group 1 Cohort 23

Facts & Figures

Countries of Operation: 5
UAE, Saudi Arabia, Qatar, Bahrain and Oman
Total Number of Plants: 66
Capacity: Over 830,000 Refrigerated Tons
Number of Plants by Country:
o UAE: 60
o Saudi Arabia: 1
o Qatar: 3
o Bahrain: 1
o Oman: 1

District

Cooling

System
Profitably

efficient

and

environmentally friendly system of the air conditioning for large


projects:

A central plant chills water and distributes it through under earth

isolated water pipes to the buildings.


The air is then enforced bygone the cold-water tubing to produce

the cold air environment.


The heated water will be reverted to the central plant to be rechilled and redistributed again and so on.

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National Central Cooling Company Tabreed Group 1 Cohort 23

Tabreed Operations
The Major Milestones
Tabreed is well-placed to reap the benefits of the district cooling
industry's growth in the GCC region. Through the years, the company
has celebrated several milestones that contributed to its current stature
as one of the most-respected district cooling utility companies in the
world.

Year 2013

Build 1 plant with a capacity of 27,000 RT came online in Saudi


Arabia

Year 2012

Inaugurated 1 plant in Ajman


Expanded UAE University plant in Al Ain

Year 2011

Completed the recapitalization program putting in place a stable,


long-term capital structure and raising additional capital of up to

AED 3.1 billion


Completion of 11 new plants (8 for the Dubai Metro Green Line)

Year 2010

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National Central Cooling Company Tabreed Group 1 Cohort 23

Delivered 13 new plants


Recapitalization program launched

Year 2009

Qatar Cool commenced chilled water supply on The Pearl Qatar


Inaugurated the Yas Island plant which provides district cooling to
the Yas Marina Circuit for the F1 Abu Dhabi Grand Prix

Year 2008

Mandatory convertible trust certificates of AED 1.7 billion issued

Year 2007

Received IDEAs Global Partner and two world awards

Year 2006

Signed an agreement with Saudi Arabias A. Abunayyan Group to

launch Saudi Tabreed


Tabreed Oman launched
Won IDEAs two gold awards for the second time
AED 735 million debt Sukuk successfully issued

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National Central Cooling Company Tabreed Group 1 Cohort 23

Tabreeds Projects in UAE:

Ferrari World Abu Dhabi


World Trade Center Abu Dhabi
Aldars HQ
Etihad Towers
UAE University, New campus in Al-Ain
Yas Waterworld
Marina Mall
Sheikh Zayed Grand Mosque
Dubai Metro
Ritz Carlton AD
Etihad HQ
Al Noor Hospital
Shangri-La
Al Jazira Sports and Cultural Club

Tabreeds Projects Outside UAE:

Saudi ARAMCO - KSA


King Abdullah Financial District - KSA
Jabal Omar Development Project in Mecca - KSA
The Pearl - Qatar
West Bay - Qatar
Bahrain Financial Harbour - Bahrain
Reef Island - Bahrain
Bahrain World Trade Center - Bahrain
Knowledge Oasis Muscat - Oman
Omans Military Technical College Oman

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National Central Cooling Company Tabreed Group 1 Cohort 23

Tabreeds Subsidiaries

Qatar District Cooling Company QCSC


Qatar District Cooling Company (Qatar Cool) is a private sector joint
venture company owned by United Development Company, Tabreed
and other private Qatari investors. In 2010, Qatar Cool inaugurated the
Integrated District Cooling Plant on The Pearl Qatar, the largest district
cooling plant in the world, with a capacity of up to 130,000 RT.

Bahrain District Cooling Company BSC


Bahrain District Cooling Company BSC (Tabreed Bahrain) is a private
sector joint venture company majority owned by Tabreed and with
Esterad and A.A. Bin Hindi as joint owners. The company currently
operates a district cooling plant that runs using sea water and provides
cooling services to some of the most prestigious developments in
Bahrain.

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National Central Cooling Company Tabreed Group 1 Cohort 23

Saudi District Cooling Company


Saudi district cooling company (Saudi Tabreed) is a closed joint stock
company established in Saudi Arabia. The major partners are ACWA
Power, RASD International and Tabreed.

Tabreed Oman SAOC


Established in 2008, Tabreed Oman SAOC, an Omani closed joint stock
company, is a joint venture between Tabreed and a group of Omani
shareholders comprising the Ministry of Defense Pension Fund, the
Diwan of Royal Court Pension Fund, the ISS Pension Fund, PMA
International Ltd and Private Projects Development Co. LLC.

S&T

Cool

District

Cooling

Company LLC
Established in 2008, S&T Cool District Cooling Company LLC (S&T Cool)
is a joint venture between Tabreed and Sorouh Real Estate PJSC. S&T
Cool currently supplies chilled water to Shams Abu Dhabi on Al Reem
Island.
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National Central Cooling Company Tabreed Group 1 Cohort 23

Industrial City Cooling Company


LLC
Established in 2004, Industrial City Cooling Company (ICCC) is a joint
venture between Tabreed, Abu Dhabi Investment Company, and Waha
Capital PJSC. ICCC currently owns and operates two district cooling
plants in the Mussaffah area of Abu Dhabi, supplying chilled water to
Zonescorps developments in the area.

Tabreed Competitors
Tabreed company was the first company to produce the district cooling
by using the chilled water in the UAE, and is recently revealed the
leading supplier of commercial district cooling in the UAE and the GCC
too. A development is the creation of confined central cooling for most
of the major UAE based real estate projects, for government and for
private sectors. There are a few companies have been formed to build
the chilled water district cooling plants for the big projects.
Utmost of those companies are subsidiaries of major companies and
their activities are related to serve the mother companies.
So, we tried to get some financial figures from those companies but
with no success, some of those competing companies are:
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National Central Cooling Company Tabreed Group 1 Cohort 23

Empower:

Emirates

Central

Cooling

Systems Corporation (EMPOWER) was


established in 2003 by the ruler's
decree, as a joint venture between DEWA (Dubai Electricity and
Water Authority) and TECOM (Dubai Technology and Media Free
Zone) to provide efficient District Cooling Services (DCS) to
developments in Dubai and the surrounding region. Empower is
managed and owned by Dubai Holdings development

http://www.empower.ae/index.php

Palm

District

Established

in

Cooling:
2004,

Palm

District Cooling (PDC) is the


regions leading supplier of chilled water to multiple buildings for
air conditioning and other uses. The concept of district cooling is
surging in popularity as higher demand is placed on natural
resources. Palm District Cooling PDC is controlled by the Nakheel
Group.5
http://www.palmutilities.ae/
4 EMPOWER website.

5 Palm District Cooling website.


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National Central Cooling Company Tabreed Group 1 Cohort 23

Emicool: The Emicool company is a


venture

entity

Investments

PJSC

among

Dubai

and

Union

joint

Properties PJSC. Emicool is a new class of district cooling company


revolutionizing chilled water services for both the B2B and B2C
markets. Emicool products and technology help optimize the cost
of cooling, increase the range and reliability of the networks and
ensure consistent performance.6
https://www.emicool.net/en/SitePages/faq.aspx

6 EMICOOL website.
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National Central Cooling Company Tabreed Group 1 Cohort 23

Recent Significant Events


2011

Significant

Event:

Recapitalization

program

involving up to AED 3.1 billion of long term funding


from the Mubadala development company
On February 2011, Tabreed stock surged after the Abu Dhabi-based
district cooling company agreed to a Dh4.5 billion (US$1.22bn) debt
refinancing plan and returned to profit. The company suffered more
than Dh1bn in losses in 2009.
Like other districts cooling operators in the UAE, Tabreed was thrown
into distress by the property downturn that started in late 2008. It spent
billions of Dirhams building air-conditioning plants, but revenues slowed
as projects were delayed and scaled back.

"Today's announcement is significant not only because of the strong


full-year unaudited results for 2010, but also because the approval of
the terms of the refinancing by our bank lenders is a decisive step
towards the successful recapitalization of Tabreed, Said Khaled Al
Qubaisi, Tabreed's managing director, who talked to "The National"
newspaper.
UAE's Tabreed has secured an extra AED3.1bn ($844.2m) lifeline from
state-owned fund Mubadala, helping the industrial cooling firm to tackle

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National Central Cooling Company Tabreed Group 1 Cohort 23


its

massive

debt

pile."

According

to

ArabianBusiness.com

on

Wednesday, 2 March 2011 10:30 AM


In 2011, Mubadala agreed to provide Tabreed long-term capital of 1.7
billion Dirham's ($463 million) in mandatory convertible notes due 2019
and a loan facility of as much as 1.4 billion Dirhams.

2012 Significant Event: Conversion of the unpaid


amounts under the Subordinated loan facility with
Mubadala Treasury Holding Company into Mandatory
Convertible Bonds (MCBs).7
On December 26 2012, the board approved the conversion of the
unpaid amounts under the Subordinated loan facility dated 31 March
2011 entered into with Mubadala Treasury Holding Company LLC into
Mandatory Convertible Bonds (MCBs).

The new MCBs have an

aggregate principal amount of AED 1,131,602,200.50 and were issued


to MDC industry Holding Company LLC on December 31 2012. See
Appendix A
The Tabreed's statement mentioned that on the December 31 2012 it
would issue the bonds that will have substantially the same terms as
the securities sold in 2011.

7 Results of the Board Meeting of the National Central Cooling


Company (PJSC) held on 24 February 2013
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National Central Cooling Company Tabreed Group 1 Cohort 23

Shareholders
Tabreed Plans First Cash Dividend in 8 Years as U.A.E. Recovers
As we can see from Table 1 the below the Tabreed company last
paid a cash dividend in 2004 with an amount of 5 percent. In the
following years, the company had a new strategy and it was in the
process to expand its projects inside and outside the UAE and who
want to do such thing, he needs to save more money and invest
more instead of distributing cash. Tabreed paid a 5 percent stock
dividend in 2005, 8 percent in 2006 and 7 percent stock dividend
in 2007. Of course, that would not happen without the approval
from the Board of Directors and the Shareholders.

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National Central Cooling Company Tabreed Group 1 Cohort 23


Table 1 Dividends History

3%

cash
2003

dividends
5%

cash
2004

dividends
5%

Bonus
2005

shares
8%

Bonus
2006

shares
7%

Bonus
2007

shares
2008

No dividends
2011
5%

cash
2012

dividends

According to the to a statement sent to the Dubai stock market on


25th Feb 2013, by the National Central Cooling Co., (TABREED) the
company planned to pay its first cash dividend in eight years as
profit climbs amid a recovery in the property market. Tabreed paid
5 fils a share for 2012.
The utility is benefiting from a recovery in the U.A.E. property
market as demand for housing and related services climb after
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National Central Cooling Company Tabreed Group 1 Cohort 23


Dubai witnessed one of the steepest real-estate industry crashes
following the 2008 world financial crisis. Tabreed shares surged
144 percent in 2011. The stock so far has gained 40 percent in
2012, the second-best return in Dubai after Emaar Properties PJSC.
(EMAAR).
Table 2 below shows the top shareholders who hold more than 5%
of Tabreed shares as of 31st January 2013.
Table 2 Tabreed Top Shareholders

ACWA Holding

16.24
%

Mubadala

Development

14.81
%

Company

12.42
General Investments FZE
%

Table 3 lists Tabreeds share ownership as 31 st December 2012,


based on share registers maintained by the Dubai Financial
Market.
Table 3 Tabreed's share ownership as of 31 December 2012

59.9
UAE Nationals
%
GCC Nationals

21.3

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National Central Cooling Company Tabreed Group 1 Cohort 23


%
21.4
Arab Nationals
%
Foreign Nationals

6.4%

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National Central Cooling Company Tabreed Group 1 Cohort 23

Financial Overview
Auditors Report Analysis
The EY (ERNST & YOUNG) stated that In our opinion, the
consolidated

financial

statements present fairly, in


material
financial

respects,
position

of

all

the
the

Group 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.

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National Central Cooling Company Tabreed Group 1 Cohort 23

Historical Highlights 2009-2012


The Figure 1 below shows the revenue of Tabreed company as
comparisons over 4 years in two series, as it is clear the revenue of the
company as a group the sales trend in general is increasing, started
from 780 million AED then during the four years increased and reached
to 1,128 million AED in end of the 2012. The operating revenue EBITDA
which

is

the

earnings

before

interest,

taxes,

depreciation

and

amortization also increased during the 4 years, in 2009 it was 230


million AED then became more than 500 million AED at the end of
2012.
Figure 1 Tabreed revenue comparision

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National Central Cooling Company Tabreed Group 1 Cohort 23

Operating Efficiency
Figure 2 shows clearly that the core business of Tabreed which is
the chilled water segment became stronger and the main segment
of the group. While the non-core business, the value chain
business is almost weighted maximum 10% of the company
activities. Financially, Tabreed's

strength stems

from

its

core

chilled water business with 90% of the companys activities. Over


the years, the company has continued to focus on growing this
segment while reducing the contributions from the non-core value
chain businesses, as a strategic plan of the company.

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National Central Cooling Company Tabreed Group 1 Cohort 23


Figure 2 Tabreed's contribution to sales

As we can see from Figure 3 below in 2012 the revenue from the
core business of the company, the chilled water segment
surpassed AED 1 billion for the

first time in the company's 15

year history.
Figure 3 Chilled water segment revenue

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National Central Cooling Company Tabreed Group 1 Cohort 23

The Figure 4 and the Table 4 below show the operation profit and
the segment margin from the core business; the chilled water
segment of the Tabreed company during the last 4 years. The

chilled water core businesss operating profit margin EBITDA in


2012 is slightly less than 50 percent which is a good financial
indication.

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National Central Cooling Company Tabreed Group 1 Cohort 23


Figure 4 Core business operations profit

Table 4 Core business activities comparisons

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National Central Cooling Company Tabreed Group 1 Cohort 23

FINANCIAL STATEMENT ANALYSIS


In this part of the report, the financial statement analysis of Tabreed for
the years 2011 and 2012 has been developed to assess the
performance of the company by using the accounting ratios.
Analyzing the financial statements of any company give indications
about how healthy is the performance of this company. These
indications can help the different parties within the business cycle. It
provides an indication of the firm performance to the management
which makes them able to plan and implement the strategic actions
and decision related to their company. Moreover, it assists the investors
in the stock market to make decisions on their investments wither to
buy or sell their shares. Furthermore, it helps the company's creditors to
assess the risk related to the ability of paying the debts.
The balance sheet, income statement, cash flow statement and the
annual report have been studied for the years 2011 and 2012. The
balance sheet is like a snapshot of the organizations financial position,
frozen at a specific point in time. It tells investors how much money the
company has, how much it owes, and what is left for the stockholders.
While the income statement is a record of the company's profitability. It
tells how much money a corporation made or lost. And the cash flow
statement is like the checking account; it shows where the money is
spent.

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National Central Cooling Company Tabreed Group 1 Cohort 23


The most powerful tool in financial analysis is the ratio analysis. This
analysis uses the financial statements (the balance sheet, the income
statement and the cash flow) to provide quantitative figures about the
performance of the firms.

There are several financial ratios that used to measure:


1.
2.
3.
4.

Liquidity.
Activity.
Profitability
Financial leverage.

Let us start with the financial ratio calculations and its interpretation.

Liquidity measures

A. Working capital
Working capital is the arithmetic relationship between current assets
and current liabilities which measures the firms ability to meet its
obligations as they come due.

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National Central Cooling Company Tabreed Group 1 Cohort 23

Working capital = current assets - current liabilities


Working capital of year 2012 (AED 000) = 1,325,794 960,825 =
364,969
Working capital of year 2011 (AED 000) = 1,492,645 1,192,788
= 299,857

It is clear that the working capital increase by more than AED 65 million
from 2011 to 2012.

B. Current ratio
This ratio permits an evaluation of liquidity that is more comparable
over time and between firms than the amount of working capital.

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National Central Cooling Company Tabreed Group 1 Cohort 23


Current ratio = current assets / current liabilities
Current ratio of 2012 (AED 000) = 1,325,794 / 960,825 = 1.38
Current ratio of 2011 (AED 000) = 1,492,645 / 1,192,788

1.25
The current ratio of 2012 and 2011 are 1.4 and 1.3 respectively.

C. Acid-test ratio
By excluding the inventories and other non-liquid current assets, this
ratio gives information about Tabreed ability to meet its current
obligations even if none of the inventory can be sold.
Acid-test ratio = Cash (including temporary cash investments) +
Accounts receivable / Current liabilities
Acid-test

ratio

of

2012

(AED

000)

(558,266+120,959+52,276+560,417) / 960,825 = 1.34


Of 2011 (AED 000) = (788,472+3,662+106,300+48,305+511,997) /
1,192,788 = 1.22

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National Central Cooling Company Tabreed Group 1 Cohort 23


The Table 5 below summarizes the liquidity ratios of Tabreed for the
years 2012 and 2011, and it is clear the liquidity ratios here are healthy
sings, since there are above 1 and in 2012 they increased in both the
current and the Acid-test ratios.

Table 5 Liquidity measures

Current assets
(AED 000)
Current liabilities
(AED 000)
Working capital
(AED 000)
Current ratio
Acid-test ratio (quick
ratio)

2012
2011
1,325,7 1,492,64
94
5
960,82 1,192,78
5
8
364,96 299,857
9
1.38
1.25
1.34
1.22

Referring to the general rule that state a current ratio of 2.0 and
an acid-test ratio of 1.0 are considered indicative of adequate
liquidity and from the data analyzed in Table 5 it can be concluded
that Tabreed has a good degree of liquidity; however, it is always
recommended to increase the level of liquidity to ensure that it
should not have any trouble meeting its current obligations as
they become due. Also, the Table 5 shows increase in both ratios
from 2011 to 2012 which is a good sign of increasing liquidity.

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National Central Cooling Company Tabreed Group 1 Cohort 23

Activity measures
A. Turnover ratios
1) Total asset turnover:
Total asset turnover = Sales / average total assets
Of year 2012 (AED 000) = (1,128,738) / ((8,492,181+8,743,753) /2) =
0. 130975=13%
Of year 2011 (AED 000) = (1,114,571) / ((8,743,753+8,193,039) /2) =
0.131615=13%

2) Accounts receivable turnover:


This ratio measures how many times a company converts its
receivables into cash each year.
Accounts receivable turnover = sales / average accounts receivable
Of year 2012 (AED 000) = (1,128,738) / ((558,266+788,472) /2) =
1.676
Of year 2011 (AED 000) = (1,114,571) / ((788,472+723,894) /2) =
1.474
For 2012 Tabreed converted its receivables into cash about 1.7 times.

3) Plant and equipment turnover:

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National Central Cooling Company Tabreed Group 1 Cohort 23


Plant and equipment turnover = sales / average plant and equipment
Of year 2012 (AED 000) = (1,128,738) / ((4,939,095+4,626,461) /2) =
0.236
Of year 2011 (AED 000) = (1,114,571) / ((4,626,461+4,401,521) /2) =
0.247

4) Inventory turnover:
This ratio is a measure of how many times merchandise inventory is
sold and replaced during the year.
Inventory turnover = cost of goods sold / average inventories
Of year 2012 (AED 000) = (628,137) / ((33,876+33,909) /2) = 18.53
Of year 2011 (AED 000) = (654,788) / ((33,909+35,796) /2) = 18.79
In year 2012, Tabreed sold its merchandise inventory and replaced
about 18.5 times.

Table 6 below gives a summary of the turnover ratios presented for the
years 2012 and 2011.

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National Central Cooling Company Tabreed Group 1 Cohort 23


Table 6 Turnover ratios

Sales (AED 000)


Average total assets (AED 000)
Average accounts receivable (AED
000)
Average plant and equipment (AED
000)
Cost of goods sold (Operating cost)
(AED 000)
Average inventories (AED 000)
Total asset turnover ratio
Accounts receivable turnover
ratio
Plant and equipment turnover
ratio
Inventory turnover ratio

2012
2011
1,128,73 1,114,57
8
1
960,825 1,192,78
8
673,369 756,183
4,782,77 4,513,99
8
1
628,137 654,788
33,893
0.13
1.68

34,853
0.13
1.47

0.24

0.25

18.53

18.79

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National Central Cooling Company Tabreed Group 1 Cohort 23


B. Number of days sales in
1) Accounts receivable
Average days sales = annual sales / 365
Of year 2012 (AED 000) = (1,128,738) / 365 = 3,092
Of year 2011 (AED 000) = (1,114,571) / 365 = 3,054
Number of days sales in accounts receivable = accounts receivable at
year-end / average days sales
Of year 2012 (AED 000) = (558,266) / 3,092 = 181 days
Of year 2011 (AED 000) = (788,472) / 3,054 = 258 days
As calculation shows it was taking quite long to collect an account
receivable in 2011 compared to 2012 which was reduced to 180 days.
So the average age of the accounts receivable has been enhanced by
77 days. The Table 7 shows the summery number of days sales.
Table 7 Activity measure: Number of days sales in

Sales (AED 000)


Accounts receivable at year-end
(AED 000)
Cost of goods sold (Operating cost)
(AED 000)
Inventories (AED 000)
Average days sales (AED 000)/day
Number of days sales in
accounts receivable
Average days cost of goods sold

2012
2011
1,128,73 1,114,5
8
71
558,266 788,47
2
628,137 654,78
8
33,876 33,909
3,092
3,054
181
258
1,721

1,794

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National Central Cooling Company Tabreed Group 1 Cohort 23

Number of days sales in


inventory

20

19

2) Inventory

Average days cost of goods sold = annual cost of goods sold / 365
Of year 2012 (AED 000) = (628,137) / 365 = 1721
Of year 2011 (AED 000) = (654,788) / 365 = 1794

Number of days sales in inventory = inventory at year-end / average


days cost of goods sold
Of year 2012 (AED 000) = (33,876) / 1721 = 20 days
Of year 2011 (AED 000) = (33,909) / 1794 = 19 days

This measure shows the number of days sales that could be made from
the inventory on hand. The number of days Inventory is sold and
replaced is 19.6 in 2012.

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National Central Cooling Company Tabreed Group 1 Cohort 23

Profitability measures
1) Return on investment (ROI)
This ratio gives the rate of return that has been earned on the assets
invested and is the key measure of profitability.
I.

General model

ROI = return / investment = net income / average total assets


Of year 2012 (AED 000) = (234,245) / ((8,492,181+8,743,753)/2) = 0.
0272 = 2.72%
Of year 2011 (AED 000) = (181,586) / ((8,743,753+8,193,039)/2) =
0.0214 = 2.14%
There is a slight increase in 2012 than 2011 due to the increase of the
return by AED 54,869,000
II.

DuPont model

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National Central Cooling Company Tabreed Group 1 Cohort 23


ROI = Margin * Turnover = net income/sales * sales/average total assets
Of year 2012 (AED 000) = ((234,245) / (1,128,738)) * (1,128,738) /
((8,492,181+8,743,753) /2) = 0. 0272 = 2.72%
Of year 2011 (AED 000) = ((181,586) / (1,114,571)) * (1,114,571) /
((8,743,753+8,193,039) /2) = 0.0214 = 2.14%
Margin expresses the net income resulting from each dollar of sales.
Whereas turnover shows the efficiency with which assets are used to
generate sales.

2) Return on equity (ROE)


General model
ROE = net income/ average total stockholders equity
Of year 2012 (AED 000) = (234,245) / ((4,426,591+3,914,083) /2) =
0.0562 = 5.62%
Of year 2011 (AED 000) = (181,586) / ((3,914,083+1,582,235) /2) = 0.
0661 = 6.6%

The rate of return on that portion of the assets provided by the


owners or stockholders of Tabreed in 2012 is 8.5% which reflect
decrease by 2.4% from 2011. Although the net income increased
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National Central Cooling Company Tabreed Group 1 Cohort 23


in 2012 however, the average total stockholders' equity increased
well, as illustrated from Table 8 below.

Table 8 Profitability ratios measures

Return (net income) (AED


000)
Investment (average total
assets) (AED 000)
Sales (AED 000)
Average total stockholders
equity (AED 000)
Margin ratio
Total asset turnover ratio
Return on investment
(ROI) ratio
Return on equity (ROE)
ratio

2012
234,245

2011
181,586

8,617,967

21%
13%
3%

8,468,39
6
1,114,57
1
2,748,15
9
16%
13%
2%

6%

7%

1,128,738
4,170,337

Financial leverage measures


1) Debt ratio
This ratio measures the percent of assets being provided by creditors.

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National Central Cooling Company Tabreed Group 1 Cohort 23


Debt ratio = total liabilities / total liabilities and stockholders equity
Of year 2012 (AED 000) = 4,065,590 / 8,492,181 = 0.4787 = 48%
Of year 2011 (AED 000) = 4,829,670 / 8,743,753 = 0.5524 = 55%
In 2012 debt ratio was 48% whereas it was 55% in 2011.
2) Debt / equity ratio
This ratio measures the relative proportion of contribution from owners
and creditors.
Debt / equity ratio = total liabilities / total stockholders equity
Of year 2012 (AED 000) = 4,065,590 / 4,426,591 = 0.9184 = 92%
Of year 2011 (AED 000) = 4,829,670 / 3,914,083 = 1.2339 = 123%
In 2012 debt ratio was 92% whereas it was 123% in 2011 as shown in
Table 9 below.
Table 9 Financial Leverage Measures

Total liabilities (AED 000)


Stockholders equity (AED 000)
Total liabilities & stockholders equity
(AED 000)
Debt ratio
Debt / equity ratio

2012
2011
4,065,59 4,829,67
0
0
4,426,59 3,914,08
1
3
8,492,18 8,743,75
1
3
48%
55%
92%
123%

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National Central Cooling Company Tabreed Group 1 Cohort 23

4 years Comparison Financial Statements for Tabreed


The Table 10 below shows financial statements comparisons of
Tabreed for 4 years.

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National Central Cooling Company Tabreed Group 1 Cohort 23


Table 10 Annual Income Statement Comparison table: 8

Bloomberg

L.P.

Businessweek

website,

http://www.businessweek.com/
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National Central Cooling Company Tabreed Group 1 Cohort 23

The financial situation in the 3rd quarter of the


current year (2013) and comparing it to the same
period last year (2012):
The Table 11 below shows that Although the company's revenues
for the 3rd quarter of 2013 decreased by 2% to be AED 826.5
million (2012 YTD: AED 842.0 million), the company managed to
reduce also the operating cost by 8% to be AED 436.6 million
(2012 YTD: AED 472.9 million), which helped the company's Gross
Profit for the 3rd quarter of 2013 to increase by 6% to be AED
275.9 million compared to the same period for 2012 with AED
261.4 million.
Table 11 The financial situation in the 3rd quarter of the current and last year 2013 and
2012

All figures in AED m

YTD Q3 2013

YTD Q3 2012

% change

Revenues

826.5

842.0

-2%

Operating Cost

-436.6

-472.9

8%

Gross Profit

389.9

369.1

6%

47%

44%

Admin & other expenses

-114.0

-107.6

-6%

Operating Profit

275.9

261.4

6%

33%

31%

-111.0

-128.6

14%

34.8

32.5

7%

202.3

167.6

21%

Gross Profit Margin

Operating Profit Margin


Net Finance Costs
Share

of

Results

of

Associates
Net profit attributable to
parent

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National Central Cooling Company Tabreed Group 1 Cohort 23


EBITDA

379.7

362.2

5%

Also the Table 11 shows that the following figures:

Net profit attributable to the parent increased by 21% to AED


202.3 million (2012 YTD: AED 167.6 million)

Core chilled water revenue increased by 4% to AED 775.9 million


(2012 YTD: AED 747.6 million)

Core chilled water profit from operations increased by 4% to AED


266.4 million (2012 YTD: AED 255.9 million)

In line with expectations as the company continued to phase out


the non-core businesses, Group revenue declined by 2% to AED
826.5 million (2012 YTD: AED 842.0 million)

EBITDA increased by 5% to AED 379.7 million (2012 YTD: AED


362.2 million)

Net finance costs decreased by 14% to AED 111.0 million (2012


YTD: AED 128.6 million)

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National Central Cooling Company Tabreed Group 1 Cohort 23

Conclusion
Today, National Central Cooling Company Tabreed is a stable and
healthy organization, underpinned by strong fundamentals and a robust
core business.
Year after year, National Central Cooling Company PJSC Tabreed has
perceived revenues continue reasonably increasing (from 783M AED to
1.13B AED), although the Tabreed company was clever to grow their net
income from 182.7M AED to 236.4M AED for last year 2012.
In addition according to the board of directors in their statement
last September, they believe that Tabreed's strategy to drive
growth through their core chilled water business continues to
deliver strong results. Also they are optimistic that chilled water
demand will continue to increase across the region, and look
forward to working closely with their clients to implement energyefficient cooling solutions that enable the regions sustainable
development.

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National Central Cooling Company Tabreed Group 1 Cohort 23

Appendix A
Results of the Board Meeting of TABREED Company held on 24 February
2013 about MCB.

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National Central Cooling Company Tabreed Group 1 Cohort 23

Bibliography
1. As of December 12th, 2013, Tabreed website:
http://www.tabreed.ae/en/about-us/vision-mission-and-values.aspx
2. As of December 11th 2013, EMPOWER website:
http://www.empower.ae/index.php
3. As of December 11th 2013, Palm District Cooling website:
http://www.palmutilities.ae/services_pdc.html
4. As of December 11th 2013, EMICOOL website:
https://www.emicool.net/en/SitePages/faq.aspx
5. As of December 12th, 2013, Bloomberg Businessweek website:
http://investing.businessweek.com/research/stocks/financials/financials.
asp?ticker=TABREED:UH

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