Tabreed Financial Analysis Project
Tabreed Financial Analysis Project
Tabreed Financial Analysis Project
National
Central
Cooling
Company PJSC
TABREED
Course Title:
ACCT 601
Accounting for Senior Managers
201370291
Cohort 23
201370227
200202209
Submitted Date:
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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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Liquidity measures............................................................26
Activity measures..............................................................29
Profitability measures........................................................33
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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
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industry,
supervision
consultancy
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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
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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
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
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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
Year 2012
Year 2011
Year 2010
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Year 2009
Year 2008
Year 2007
Year 2006
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Tabreeds Subsidiaries
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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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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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Empower:
Emirates
Central
Cooling
http://www.empower.ae/index.php
Palm
District
Established
in
Cooling:
2004,
Palm
entity
Investments
PJSC
among
Dubai
and
Union
joint
6 EMICOOL website.
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Significant
Event:
Recapitalization
program
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massive
debt
pile."
According
to
ArabianBusiness.com
on
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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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
ACWA Holding
16.24
%
Mubadala
Development
14.81
%
Company
12.42
General Investments FZE
%
59.9
UAE Nationals
%
GCC Nationals
21.3
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6.4%
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Financial Overview
Auditors Report Analysis
The EY (ERNST & YOUNG) stated that In our opinion, the
consolidated
financial
respects,
position
of
all
the
the
with
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is
the
earnings
before
interest,
taxes,
depreciation
and
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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
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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
year history.
Figure 3 Chilled water segment revenue
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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
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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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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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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)
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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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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%
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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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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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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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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
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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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
DuPont model
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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
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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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Bloomberg
L.P.
Businessweek
website,
http://www.businessweek.com/
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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%
-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%
of
Results
of
Associates
Net profit attributable to
parent
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379.7
362.2
5%
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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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Appendix A
Results of the Board Meeting of TABREED Company held on 24 February
2013 about MCB.
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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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