Abu Dhabi: The National Central Cooling Company (Tabreed) on Monday said first quarter net profit more than doubled over the same period last year on revenues that remained more or less flat.

The Abu Dhabi-based utility company said total revenue was Dh184.6 million compared to Dh189.7 million in the same period in 2009.

Net profit for the first quarter of this year was Dh43.8 million compared to Dh21.7 million in 2009, in part reflecting non-cash finance gains associated with the company’s 2008 convertible sukuk, a Tabreed statement said. Excluding these gains, underlying net profit increased 15 per cent.

Excluding minority interests, Tabreed’s share of profits was Dh40.4 million compared to Dh10.8 million in the previous year. Gross profit increased 11 per cent to Dh88.9 million compared to Dh80.2 million in 2009.

Chilled water revenue for the period was Dh117.1 million, a 91 per cent increase over the same period in 2009, as new plants and customers came on line. Profits in this division more than doubled to Dh22.8 million and margins improved from 18 to 20 per cent.

Basic and diluted earnings per share attributable to ordinary equity holders of the parent increased from Dh0.01 in 2009 to Dh0.02 in 2010.

“The first quarter 2010 results demonstrate the significant progress we have achieved to date in reengineering the business and implementing corporate governance and process controls,” Tabreed Chief Executive Sujit S. Parhar said in the statement.

“We have a strong core business of chilled water and a steady pipeline of new plants coming on stream. We will continue to focus on improving operations and actively managing facilities.  We acknowledge the challenges facing the business in the year ahead and those associated with our recapitalization process, but we are confident in our long-term prospects,” he said.

Chief Financial Officer Steve Ridlington added: “In addition to operational improvements, we have also taken steps to implement a more rigorous financial discipline and focus on efficiency for our business, both of which are evident in the results announced today.  Our efforts have translated into the best first quarter results in the company’s history.”

During the first quarter of this year, Tabreed added four new plants, adding 27,000 TR of capacity and bringing Tabreed’s total installed cooling capacity to 422,100 TR across 40 plants. 

The company’s core business of chilled water recorded sales of Dh117.1 million, an increase of 91 per cent over the same period last year as a result of three new plants coming online in 2009 and four new plants coming online in the first quarter of 2010.

The contracting segment recorded sales of Dh36.1 million, an increase of 37 per cent over the same period last year. Profits for the segment were Dh15.6 million.

Tabreed’s wholly owned subsidiary, Gulf Energy Systems (GES), was the biggest contributor to the strong results, particularly reflecting GES commissioning the chilled water network on Al Reem Island and signing Dh60 million of new orders for the Sowwah Island network project, the company said.

Tabreed’s manufacturing segment reported sales of Dh15.6 million, a significant decline from the Dh81.4 million for the first quarter 2009, due to a significantly reduced order book. During the quarter, Emirates Pre-insulated Piping Industries was awarded three new projects, valued at approximately Dh25 million, which are expected to be completed by the second quarter of 2010, it said. Profits for the manufacturing segment were Dh0.7 million.

Tabreed’s services segment, which is involved in the design and supervision of building electrical and mechanical works, reported sales of Dh15.9 million - down 23 per cent over the same period in 2009, reflecting reduced order books from the slowdown in the economy. Profits for the segment were Dh5.5 million – unchanged over the same quarter in 2009.

As of March 31, 2010, Tabreed’s total installed cooling capacity is 422,100 tonnes across 40 district cooling plants. The company expects nine plants to come on stream in the remainder of 2010.

Recapitalisation programme

On March 8, 2010, Tabreed announced its unaudited full-year 2009 results and its intention to submit for Tabreed shareholders’ approval a recapitalisation programme designed to allow the company to achieve a stable long-term financial profile and capital structure. 

“Since that announcement there have been positive discussions with Tabreed’s main stakeholders.  Shareholders will decide on providing the board the authority to move forward with a recapitalisation programme at the April 28 extraordinary general assembly,” the company said.

Following a review of alternatives with respect to the annual distribution on its convertible Ijara 08 Sukuk, Tabreed intends to defer making this payment on May 19. 

“Deferring the annual distribution is consistent with the objectives of the recapitalisation proposal that will be decided upon by Tabreed’s shareholders and reflects the subordinated and equity-like nature of the 08 Sukuk. Mubadala Development Company and ACWA Holdings, who together represent a majority of 08 Sukuk holders, have expressed their support for Tabreed’s decision,” the statement said.

“Tabreed intends to propose amendments to the terms of the 08 Sukuk in due course in connection with its broader recapitalization program that Tabreed is targeting for completion in Q4 2010,” it said.