Salik Company Pjsc · DFM:SALIK
Salik Company Pjsc — H1 2023 Earnings Presentation
33 slides from Salik Company Pjsc's earnings presentation, August 2023
Slide 1: Investor Presentation
Investor Presentation August 2023 1
Slide 2: Disclaimer
Disclaimer No statement in this document is intended to be nor may be construed as a profit forecast. Any statements made in this document which could be classed a “forward-looking” are based upon various assumptions, including, management’s examination of historical operating trends, data contained
Slide 3: Table of contents
Table of contents Management team 4 Salik at a glance 5–6 Investment highlights 7 – 21 Operational performance 22– 24 Financial performance 25 - 32
Slide 4: Management team
Management team SALIK AT A GLANCE INVESTMENT HIGHLIGHTS OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE MANAGEMENT TEAM • 20+ years track record of • 30+ years experience in finance • 17+ years of management achieving commercial and audit including Big4 audit experience in the public transformation ac
Slide 5: High quality core transportation infrastructure asset, serving Dubai's busiest toll road corridor
High quality core transportation infrastructure asset, serving Dubai's busiest toll road corridor MANAGEMENT TEAM INVESTMENT HIGHLIGHTS OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE SALIK AT A GLANCE Operating as a standalone entity since 1 July 2022 49-year concession with RTA, ending in 2071 Estab
Slide 6: Salik: The gateway to opportunities
Salik: The gateway to opportunities MANAGEMENT TEAM INVESTMENT HIGHLIGHTS OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE SALIK AT A GLANCE Exclusive Toll Operator for Dubai’s Road Strong Macro Growth Tailwinds from Custom-Built Technology Underpinning Network in a City Where Car is Dominant Dubai’s A
Slide 7: Salik: connecting the hearts of Dubai in a city where car use is dominant
Salik: connecting the hearts of Dubai in a city where car use is dominant MANGEMENT TEAM SALIK AT A GLANCE OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE STRONG MACRO DUBAI JOURNEY MODE SPLIT High Population Areas Exclusive operator Sharjah Major Roads Serving high population areas 12% 5 Light Al Mam
Slide 8: Attractive economy with strong GDP and population growth prospects
Attractive economy with strong GDP and population growth prospects MANAGEMENT TEAM SALIK AT A GLANCE OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE STRONG MACRO Dubai is Taking Active Steps to Attract and Retain Residents Consistent Track Record and Strong Outlook for Population Growth Dubai Daytime
Slide 9: Dubai wants to become the most visited city globally
Dubai wants to become the most visited city globally MANAGEMENT TEAM SALIK AT A GLANCE OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE STRONG MACRO Tourists in Dubai per annum (m) Busiest Home to the world’s busiest airport +74% 25.0 Int’l Airport 2014-22 Highest hotel occupancy rate amongst the 16.7
Slide 10: Well-rounded growth strategy
Well-rounded growth strategy MANAGEMENT TEAM SALIK AT A GLANCE OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE GROWTH STRATEGY Market Opportunity Capability & Fit • Favourable macro trends with daytime population and tourists alike to • Exclusive toll operator in Dubai, will capture all of the additio
Slide 11: Addition of New Gates
Addition of New Gates MANAGEMENT TEAM SALIK AT A GLANCE OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE GROWTH STRATEGY Market Opportunity Capability & Fit • With 8 gates built over a 11 years period, Salik has demonstrated its ability to meet the • Well-defined framework for addition of new gates in
Slide 12: Future Opportunities
Strong market opportunities to unlock additional value MANAGEMENT TEAM SALIK AT A GLANCE OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE GROWTH STRATEGY A dedicated team at Salik has been set up to study these future avenues of growth Market Opportunity Capability & Fit Global Examples Potential to le
Slide 13: Salik benefits from Dubai's well-invested transportation infrastructure
Salik benefits from Dubai’s well-invested transportation infrastructure MANAGEMENT TEAM SALIK AT A GLANCE OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE INFRASTRUCTURE & TECHNOLOGY THEN NOW FUTURE UAE Ranked #1 in Quality of Roads Road Quality Scores(1) • 50 years of continuous investments supported
Slide 14: Custom-built technology underpinning efficient and seamless operations
Custom-built technology underpinning efficient and seamless operations MANAGEMENT TEAM SALIK AT A GLANCE OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE INFRASTRUCTURE & TECHNOLOGY Reliability and Seamless Customer Experience is a Key Priority Efficient Platform for Trips Processing • The camera captu
Slide 15: Concession agreement overview
Concession agreement overview MANAGEMENT TEAM SALIK AT A GLANCE OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE FAVOURABLE REGULATIONS Relevant Authorities and Relationship with Salik Key Concession Agreement Terms Legislative Term of the Concession Governmental Body • Ultimate decision maker around c
Slide 16: Concession agreement overview (cont'd)
Concession agreement overview (cont’d) MANAGEMENT TEAM SALIK AT A GLANCE OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE FAVOURABLE REGULATIONS SALIK’S KEY RIGHTS RTA’S KEY OBLIGATIONS TO SALIK Take necessary actions during the Ensure that any operational registration process to and system for the Dub
Slide 17: Price increase mechanism and concession fee overview
Price increase mechanism and concession fee overview MANGEMENT TEAM SALIK AT A GLANCE OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE FAVOURABLE REGULATIONS Price Increase Mechanism Approval Process • Mechanism for tariff increase that is linked to inflation providing investors with • The Board of Dir
Slide 18: New gate addition mechanism
New gate addition mechanism MANGEMENT TEAM SALIK AT A GLANCE OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE FAVOURABLE REGULATIONS Future Toll Gates Network Valuation Discrepancy & Earn-out Mechanism • A number of additional toll gates have been considered as part of the • Valuation of a new gate whi
Slide 19: Capex-light model resulting in industry-best cash conversion
Capex-light model resulting in industry-best cash conversion MANAGEMENT TEAM SALIK AT A GLANCE OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE EXCEPTIONAL CASH FLOW MARGINS Salik’s Capex is Significantly Lower than Listed Peers… …Resulting in Exceptionally High Free Cash Flow Margin(1) Levels Capex /
Slide 20: Best-in-class operating margins
Best-in-class operating margins MANAGEMENT TEAM SALIK AT A GLANCE OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE BEST-IN CLASS MARGINS EBITDA Margins (H2 2022) (1) Net Profit Margins (H2 2022) 71.8% 72.4% 55.4% 68.0% Peer average: 62% 56.1% 46.4% 19.4% 18.3% Peer average: 14% 3.2% - Peer 1 Peer 2 Pee
Slide 21: Forward thinking organization with a sustainable agenda aligned with Dubai's ESG goals
Forward thinking organization with a sustainable agenda aligned with Dubai’s ESG goals MANAGEMENT TEAM SALIK AT A GLANCE OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE SUSTAINABILITY Committed to Reduced congestion & fuel Digital Green Clear commitment to reduce green energy consumption transformatio
Slide 22: Toll gates located at the heart of Dubai's dynamic activity
Toll gates located at the heart of Dubai’s dynamic activity MANAGEMENT TEAM SALIK AT A GLANCE INVESTMENT HIGHLIGHTS FINANCIAL PERFORMANCE OPERATIONAL PERFORMANCE Installation Total Trips(1) in % of Total Date H1 2023 (m) 1 Al Barsha 2007 58.9 20% 2 Al Garhoud 2007 43.5 15% 3 Al Safa 2008 55.4 19% 4
Slide 23: Overview of toll gates network
Overview of toll gates network MANGEMENT TEAM SALIK AT A GLANCE INVESTMENT HIGHLIGHT FINANCIAL PERFORMANCE OPERATIONAL PERFORMANCE Revenue-Generating Trips vs. Total Trips(1) (H1 2023) Revenue-Generating Trips (% of Total) (m trips) 95% 96% 94% 55% 57% 52% 95% 95% 56% Lower proportion compared to ot
Slide 24: Operating performance of the network historically
Operating performance of the network historically MANAGEMENT TEAM SALIK AT A GLANCE INVESTMENT HIGHLIGHTS FINANCIAL PERFORMANCE OPERATIONAL PERFORMANCE Historical Revenue-Generating Trips Evolution(1) (m trips) % of Total Trips 58% 56% 56% 62% 64% 64% 65% 73% 75% 76% 76% 75% 76% 78% Al Al Safe Makto
Slide 25: Streamlined business model
Streamlined business model MANAGEMENT TEAM SALIK AT A GLANCE INVESTMENT HIGHLIGHTS OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE Total Revenue (H1 2023) - Operating Costs (H1 2023) = EBITDA Fines & Concession O&M & Related Toll Usage Fees Other Other Penalties Fee Costs # of Revenue Tags activation
Slide 26: Resilient revenue base and strong rebound despite adverse economic headwinds from COVID-19
Resilient revenue base and strong rebound despite adverse economic headwinds from COVID-19 MANAGEMENT TEAM SALIK AT A GLANCE INVESTMENT HIGHLIGHTS OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE Revenue Evolution Commentary • Primary driver of historical revenue has been toll usage -30% +22% +12% +10%
Slide 27: Operating cost structure places Salik among the most profitable in the industry
Operating cost structure places Salik among the most profitable in the industry MANAGEMENT TEAM SALIK AT A GLANCE INVESTMENT HIGHLIGHTS OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE Operating Costs Evolution Commentary Carve-out Financials (2019 to H1 2022): 17% 20% 18% 27% 38% 37% • Salik’s concess
Slide 28: Resilient EBITDA generation and best-in-class margins
Resilient EBITDA generation and best-in-class margins due to favourable contractual framework and defensive business model MANAGEMENT TEAM SALIK AT A GLANCE INVESTMENT HIGHLIGHTS OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE EBITDA Evolution Commentary • EBITDA fluctuated between 80-85% of revenue f
Slide 29: Advance customer charges drive positive working capital profile
Advance customer charges drive positive working capital profile MANAGEMENT TEAM SALIK AT A GLANCE INVESTMENT HIGHLIGHTS OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE Net Working Capital Evolution Commentary (165) (235) (78) (147) (131) • Salik enjoys a negative working capital balance that normally
Slide 30: Solid cash generation supported by robust profitability and minimal capex
Solid cash generation supported by robust profitability, positive working capital dynamics, and minimal capex MANAGEMENT TEAM SALIK AT A GLANCE INVESTMENT HIGHLIGHTS OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE Free Cash Flow Evolution Commentary • Thanks to Salik’s positive working capital dynamic
Slide 31: Healthy balance sheet with net debt-to-EBITDA of 2.3x
Healthy balance sheet with net debt-to-EBITDA of 2.3x MANAGEMENT TEAM SALIK AT A GLANCE INVESTMENT HIGHLIGHTS OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE Sources vs. Uses – H1 2023 11 26 Total borrowings* Cash & cash equivalents 113 As of June 30, 2023 As of June 30, 2023 - * Islamic Mudaraba faci
Slide 32: Attractive dividend policy
Attractive dividend policy MANAGEMENT TEAM SALIK AT A GLANCE INVESTMENT HIGHLIGHTS OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE to be Salik completed Second dividend, AED 548 This dividend policy is paid by April and October of as publicly listed million, for H1 2023 to be paid designed to reflect
Slide 33: THANK YOU
THANK YOU For enquiries, please contact Investor Relations: Mohamed Zein Head of Investor Relations E: Mohamed.Zeinelabedin@salik.ae