Good afternoon, everyone, and thank you for joining Empower's Earnings Call. Today we'll review our performance for the fourth quarter and the full year-end in 2025, covering financial results, key developments, and our outlook ahead. I am Chandra Teckchandani, Director of Finance at Empower, and it's a pleasure to have you with us.
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Joining me on today's call are Mr. Ramesh Ramadurai, our Chief Financial Officer, and Mr. Edgar Qureshi, our Chief Commercial Officer.
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Before we begin, please note that some statements made during today's call may be forward-looking in nature. These reflect our current expectations and are subject to risks and uncertainties as outlined in this slide. The presentation materials and supporting financial information are available on Empower's website. Our agenda for today includes a review of financial performance, an update on operations and outlook, followed by the Q&A session. With that, I'd now hand over to our CFO, Mr. Ramesh Ramadurai.
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Thanks, Chandra. Good afternoon, everyone. I'm Ramesh Ramadurai. Let me begin with a brief overview of our performance and the key drivers behind our continued growth. The UAE continues to provide a strong economic foundation supported by resilient fundamentals, world-class infrastructure, and sustained investor confidence. Rapid urban development is also accelerating the focus on sustainability and energy efficiency. In this context, district cooling continues to gain importance as a more energy-efficient alternative to conventional cooling. Against this backdrop, Empower remains the clear market leader.
We operate the world's largest district cooling portfolio, supported by over two decades of proven execution and the trust of more than 156,000 customers. Our long-term master concession agreements provide strong visibility with a pipeline of over 3.1 million refrigeration tons. As of Q4 2025, contracted capacity reached 1.96 million refrigeration tons, with 1.66 million refrigeration tons already connected, reflecting steady expansion and continued capacity growth. Overall, with strong cash generation, an attractive dividend profile, and an experienced leadership team, Empower remains well-positioned to deliver long-term shareholder value while supporting Dubai's low-carbon future.
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Turning to 2025, the year reinforced the resilience of our business model. Q1 was impacted by milder-than-usual weather in January, but demand improved in Q2, supported by hotter-than-normal conditions in April. This trend continued through Q3 and Q4, and full-year consumption was higher than last year. Financially, we delivered strong results. Revenue increased to AED 3.42 billion, up 4.9% versus 2024. Net profit before tax reached AED 1.1 billion, up 10.5% year-on-year. Net debt remained well-managed at 1.9x EBITDA, reflecting disciplined cash flow and balance sheet management. Overall, these results highlight our ability to deliver sustainable growth while maintaining financial strength. With that, I will now hand over to Mr. Edgar to share his perspective on the macroeconomic outlook across the UAE and Dubai.
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Good afternoon. I'm Edgar, the Chief Commercial Officer at Empower. Let's start by taking a helicopter view of the UAE's macroeconomic landscape. UAE markets hit new record levels, reflecting strong liquidity and sustained investor confidence. ADX market capitalization rose to AED 3.13 trillion, marking a 4.6% increase over the previous year. The DFM General Index delivered an even stronger 17.2% annual gain, with market capitalization reaching AED 992 billion. The Central Bank of the UAE is projecting a healthy GDP growth of 5% in 2025 and 5.2% in 2026.
This is supported by strong annual growth of 6.7% in the hydrocarbon sector, coupled with a 4.7% growth in the non-hydrocarbon sector in 2026. As expected, the Central Bank of the UAE lowered its inflation forecast for 2025 from 1.5% to 1.3%, while maintaining the 2026 prediction at 1.8%, enhancing cost visibility for capital-intensive sectors such as district cooling, construction, and manufacturing. This favorable interest rate environment, with the central bank's base rate reduced to 4.15% in September 2025 and 3.9% in October 2025, supports financing conditions for energy and infrastructure projects.
As expected, the UAE's tourism sector consolidated its position as one of the country's most dynamic economic sectors, contributing AED 257 billion to the UAE's GDP during that year, which continues to support robust cooling demand across hospitality, retail, and mixed-use developments. These tourism trends do not exist in isolation. They directly influence property demand, rental patterns, and long-term investment behavior. Tourism is quietly reinforcing confidence in the UAE's property market, as visitors spend more time experiencing the UAE way of life and real neighborhoods, with their preferences shifting towards ready communities with established infrastructure, properties that support both short-term flexibility and long-term value, and locations which are aligned with lifestyle.
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Now let's dive into the Dubai-specific economic trends. Dubai's international airport maintains its position as the busiest international airport in 2025 with 94 million footfall, maintaining its longstanding lead since 2023, according to the OAG. DXB's airline capacity has seen significant growth since 2019, with seats increasing by 16% and capacity growing by 4% year-on-year. Dubai welcomed 17.5 million overnight visitors between January and November 2025, which was an increase of 5% compared to January to November 2024. Dubai's residential real estate market encountered unrivaled quarterly performance in Q4 2025. Dubai's residential market generated AED 140 billion alone in Q4 2025, which is up 26% compared to Q4 2024.
The sector's momentum underpins sustained demand for energy-efficient district cooling across residential clusters. Dubai approved its 2026 annual budget, with total predicted expenditure of AED 99.5 billion, of which infrastructure spending holds the largest share at 48%. Revenue is projected to be AED 107 billion, resulting in a forecasted budget surplus of AED 8.2 billion. Dubai's population crossed 4 million residents for the first time in Q3 2025, as an inflow of new residents continued the growth trajectory towards the 5 million milestone by 2030. Now I would like to hand it back over to Chandra, who will provide you with insights on Empower's financial performance for Q4 2025.
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Let's now take a closer look at our financial performance for Q4 and the full year 2025 compared to last year. For the full year, revenue reached AED 3.419 billion , representing a 4.9% increase over 2024. In Q4, revenue stood at AED 88.33 million, up 3% year-on-year. This growth was driven mainly by the connection of approximately 90,000 refrigeration tons added during the year. Turning to profitability, Q4 EBITDA increased by 12.2% to AED 84.79 million, while full-year EBITDA reached AED 81.649 million, up 6.3% year-on-year. For the full year, both pre- and post-tax profits grew by approximately 10.5%. With a supportive market environment and steady demand, we remain confident in our strategy to deliver sustainable long-term growth through capacity expansion, efficiency improvements, and disciplined cost management.
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Let me briefly touch on some key performance indicators for Q4 and the full year. As you know, our business is seasonal. Consumption is higher during the warmer months and moderates during cooler months. This naturally affects our revenue mix and margins. As a result, consumption revenue as a percentage of total revenue stood at 49.6% for Q4 2025 and for the full year at 56.3%. These levels are in line with historical patterns and continue to support a healthy margin profile. I'll now hand over to Mr. Ramesh, who will share insights on our leverage position and dividend policy.
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Let me now briefly touch on leverage. As of end 2025, net debt stood at AED 3.19 billion, and our net debt to EBITDA remained stable at 1.9x. This remains comfortably below our target leverage range of 3x-4x, providing meaningful headroom to support future growth. During Q1 2025, we also strengthened our financing profile by refinancing our term loan facilities into a new AED 5.5 billion revolving credit facility. This refinancing extended maturities to February 2028 and reduced financing costs compared to the previous structure. These benefits are already reflected in our results, and we continue to maintain a strong liquidity position to support future expansion.
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Turning to dividends, shareholder returns remain a key priority for Empower. Following our IPO, we distributed AED 850 million annually in both 2023 and 2024, with payout ratios of 87% and 91%, respectively, supported by strong cash flow generation and disciplined capital allocation. Building on this track record, shareholders have approved a progressive dividend framework. Under this policy, we are committed to paying AED 875 million annually in 2025 and 2026, reflecting our confidence in the business and our cash flow outlook. In April 2025, we paid the final dividend for 2024 of AED 437.5 million, and in October 2025, we also paid an interim dividend of AED 437.5 million, reinforcing our commitment to consistent and reliable shareholder returns.
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Let me now turn to our capacity outlook. Connected capacity has expanded from 992,000 refrigeration tons in 2017 to 1.66 million refrigeration tons by the end of 2025, representing a CAGR of approximately 6.6% over the period. Connected capacity stood at 1.57 million refrigeration tons at the end of 2024. Looking ahead, we expect connected capacity to reach between 1.76 and 1.77 million refrigeration tons by 2026, implying an additional 100,000-110,000 refrigeration tons during 2026. This outlook reflects continued demand momentum and our ability to execute consistently under long-term concession frameworks. In addition, during 2025, we secured two strategic projects, Wasl The Island and DMCC Uptown Dubai, which further strengthened our long-term pipeline and growth visibility.
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To conclude, Empower continues to offer a clear and compelling investment proposition. We have a strong track record of market leadership and disciplined growth, supported by long-term concession agreements that generate predictable and resilient cash flows. We remain well-positioned to benefit from the continued growth of UAE and Dubai, with strong long-term visibility through our contracted pipeline and expansion plans. At the same time, we offer an attractive and sustainable dividend profile while contributing meaningfully to the UAE's Net-Zero 2050 strategy. Overall, Empower represents a strong total return opportunity, combining sustainable growth, disciplined financial execution, and long-term shareholder value creation. With that, I will now hand over to Chandra for the Q&A session and concluding remarks.
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Before we move into the Q&A, please note that the presentation includes an appendix with additional details. This covers the summary P&L, balance sheet, and cash flow statement, along with information on share price performance, analyst coverage, and ESG initiatives. Thank you for your attention. We'll now move into the Q&A session.
Thank you. We will now proceed with the Q&A session. Participants can ask both text and live audio questions. To ask a text-based question, please select the messaging icon, type your question in the box towards the top of the screen, and press the send button. If you wish to ask a live audio question, please press the request to speak button at the top of the broadcast window. This will be replaced by the audio questions interface.
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Definitely, yes. There is a lot of momentum in the data center space. We are definitely following up with the operators in the region. This can be another opportunity in another segment of the market, and we are actively pursuing these opportunities. However, we will not be able to give you any guidance at this point in time with respect to capacities that can accrue through data center opportunities. The guidance for 2026 margin from an EBITDA perspective is 46%-47%, which is what we have been consistently highlighting. So the guidance for 2026 will be between 46% and 47%. Yes, your observation is right. Yes, there is a one-off item, which is a credit that we received from Dubai Municipality for excess discharge charges they applied in the past. That impact is around AED 26 million. That is a one-off item.
Otherwise, the margin improvement is purely based on additional capacity that we connected in the last quarter and improvement in our operational efficiency from an energy perspective, plus also availability of TSE in the quantum, up to 80% of the peak quantum that was available before the flood that happened in April 2024. These are the key reasons why our margin is higher than even last year. But as I highlighted, except for these one-off items, the margin will stabilize at around 46%-47% going forward. Regarding the dividend for 2026, we have already committed ourselves to a dividend of AED 875 million. However, if there is an improvement in our margins and on the top line, those will be reflected in our dividend policy for 2027 and beyond. Higher sewerage charges from Dubai Municipality. See, there are two elements to it.
One is this is with reference to the charges we paid Dubai Municipality for discharging into their network. The adjustment that I was referring to was an excess that they were charging in all the sites where discharge facilities were not available, which was given credit for. However, going forward, those rates will be fixed at the level which the tariff is subject to. So that impact is going to be around AED 19 million going forward, which is already captured in the projected margins for 2026 and beyond. Regarding update on the tariff revision for pass-through of the drainage cost, it is still with the Supreme Council of Energy. It has not been decided in our favor, but we are making our effort to get that revision passed through to the end customer.
Regarding delays in contracted capacity converting to
Connected capacity, I don't think so. In fact, we added 90,000 tons in 2025, and our projection is 100,000-110,000 tons for 2026. We are contracting more capacities. Our sales and marketing is quite aggressive in contracting capacities, signing more contracts. However, I don't see any lag in terms of delivering those capacities and connecting them to our system. The rental income is from our residential unit and the office space in our new corporate headquarters. This will be something that will continue to accrue going forward. We have leased the entire residential block, and we have let out three floors in our corporate office, which has a total of 10 floors. The rest of the floors are occupied by Empower for its own purpose. We expect 100% recovery of pre-flooding TSE maybe by middle of second quarter or end of second quarter.
Considering that we have already reached 80% of pre-flooding level, very likely that 100% availability could be reached middle of second quarter, end of second quarter. The AED 26 million impact is for even previous years. It was accounted in the fourth quarter. As I highlighted to you, this has been for many years in the past for which the credit was finally agreed by DM, and it was given to us the last quarter, which has been accounted for.
On the receivables movement in terms of quarter to quarter, I think September quarter is the peak where the consumption billing is the highest. So for that reason, the receivables generally are high in that quarter, which reduces because of the seasonality. It reduces in December. This is in line with the normal practice of the business.
I presume that you are referring to the AED 26 million credit that was received from DM. This is the excess discharge fees they charged for many of our sites in the past for which we were having continuous conversation with them to get a credit, which was ultimately provided in the last quarter of 2025, which has been reflected in the fourth quarter. Our guidance for CapEx remains the same, AED 6,000 per connected load.
Considering that we are going to have close to 100-110,000 tons of capacity that is going to be connected in 2026, a similar level of CapEx will be incurred to deliver services to those capacities. The 90,000 tons which we added in 2025, all of them are organic. They are from our existing concession agreements that are forming part of the 3.1 million site capacity that we have and we have been referring to in all of our presentations.
We are guiding for 46%-47%, which includes the additional cost of sewerage, which is expected to be incurred during the year 2026, which we have factored in. Accordingly, we have taken these margins. Any plans to expand outside of Dubai and UAE?
Yes, we're constantly looking for opportunities to grow beyond Dubai within both the UAE and outside of the UAE. Wherever there's any opportunities, we aggressively pursue them. At the end of the day, we can only respond to the opportunities that are available in the market. We are currently in pursuit of a few major opportunities. However, unfortunately, due to the sensitive, confidential nature of those opportunities, we're not in a position to disclose what those are. But of course, if those come to fruition, then we will disclose that information. There are a few opportunities in the market at the moment, which, as I mentioned, are very interesting for us and we're aggressively pursuing them. But we'll certainly update you once we get the results of our efforts with respect to those opportunities.
If we remove the one-off, I think there is a query that the net profit increases by AED 20 million. I think excluding the savings and finance cost. If you remove both finance cost savings and one-off of AED 26 million, you'll have a AED 47 million increase in net profit and not AED 20 million. The annual run rate for rental income is AED 18 million, same as this year. Tariff pass-through update, the potential uplift could be in the range of AED 25 million. Regarding the timing, it is with the Supreme Council of Energy. We are awaiting and following up on that.
We are currently not rated by any of the credit rating agencies. However, if we are going for a market transaction, we would definitely get the rating exercise done. We don't have any timeline currently to share. Yes, part of it is the one-off payment. The rest of it is efficiency improvement. Yes, sewerage charges are increasing in 2026 as well. If we go to 2027 also, it will grow to 2.8 fils . Our ask with the Supreme Council is for us to pass through the entire increase in sewerage charges from DM. The margin will move up by 0.5% if we have 100% pre-flood TSE limits. Due to TSE reaching 100%, it will be half a percentage point.
Are there any more questions on the line?
We revised the Empower consumption rate in 2011 when DEWA revised their water and electricity charges from electricity from 20 fils to 38 fils and water from 4 fils to 5 fils. That was the last time we revised our consumption tariff.
I think we have covered this. This is embedded in the guided margin of 46%-47% for 2026 and 2027.
Thank you. It appears that there are no further questions. I will now hand back to Chandra for the closing remarks.
That concludes our call. Thank you for joining us today. If you have any follow-up queries or require additional information, please feel free to reach out to our investor relations team. Thank you once again.