The rides through the various Salik toll gates in Dubai hit a new peak during Q2-23. Image Credit: Clint Egbert/Gulf News

Dubai: The Dubai toll-gate operator Salik will pass on Dh548 million as dividends for H1-2023 after revenue-generating rides exceeded pre-pandemic peaks and set a new record of 113.8 million trips in Q2-2023.

"Revenue-generating trips not only surpassed pre-Covid levels, but they also increased from the previous quarter, in spite of the typical seasonality effects,” said Mattar Al Tayer, Chairman. (Salik operates 8 toll-gates in Dubai.)

The half-year revenues rode in with Dh1.03 billion, a gain of 9.7 per cent to Dh945 million same time last year. Profit dropped to Dh548 million against Dh797 million.

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But Salik makes a point that there should not be a straight comparison on the profit situation." Comparing Salik's profitability between Q2-22 and Q2-23, and similarly, between H1-22 and H1-23, may not accurately reflect the company's performance on a like-for-like basis, due to changes in its operating structure and cost profile," said a statement.

"Since July 2022, Salik operates as a separate legal entity from the RTA through a 49-year concession agreement. As a result, Salik incurs new costs - concession fees, rent, amortization, and transitional service expenses -  as well as finance costs." (The finance costs alone came to Dh105 million during this half-year.) 

Revised growth numbers
Given the higher traffic though its gates, 'the company revises its guidance for the entire year. Salik expects revenue-generating trips to grow 9-10 per cent compared to 2022, with an EBITDA margin in the range of 66-67 per cent."

Stellar stock price

The Salik stock price is up 22.5 per cent year-to-date on DFM, with the broader index itself experiencing an exceptional performance. Salik becomes the second DFM-listed company in as many days to announce an H1-23 payout, with DEWA confirming Dh3.1 billion.

"In light of the strong set of results, the (Salik) Board of Directors approved distributing 100 per cent of H1-23 net profit as dividends to shareholders (Dh548 million, equivalent to 7.3057 fils per share)," the company said.

By capitalizing on the city's ecosystem and global connectivity, Salik continues to emerge as a leading toll-gate operator globally.

- Mattar Al Tayer
How much did fines and penalties contribute to Salik tally?
These gained 5% year-on-year to Dh53 million, from Dh50 million a year earlier, which is 'broadly in line with the increase in the number of violations, net of violation dismissals'. In number terms, that's 620,000 in Q2-2023 compared to 573,000 a year earlier.
The number of net violations remained mostly unchanged as a fraction of net toll traffic, and revenue from fines and penalties contributed 10.2% to total revenue.

Good cash position

Salik's free cash flow came to Dh357 million by end June, with a margin of 69.7 per cent in the second quarter. Another big positive was that it did not incur any capital expenditure during the April-June phase.

Salik's strong financial and operational achievements for the second quarter of 2023 continued to build upon our momentous award-winning listing on the Dubai Financial Market in September last year

- Ibrahim Sultan Al Haddad, CEO of Salik

It was in June 2022 that Salik secured a Dh4.2 billion credit facility (including a revolving facility of Dh200 million) with Emirates NBD Bank to cover the upfront concession payment and general corporate needs. In May 2023, Salik reduced the revolving facility to Dh50 million. By the end of the quarter, net debt stood at Dh3.1 billion. (This works out to a trailing 12-months net debt/EBITDA ratio of 2.3x, well below debt covenants.)