Tabreed 06 Prospectus - London Stock Exchange

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NATIONAL CENTRAL COOLING COMPANY (TABREED) PJSC Overview National Central Cooling Company (Tabreed) PJSC (hereafter referred to as ‘‘Tabreed’’ or the ‘‘Company’’) is one of the leading suppliers of district cooling services in the United Arab Emirates (the ‘‘UAE’’). Tabreed designs, engineers, finances, constructs and operates district cooling facilities that supply chilled water for air conditioning. Tabreed currently operates 19 district cooling plants (of which it owns 17) in the UAE from which it sells chilled water air conditioning services to customers that are connected to the relevant distribution network. Tabreed was incorporated on 17 June 1998 as a public joint stock company with unlimited duration pursuant to the UAE Commercial Companies Law Number 8 of 1984 (as amended), and operates under Dubai licence no 506206. The registered office of Tabreed is at PO Box 32444, Dubai, United Arab Emirates and the telephone number is 971-4-3404422. Tabreed’s current authorised and issued share capital is AED 1 billion. Tabreed is listed on the Dubai Financial Market (‘‘DFM’’) and has a wide shareholder base, with the largest single shareholding being 7.38% as at 31 May 2006. Its shareholders include government bodies and investment institutions, private offices of high net worth individuals, overseas investors and the public. Following incorporation, Tabreed acquired Gulf Energy Systems LLC (‘‘GES’’) in 1998 and signed a contract with the UAE Armed Forces (‘‘UAF’’) in 1999 to own and operate a 3,800 ton district cooling plant at Zayed Military City. Subsequently, Tabreed went on to become the first and only commercial provider of district cooling services in the Gulf region and, according to a report on Tabreed by EFG-Hermes dated 30 November 2005 (the ‘‘EFG-Hermes Report’’), the largest in the world. The installed capacity is currently approximately 144,000 refrigeration tons (‘‘tons’’) of which Tabreed owns approximately 134,000 tons and operates approximately an additional 10,000 tons. It has a further pipeline of at least 22 new greenfield or expansion projects in the UAE of approximately 250,000 tons capacity in various stages of implementation. The UAF has been Tabreed’s major customer to date, accounting for, in the fiscal year 2005, approximately 85% of installed capacity and 84.4% of the Company’s district cooling revenues. In addition, the Company has expanded its district cooling operations by establishing subsidiaries and associate companies in Qatar, Bahrain and Saudi Arabia. It is already implementing projects of about 90,000 tons in Qatar and Bahrain, and has identified prospects of over 100,000 tons in each country. Although Tabreed is currently exploring initial project opportunities it is expected that Saudi Arabia will be the main revenue contributor in the future. In Oman, Tabreed LLC Oman was recently established, and is in the early stages of development. The Company is currently considering opportunities to develop into Jordan and Kuwait. Tabreed typically enters into long-term (usually 20 year) renewable contracts to supply chilled water air conditioning services to customers it regards as creditworthy, with a view to providing the Company with stable cash flow. The majority of new contracts are being entered into with private commercial customers and other government authorities and it is expected that, by the end of 2008, they shall represent the majority of Tabreed’s customer base. Principal Business Segments The business segments of Tabreed comprise: * District cooling air conditioning (chilled water): The provision of district cooling services represents the core business activity for Tabreed. For the year ended 31 December 2005, this segment contributed approximately 54.4% of Tabreed’s gross profit before depreciation. * Contracting: Tabreed, through its subsidiary GES, provides contracting services for the conversion of buildings to ensure compatibility with its district cooling system. For the year ended 31 December 2005, this segment contributed approximately 13.3% of Tabreed’s gross profit before depreciation. * Servicing: Tabreed also provides ancillary servicing, including engineering, maintenance and consultancy services, to its district cooling systems through its subsidiaries, Ian Banham and Associates and Installation Integrity 2000 LLC. For the year ended 31 December 2005, this segment contributed approximately 12.1% of Tabreed’s gross profit before depreciation. 48
* Manufacturing: Tabreed, in conjunction with its joint-venture partner Emirates Pre-insulated Pipes & Industries (‘‘EPPI’’), manufactures and sells piping systems for district cooling and other energy related applications. For the year ended 31 December 2005, this segment contributed approximately 20.2% of Tabreed’s gross profit before depreciation. The gross profit before depreciation in 2004 and 2005 for all segments: 2005 2004 (AED mn) (% growth) (AED mn) (% growth) Chilled Water .................................................... 104.1 25 83.1 34 Contracting ....................................................... 25.4 53 16.6 177 Servicing ............................................................ 23.2 164 8.8 103 Manufacturing................................................... 38.6 144 15.8 50 TOTAL ............................................................. 191.3 54 124.3 50 Strategy According to the EFG-Hermes Report, Tabreed holds a dominant market position in the UAE and regional district cooling industry It has grown its business rapidly and its business strategy is aimed at continuing this growth, whilst consolidating its existing position. The key elements of this are: * Maintaining its relationship with the UAF, which is considering the use of district cooling at a number of new sites; * Diversification of its customer base, which is already being undertaken; * Expansion within the UAE, as well as in other countries in the Gulf region; * Investing in technology and customer service capabilities to ensure seamless service; and * Continuing to demonstrate the economic and environmental benefits of district cooling. The current boom in the real estate markets in the UAE and other countries of the Gulf Cooperation Council (‘‘GCC’’) provides a great opportunity for district cooling to establish a firm foothold. Tabreed, as the market leader, intends to seize this opportunity and create a solid base of customer contracts and assets that will ‘‘lock in’’ its revenues for next 20 years. Tabreed intends to target the following categories of buildings for district cooling services: * Large multi-storey buildings, particularly new developments; * Institutional complexes such as military bases, government buildings, universities and schools, hospitals and mosques; * Commercial complexes such as officer towers and shopping malls; * Leisure facilities such as hotels; and * Large residential clusters such as multi-storey buildings and housing compounds. Business Tabreed’s core business activity is the provision of district cooling air conditioning systems in the UAE, Qatar, Bahrain and Saudi Arabia. Tabreed’s business is divided into the four principal segments: chilled water district cooling, contracting, servicing and manufacturing. The District Cooling – Chilled Water segment contributed AED 133.1 million of turnover, representing approximately 33.2% of the Company’s revenue, for the financial year ended 31 December 2005. District Cooling – Chilled Water District cooling is an efficient system of air conditioning. It uses a central plant to cool water and distribute it through insulated pipes to customers’ buildings. Air is then forced past cold-water tubing to produce an air conditioned environment. The warmer water is returned to the central plant to be re-chilled and redistributed. The technology is the same as in standard air conditioning systems. Each central plant consists of one or more chillers, heat exchangers, pumps and insulated piping. District cooling can be run on electricity or natural gas, and can use either regular water or seawater for heat rejection. Gas powered plants are usually more expensive to install, but cheaper to operate. 49
Page 1 and 2: TABREED 06 FINANCING CORPORATION (i
Page 3 and 4: Table of Contents Page STRUCTURE DI
Page 5 and 6: above, the Dissolution Distribution
Page 7 and 8: OVERVIEW OF THE OFFERING This follo
Page 9 and 10: ‘‘Margin’’ means 1.25 per c
Page 11 and 12: Redemption for Tax Reasons accordan
Page 13 and 14: Lease Agreement Date. The balance s
Page 15 and 16: (d) fourth, only if such payment is
Page 17 and 18: Governing Law The Declaration of Tr
Page 19 and 20: Legionnaire’s Disease Tabreed is
Page 21 and 22: Enforcement of Liabilities Ultimate
Page 23 and 24: TERMS AND CONDITIONS OF THE CERTIFI
Page 25 and 26: 3 Status - Limited Recourse 3.1 Sta
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Page 33 and 34: 8.6 Agents act solely as agents of
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Page 45 and 46: Under the Lease Agreement, if Tabre
Page 47: USE OF PROCEEDS The proceeds of the
Page 51 and 52: * High barriers to entry. District
Page 53 and 54: Detailed customer profile of plants
Page 55 and 56: Contractual Overview Contracts for
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Page 65 and 66: Marketing district cooling services
Page 67 and 68: TABREED 06 FINANCING CORPORATION In
Page 69 and 70: TAXATION The following is a general
Page 71 and 72: THE UNITED ARAB EMIRATES The UAE is
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Page 77 and 78: GENERAL INFORMATION 1. It is expect
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National Central Cooling Company PJ
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Registered/Head Office of the Issue
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Tabreed 06 Prospectus - London Stock Exchange

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