Dubai: The UAE district cooling company Tabreed’s move on 2023 dividends sure will please its shareholders.
A ‘record high’ 15.5 fils a share will be provided to them after a year of strong financial performance, robust cash generation and a positive outlook for the medium-term.
The proposed dividend represents an increase of 15 per cent. (The stock is up 11 per cent over the last 12 months, and with the 2023 dividend announcement, the yield works out to over 5 per cent.)
The confidence stems from wins in the UAE as well as successful first moves into new markets such as India. Last year, the company recorded a substantial Dh751 million as net profit before tax from a Dh2.4 billion turnover, which is 9 per cent higher over 2022.
International demand for our services is growing considerably and these results prove we are ready, willing and able to respond like no other company
Aggressive on ambitions
The bullish sentiment is reflected in the statement put out by a top official. “This time last year I spoke about Tabreed’s carefully planned growth and taking our expertise into new markets," said Khaled Abdulla Al Qubaisi, Chairman. "We spent 2023 making good on that promise and now operate in six countries, including India, supplying sustainable cooling to clients.
“This is just the beginning and, over the next few years, we will continue to capitalise by aggressively, yet considerately, targeting opportunities for expansion."
Tata alliance
In 2023, Tabreed entered the India market in alliance with Tata Realty and Infrastructure, part of a carefully crafted move to expand beyond the GCC. Across all of its operational markets, its total connected district cooling capacity closed last year with 1.303 million RT (refrigerated tonnes).
In Egypt, its subsidiary recently cancelled a contract with an entity belonging to Egyptian Healthcare Services Company on new medical city called Capital Med. Tabreed had at the time said it was due to the currency depreciation in Egypt, but that it has other ongoing projects in that market.
Corporate tax provision
With the UAE corporate tax regime in effect, Tabreed had a one-off, non-cash accounting impact - due to recognising a deferred tax liability amounting to Dh359 million, resulting in a reported net profit of Dh431 million for the year.
Net debt decreased helped by 'strong' cash generation and the 'decline in gross debt due to a proactive debt management exercise carried out during the year'. The company also had reductions in its net finance costs by 24 per cent despite the high interest rate environment.
"Throughout the year, Tabreed continued to maintain its strong cash flow profile, underpinned by long-term contracts, resilient margins and efficient working capital management," said a statement. Net cash from operating activities totaled Dh1.31 billion in 2023 (against Dh1.35 billion in 2022), while free cash flows increased 8 per cent to Dh1.21 billion.
