Tabreed 06 Prospectus - London Stock Exchange

* Fawaz Elhindi, Marketing Manager – Abu Dhabi & Al Ain, has a BSc in Mechanical Engineering
from the University of Louisiana, USA. He has over 20 years’ experience in sales and marketing
working for leading multinationals in the Middle East. He is a member of the American Society
of Mechanical Engineers.
* Issa Cattan, IT Manager, has a BSc in Economic and Computer Science from Yarmouk
University, Jordan. He has extensive experience with computers and has held managerial
positions in leading computer system companies.
There are no potential conflicts of interest between the duties to Tabreed of the persons listed above
and their private interests or other duties.
Employees
Tabreed had 274 employees as at 31 December 2005, including all its subsidiaries, none of whom are
members of any trade union in any jurisdiction in which Tabreed does business.
In addition to operations in Bahrain, Bahraini nationals are entitled to join labour unions although
Tabreed does not currently anticipate its employees joining any labour union.
Employees who are citizens of the UAE or Bahrain are covered by a federal pension plan. The UAE
employees and the Company contribute on a monthly basis. In Bahrain, only the Company
contributes to the plan (the name of the institution is GOSI – General Organization for Social
Insurance). Expatriate employees accrue end of service benefits defined by the Company’s Policies and
Procedures, employee contracts and Federal Law. End of service liabilities are accounted for.
Risk Management
Competitive Environment
Tabreed and its district cooling subsidiaries and associates are the leading commercial district cooling
companies in the UAE and the Gulf region.
A recent development is the creation of captive central cooling for most of the major Dubai based
real estate projects. Two joint venture companies have been formed to develop the district cooling for
these projects:
* Empower: a joint venture between DEWA and TECOM, for the Dubai Holdings
developments; and
* Palm District Cooling: a joint venture between the Nakheel Group and Al Ghurair Group, for
the Nakheel Group developments.
Whilst primarily serving a captive market, these companies have attempted to bid for non-captive
contracts as well. To date, Tabreed has not lost any contract that was awarded on a competitive
basis to these companies.
Emaar’s initial properties did not previously use district cooling, but the company launched a district
cooling subsidiary in 2004 that could potentially serve Emaar’s new developments in the future.
Tabreed’s management is aware of the competition, but takes comfort from the fact that the
Company’s medium term growth is protected by signed customer contracts. For growth beyond that,
management expects a substantial portion to come from clearly established further build-out potential
on the signed contracts. Thus, management believes that the next five years’ growth in assets (and
hence the revenues out of those assets for the following 20 years) is not vulnerable to competitive
pressures. More importantly, competition will not adversely affect cash flows under the existing
contracts, and probably wouldn’t affect the (highly profitable) build out of those plants.
Management believes that the main barrier to entry into the district cooling market is the substantial
initial capital and long term financing requirements for development of district cooling projects which
may prove an obstacle to its competitors. But, even so, management considers the market sufficiently
large to accommodate multiple players.
The Company follows an established procedure and tracks the progress through a Scheme Initiation
form. The form is initiated by marketing and if approved by the CEO results in a development
business unit being created with a budget. The form then is processed through the engineering,
projects, operation & maintenance and the finance departments. During this time, approximately six
months, negotiations with the customer are ongoing. If we are successful and a contract is signed and
all the department sign offs have been obtained, the development business unit is converted into a
project business unit with the appropriate capital budget and implementation begins.
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