Tabreed 06 Prospectus - London Stock Exchange

* 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