Empower targets huge expansion
Ahmad Bin Shafar-led district cooling company has ambitious plans to double its capacity to 2 million RT by 2018
Empower has set its sights on further rapid expansion after delivering a record set of financial results in 2014, a year in which its portfolio surpassed the 1 million refrigeration tonnes (RT) mark for the first time.
Ahmad Bin Shafar, CEO of the world’s largest district cooling company, is confident that Empower can double capacity by 2018, given its recent success in securing new contracts and the outlook for Dubai’s property market, which is expected to see a wealth of new projects in the coming years.
At a press conference to announce a full year profit of AED 410mn ($111.6mn), up by 65% on the previous year’s total, Bin Shafar also confirmed the company is eyeing further acquisitions – one in Dubai and one in Abu Dhabi – following the successful takeover of Palm District Cooling in late 2013.
Asked by Utilities Middle East if it was true that Empower was aiming to double capacity to 2 million RT by 2018, Bin Shafar was emphatic: “True. And I’ll tell you how. Dubai Design District requires 175,000 RT. Business Bay is still under development and as you know there’s a lot going on there so there’s another 100,000 RT there. Lagoon, by itself will require around 300,000 RT. IPZ and Jumeirah will bring more capacity and with one acquisition we can easily jump to 2m RT.”
Pressed further on the issue of acquisitions, Bin Shafar declined to divulge any names or put valuations on the targets, though he said any takeovers would likely be funded by bank loans and equity.
He also confirmed that Empower is considering plans for a stock market listing at some point in the future and that it was in the process of hiring an advisor and would probably look to eventually float a 40% stake. However he said a timeline for a listing had not been set.
“I’m very confident that if Empower goes public it will be a blue chip company on the stock market,” he said. “We have been distributing dividends for the last few years and this year we gave shareholders back AED 250mn.”
Expansion beyond the borders of the United Arab Emirates (UAE) to other markets in the Gulf is not on the cards - for the time being at least, Bin Shafar said. “There is a lot of work in Dubai. If we can cover the whole of the UAE it’s enough. If you look at the region we are the most stable economy with a lot of construction going on in Dubai, Abu Dhabi and Sharjah. So I think if we focus only on the UAE for the next five to seven years then maybe we could look at expansion.”
Bin Shafar said shifting to greater use of treated sewage effluent (TSE) could lead to further savings for customers and higher profits for Empower. The company currently buys desalinated water from DEWA at 4 fils per unit and TSE at just 0.5 fils, however most of Empower’s plant rooms are currently not connected to a TSE network.
“We are trying to connect most of them,” he said. “Also, in the summer time TSE is used for greenery and there is even a shortage because the weather demands more.”
Growth on every level
As well as profit of AED 410mn, Empower saw its revenue rise by 76% to AED 1.5bn in 2014. The number of district cooling plant rooms rose to 62 at the end of the year from 57 while the number of buildings under service crept up by 4% to 746. Its customer base grew by 11% to just under 50,000 and staff numbers were up by 20 to 620.
Bin Shafar said much of the growth had come from the $500mn acquisition of Palm District Cooling which the company is still trying to integrate despite undertaking a lot of restructuring last year. Empower did not see a single new connection on the Palm in 2014 but there remains plenty of potential from new projects on the trunk and crescent, Bin Shafar said.
Notable new projects signed by Empower last year include a AED 750mn contract to provide Dubai Design District (d3) with 120,000 RT of district cooling services, signifying a 12% capacity addition to Empower’s network.
It also bagged a significant retrofitting agreement with Jumeirah Group to convert some of Dubai’s most iconic properties - including Emirates Towers, Burj-Al Arab, Jumeirah Beach Hotel and the Madinat Jumeirah - to district cooling.
During 2014, Empower also completed its second plant in Business Bay, which is the region’s first large district cooling facility built according to green building principles.
Empower currently provides 1,045,000 refrigeration tonnes (RT) of district cooling to some of Dubai’s largest commercial and residential property develpments.
According to its website existing projects include: International Media Production Zone (140,000 RT), Business Bay (50,000 RT), Dubai Intl Financial Centre (90,000 RT), Healthcare City (56,000 RT), JBR (60,000 RT), TECOM (100,000 RT), Al Khail Gate (32,000 RT), City of Arabia (120,000 RT), World Trade Centre Residences (3,750 RT), Business Village (5,000 RT), Ghoroob Mirdiff (18,500 RT).
New contracts secured last year include Dubai Design District (120,000 RT) and the retrofitting programme for Jumeirah Group properties including Burj Al Arab, Jumeirah Beach Hotel, and Madinat Jumeirah.