The Board of Directors of Salik Company PJSC (“Salik” or the “Company”), Dubai’s exclusive toll gate operator, chaired by His Excellency Mattar Al Tayer, Chairman of the Board, today announces the Company’s financial results for the three-month period ended March 31, 2024 (“Q1 2024”).
Salik continued to deliver strong top-line performance in the first quarter of 2024, with 122.8 million revenue-generating trips and total revenue of AED 562 million, increasing by 8.1% YoY which is the highest Q1 Revenue-Generating Trips Since Inception. Toll usage revenue, which represents 87.4% of total revenue, also increased 8.1% YoY to AED 491 million, supported by continued strong growth in tourism and residency, with Dubai remaining an attractive destination both for visitors and new residents relocating to the city.
His Excellency Mattar Al Tayer, Chairman of the Board of Directors of Salik, celebrated another strong quarter for the company in 2024, building on the momentum from a record-breaking performance in 2023. He attributed the positive results to the company's strategic vision, commitment to shareholder value, and the favorable macroeconomic environment in the UAE, including robust GDP growth and tourism inflow.
Ibrahim Sultan Al Haddad, CEO of Salik, echoed this sentiment, expressing satisfaction with the strong start to the year, highlighted by an over 8% increase in revenue-generating trips year-on-year. He emphasized the company's ambition to become a global leader in mobility solutions and its focus on diversifying revenue streams. Al Haddad announced strategic milestones, including the expansion of the toll gate network with two new gates in Dubai and the diversification into parking management solutions through a partnership with Emaar Malls. These developments position Salik for continued growth and success in the future.
Mobility Highlights
Salik posts 8.1% YoY growth in revenue-generating trips in Q1 2024, reaching 122.8 million
In the first quarter of 2024, Salik experienced a 6.2% year-on-year increase in the total number of trips, including discounted trips, attributed to Dubai's ongoing appeal to tourists and regular commercial activities. Revenue-generating trips reached a record high of 122.8 million, marking an 8.1% year-on-year increase, the highest for a first quarter since inception. Notably, the Al Maktoum Bridge gate witnessed a significant 49.0% year-on-year increase in revenue-generating trips due to traffic diversion from the nearby Floating Bridge closure. Al Garhoud Bridge also saw a 9.1% year-on-year increase in revenue-generating trips. Excluding these bridges, Salik's revenue-generating trips increased by 5.3% year-on-year, with strong growth observed at gates like Jebel Ali and others in the high-single digit range, such as Airport Tunnel and Al Mamzar North.
Million | Q1 2024 | Q1 2023 | % Δ YoY | Q4 2023 | % Δ QoQ |
Total trips(1) | 156.0 | 146.9 | 6.2% | 156.4 | -0.3% |
Discounted trips(2) | 31.2 | 31.7 | -1.5% | 31.9 | -2.3% |
% of total trips | 20.0% | 21.5% | -1.6% | 20.4% | -0.4% |
Net toll traffic(3) | 124.8 | 115.2 | 8.3% | 124.5 | 0.2% |
% of total trips | 80.0% | 78.5% | 1.6% | 79.6% | 0.4% |
Revenue-generating trips(4) | 122.8 | 113.6 | 8.1% | 123.2 | -0.2% |
% of net toll traffic | 98.4% | 98.5% | -0.2% | 98.9% | -0.5% |
% of total trips | 78.7% | 77.3% | 1.4% | 78.7% | - |
(1) Total vehicle trips through Salik toll gates (2) Discounted trips include taxis without passengers, Al Mamzar and Al Maktoum gates free time and discounts, vehicles exempted by law, and multiple violations and other. Multiple violations refer to drivers that repeatedly drive through the toll gates without paying in 24 hours. In this case, the fine is paid only once (3) Net toll traffic is total trips minus discounted trips (4) Revenue-generating trips is net toll traffic minus fines & penalties and unreconciled trips. Revenue-generating trips is the driver for Salik's toll usage fees revenue, which accounts for the majority of Salik's revenue | |||||
Growth in active accounts exceeds 16% to new record high, with registered vehicles increasing by 9.2% YoY to 4.1 million
In the first quarter of 2024, Salik experienced significant growth in registered active accounts, with a 16.5% year-on-year increase to approximately 2.5 million from about 2.1 million in Q1 2023. Tag activations also saw a notable rise, reaching around 242,000 tags, marking an almost 13% year-on-year increase. Additionally, the number of vehicles registered with Salik increased by 9.2% year-on-year, reflecting Dubai's economic expansion and its appeal to tourists and new residents. Salik continued to provide tariff exemptions to various vehicles, leading to a 5.1% year-on-year increase in free-of-charge trips made by exempted vehicles, reaching approximately 2.1 million in the first quarter of 2024. This growth was driven by a 10% year-on-year increase in the number of registered exempted vehicles, which reached 53,819 by the quarter's end.
Financial Highlights
Continued strong performance drives revenue to AED 562 million in Q1, up 8.1% YoY
Toll usage fees: revenue continued to increase during the first quarter of 2024, supported by the inflow of tourists and increased movement of individuals across Dubai. As a result, toll usage fee revenues increased 8.1% YoY to AED 491 million in the first quarter of 2024.
Fines: revenue from fines increased by 6.4% YoY to AED 59 million, also up 8.6% versus Q4 2023. The number of net violations (accepted minus dismissed violations) grew 8.2% YoY in Q1 2024, having reached 683,000. Net violations during the first quarter represented 0.5% of net toll traffic, a marginal decrease on the fourth quarter, with revenue from fines contributing 10.5% to total revenue.
Tag activation fees: grew strongly in the first quarter, with revenue from tag activation fees increasing 13.6% YoY to AED 10 million. Tag activation fees contributed 1.7% of total revenues in the quarter.
Salik maintained strong profitability in the first quarter, with EBITDA up 8.4% YoY
Salik generated EBITDA of AED 377 million in the first quarter of 2024, up 8.4% YoY, from AED 348 million in the prior year. EBITDA margin reached 67.1% in the first quarter, compared to a margin of 66.8% during the first quarter of 2023 and 65.0% during the fourth quarter of 2023.
Salik achieved a growth in net profit before taxes of 10.7%, reaching AED 304.5 million during the first quarter of 2024. Despite the implementation of the 9% corporate tax, Salik maintained a growth of 0.7% in its net profits after tax to reach a net profit of AED 277 million.
Summary of statement of profit or loss
AED million | Q1 2024 | Q1 2023 | % Δ YoY | Q4 2023 | % Δ QoQ |
562 | 520 | 8.1% | 563 | -0.2% | |
Toll usage fees | 491 | 454 | 8.1% | 493 | -0.4% |
Fines | 59 | 55 | 6.4% | 54 | 8.6% |
Tag activation fees | 10 | 9 | 13.6% | 14 | -29.1% |
Other revenue | 2.3 | 1.9 | 17.1% | 2.1 | 8.2% |
EBITDA(1) | 377 | 348 | 8.4% | 366 | 2.9% |
EBITDA margin | 67.1% | 66.8% | 0.2% | 65.0% | 2.0% |
Finance costs, net | (51) | (52) | -1.4% | (50) | 2.6% |
Profit before tax | 305 | 275 | 10.7% | 295 | 3.2% |
Income tax | 27 | - | - | - | - |
Profit for the period | 277 | 275 | 0.7% | 295 | -6.1% |
Profit margin | 49.3% | 52.9% | -3.6% | 50.6% | -1.2% |
Earnings per share (AED) | 0.037 | 0.037 | 0.7% | 0.038 | -3.5% |
(1) EBITDA is profit for the period, excluding the impact of finance cost, taxation, finance income, and depreciation and amortization expenses | |||||
Balance sheet remains solid, with net debt/EBITDA comfortably within Company’s target ratio
The Company recorded a favourable net working capital balance of AED -200 million as of 31 March 2024, equating to c.35.6% as a percentage of revenues. As at 31 March 2024, net debt stood at AED 3.3 billion, from AED 3.7 billion at the end of December 2023. This translates to a trailing twelve months’ net debt/EBITDA ratio of 2.3x, significantly below the Company’s debt covenant of 5.0x.
Summary of financial position
ED million | 31 Mar 2024 | 31 Dec 2023 | % Δ YTD |
Total assets, including: | 5,533 | 5,224 | 5.9% |
Cash and cash equivalents | 725 | 266 | 172.3% |
Short Term Deposit with Bank(1) | 600 | 750 | -20.0% |
Total liabilities, including: | 4,593 | 4,561 | 0.7% |
Borrowings | 3,990 | 3,989 | - |
Contract liabilities(2)) | 358 | 353 | 1.4% |
Total equity | 940 | 663 | 41.9% |
Net debt(3) | 3,282 | 3,742 | -12.3% |
Net working capital balance(4) | (200) | (192) | 3.9% |
(1) Represent Fixed deposit with original maturity of 3 to 12 months. (2) Contract liabilities is the sum of current and non-current balances paid in advance by customers relating to recharges and too-ups and tag activation fees (3) Net debt is total borrowings minus cash and cash equivalents minus short term deposit (4) Net working capital is the balance of inventories plus trade and other receivables plus dues from related parties plus contract assets minus trade and other payables, minus due to a related party minus provision for taxation minus current portion of contract liabilities and lease liabilities. | |||
Solid free cash flow of AED 354 million, with a margin of 62.9%
Salik generated free cash flow of AED 354 million in the first quarter, with a free cash flow margin of 62.9%, a c.40-basis point improvement versus 62.5% in the prior year.
Summary of cash flow
AED million | Q1 2024 | Q1 2023 | % Δ YoY | Q4 2023 | % Δ QoQ |
387 | 355 | 9.0% | 378 | 2.5% | |
Changes in working capital | (33) | (30) | 11.6% | 31 | -135.7% |
Net cash flow from operating activities | 354 | 325 | 8.8% | 409 | -13.5% |
Net cash generated from / (used in) investing activities | 170 | 4 | - | (249) | -168.4% |
Net cash used in financing activities | (65) | (55) | 18.7% | (61) | 8.0% |
Free cash flow(1) | 354 | 325 | 8.8% | 409 | -13.5% |
62.9% | 62.5% | 0.7% | 72.6% | -9.7% | |
(1) Free cash flow is net cash flows from operating activities less purchases of property and equipment plus proceeds from the sale of property and equipment (2) Free cash flow margin is free cash flow divided by revenue | |||||
Salik maintains a growing and positive impact on the community
Salik continues to prioritize investing in its human resources and upholds its commitment to diversity and inclusivity. Salik expanded its full-time workforce by 27% YoY, from 33 in March 2023, to 42 personnel in March 2024, with a rise in the number of nationalities represented from 9 to 13. Salik continues to progress on Emiratization, attaining a level of over 30% by the end of the quarter.
Corporate Strategy Update
Salik’s strategic evolution for becoming a global leader; two new gates expected in 2024
Salik aims to become a global leader in sustainable and smart mobility solutions by focusing on achieving sustainable growth and establishing itself as a future-proof company. It plans to diversify its business through initiatives such as introducing new toll gates and providing parking payment solutions at Dubai Mall. Salik aims to build a portfolio of vehicle-centered mobility services and ancillary revenue streams while ensuring efficient treasury management and funding systems. It emphasizes maintaining strong ESG credentials, reducing environmental impact, contributing to community happiness and safety, and upholding corporate governance standards.
Business Outlook
Salik anticipates a 4-6% YoY increase in revenue-generating trips for full year 2024, with a robust EBITDA margin of 65-66%. Management is monitoring the closure of the Floating Bridge, which has boosted traffic through the Al Maktoum Bridge toll gate, potentially impacting financials positively if the closure persists. Updated financial guidance will be provided at the half-year results, considering the impact of new toll gates. Salik recently reduced its annual concession fees to the RTA, resulting in a lower cost structure effective from April 1, 2024, expected to positively impact financial performance from Q2 2024 onward.
News Source: Dubai Media Office
