2014 Annual Report Delivering innovative district cooling solutions to landmark projects across the GCC Yas Island Dubai Metro The Pearl Jabal Omar Abu Dhabi Dubai Doha The Holy City of Mecca Abu Dhabi, UAE Abu Dhabi Mall West Tower, 13th floor P.O. Box: 29478 Tel: +971 (0)2 645 5007 www.tabreed.ae Fax: +971 (0)2 645 5008 [email protected] Copyright © 2014 Tabreed. All rights reserved Al Maryah Island Abu Dhabi H.H. Sheikh Khalifa Bin Zayed Al Nahyan President of the United Arab Emirates H.H. Sheikh Mohammed Bin Zayed Al Nahyan H.H. Sheikh Mohammed Bin Rashid Al Maktoum Abu Dhabi Crown Prince and Deputy Supreme Vice President and Prime Minister of the UAE Commander of the UAE Armed Forces and Ruler of Dubai Table of Contents Our Regional Overview of 2014 08 Key Achievements of 2014 10 Historical Highlights: 2011-2014 12 Chairman’s Message 16 CEO’s Message 18 Presence Board of Directors 22 Board of Directors’ Report 24 Corporate Governance Report 28 Saudi Arabia Bahrain Independent Auditors’ Report 34 2 Plants 1 Plant Financial Statements 36 Qatar 3 Plants UAE 62 Plants Oman 1 Plant Al Maryah Island Abu Dhabi, United Arab Emirates In 2014, a consortium comprising Tabreed and Mubadala Infrastructure Partners acquired the existing district cooling plant on Abu Dhabi’s Al Maryah Island, a 114 hectare mixed- use development designed to become the capital’s new Central Business District. This acquisition (which represents an installed capacity of up to 80,000 RT) secured for us the exclusive right to provide district cooling services to all the projects on the Island. Abu Dhabi Global Market (ADGM) Square ADGM Square’s four office towers & the ADGM Building form a striking waterfront grouping that creates a strong business hub for the Island and sets new standards in premium real estate developments in the UAE. The Galleria Featuring an unrivalled collection of designer labels and premium brands, as well as sophisticated cuisines, The Galleria is Abu Dhabi’s new premier shopping destination and Rosewood Abu Dhabi comprises one of the highest concentrations of luxury brands in the Middle East. Defining new standards, this five-star hotel offers locals and tourists a distinct and personalized luxury lifestyle experience in the heart of the capital. Cleveland Clinic Abu Dhabi A world-class multispecialty hospital designed to address a range of complex and critical care requirements unique to the Abu Dhabi Tabreed’s Plant population. The 364 bed hospital provides direct access to the world’s best healthcare Via this plant, Tabreed currently providers and Cleveland Clinic’s unique model delivers a total of 43,900 RT to all of care right here in the UAE. the existing developments on Al Maryah Island. Overview of 2014 June July Won two silver In a transaction Net profit for the awards at the 105th valued at over first half of the year annual International AED one billion, reached AED 149 District Energy a consortium million, an increase January March Association comprising of 17% conference in Tabreed and Energy savings in AGA approved a Shareholders also Seattle, USA Mubadala 2013 surpassed one dividend distribution elected two new Infrastructure billion kilowatt hours, to shareholders of five members to the Board Signed a new Partners acquired a which translates into fils/share for FY 2013 of Directors: Fahad agreement with UAE 30-year concession the elimination of Saeed Mohamed University to provide to be the exclusive over half a million Shareholders Al Raqbani and them with 17,500 provider of district tons of CO2 emissions re-elected Board of Mohammed Al tons of cooling for cooling to the from our atmosphere Directors to another Huraimel Al Shamsi their current and developments on three year term future projects Al Maryah Island in Abu Dhabi April May June September October December Inaugural Corporate In response to higher Renewed master Signed a long term Net profit for the first Successfully Social Responsibility cooling demand, services agreement concession agreement nine months of the completed the Report launched our Qatari affiliate, with the United Arab with Meraas Leisure year increased by 21% refinancing of AED 2.6 “Qatar Cool”, signed Emirates Armed and Entertainment to AED 245 million billion debt facilities. First quarter net a contract for the Forces. The new to provide 45,600 The improved profit increased by construction of a contract is valued at tons of cooling to the conditions, margins, 22% to AED 58 million fourth district cooling AED 6 billion new Dubai Parks and and tenor in the new plant in Qatar Resorts development agreement reflect Mubadala converted in Jebel Ali Tabreed's established AED 134 million position as a leading of mandatory utility infrastructure convertible bonds into business shares, increasing Tabreed’s total Full year net profit issued shares to reached AED 326 approximately 738.5 million, a 20% million increase over 2013 8 | 2014 Annual Report 2014 Annual Report | 9 118,273 RT of new Key Achievements of 2014 customer connections added Net profit reached Total group 957,000 RT AED 326 million - an increase of connected capacity 20% from 2013 Acquired a district 69 Plants in the GCC Cash flow cooling plant on from Abu Dhabi’s Al Maryah Island operations reached AED 549 million Signed a contract to provide 45,600 tons of cooling to Dubai Parks and Resorts Won 2 silver awards at the International District Energy Qatari affiliate began Renewed contract Association conference in USA construction on its with UAE Armed 4th plant in Qatar Forces, valued at AED 6 billion Signed a new agreement with UAE University to provide them with 17,500 RT 10 | 2014 Annual Report 2014 Annual Report | 11 Historical Highlights: 2011 1,115 2011 183 2012 1,129 2012 236 2011-2014 2013 1,100 2013 272 2014 1,131 2014 272 326 As we have done in previous years, 2014 saw Tabreed Group Revenue (Millions AED) Net Profit (Millions AED) continue to grow its business in a stable and sustainable manner. The company delivered strong results, and 2011 435 2011 274 improved on its performance over the past several years. 2012 502 2012 347 We continued to execute on our business Today, we have an industry leading 2013 507 2013 348 strategy, which is anchored in the robust 69 district cooling plants operating performance of the core chilled water in 5 countries across the GCC – making 2014 535 2014 359 business. At the end of 2014, the chilled us the region’s only district cooling water segment contributed 93% of our provider that has established themselves Group EBITDA (Millions AED) Chilled Water Profit from Operations overall group revenue. This is a strong across different markets. (Millions AED) testament to our successful transformation into a utility infrastructure company. Our plants are located in the UAE (62 plants), Qatar (3 plants), Saudi Arabia In 2014, group revenue reached over (2 plants), Oman (1 plant) and Bahrain 2011 64 2011 703,000 AED 1.1 billion, and revenue from (1 plant). the core chilled water business grew by 2012 65 2012 767,000 1% (as compared to the previous year) Our connected capacity has likewise to just over AED 1.03 billion. continued to increase with our total 2013 66 2013 839,000 capacity across the region now reaching 272 More importantly, net profit saw a 957,000 RT – an increase of over 14% from 2014 69 2014 957,000 significant increase, reaching AED 325.7 2013. The major contributors to our regional million (a 20% increase from 2013). growth have been Saudi Arabia and Qatar. Number of Plants (Group) Group Connected Capacity (RT) This increase can be attributed to not In 2014, we added over 31,000 RT in Saudi only the new connections we have made Arabia, while in Qatar we connected over throughout the year, but also to our 16,000 RT. 270,314 commitment to operating our business as 2011 564,780 2011 efficiently as possible and leveraging one While we have established ourselves across 294,466 274,227 of our main competitive advantages - our the GCC, we remain focused on our home 2012 612,045 2012 economies of scale. market of the UAE, where in 2014, our total 337,818 connected capacity increased by over 69,000 2013 636,104 274,871 2013 Tabreed’s strong financial performance RT from 2013. 361,233 is a direct result of the company’s robust 2014 705,613 275,026 operations. The Tabreed of today is a vastly Our customer profile in the UAE remains 2014 different company from the Tabreed of four strong, with a large percentage of our 430,587 years ago, and one look at the improved capacity contracted to well-established UAE Connected Capacity (RT) UAE Customers (RT) operational performance demonstrates government entities. Government / Non-Government why Tabreed has become a solid company. 12 | 2014 Annual Report 2014 Annual Report | 13 Tabreed’s Plant Yas Island Via this plant, Tabreed currently delivers a total of 52,300 RT to all the existing developments on Abu Dhabi, United Arab Emirates Yas Island. In July 2009, Tabreed completed the construction of its district cooling plant on Yas Island, Abu Dhabi’s premier leisure and Yas Marina Circuit entertainment destination. The plant, located on Yas Island West and adjacent to the Sheikh Khalifa Highway, provides cooling to all the current and future developments on the Island. Yas Marina Circuit is home to the annual Formula 1 Etihad Airways Abu Dhabi Grand Prix (and many more exciting events). The highly acclaimed circuit is 5.554 kilometers long, making it the sixth-longest circuit and the only twilight race on the calendar.