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1 Next-Gen Sustainability Champion Disrupting The Cooling World Earnings Presentation | Q4 2024 1
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2STRICTLY PRIVATE AND CONFIDENTIAL The information contained herein has been prepared by Emirates Central Cooling Systems Corporation PJSC (“Empower”) or the “Company” or the “Group”. This contains information in summary form and does not purport to be complete. Some of the information relied on by Empower is obtained from sources believed to be reliable but does not guarantee its accuracy or completeness. This presentation has been prepared for information purposes only and is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate. Except where otherwise indicated in the presentation, the information provided herein is based on matters as they exist at the date of preparation of the presentation and not as of any future date and will be subject to updating, revision, verification and amendment without notice and such information may change materially. Neither Empower, any of its subsidiaries, nor any of such entity’s respective directors, officers, employees, agents, affiliates, advisers, partners or firm personnel is under an obligation to update or keep current the information contained in this presentation or to provide the recipient with access to any additional information, or to correct any inaccuracies in the presentation, that may arise in connection with it. It is possible that this presentation could or may contain forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could or other words of similar meaning. Undue reliance should not be placed on any such statements because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and the Group’s plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. There are several factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Empower undertakes no obligation to revise or update any forward-looking statement contained within this presentation, regardless of whether those statements are affected as a result of new information, future events or otherwise. Rounding differences may appear throughout the presentation. Disclaimer
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3STRICTLY PRIVATE AND CONFIDENTIAL District Cooling is considered as one of the important pillars of Dubai’s energy strategy that aims to increase its penetration from the current level of circa. 25% to 40% by 2030 Eco-efficient c.50% electricity savings vs traditional cooling systems World’s Largest District Cooling Services Provider with over 20 years of experience 1,566k RT Connected Capacity 143,000+ Long-term and diversified customer base (corporates and individuals) 25+ Years Long-term Contracted Revenue providing greater cash flow visibility Dividend payout Supported by robust and attractive financial profile Clear roadmap For growth with exclusive arrangements in existing concessions Dynamic management team With proven track record and knowhow 1,764k RT Contracted Capacity Empower: A Compelling Investment Opportunity
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4STRICTLY PRIVATE AND CONFIDENTIAL Empower continued with its robust operational and financial performance during 2024 with growing Revenue, EBITDA and Profit before Tax Notes: RT = Refrigeration tons; RTh = RT hours; EFLH = Effective full load hours; LTM = Last twelve months 1,566 k Connected RT 54 k RT 1,942 hrs EFLH 4.1% AED 1,551 m EBITDA 6.2% 2,988 m Consumption RTh 267 m RTh AED 998 m Profit before Tax 5.9% AED3,260 m Revenue 7.4% AED 3,532 m Net Debt Net Debt/EBITDA 2.3x 1,764 k Contracted RT 101 k RT Key Highlights – 2024
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5 5 Macroeconomic Overview
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6STRICTLY PRIVATE AND CONFIDENTIAL Macro Economic Snapshot Robust GDP growth at 4.5% in 2025 and 5.5% in 2026 (driven by diversified sector) Optimistic interest rate environment (Federal Reserve decrease of 25 basis points, 3rd consecutive cut) UAE ranked 11th globally in FDI attraction1 AED 2.2 Tn in FDIs is expected by 2031 (UAE’s Investment Strategy to 3x its FDI) New Domestic Minimum Top-up Tax (multinational firms with +€750 Mn in revenues pay at least 15%) Source: 1. United Nations Trade and Development report
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7STRICTLY PRIVATE AND CONFIDENTIAL 1 Source: Dubai Statistics Centre 2. Dubai’s Supreme Legislation Committee 3,192,000 3,356,000 3,411,000 3,478,000 3,550,000 3,655,000 3,825,000 2018 2019 2020 2021 2022 2023 2024 D U B AI P O P U L AT I O N1 Dubai’s population grew by 170,478 reaching 3.83 million as of 31st December 2024, a 4.7% increase over 2023 Dubai Macro Economic Snapshot Dubai equities gain most in the region in 2024 (Benchmark Index surged 27.1%) Commercial Transport Sector sees 34% Surge in Operating Companies in 2024. 12,100 companies now operate in Dubai’s Commercial Transport Sector (2023: 9,000). 400,000 vehicles registered in the Commercial and Logistics Transport Sector, reflecting a 31% growth from 2023. Dubai International Airport handled a record 92.3 million passengers last year, an annual increase of nearly 6%, as the emirate solidified its standing as a global tourist destination DSLC2 announced its 2024-2029 plan to improve legislative quality, transparency, and sustainability Dubai’s real estate market witnessed significant growth, recording transactions of ~140K apartment units in 2024 compared to ~93K in 2023
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8 8 Performance Highlights YTD Q4/24
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9STRICTLY PRIVATE AND CONFIDENTIAL 2,464 2,793 3,035 3,260 765 809 2021 2022 2023 2024 Q4-23 Q4-24 13.3% 8.7% 7.4% 5.8% Revenue (AED mn) EBITDA (AED mn) 14.1% 6.2% 6.2% 10.1% Net Profit Before Tax (AED mn) Net Profit After Tax(AED mn) Tax Impact AED 90 mn Performance Snapshots – Q4 2024 936 1,001 943 998 258 279 2021 2022 2023 2024 Q4-23 Q4-24 1,206 1,376 1,461 1,551 388 427 2021 2022 2023 2024 Q4-23 Q4-24 936 1,001 960 908 275 254 2021 2022 2023 2024 Q4-23 Q4-24
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10STRICTLY PRIVATE AND CONFIDENTIAL 2021 2022 2023 2024 Gross Debt / EBITDA (x) 1.6x 3.3x 3.1x 3.6x Net Debt / EBITDA (x) 0.5x 2.2x 2.7x 2.3x Consistent track record of dividend payment to shareholders Post-IPO dividend commitment of AED 850 mn per year for the first two years Paid AED 850 mn in 2023 (Apr and Oct) and AED 850 mn in 2024 (Apr and Oct) Robust balance sheet with moderate leverage profile; gradual de-leveraging to c.2.5x in 2025 and below 2.0x in the medium term Significant headroom to fund inorganic growth while maintaining a healthy leverage ratio of 3 - 4x Revolving Credit Facility (RCF) Empower has successfully refinanced the term loan (A1 & B1) of AED 2,750m, which had original maturity in Sep-25. The new maturity is extended up to Sep-27. The margin on RCF is lower compared to old term loan facilities (A1 & B1). Net Debt (AED mn) Gross & Net Debt / EBITDA RCF 2.75M 400 500 850 850 2,900 2021 2022 2023 2024 Dividend Payments (AED mn) Dividend Payout Ratio % 3,400 One-time special dividend payment 43% 351% 87% 91% Prudent Leverage Underpinning Attractive Dividends 1,322 1,988 4,490 4,492 5,498 235 627 3,004 3,926 3,532 2020 2021 2022 2023 2024 Gross Debt Net Debt
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11STRICTLY PRIVATE AND CONFIDENTIAL Year Q1 Q2 Q3 Q4 Annual Revenue 2023 AED 494m AED 731m AED 1,045m AED 765m AED 3,035m 2024 AED 538m AED 814m AED 1,100m AED 809m AED 3,260m EBITDA 2023 AED 284m AED 371m AED 419m AED 387m AED 1,461m 2024 AED 313m AED 380m AED 431m AED 427m AED 1,551m EBITDA Margin 2023 58.40% 50.10% 40.10% 50.60% 48.14% 2024 58.10% 46.70% 39.13% 52.78% 47.58% EBIT 2023 AED 201m AED 277m AED 331m AED 311m AED 1,120m 2024 AED 229m AED 295m AED 344m AED 324m AED 1,192m Consumption % to Total Revenue 2023 37.40% 56.40% 68.10% 53.70% 56.60% 2024 41.80% 61.00% 67.50% 53.42% 58.13% Connected load (Cumulative k RT) 2023 1,413k RT 1,420k RT 1,497k RT 1,512k RT 1,512k RT 2024 1,522k RT 1,532k RT 1,552k RT 1,566k RT 1,566k RT Contracted load (Cumulative k RT) 2023 1,530k RT 1,574k RT 1,644k RT 1,663k RT 1,663k RT 2024 1,697k RT 1,716k RT 1,754k RT 1,764k RT 1,764k RT Financial Highlights – Quarterly Performance
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12STRICTLY PRIVATE AND CONFIDENTIAL Overview of Key Projects in Dubai with Site Capacity Jumeirah Village South 260 RT Dubai Production City 125k RT Business Bay 452k RT Jumeirah Lake Towers 150k RT Palm Jumeirah 225k RT DIFC 107k RT Dubailand Residential 120k RT Dubai International Airport 110k RT TECOM (A, B, C) 109k RT Discovery Gardens 89k RT Nakheel Projects 88k RT Meydan 382k RT Jumeirah Beach Residence 85k RT Dubai Design District 84k RT Dubai HealthCare City 2 77k RT Dubai Studio City 70k RT Dubai World Trade Centre 58k RT Dubai Int’l Academic City 72k RT Deira Waterfront Ph1 15k RT Al Quoz JISA / Al Khail 35k RT Dubai HealthCare City 1 43k RT Bluewaters 25k RT Mirdiff 22k RT Global Village 20k RT Exclusive Arrangements across key areas of Dubai
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13STRICTLY PRIVATE AND CONFIDENTIAL Connected Capacity (k RT) 992 1,368 1,405 1,566 2017 2021 Additions in 2022E 2022 2024 Potential RT Capacity by 2026E 1,725 – 1,750 Empower signed agreement to provide DCS services to following developments : Feb-2023 : Dubai Maritime City 63,000 RT Mar-2023 : Sobha Hartland 17,000 RT Apr-2024 : Al Habtoor Tower 7,200 RT • Expected Connected Capacity 2025 - 2026: Additions of 165,000 – 185,000 RT • + Potential upside from acceleration of developments. Expected Connected Capacity 2025 - 2026: 165,000 – 185,000 RT Capacity Outlook and Guidance +413 RT (7.2% CAGR)
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14STRICTLY PRIVATE AND CONFIDENTIAL EMPOWER’s Investment Thesis | Growing Total Return Sustainability Enabler Source: Company information. Proven Track Record of Growth and Market Leadership Highly Visible Cash Flows and Resilient Business Model Compelling Long-term Macro Growth Trends in UAE and Dubai Strongly Positioned to Capitalize on Growth Opportunities Sustainable Dividend Capacity Growing Total Return Sustainability Enabler Key Enabler of UAE’s Net Zero 2050 Strategy
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15 15 Q&A
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16STRICTLY PRIVATE AND CONFIDENTIAL Chander Teckchandani Shaik Usman Investor Relations investor.relations@empower.ae Dubai - UAE https://www.empower.ae/investor-relations/ Tel: +971 4 375 1236 EMPOWER | Investor Relations Contact Deepak Lachhwani
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17 17 APPENDIX
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18STRICTLY PRIVATE AND CONFIDENTIAL Key Highlights 2024 Revenue Composition Others 6% 1) Interest on financial asset - Financial asset represents upfront consideration paid by Empower against which demand charges will be settled by Dubai Airport / Nakheel for the term of the concession. Since, Dubai Airport does not include any third-party customers, financial asset comprises full demand charges. However, for Nakheel, only partial demand charges (to the extent guaranteed by Nakheel) has been considered as financial asset. 2) Cost of sales includes utilities costs that includes electricity and water utilized to produce chilled water. Besides utilities, it includes depreciation for plant and machinery, direct staff costs and other expenses. 3) General and admin. expenses include staff costs and admin costs that have grown in line with growth in revenues. 4) Finance income has increased due to increase in deposit placement of AED 1 billion of additional loan drawdown during the year; while finance costs have increased due to net increase in EIBOR (20-70bps increase between Jan-Sep23 vs Jan-Sep24 and partially reduced rate in Q4-2024 due to rate cut in Sep-24 & Nov-24) and additional loan drawdown of AED 1 billion. 5) Consistent margins at operating level compared to last year; Profit before tax is higher by 5.9% and Net profit after tax includes 9% corporate tax impact starting 1 Jan 2024. Note: Utilities costs have increased in line with increase in consumption revenues. Other costs have reduced due to decline in pre-insulated pipe sales to 3rd party customers. Income Statement Figures in AED'000 2024 2023 Var Utilities costs 1,452,212 1,285,778 (166,434) Others (depreciation, staff costs, etc.) 465,285 455,100 (10,185) Totals 1,917,497 1,740,878 (176,619) Particulars 2024 2023 Variance AED'000 % AED'000 % AED'000 % Revenue 3,260,489 100.0% 3,035,203 100.0% 225,286 7.4% Interest income on financial asset 59,151 1.8% 38,711 1.3% 20,440 52.8% Cost of sales (1,917,497) (58.8%) (1,740,878) (57.4%) (176,619) (10.1%) Gross profit 1,402,143 43.0% 1,333,036 43.9% 69,107 5.2% General and administrative exps. (235,119) (7.2%) (220,285) (7.3%) (14,834) (6.7%) Reversal of provision for expected credit losses 17,482 0.5% - - 17,482 100.0% Other income 7,938 0.2% 7,120 0.2% 818 11.5% Operating profit 1,192,444 36.6% 1,119,871 36.9% 72,573 6.5% Finance income 54,027 1.7% 43,593 1.4% 10,434 23.9% Finance costs (248,139) (7.6%) (220,833) (7.3%) (27,306) (12.4%) Finance costs – net (194,112) (6.0%) (177,240) (5.8%) (16,872) (9.5%) Profit before tax 998,332 30.6% 942,631 31.1% 55,701 5.9% Income tax expense (90,097) (2.8%) 17,454 0.6% (107,551) (616.2%) Net Profit after tax 908,235 27.9% 960,085 31.6% (51,850) (5.4%) Consumption Demand / Connection Others 58% 34% 8%
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19STRICTLY PRIVATE AND CONFIDENTIAL 1) Financial assets include demand/capacity charge receivable from Dubai Airport and Nakheel 2) Cash and cash equivalents increased by AED 1,398 million, resulting from: Operating activities: Generated AED 1,824 mn Financing activities: Used AED 154 mn (includes proceeds from borrowings AED 4,749 mn, loan repayment AED 3,750 mn, Interest payment AED 299 mn and dividend payment of AED 850 mn) Investing activities: Used AED 272 mn (includes additions to PPE AED 274 mn and additions to investment property AED 32 mn) 3) Trade and other receivables Lower by AED 44 mn mainly due to reduction in AR balances resulting from continuous efforts in collecting outstanding balances. 4) Intangible assets represent rights to charge users that have been acquired from Nakheel. 5) Bank Borrowings increased due to drawdowns made during the period. 6) Trade and other payables increased by AED 273 mn due to increase in deferred revenue (AED 178 mn), increase in project related liabilities (AED 59 mn), increase in security deposits (AED 36m). 7) Government grants received prior to 2010 are recognized as income over the useful life of the plant constructed on the granted land/(s). 8) Due to related parties represents mainly amount payable to DEWA towards utilities costs. 9) Other liabilities include provision for EOSB (AED 57 mn), tax liability (AED 89 mn), etc. Balance Sheet Key Highlights Particulars 31-Dec-24 31-Dec-23 Variance AED'000 AED'000 AED'000 % Property, plant and equipment 6,995,160 6,934,815 60,345 0.9% Financial assets 1,405,962 1,408,044 (2,082) (0.1%) Cash and cash equivalents 1,936,627 538,780 1,397,847 259.4% Trade and other receivables 275,280 319,094 (43,814) (13.7%) Term deposits 30,264 27,500 2,764 10.1% Intangible assets 327,825 339,982 (12,157) (3.6%) Other assets 211,928 159,951 51,977 32.5% Total Assets 11,183,046 9,728,166 1,454,880 15.0% Bank borrowings 5,498,415 4,492,438 1,005,977 22.4% Trade and other payables 1,693,826 1,421,299 272,527 19.2% Government Grant 305,948 308,728 (2,780) (0.9%) Due to related parties 159,372 135,953 23,419 17.2% Other liabilities 152,150 58,747 93,403 159.0% Total Liabilities 7,809,711 6,417,165 1,392,546 21.7% Equity 3,373,335 3,311,001 62,334 1.9%
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20STRICTLY PRIVATE AND CONFIDENTIAL Key Highlights 1) Increase in settlement of financial assets is due to full year Demand charges from Dubai Airport compare to six months during 2023. 2) In January 2024, Empower acquired 3% minority shareholding in ELIPS from Logstor Holding. 3) Net loan drawdown includes AED 1 billion drawn down from the undrawn term loan facilities (A2 & B2). 4) Dividend paid is final dividend for FY 2023 paid in April 2024 (AED 425m) and Interim dividend for H1 2024 paid in October 2024 (AED 425m). 5) Finance cost increased due to additional interest on AED 1 bn drawn down during the year and also increase in EIBOR compared to 2023. Cashflow Statement Particulars At 31 Dec 2024 At 31 Dec 2023 Variance Variance AED'000 AED'000 AED'000 % Profit before non-cash expenditure 1,122,680 1,085,932 36,748 3.4% Depreciaion and Amortization 359,081 348,199 10,882 3.1% Settlement of financial assets 78,255 49,977 28,278 56.6% Profit from operations 1,560,016 1,484,108 75,908 5.1% Working capital movement 264,386 (92,517) 356,903 385.8% Net cashflow from operating activities 1,824,402 1,391,591 432,811 31.1% Acquisition of subsidiary - (892,500) 892,500 (100.0%) Acquisition of minority interest in a subsidiary (159) - (159) (100.0%) Capex payment - PPE & Investment property (306,781) (320,144) 13,363 (4.2%) Redemption / (Investment) in short term FD/Bonds (18,054) (26,200) 8,146 (31.1%) Addition to investment properties - (12,786) 12,786 (100.0%) Interest received 52,873 42,887 9,986 23.3% Net cashflow from investing activities (272,121) (1,208,743) 936,622 (77.5%) Proceeds from bank borrowings net of arrangement fee 4,749,358 - 4,749,358 100.0% Repayment of bank borrowings (3,750,000) - (3,750,000) (100.0%) Lease payments (4,782) (3,280) (1,502) 45.8% Dividends paid (850,000) (850,000) - 0.0% Finance costs paid (299,010) (264,696) (34,314) 13.0% Net cashflow from financing activities (154,434) (1,117,976) 963,542 (86.2%) Net (decrease)/increase in cash and cash equivalents 1,397,847 (935,128) 2,332,975 (249.5%) Cash and Cash Equivalents at the beginning of the year 538,780 1,473,908 (935,128) (63.4%) Cash and cash equivalents at the end of the period 1,936,627 538,780 1,397,847 259.4%
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21STRICTLY PRIVATE AND CONFIDENTIAL Share Price (AED)Analysts Coverage Firm Name Target Price (AED) Action Al Ramz Capital 2.10 Buy BOFA Securities 2.10 Buy Citi Bank 2.00 Buy EFG Hermes 2.15 Buy Emirates NBD Securities 2.21 Buy HSBC Global Research 2.70 Buy International securities 1.94 Hold JP Morgan 2.40 Buy Morgan Stanley 2.00 Buy 1.33 1.42 1.73 1.92 1.79 1.66 1.64 1.59 1.46 1.65 1.75 1.82 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Share Price Performance & Analyst Coverage Dividend (AED Millions) 425 425 425 425 Dividend per share (AED) 0.0425 0.0425 0.0425 0.0425
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22STRICTLY PRIVATE AND CONFIDENTIAL Unlocking Value: Leveraging ESG Capitals for Sustainable Growth Relationship & Social Capital 05 Human Capital 04 Intellectual Capital 03 Manufactured Capital 02 Financial Capital 01 Natural Capital 06 Key Elements Triggering EMPOWER ESG Strategy Aligning Empower Strategy in achieving the objectives of the UAE Net Zero Strategy 2050. Empower contributes to the Dubai Integrated Energy Strategy 2030 and the Dubai 2040 Urban Master Plan through its business activities. The Dubai Supreme Council of Energy (DSCE) targets a 40% district cooling penetration in Dubai by 2030. Efficient cooling is a key pillar of the Dubai's Demand Side Management (DSM) Strategy
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23STRICTLY PRIVATE AND CONFIDENTIAL Financial Capital Focused on diverse financial resources to support operations. Market capitalization grew to AED 18.2 billion as on 31st December 2024, demonstrating investor confidence and market strength. Human Capital Delivered extensive training and development programs to employees. Launched multiple employee well-being initiatives towards health and safety. Enhanced competitive advantage through increased employee engagement. Achieved market differentiation with strong employer branding. 01 04 Manufactured Capital Implemented energy-efficient technologies for reducing electricity consumption. Achieved long-term savings in energy, emissions, and costs from strategic investments. Increased refrigeration capacity by 3.6% to 1,566K RT in FY 2024. Relationship and Social Capital Implemented community programs for sustainable development. Invested in customer service and digital experience. Conducted stakeholder engagement sessions. Supported UN SDGs, promoting sustainable practices. 02 05 Intellectual Capital Empower won ESG Award from Dubai Chamber of Commerce in 2024 with Maturity level of Advanced category. Enhanced Reverse Osmosis (RO) technology use for better water efficiency. Invested in branding to highlight sustainability and innovation. Natural Capital Implemented TSE for cooling, enhancing water sustainability. Adopted VSDs for energy efficiency in operations. Initiated waste reduction and recycling strategies. 03 06
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24 Thank You