Hello, everyone. My name is Nathan. I am one of the Bank of America operators here. Just a few things before the meeting begins. Just to let you know, this particular meeting is being recorded, so just be aware that this meeting is being recorded. Could I also ask anybody that are from the press to please remove themselves?
This is a press-free call. Just to let you know as well, could everybody please rename themselves and make sure that they have their full name and their company present. If you do not have your full name and your company, we will have to take you through into a renaming room and rename you there. If you do have the means to be able to rename yourselves, please do it. Thank you very much, and enjoy the meeting.
Great. Thank you very much, Nathan. Good afternoon and good morning, everyone. Welcome to Salik's Q2 and H1 earnings presentation. I am Jameel Bakhsh , MENA Research Analyst at Bank of America. It gives me great pleasure to introduce the Executive Management Team of Salik. Firstly, I will talk to you about just the format. We will have a management presentation followed by a Q&A session. For the Q&A session, please use the raise your hand function there. With that, I will pass it over to Wassim El Hayek, Head of Investor Relations at Salik.
Good afternoon, everyone, and thank you for joining us. This is Wassim El Hayek, Head of Investor Relations at Salik. I would like also to thank Bank of America team for hosting today's call and Jameel for handling this call as well. We are pleased to have you with us as we discuss Salik's financial and operational performance for the first half of 2026 and provide an update on the business. Presenting today, we have our CEO, Mr. Ibrahim Al Haddad, along with Mr. Maged Ibrahim, our CFO, and Mr. Hariharan Gopal, our Director of Strategy and Growth.
We will begin with the operational story and key highlights of the first half 2026, followed by the financial results and close with our full year outlook, leaving time at the end for your questions. Before we begin, please take a moment to review our disclaimer on the slide, which is relevant to our status as publicly listed company. Today's session is being recorded and transcript, and a copy of this presentation is available on our website for your reference. I will now hand over to our CEO, Mr. Ibrahim Al Haddad.
Thank you, Wassim. Good afternoon, everyone. Before we go over the details of Salik's operational and financial results, I want to leave you with the four key highlights that have defined our performance during the first half of 2026. First, despite a challenging operating environment, Salik delivered a resilient financial performance reflecting the strength of our financial and business model. Second, while the first half was impacted by external factors, we saw encouraging signs of recovery in traffic and mobility trends at the later part of the period, supporting our confidence in the underlying fundamentals of the business.
Third, we remain firmly focused on executing our long-term strategy. We continued expanding our ancillary services portfolio through a number of important strategic agreements that will support future growth and diversification. Finally, Dubai continued to demonstrate confidence in its own long-term economic vision through the announcement of major infrastructure project during the period. These investments reinforce the city's long-term growth trajectory.
With that, let me now walk you through our financial highlights for the six month ended June 2026. Our core network handled 278.5 million chargeable trips during the first half, generating revenue of AED 1.4 billion, with the second quarter revenue of AED 683.1 million. Despite the softer traffic condition throughout the period, our profitability margins remained strong. EBITDA reached AED 975.6 million at a margin of 69.1%, and net profit was AED 704 million, delivering a margin of 49.9%.
We executed against our strategy during first half, expanding our role across Dubai's mobility ecosystem, building on partnership already in place, including Dubai Airports and Dubai Trans. We announced two important additions. In July of this year, we signed an MoU with Shamal to enable seamless parking payment at Dubai Harbor with Car Park, which went live in the same month. We also entered into an MoU with DIEZ to deploy access control and parking optimization solution across more than 21,000 parking spaces at Dubai Airport Free Zone, Dubai Silicon Oasis and Dubai CommerCity.
It expands our capability beyond our core business and opens a meaningful new growth avenue for Salik. Our outlook continues to be supported by Dubai's strong macroeconomic fundamentals. The population reached 4.6 million in 2025, growing at a 7% compound annual rate, while the U.A.E.'s economic outlook remains robust and its sovereign rating were reaffirmed by Moody's, S&P, and Fitch with stable outlooks. Looking ahead, Dubai's 2040 Master Plan targets a population of 5.8 million, supported by continued investment in infrastructure and tourism.
Together, these structural drivers reinforce our confidence in long-term traffic and growth, and demand for smart mobility solutions. Government initiatives continue to reinforce Dubai's long-term growth story. Infrastructure investment is accelerating with landmark projects, including the first Al Khail elevated corridor and Metro Blue and Gold Lines.
At the same time, new investment support measures and the unified Dubai investor register are advancing the D33 agenda, while continued reform to visas and property residency are supporting tourism and population growth. Every one of these measures fuels the growth that flows straight into demand across our network. With that, I'll hand over to Director of Strategy and Growth, Mr. Gopal, who will take you through our operational performance in more details.
Thank you, Ibrahim, good afternoon, everyone. I will now take you through the key operational highlights for the period. Starting with the traffic volumes, total trips reached 186.6 million in the second quarter, down 12.6% year-on-year and 5.4% quarter-on-quarter, with 132.8 million chargeable trips. For the first half, total trips reached 383.8 million, with 278.5 million chargeable trips, reflecting the softer traffic conditions experienced during the period.
While traffic volumes softened, the underlying foundation of the business continued to strengthen. Active registered accounts grew 6.6% year-on-year to 2.9 million, while active registered vehicles increased 7.2% to 4.9 million. The continued expansion of our user base reinforces the defensive characteristics of our business and supports long-term traffic growth. Looking at the breakdown by gate, the softer volumes in the quarter were spread broadly across the network rather than concentrated in any one location.
Al Barsha and Al Safa South continued to lead trip volumes, the overall mix across the gates remained consistent with prior quarters. By time of day, off-peak trips continued to account for the largest share of traffic, followed by peak and post-midnight trips, with the overall mix remaining broadly stable. Variable pricing continues to show consistency with regards to distribution, with traffic patterns remaining stable. The mix between peak, off-peak, and post-midnight trips remains broadly unchanged from prior quarters, reflecting consistent commuter behavior.
Our parking payment solutions continued to scale during the first half, as our e-wallet is now live across 180 Parkonic locations, with two important additions carrying beyond. The first is our partnership with Shamal, where our solution went live in July at Dubai Harbor West car park, covering 845 spaces across nine stories, including rooftop parking, further expanding our presence across one of Dubai's key lifestyle destinations.
The second is our MoU with DIEZ. The partnership will deploy access control and parking optimization solutions across more than 21,000 parking spaces at Dubai Airport Free Zone, Dubai Silicon Oasis and Dubai CommerCity. It takes Salik into smart parking management and access control for the first time across three of Dubai's economic zones. These initiatives build on a platform that is already operating at a scale, with Dubai Airports, Dubai Mall, and Parkonic continuing to expand the reach of our digital mobility ecosystem. Beyond parking, our ancillary revenue platform continues to expand.
Our partnership with Liva continues to gain momentum with Salik's customer base to deliver seamless digital motor insurance renewals. Meanwhile, our proof of concept with Schneider Electric and Vcharge has progressed well, with the rollout of more than 1,800 EV charging points expected in Q3 2026. Our ENOC pilot also remains on track for launch during the second half of the year. I will now hand over to Mr. Maged for review of our financial performance.
Thank you, Gopal, and good afternoon, everyone. Let's go through now the key financial highlights. The first half of 2026 was more measured period for business. However, our performance underscores the resilience of our business model and discipline embedded in our operating approach. Revenue for the first half reached AED 1.4 billion, down 7.5% year-on-year, while the second quarter revenue stood at AED 683 million, down by 11.9%. This mainly reflected lower traffic activity following the regional events that began in late February.
From an operational perspective, total chargeable trips for the first half were 278.5 million, down 12.5% year-on-year, with a decline spread across both peak and off-peak periods. Despite the softer revenue, profitability held up well. EBITDA reached AED 975.6 million at a margin of 69.1%, with a second quarter margin at 68.6%, while net profit was AED 704 million, delivering a margin of 49.9%, which is almost 50%. Toll usage fees continued to represent our core revenue stream, contributing 85.2% of total revenue in the first half.
Fines accounted for 10.2%, while the remaining 4.6% was generated from tag activation fees and our expanding ancillary revenue streams. That includes parking payment solutions and insurance. On the cost side, concession fee remained aligned with the concession agreement, while operating expenses continued to be tightly managed. Net finance costs also declined year-on-year, supported by lower interest rate.
These factors delivered an EBITDA margin of 69.1% and a net profit margin of 49.9%, reinforcing the resilience and efficiency of our operating model. Breaking revenues down by stream, toll usage fees totaled AED 1.2 billion for the first half. The year-on-year decline was concentrated in this line mainly, reflecting the softer traffic activity following the regional events that began late February. The remaining revenue streams continued to perform well. Fines increased 7.5% year-on-year to AED 144.4 million.
Other revenue reached AED 65.1 million, reflecting continued momentum across our ancillary businesses, in addition to a one-off revenue related to old unused recharge cards. Over time, we expect these streams to become an increasingly meaningful contributor to our business. On a monthly basis, the chart shows softer performance in March and April, followed by a clear improvement. June returning to year-on-year growth increasing by 2.3%, supported by other revenue streams and the early signs of recovery in traffic activity, which we expect to continue into the second half.
For the first half, also EBITDA reached AED 975.6 million, representing an 8.4% year-on-year decline, while the EBITDA margin remained broadly stable at 69.1%. This underscores the inherent efficiency of our cost structure and the disciplined approach we apply in managing the business. While toll usage revenue was impacted by lower traffic volumes following the regional events, disciplined cost control helped protect the margins and sustain resilient profitability through the softer operating period. Net profit for the first half reached AED 704 million, representing an 8.7% year-on-year decline, while the net profit margin remained strong at 49.9%, and the pre-tax margin stood at 54.8%.
Building on EBITDA performance, net profit was further supported by lower finance costs, reflecting the benefit of lower interest rates during this period. Overall, the impact of softer revenue was largely absorbed by our efficient operating cost structure, allowing profitability to remain resilient through the period. Free cash flow for the first half stood at AED 551 million, representing a margin of 39% compared with 72.8% in the same period last year.
The year-on-year movement was mainly driven by working capital timing, including the settlement of VAT-related liabilities, related concession fee payable, and amounts due to our operational maintenance subcontractor. EBITDA generation remains strong and the reduction reflects temporary timing effects rather than any change in the underlying cash generating capacity of the company. Our balance sheet remains robust. As of June 30, 2026, net debt stood at AED 5 billion, with net debt to trailing 12 months EBITDA at 2.45x , comfortably below our covenant threshold of five times. We also continue to benefit from strong investment-grade credit rating from Fitch and Moody's, with Fitch reaffirming its A rating in July 2026.
Turning to our outlook. We are reaffirming the guidance issued in the first quarter of 2026 with no revisions. We continue to expect revenue growth in the range of -3% to flat, supported by a gradual recovery in traffic volumes, which are expected to normalize during the third quarter. We also maintain our expectations for an EBITDA margin of 67.5%-68.5%, a pre-tax net profit margin of 54%-55%, and a post-tax net profit margin of 49.5%-50.5%, reflecting our confidence in the company's cash generation and long-term earning profile.
We remain committed to distributing 100% of net profit. Subject to Board approval, the distribution is expected to take place before the end of October, in line with our dividend policy. With that, I will hand the call back to our Chief Executive Officer, Mr. Ibrahim Al Haddad, for his concluding remarks.
Thank you, Maged. To conclude, the first half demonstrated exactly what Salik is designed to deliver. Even in a softer operating environment, we maintained industry-leading margins, continued to expand our digital mobility platform, and executed against our long-term strategy. With Dubai's structural growth drivers firmly in place, we remain well-positioned to deliver sustainable long-term value for our shareholders. Thank you. We will now open the floor for questions.
Thank you very much, everyone. Just as a reminder, if you want to ask a question, use the raise your hand function. We'll begin our first question from Alexander Estefanous, UBS. Please go ahead, unmute yourself, and ask. Thank you.
Hi, guys. Congrats on the resilient set of results. Just a couple from me, if that's okay. I'll start with the first one. You noted that June congestion traffic levels were somewhat resembled what is considered normal. Could you give us some color on this, notwithstanding the season demand slump? What are you seeing for July and the start of August? I'll ask a second question after.
Gopal, you take this question?
Yes. Our expectation for July, it's similar to or it's in line with our expectation. We are unable to disclose the actual numbers because it's still being worked upon. We do expect the traffic to improve in the coming months.
Okay, perfect. Just another question on your margin. You delivered in the first half of this year 69.1%, and you're reiterating the guidance of 68.5% at the upper end of the ceiling. Where do you foresee any potential margin pressure to come in, and what would stop you from delivering another sort of 69.1% margin going into the second half?
Again, we need to be here realistic when we are giving our guidance. This reflects usually the best assessment on the information available today. We definitely will continue to monitor the developments in the region, and we have not seen an evidence yet of a structural change in demand. Based on the current trends, we came up with this guidance, and we still affirming the same guidance as we give.
Perfect. Thank you very much, guys.
Thank you. The next question will be from Roman Reshetnev, Goldman Sachs. Please go ahead, unmute yourself.
Hi. Thanks for taking my questions. I just wanted to check on divergence between fines and toll fees growth revenues in the second quarter. Qualitatively, what is driving this divergence? Is this primarily a reflection of a high rate of insufficient funds violations and given the irregular commuting patterns in the quarter, or that reflects some structural lack in fine processing and recognition from previous high traffic quarters? In general, how should we think about the fine growth for the rest of the year? Thank you.
Usually, this is coming from the organic traffic growth. If you notice currently, the elements that we are missing in our traffic, which is the tourists coming and the trips that the tourists used to do through Salik. That's why you can see the toll revenue from traffic is reduced because it's mainly depending on the residents of Dubai as of now. Usually, the fines coming from this category, because whoever coming as a tourist, he got a rental car, he got a taxi. Those are not making a fine or generating fines for Salik. Usually, the fine is generated by the people who are resident in Dubai. That's why you will see a reducing in toll revenue, while the fine revenue remain almost the same and increasing now.
Okay, thank you very much.
Thank you. Ankur Agarwal of HSBC, please go ahead.
Yeah. Thank you for the presentation and the opportunity to ask a question. My question really is that, can you talk a bit more about the measures the government is taking to prop up tourism? Related to that, have you seen some policies yield some results, let's say in July and early part of August so far?
Speaking about the country measures that they take, it is known for everyone now and all these initiatives that has been done by the government, like encouraging, inviting your friends and your relatives, making the visa processes more easier. Again, it is not only in the hands of the country here to enhance this kind of element, which is the tourist. What we see right now is that at least the current resident movement is returning almost the same like before. This will be affirmed and clearly by announcing the results of the quarter three, once we have.
Okay. Secondly, on the tie-up with Parkonic, right? Are we still considering bidding for the Dubai Airport parking, for example? I think, is that part of the business doing well, the ancillary revenue? Has that been less impacted by this situation compared to Salik?
Gopal?
Yeah. Our partnership with Parkonic has been growing consistently. Today we are at almost 180 locations out of the 230 locations that Parkonic is operating, and we will continue to grow with them. Regarding bidding opportunities, we will take it as it comes, right? It is too early to disclose anything of that sort right now.
Okay. All right. Thank you very much.
Yeah.
Thank you. For a reminder, if anyone wants to ask a question, please use the raise your hand function. We will go to our next question from Klas Bergelind at Citi, please.
Thank you. I had two questions. First, thinking about the second half, even at the lower end of your guide, i.e., sales down 3% for the year, this implies second half growth acceleration to around 4% growth year-over-year. I had two questions within this. You did say traffic volumes for June returning to almost near normal levels. Is that down like low to mid single digits year-over-year then? The conflict re-escalated in July, did you have an impact on July over June?
Looking to September, which is key as the school opens, you must be assuming normal September then grow from there for the rest of the year. What kind of leading indicators are you looking at to sort of determine that growth acceleration to sort of pointing to normal traffic volumes in the third quarter? Thank you.
The traffic tends to improved progressively through April and May, with June returning to near normal levels based on what we are seeing, actually. This all indicators, don't forget also we have a temporary impacting during the quarter two coming from the rain, coming from the weather, work from home. What we are seeing right now is an indicator that the traffic is recovering to the normal levels when it comes to the in-house traffic. Based on the recovery we observed towards the end of Q2, we still expect the traffic to normalize during Q3. Don't forget also Q3 is a seasonality Q, which usually we don't have much traffic in that.
All right.
I don't know if, Gopal, if you have something to add to this traffic.
No, nothing. As you said, our guidance currently reflects our best assessment based on the information that is available today, definitely, we've taken those into consideration while providing the future guidance.
Yeah. Okay. Fair enough. My second one is on other revenues. Quite solid momentum, better performance than what I thought, at least. You've indicated some revenue levels for the out-year period in 2030 for parking, data monetization, other revenue streams. If you annualize the second quarter level, we're already at AED 72 million of revenues. That points to upside to those projections by 2030. Do you still stand by them or it points to-
Yeah.
Right. Yeah.
We still stand up for it. If you just exclude the one-off revenue coming from the unused recharge tags, which we have been reflecting in other revenues, this is by itself in the first half, approximately AED 80 million. Rest is showing improvement like parking, Liva insurance, and all other revenues are showing a significant improvement.
Yeah, fair enough. Thank you.
Thank you.
Thanks, everyone. Yes, kind reminder, use the raise your hand function. I'll also just put a quick call to the operators. I've got a couple of messages from people who are in the waiting room, so if you could just have a quick look, see if we can admit people from there. In the meantime, we'll go to our next question from Mehwish Zafar from Ghobash Group. Please unmute yourself and then ask your question.
Yeah. I'm audible now?
Yes. Can hear you now.
Thank you very much for the call today. I just have one question regarding your margins. I see the revenue has fallen largely by 12%-13% year-over-year in the first half. However, the margins have managed to remain quite resilient. What are the key reasons behind that? How are you trying to keep the margins stable despite the huge fall in the traffic? Going forward, if you think that quarter three onwards, if the traffic is going to significantly improve and go back to the normality levels, do you expect the margins to go above these levels?
Let me say it in a different way. Actually, the reduction you're talking about here in revenue and overall revenue is around 11%, which is where January and February has a significant impact in reducing the impact of revenue reduction of those 13%, because those two months by themselves is 2%. Looking at the revenue structure, you can see that the reduction mainly in, and only if I can say, in the toll usage revenue, which there's too many other elements in the cost attached to this line, like the concession fee, by default, it will get reduced automatically as it's linked to that revenue.
Those cost variables linked to the tolling process. In addition to this, we also implemented a very disciplined and strict cost monitoring and cost reduction program. Both factors contributed to maintaining this margin that we are seeing with the other profit. We still, as per our guidance, we expect the margins to be within our announced guidance of 67%-68%.
Perfect. That's understood. Thank you very much.
I'll step in just with a quick question from myself, if that's okay. This is on your free zone partnership. I understand that this is a new business area for Salik, looking at traffic flow management and optimizing parking solutions as well. Could you just talk a bit more about the structure of the contracts, the financial implications for Salik? I noticed that we haven't seen any new ancillary revenue guidance looking at, let's say, your 2030 revenues. Would this free zone contract therefore be potential revenues on top of the guidance that you last said at Q1? Thank you.
Gopal.
I can explain the agreement that we have. The DIEZ agreement, it marks Salik's entry into smart mobility and access control solution, creating a new growth avenue for Salik. The solution is planned to cover more than 21,000 parking spaces across their key economic zones, and it provides a substantial platform for future growth. This platform also supports automated monitoring and enforcement of vehicle access, unauthorized entry, tailgating, parking misuse, improving the operational governance across the free zones. Regarding the contractual structure, we are not in a position to disclose that because it's still in discussion and obviously for confidentiality reasons, we cannot be disclosing that.
Sure. That's all noted. I guess it is theoretically then upside to the last guidance.
Yeah.
Okay. Cool. We'll go onto our next question from Afaq Nathani. Please unmute yourself. Go ahead.
Hello. Thanks for taking my question. Just a quick one on your dividends. I didn't really see anything on the first half dividends with your result announcements. I just wanted to check if there's any potential change in the dividend policy of the company, please.
No, there's no change. Let me confirm it once again. Salik dividend policy remains unchanged with the company continuing to target a cash dividend of 100% of net profit. The timing here is linked to the normal board approval and governance process. There has been no change in our dividend policy. This will be announced soon once we decide on the coming Board of Directors meeting.
Very clear. Thank you so much.
I want to stress, sorry if I didn't say that, but I want to stress that our dividend policy is clear about distributing the 100% net profit by April and October each year. Before October, we should have the announcement.
Understood. Thank you.
Thanks. Ricardo Rezende from Morgan Stanley, please go ahead.
Hi. Good morning. If I may just follow up on the question from Jameel about the economic zones, the free zones. Do you have any other similar contracts that you're negotiating that were sort of not assumed at the time when you provided the 2030 guidance for those ancillary revenues, such some of those new methodologies that have been applied, some of those new models that could present upside to the ancillary revenue guidance? Then second question is on dynamic pricing. It's been a few quarters now with dynamic prices being implemented in Dubai. Has there been any updates with RTA or potential updates on how dynamic pricing has been working? Thank you.
I will handle the first question and leave the second question. I will leave the first one for Gopal. When it comes to the dynamic pricing, it is performing very well as of now, but there's nothing yet with RTA about changing the mechanism or tariff or anything related to this as of now. Definitely once there's something, we will immediately announce and disclose. Gopal can answer the other one.
Similar to the DIEZ free zone agreement, we are in discussion with other potential clients for similar solution. I think once we reach, again, a more formal or concrete conclusion to that, I think we will announce it to the market. Yes, we are discussing with other potential clients.
Thank you very much.
Great. Thank you. We will move on to our next question. [Aarthi Krishnan] from Arqaam Capital .
Hi. Thank you for taking up my question. My question is on free cash flow. I see free cash flow declined by 50% this 1H . Can you please explain the main reasons for this significant decline? Thank you.
Yeah. The cash flow, it's not about decline, it's about the treatment that we had for VAT and it has been impacting this kind of cash flow. We're still a strong cash generative company, the cash flow is not much impacted due to the current. We maintain a strong financial position, a robust cash generation. It's only about timing. This is not an indication of liquidity pressure or change in the company's approach for the cash flow of the company.
Thank you.
Next question from [Samia Aslam] from National Bonds. Please go ahead.
Hello. Yes, I have a quick question. Can you give the composition of your total trips? How much was the taxi trips within, for example, in this quarter? Out of this 132 million trips, chargeable ones, how much were taxi trips?
In Q2, we can say that we have a reduction in the taxi trip by around 2%. From traffic point of view, I don't know, Gopal, if you have the numbers ready with you here.
I don't have the exact numbers ready. No.
This is Wassim, the Head of Investor Relations. We can share with you. Actually it's part of the full presentation under our website. You can just view the taxi breakdown out of the total chargeable trips, and we can also email it to you.
Okay, great. Thank you.
Okay. At this point, looks like there are no further questions. I'll turn the call back over to Salik.
Thank you, Jameel, and thanks for Bank of America for hosting today's call. Thank you all for joining us as well today. If you have, please, any follow-up question, please feel free to reach out to me directly or to the investor.relations@salik.ae or by visiting our website at salik.ae. Thank you again and have a great day.