Good afternoon, everyone, and welcome to Tabreed's full year 2024 earnings conference call on the 14th of February, 2024. Please note that this call is being recorded and all participants are on listen-only mode. After the presentation is completed, there will be an opportunity to ask questions. Without further ado, I would like to pass the line over to Mr. Yugesh Suneja, the Head of Investor Relations at Tabreed. Please go ahead, sir.
Thank you, Michael. Good afternoon, everyone. I am pleased to welcome you all to Tabreed's earnings conference call for the financial year 2024. As Michael introduced, I am Yugesh, Head of IR at Tabreed. Today, I am joined by Adel Al Wahedi, our CFO, and Salik Malik, Vice President, Finance. Before we proceed further, I would like to remind everyone that some of the information that we will be presenting today is about future performance and forward-looking in nature. These statements are based on our current expectations and are subject to risks and uncertainties. Please refer to this disclaimer slide for more details. Our financial results, including copy of this presentation, are available on our website. Video replay and transcript of today's call will also be made available on Tabreed's website under IR section. Let us now move to the agenda for today's call.
Adel will start the presentation with key operational and financial highlights of the year and then take you through our corporate strategy and sustainability updates. Following this, Salik will discuss financial results in detail. Finally, Adel will conclude with a discussion on our guidance and closing remarks. We will then take your questions. With this, I now invite Adel to begin the presentation.
Good afternoon, everyone. Thank you for joining us today for our 2024 results conference call. Tabreed has once again showed the resilience to its business model with a steady growth in revenue, stable margins, strong cash flow conversion, and robust improvement in balance sheet. This financial performance has been achieved along with significant benefits to environment through our sustainable district cooling operations and continued investments in innovative projects to make district cooling even more efficient. Let me provide a summary of our financial performance, please. Revenue at AED 2.43 billion increase comparing to the last year. Like-for-like growth in revenue was 4.5%. However, deconsolidation of Tabreed Park Investments, which owns Dubai Parks DC assets and higher one-off CPI gains recorded in 2023 resulted in lower reported growth of 1% during 2024. Revenue growth was driven by higher consumption volumes, new capacity, CPI indexation, and increase in our value chain business.
We were able to keep operating costs and G&A expenses in check. This helped to improve our EBITDA margin for the year to 51% while taking 2024 EBITDA growth to 5% compared to the year 2023. Interest charges decreased from 2023 level as we partially bought back Sukuk during early part of 2024 as part of liability management exercise. Excluding the impact of one-off gains in year 2023, net profit before tax grew by 4% year-on-year. Moving on to operational updates. We saw continued strong trend in cooling consumption, thereby driving volume growth of 5% in year 2024. We commissioned two new greenfield plants in 2024, first one at Saadiyat Island in Abu Dhabi, U.A.E., and the second one in Oman to meet growing demand of cooling.
We have further strengthened our international presence during the year, as seen in almost one-third of total capacity additions coming from geographies outside the U.A.E., including Saudi, Oman, India, and Egypt. Overall, we added a new capacity of around 24,000 RTs during the year. I will talk more about this when we are providing an update on capacity guidance. Despite the fact that district cooling is already efficient compared to conventional cooling methods, Tabreed is continuing to advance various initiatives that will increase efficiency further. In 2024, we achieved Verified Carbon Standard for one of our plants in Abu Dhabi. This third-party verification recognizes the significant environmental benefits of Tabreed district cooling operations compared to conventional methods. As a result, Tabreed is now eligible to generate and trade carbon credits.
This is the first time that a district cooling company has achieved such certification, paving the way for industry to be recognized for its environmental contribution. Moving to the second slide. This slide provides details on our operational performance and expansion during the year. Consumption volumes have maintained a strong trend and saw an increase of 5% year-over-year to reach 2.7 billion ton-hours of refrigeration. This growth is a result of both higher connected capacity and robust cooling demand owing to the rising global temperature. As you know, chilled water revenues has two key components. Fixed charges contributed 55% of chilled water revenue in year 2024 and experienced a growth of 2% driven by increased capacity and CPI indexation. The variable charges accounted for the remaining 45% of chilled water revenue during the year and increased by 5% in line with the volume growth.
Deconsolidation of Tabreed Park Investments in Q3 year 2023 sustained the growth in both fixed and variable charges. The U.A.E. remains our core market, accounting for 83% of connected capacity. Our presence in other GCC markets such as Saudi Arabia, Oman, and Bahrain accounted for 17% of the total connected capacity. While outside GCC, we have expanded in India and Egypt, but the contribution remains small for now. We added close to 24,000 RTs of a new capacity in the year 2024, taking total connected capacity to 1.325 million RT. While U.A.E. represented major share of this addition, mainly in the Saadiyat, Al Raha, and from the United Arab Emirates Armed Forces. We have also seen fair degree of contribution from markets outside U.A.E. Let's move to the next slide, please.
Let me now take you through our corporate strategy that would allow Tabreed to maintain and enhance its leading market position in the district cooling sector. Tabreed is pursuing this strategy through local and international growth, business excellence, best practices in environmental sustainability, social responsibility, and governance, becoming an employer of choice, and focus on research development and innovation. Tabreed aims to achieve sustainable growth and unlock additional opportunities. This will be achieved through organic growth, selectively pursuing M&A transactions. In all its investments, Tabreed seeks a minimum internal rate of return that exceeds our cost of capital, enabling us to add value to our shareholders, as well as adequately compensate for upfront investment risk. We are also focusing on maximizing value creation by optimizing our operations, promoting HSE excellence, and delivering exceptional customer service.
Tabreed is committed to implementing best practices in environmental sustainability, social responsibility, and governance to enhance trust from our stakeholders. A key enabler to achieve this is our people-oriented mindset. Tabreed aims to attract, develop, and retain top talent across all the countries where it operates, and by fostering higher engagement and positive corporate culture. Lastly, Tabreed believes that new technologies and innovation are important to ensure its ability to adapt, stay competitive, and meet evolving customer needs, thereby supporting future-proofing of our business. Moving to the next slide. On this slide, we show how we measure success and progress against our key strategic objectives. We have achieved strong growth in capacity, EBITDA, and net profit in the last five years, and have further diversified our presence in new markets.
Tabreed is a leader in its industry, and we intend to maintain this market leading position in key geographies in which we operate. We have shown exceptional track record in realizing operating efficiencies and sustaining healthy margins, maintaining top-tier HSE performance and reliability of our services, and strengthening our relationships with customers through dedicated teams for various services. Tabreed has a long-standing approach of integrating international best practices in governance and ESG, IT security and data privacy, and a strong nine-member board that brings international expertise for effective monitoring and oversight. Tabreed has been driving productivity and business success by creating a positive work environment to attract skilled and motivated employees, which is well reflected in employee engagement and satisfaction survey results for the year 2024. We continue to invest in new technologies and solutions that improve operational efficiency and reduce environmental impact.
Various examples of such achievements include geothermal district cooling project in Masdar, use of nanofluid, variable frequency drives, and many more. Moving to the next slide. We see favorable macroeconomic trends that key markets where we are at present. This supports positive outlook for the district cooling industry. In general, economic growth is expected to improve over the next five years compared to the last five years in most of our markets. Other demand drivers, such as population growth, are also likely to be supportive of cooling demand. District cooling adoption is expected to increase further, driven by increasing investments in real estate and large infrastructure projects, including smart cities and mega events such as Expo. Regulatory environment and national targets for net zero carbon emissions are also supportive factors for DC industry. In other markets, such as India, size of cooling demand is significant.
Rapid urbanization and increasing disposable income promote demand in residential and commercial segments. Governments also remain focused to increase use of DC systems to meet energy efficiency targets through initiatives like National Cooling Action Plan. All these market trends are expected to drive rise in energy needed for space cooling, which can then push for more energy efficient, reliable, and cost-effective district cooling. Mov ing to the next slide, let me elaborate more on how Tabreed will capitalize on these market trends to grow. The UAE market remains at the center of our growth strategy. We are focusing on both organic and inorganic growth. We have already secured capacity in our existing concession areas. We have about 300,000 RT to be connected over medium-term in these concession areas. This expansion offers steady and secured organic growth at minimal incremental CapEx.
We are also targeting new greenfield opportunities to meet demand from increasing investments in real estate and infrastructure projects. We also anticipate further opportunities in the form of mergers and acquisitions in the UAE as developers still own captive assets, which can be monetized at the right time. Outside UAE, other GCC countries such as Bahrain, Oman, will continue to offer expansion potential, though scale is likely to be small considering market size. Our strategic expansion plans are focused on increasing our presence in under-penetrated markets where the demand for sustainable cooling is rapidly growing. We are actively assessing multiple opportunities in markets such as Saudi Arabia, India, and the wider Asia region. Our goal is to build greenfield plans to enter into large concessions by leveraging our technical expertise and proven track record.
The international landscape also provides opportunities for growth through M&A, where Tabreed can acquire captive assets owned by developers or public sector entities. In conclusion, our extensive expertise in the district cooling industry uniquely positions us to capitalize on these opportunities, while our robust financial framework ensures sustainable value creation for our shareholders. Moving to the next slide, Tabreed reaffirms its commitment to sustainability and climate action by embedding environmental, social, and governance principles into its operations and long-term strategy. Tabreed's ESG framework is built on three core pillars. Environmental stewardship. We prioritize our environmental responsibility through a robust integrated management system. The second one, social responsibility, where we believe that the company's employees are our greatest asset and recognize that employee well-being, development, and engagement are essential to drive the success.
At the same time, we are actively working to foster stro ng customer and supplier relations and create a positive impact on community we serve. The third pillar is the go vernance excellence. Our governance framework outlines the code of conduct and corporate structure. Comprehensive set of policies are approved by the board for best business practices, and we are committed to maintain high standards of transparency by adhering to global reporting standards. Let me provide some more clarity on our decarbonization roadmap, which is on the next slide, please. Tabreed is actively pursuing a roadmap to achieve net zero emissions by 2050.
Aligning with UAE Energy Strategy 2050, the roadmap includes initiatives aimed at enhancing energy efficiency, upgrading its cooling systems with the latest technologies to maintain high level of reliability and efficiency, integration of renewable energy sources, including solar PV and geothermal, exploring new and innovative technologies to maintain competitive edge, collaborating with suppliers to align their business practices with our sustainability goals, and lastly, compensating any residual emissions through offsetting by expanding the scope of Verified Carbon Standard certifications to more number of our district cooling plants. Next slide. Water efficiency is another top priority for Tabreed. We aim to optimize our operations and minimize water consumption per unit of cooling product, and we actively monitor this key performance indicator and have set targets to improve it. Additionally, we are focused on responsible waste management.
Our waste reduction action plan is outlined in environmental management policy and enables us to track and manage waste generated across various locations. The next slide. Tabreed plays a pivotal role in sustainable development through the provision of district cooling solutions. Our operations have yielded substantial environmental benefits. In the past year, we achieved energy savings of 2.6 billion kilowatt hours, equivalent to powering over 150,000 homes, and prevented 1.58 million tons of carbon emissions. As we expand our operations, our positive environmental impact will continue to grow. With this, I will now hand over to Salik to discuss our financial performance in detail.
Thank you, Adel, and good afternoon, everyone. In the next few slides, I will discuss our income statement, balance sheet, and cash flows in detail. In a nutshell, our financial results for the 2024 year clearly demonstrate the quality of our business model that provides high visibility of revenue, cash flows, and margins. At the same time, the credit profile of our customers, which are mostly B2B in nature, supports strong cash collection, demonstrating high creditworthiness. Our balance sheet position has significantly improved over the last few years, as evident in our net debt to EBITDA ratio of 3.7x , which is well below the 2019 level, when our leverage started to increase to fund our M&A-driven growth strategy. We are in very sound financial position to sustain growth in the future and deliver healthy returns to our shareholders.
Looking into our income statement for the year 2024, group revenue reached AED 2.4 billion, increasing by 1% year-over-year. However, the underlying growth reported an increase of 4.5% in revenue, which is masked by certain one-off items. These one-off items are the CPI gain on finance leases, which recorded in 2023 when the CPI reported was 4.8%. However, in 2024, the CPI indexation was 1.6%, which resulted in a one-off gain lower than 2023. This impacted our top-line growth by approximately 2%. Secondly, 2023 included a revenue contribution from Dubai Parks for almost eight months, before being deconsolidated at the time of divestment of 50% to Dubai Holding. This has further impacted our total revenue by 1.5%. Otherwise, our like-for-like revenue would have grown by 4.5%.
Revenue increase in 2024 was largely organic in nature and was attributed to gross new connections of 24,000 tons, which Adel mentioned in his remarks. It's also contributed by consumption volumes increased by 5% over the year. Contractual CPI indexation is another thing that has added in our small revenue increase. Also, coming to our value chain business, we focused on offering energy services to our customers and added more customers to our profile of billing and collection services. Total operating costs increased by 1% in the year 2024, despite 5% growth in consumption volumes. Even though the utility charges account for most of our operating costs, we were able to keep total operating costs in check due to higher efficiencies. As a result, gross profit remained broadly stable.
Our cost optimization efforts also supported to maintain our G&A expenses stable during Q4 versus the Q3, thereby restricting our full year 2024 increase to just 4%. These efforts led to an improvement in our EBITDA margin to 51%, and the total EBITDA increased by 5% year-over-year to a total of AED 1.25 billion. Positive operational performance was further lifted by 15% savings in finance costs following a proactive debt management, which the management had encroached on. Therefore, despite the adverse impact of our lower one-time CPI gains and 50% divestment of Tabreed Park Investments, net profit before UAE Corporate Tax grew by almost 4% to AED 624 million in 2024, compared to normalized level of AED 603 million in 2023. After accounting for the new corporate tax, the reported net profit for the year stood at AED 570 million, versus AED 430 million in 2023.
Moving on to the next slide. This slide summarizes Tabreed balance sheet as of the year-end 2024. The total assets and liabilities reduced by 5% in 2024, as management used surplus cash to proactively manage its borrowings to partial buyback of our Sukuk and pay increased dividends for the year 2023. Major movements in assets are the fixed assets and intangibles declined marginally as capital expenditure incurred during the year was offset by the depreciation and amortization charges. Investments in associates and joint ventures remain stable as the profit generated during the period were offset by the dividend distributions and the disposal of our interest in one of our joint ventures, namely the SNC-Lavalin. Receivables and other assets declined on reduction in fair value of our derivatives, while overall collections remained at very healthy levels.
As I mentioned before, our cash balance reduced as we prepaid our debt and paid 2023 dividends in 2024. Looking at the movement in equity sides and the liabilities, equity and reserves increased marginally as profit generated during the year was mostly balanced by the payment of shareholders dividends and the fair value adjustments in derivatives. Payables and other liabilities increased due to the introduction of income tax payable at the start of 2024. Our debt includes the bank borrowings and fixed income instruments, Sukuk and bonds. The total debt reduced by 12% as we partially bought back our outstanding Sukuk maturing in 2025. Our net debt stood at AED 4.6 billion at the end of the year, which is 6% lower than the 2023 number.
Subsequently, the net debt to EBITDA also improved to 3.7x , which is the lowest level in the last five years, and therefore fortifying our strong investment-grade status. Our balance sheet robust with net debt to capital ratio of 37%. Strong cash flow generating business model with a long-term contract provides room to increase gearing ratio to meet the potential funding requirements for growth purposes that may come across. In terms of upcoming debt maturities, we have a debt worth AED 2.4 billion due at the end of first quarter. While remaining Sukuk amount of AED 970 million is due in October of this year. We are quite confident in our ability to manage the upcoming refinance, whether in full or in part as the situation demands. We are in process of finalizing refinancing option with a goal of achieving optimum financing cost.
Once the decision is made, we will update the market accordingly. Moving on to the next slide. As I said, Tabreed continues to generate strong cash flows, which is being utilized to invest in growth, reduce our debt, and provide dividend returns to our shareholders. Our operations generated an impressive net operating cash flows of AED 1.2 billion, underscoring the robust nature of our business model, sustainability, profitability margins, and efficiency in managing working capital. Our DSO improved further in 2024, signifying the effectiveness of Tabreed's collection processes and the robustness of our customer credit profiles. We continue to invest in growth and incurred a cash expense of AED 257 million to fund expansion of our capacity in our existing concessions and construction of new greenfield plants, of which two were completed during the year 2024 and three are under construction.
Overall, Tabreed generated substantial free cash flows of AED 971 million in 2024, resulting in a free cash flow yield of more than 10%. Our financing activities clearly demonstrated our commitment to improve our financial prudence. We strategically utilize surplus cash to service our debt and improve our net debt to EBITDA, including the buyback of support and increase our returns to our shareholders. At the end of the period, we reported a cash balance of AED 1 billion. In addition, we maintain an undrawn AED 600 million of green revolving credit facility. This robust liquidity position enables us to effectively execute our capital allocation strategy. With this, I conclude the summary of financial results presentation. Now I'll hand it back to Adel to take you through the rest of the proceedings.
Thank you, Salik. Let me first update on our capacity guidance for the last two years period. We provided a capacity guidance of 100,000 RT to be achieved over the years 2023 and 2024, of which 85% was expected from consolidated entities. We delivered 77 RT against this guidance, of which 80% came from consolidated entities. Shortfall in delivered capacity versus our guidance is due to a combination of factors. Firstly, there were delays in completion of real estate projects in some of our concessioned areas such as Umm Al Quwain Beach, Masdar City, Saadiyat, Downtown Dubai, et cetera. Secondly, we are constructing a new plant for one of our customers, which will now be completed in the first half of this year as per revised timelines from the customer. Lastly, we were expecting some small-scale inorganic transactions to be materialized, which are still at discussion stage.
All these factors combined together contributed to a lower than expected addition in capacity. However, the good news is that all these connections are set to be connected this year based on contractual commitments. Other than short-term delays, we are on track to deliver on our growth expectations over the medium term. Talking about our medium-term expectations, we are now introducing additional performance indicators in our medium-term guidance for the period 2025-2 027. Firstly, for capacity growth, we are targeting an annual growth rate of 3%-5% over the next three years. This growth should be driven by signed agreements with our customers, as well as the new projects that we anticipate to win this year. It also includes potentially small-scale M&A opportunities but excludes large-scale M&As of size, similar to what we have done in years 2020 and 2021.
To meet this anticipated growth, we expect to incur organic capital expenditures of around AED 200 million-AED 300 million per year. We expect to maintain a healthy margin profile aligned with our long-term take-or-pay contracts and therefore guide for EBITDA margin of between 50%-53%. Our current leverage ratio, which mainly refers to net debt to EBITDA, stands at 3.7x . Nature of our business, our customer profile, and backing from our major strategic shareholders allow leverage ratios to trend above the current levels for a temporary period to fund large growth opportunities. If required, at the same time, the business model allows faster de-leveraging in absence of any major capital expenditure. We therefore do not have a fixed target for leverage. However, we expect to keep the upper limit cap to maintain an investment-grade credit rating. Moving to the next slide.
Before I conclude this presentation, let me summarize Tabreed's investment position. At the core of Tabreed's strategy to deliver long-term shareholder returns is a resilient business model. The company's financial position remains strong, with a high degree of future revenue predictability and cash flow visibility, underpinned by utility-like tariff structure and long-term contracts. Tabreed is well-placed to tap significant growth opportunities in both domestic and international markets, supported by 27 years of solid operational track record. Our balance sheet's rapid de-leveraging in recent years puts us in a comfortable position to deliver on our growth initiatives. We actively form partnerships to enter new markets and adopt cutting-edge technologies aimed at long-term success and boosting operational efficiency. District cooling is a preferred choice for new urban master developments and infrastructure projects, considering significant energy savings potential.
We therefore expect favorable regulatory policies that encourage the increased use of district cooling in the future. All in all, management of Tabreed remains focused on profitable and sustainable growth, prudently managing surplus cash and strengthening balance sheet and increasing cash returns to maximize shareholder value creation. With this, I conclude our earnings presentation. Thank you for your attention. Now, we will open the line for the Q&A.
Thank you very much for the presentation. We will now be moving to the Q&A part of the call. If you have any voice questions, please press star two on your keypad. That is star two on your keypad. If you are dialed in via the web, you may also ask a voice or a text question, and we acknowledge all the text questions that have already been asked. Our first question is a voice question from Mr. Vinod from AllianceBernstein. Please go ahead. The line is open. Hi, Vinod. Just to let you know that your line is open in case you still have a question. We will come back to your line later. In the meantime, we will take the question from Aliyan Ahmed from SHUAA Capital. What is your leverage outlook going forward in terms of any debt refinancing costs and overall debt structure?
Yeah. Hi, Aliyan. I mentioned a few minutes back that the company does not have a specific target for the leverage. But the main strategy and guidance, and we will never shy away of that, to maintain investment-grade credit rating. Under that strategic goal, definitely our strategy remains to be growth. Always, we will look for the best option on how to fund that growth. In the same time, balancing the dividend distribution as a responsibility toward our shareholders. This is an overall the strategy and the guidance that always we will follow.
Thank you very much. Our next question comes from Mr. Ahmed Alahmadi from Al Bahar. There are a couple of questions. I am going to read them one by one. Congratulations on the results. Question number one, given the current volatile interest rate environment, what is the target for net debt to EBITDA going forward?
Yeah. Thank you. Thank you, Ahmed. I believe I answered the same point in the previous question. The strategy, again, I will repeat it for sake of clarity. To maintain investment grade credit rating always. Always we will balance growth, how to fund the growth, dividend distribution, and utilize the cash. As you understand, it is a cash-rich generating business and industry, and it is sustainable as well. I hope this clarifies.
Okay. The second question from Mr. Ahmed. Certain news outlets reported a potential listing of Saudi Tabreed District Cooling Co. Can you provide some color as to whether this will be a primary or secondary offering? If secondary, what is the expected allocation of proceeds? Towards growth, further delivering or special distribution?
Yeah. Thank you, Ahmed, again for this question. As you can understand the strategy here for us as a listed company, that we do not react to any market speculation. Anything that it is coming, always we will follow SCA and DFM disclosure, rules and laws. This is what we can say as of now.
Okay, perfect. Thank you. Thank you very much. We have Vinod from AllianceBernstein. Thank you very much for your text question that came through. I know you had some issues with connecting to the voice. Vinod's question is, can you please shed some light on your refinancing plans? Can you please remind how much of the Eurobond is due in the next 12 - 18 months? And will you approach the Eurobond market to refinance them?
Yeah. Thank you. For this year, 2025, we have two different debts that are maturing this year. The first one is $692 million. It was taken as a corporate loan since 2020 to fund the acquisition of the downtown in Dubai. And the other one, Sukuk, was issued in the year 2018. It was $500 million. And this is the part of the Sukuk buyback we mentioned during this presentation today, so that we bought back around $240 million out of the $500. So in total, we are around between $900 million- $1 billion this year.
Tarek mentioned also earlier today that we are currently in the phase of identifying options. We will select, inshallah, the best option to refinance that, and it will be also announced in the right time once it is closed.
The follow-up question is about, do you plan to issue any hybrid capital instruments?
We are exploring all options as of now, but nothing worth mentioning that will be the preference or not as of now.
Okay. I believe this is a follow-up question from Mr. Ahmed from Al Bahar. I believe to some extent it was already answered. Should we expect long-term duration liabilities that benefit your business profile when looking at the upcoming 2025, 2027 maturities?
The point is very valid. For sure, it is strategic. But again, as I said, we are exploring all options according to the strategy, market practice, risk management profile of the company. Once we conclude, definitely it will be shared with the market as per the disclosure rules.
Okay. Thank you very much. Next question comes from Shadab Ashfaq from Al Ramz Capital. Good evening, everyone. Could you please provide an update on guidance breakdown in terms of geography?
Yeah. Thank you. Thank you, Shadab. As per our historical number, the guidance will continue. The major, the cornerstone of our connection and our growth will remain UAE, that's for sure. Then it will be GCC, then the other markets. Worth mentioning that during 2024, almost 24,000 RTs got increased or added connections. So two-thirds were from UAE and one-third was from the other markets. So this is an illustration or an indication about it. It could be more or less according, definitely, of each or every market development and prospects there. Thank you.
Okay. Thank you very much. It's once again star two for any additional questions. Star two. We have a follow-up question from Shadab from Al Ramz Capital. Could you elaborate on any major contracts or agreements that might impact capacity in any significant way.
Yeah. Maybe it is not clear really the question to us, but we do not have any current contract that may impact anything. Everything is as per the investment checklist measures. We follow. We do not expect anything that is coming, whether we are working on it currently or in the future, because as I said, most of our business is from U.A.E. U.A.E. today, it is a regulated market, whether in Dubai or Abu Dhabi, and we agreed with both regulators about the tariff and the tariff structure. Nothing is visible from that angle.
Okay, thank you very much. We have a question from Mr. Jean-Pierre Dmirdjian. Please go ahead, sir. Your line is open.
Yes, good afternoon. This is Jean-Pierre Dmirdjian from Kepler Cheuvreux. I just wanted to ask a follow-up question with regards to the growth prospects by geographics. Could you comment within the U.A.E. whether you see the greatest growth potential between Abu Dhabi and Dubai? Where do you think growth is strongest between those two Emirates? Another quick question regarding the dividend. I noticed that for the first time in 10 years, the board has decided to propose a stable dividend year on year. Could you comment on the reasons that underpin this decision to keep the dividend flat year on year? Thank you.
Yeah. Thank you, Jean-Pierre. For the first question, we are blessed with the U.A.E., the location, the leadership here, and that is why as we speak now, we are witnessing really, a growth into economy at all fronts, all maybe sectors as well. The outlook also that it will continue in the coming year. When it comes into the real estate, urban planning, Dubai, they took good shots, and it will continue. Yet Abu Dhabi, if it was behind, but now we see an acceleration into their strategies and plans. It is witnessed at all fronts as well. Everyone, they are noticing that at different sectors, whether real estate, hospitality, good projects that are in development, that it is coming.
So maybe, again, to summarize it and precise, maybe Dubai is a little bit ahead, but Abu Dhabi, they are really accelerating, and they are catching up, and we expect that it will continue. Regarding the dividend, maybe it looks as a number, okay, that it is the same number. But if we go into the details, the net profit, it was last year, AED 751 million before tax. Okay? And the shareholders that they approved to distribute 15.5 fils. But this year, the net profits before tax, it is AED 624 million. As from responsibility towards our shareholders, also the board, they recommended the general assembly meeting to the shareholders, also the same value. So this is, I think it is not really the same. As a value, it means more.
If you will add another tax point in year 2023, no corporate tax was implemented in UAE, and this is started for Tabreed fiscal year in year 2024. But this is a cash item so that we will pay to the FTA, okay, 9% of the net profit. So that again, maintaining the same last year, 15.5 fils, strongly we believe that it is really an accretive value to our shareholders. I hope this clarifies. Thank you.
Thank you.
Okay, thank you. Thank you very much, Jean-Pierre, for the question. We have a follow-up question from Vinod [Surendran] from AllianceBernstein. Could you please elaborate on your M&A plans and your appetite for acquisitions? Can we expect large transformational acquisitions in the medium term? Finally, any acquisition targets in the pipeline?
Yes, thank you. I mentioned today in our presentation that our strategy is growth, and it will continue through the two pillars, organic and inorganic. That is for sure. This applies to all markets where we exist as of today. For new markets, we are exploring prospects if it will fly, whether that it will be M&A or a greenfield. Everything definitely, as I said, that it will be announced in the right time.
Okay, thank you very much. Just once again, a final request for any additional questions. Star two for any voice or text questions. Okay.
No questions.
You good?
All right. Okay. Thank you. Thank you, everyone, for joining us today. If you have any further follow-up questions which you want to clarify, please feel free to reach out to us at ir@tabreed.ae. With that, we will conclude this call and wish you all a good day. Thank you.
Thank you very much. This concludes today's conference call. We will now be closing all lines.