Parkin delivers its maiden results, following the successful IPO, with Q1 2024 EBITDA growth of 33%
Parkin delivers its maiden results, following the successful IPO, with Q1 2024 EBITDA growth of 33%
Parkin Company PJSC (“Parkin” or the “Company”), the largest provider of paid public parking facilities and services in Dubai, today reports its financial results for the first quarter ended 31 March 2024 (“Q1” or “first quarter”).
Key Takeaways
• Total number of parking transactions +9%
• Average public parking utilisation rate +2 percentage points to 26%
• Total revenue +8%, with public parking revenues +11%
• EBITDA +33%, with margin expanding to 64% (from 52%)
• Profit after tax +5% (notwithstanding introduction of 9% corporate tax from Jan 2024)
• Company on track to meet FY 2024 guidance disclosed at listing
Ahmed Bahrozyan, Chairman of Parkin’s Board of Directors, commented:
“With a critical role in Dubai’s transport ecosystem, now and in the future, Parkin delivers market-leading parking management capabilities in line with the economic, urbanization and social ambitions of the Emirate. We are well positioned to build on and accelerate our success through our seamless, sustainable and innovative mobility solutions across our city. First quarter results highlight continued progress in delivering financial performance, driving operational excellence and realizing the potential of our growth platform to scale up and diversify. Going forward, I am confident in Parkin’s future opportunities and our pivotal role in enabling mobility to support Dubai’s growth story.”
Eng. Mohamed Al Ali, CEO of Parkin, added:
“Parkin delivered a solid first quarter performance, with EBITDA up 33% and margin expanding to 64%, alongside our record-breaking IPO in March. This was driven by revenue growth of 11% in our core business of public parking, where we have a dominant market position. Parkin provides critical infrastructure to Dubai, operating at the centre of the city’s ambitious economic growth and population expansion plans. Our best-in-class, capex light business model is powered by market leading technology, robust digital infrastructure and a highly experienced, longstanding management team. This platform is driving margin expansion, scale efficiencies and growth opportunities for Parkin across our operations. Looking ahead, we are fully committed to delivering long-term value for our shareholders and shaping the future of our industry.”
Q1 2024 Operational Performance
The Company cemented its position as the leading provider of parking solutions in Dubai with 197.3k spaces at end of Q1 2024 (Q1 2023: 195.0k).
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Public Parking
Parkin’s core business and key growth driver is public parking, which includes both on and off-street parking facilities and services. Public parking is classified into four tariff zones with premium and standard zones for both on and off-street parking.
Public parking spaces increased 1% from 173.6k spaces in Q1 2023 to 176.2k spaces in Q1 2024. In terms of new additions, zone C saw the largest increase with 1.5k spaces added.
Developer Parking
Developer spaces increased 4% from 17.2k in Q1 2023 to 17.9k in Q1 2024 following the addition of c.600 new spaces at Business Bay and a smaller amount around the Burj Khalifa.
It should be noted, that, as was previously disclosed by the Company, the number of developer-owned parking spaces operated and managed during Q2 2024 is expected to decrease from c.17,800 to c.10,000, due to a change in the terms of an agreement with a developer in the Al Sufouh area, which will result in a reduction of c.7,700 spaces.
Multi-story Car Parking (MSCP)
MSCP spaces decreased by 22% from 4.1k spaces in Q1 2023, to 3.2k in Q1 2024, due to the demolition of the Sabkha car park and the closure of the Al Rigga site for maintenance and repair. The Al Rigga site is expected to re-open towards the end of Q4 2024.
Parking Transactions
The total number of parking transactions increased 9% from 29.9 million in Q1 2023 to 32.5 million in Q1 2024, primarily driven by increased transactions across the public parking segment. Of particular significance is the fact that over 90% of all transactions in Q1 2024 were cashless, with Parkin offering six payment channels and four alternative payment methods for customers.
Utilisation and Weighted Average Hourly Tariff
Across the Company’s public parking facilities, the utilisation rate increased by 2 percentage points from 24.0% in Q1 2023 to 26.0% in Q1 2024. This was primarily driven by increased utilisation in zones C and D, notwithstanding the addition of new spaces in those two zones, thanks to higher economic activity. The weighted average public parking hourly tariff remained stable at AED 2.01 in Q1 2024 (Q1 2023: AED 2.02).
Seasonal-cards and Permits
The total number of seasonal cards and permits issued increased by 35% from 24.0k in Q1 2023 to 32.4k in Q1 2024. This was driven by a 71% increase in the issuance of seasonal cards with a validity period of 0 -3 months
Fines
The total number of fines issued increased 2% from 369.5k in Q1 2023 to 378.4k in Q1 2024, with the Company’s fine collection rate improving by 11 percentage points to 87% in Q1 2024, due to the doubling in the number of smart inspection scan cars in operation to 18 vehicles in Q1 2024, as compared to 9 vehicles in Q1 2023.
Q1 2024 Financial Performance
Note to the financial statements: Parkin became established as a separate legal entity on 1 January 2024, operating under a 49-year concession agreement with the RTA. Prior to this, Parkin did not incur expenses relating to its concession fee or a transitional service agreement with the RTA. Therefore, comparing the Company’s 2024 financial results with those of 2023 may not accurately reflect like-for-like performance.
Total Revenue
Total revenue rose by 8% to AED 215.3 million, driven by an increase in public parking revenue, the issuance of seasonal cards / permits and, to a lesser extent, developer parking demand.
Public parking revenue was up 11% to AED 99.3 million due to a higher volume of parking tickets issued during the period. In particular, zones C and D benefited from higher utilisation, despite the addition of new parking spaces in these areas.
Seasonal cards and permit revenue increased 17% to AED 36.9 million due to a greater volume of permits sold, particularly in the 0 – 3 months validity bracket.
Revenue from developer parking increased 13% to AED 16.6 million in the period due to higher ticket volumes.
Revenue generated from fines increased by 1% to AED 52.6 million with continued effective enforcement during the period.
It should be noted that Parkin’s business is subject to moderate seasonal fluctuations. Traffic activity generally slows down during the summer months as residents take their holidays overseas and tourism activity contracts. On account of these seasonal fluctuations, Q1 2024 results may not necessarily be indicative or representative of the results that may be reported during the remaining quarters of 2024.
Concession Fee Expense
As part of its concession agreement with the Roads & Transport Authority (“RTA”), Parkin began paying the RTA a variable concession fee and a Transitional Service Agreement (“TSA Agreement”). The variable concession fee amounted to AED 28.7 million in Q1 2024 and represents 20% of all company revenue with the exception of fines and developer parking. The RTA is providing the Company with a range of support services under a two-year TSA Agreement. TSA expenses in Q1 2024 amounted to AED 5.8 million.
Staff Costs
Employee benefits expense decreased by approximately half from AED 35.7 million in Q1 2023 to AED 18.4 million in Q1 2024. In Q1 2023, the RTA’s cost centre allocation was based on c.450 employees whereas Parkin’s headcount stands at 282 as at the end of Q1 2024. The headcount is expected to increase throughout the year as the Company builds up its internal capabilities and reduces its reliance on RTA’s support functions.
EBITDA
The strong revenue performance along with operating leverage, resulted in a 33% increase in Q1 2024 EBITDA of AED 138.3 million, representing an EBITDA margin of 64%, up 12 percentage points on Q1 2023. This margin expansion was driven by Parkin’s growing platform, enabling scale efficiencies and continued digitalisation across the Company’s operations.
Net Profit
Net profit increased 5% to AED 103.7 million on a higher EBITDA base, partially offset by an increase in depreciation and amortisation expense, higher interest expense and the introduction of a 9% corporate tax rate for UAE companies from 1 Jan 2024.
Intangible assets
In February 2024, the Company made a one-off upfront concession payment of AED 1,100 million to the RTA, in exchange for the 49-year contractual right to operate, maintain develop and upgrade the RTA’s parking facilities and services and to use the RTA’s assets to operate and maintain the same. That payment was recorded as a capital expenditure and was capitalised on the balance sheet as an intangible asset.
Free Cash Flow and Cash Conversion
Free cash flow amounted to AED 102.9 million in the first quarter.
Cash conversion amounted to 100%, driven by Parkin’s capex light business model, solid revenue growth and stable cost base.
Borrowings
During the quarter, Parkin and Emirates NBD PJSC entered into an agreement for AED 1.2 billion in unsecured credit facilities, comprising of a 5-year Murabaha term financing facility of AED 1.1 billion and an AED 100 million Murabaha revolving credit facility. Both facilities carry a variable interest set at 3-month EIBOR plus a margin of 0.80% per annum.
At quarter-end, Parkin’s net debt position was AED 994.5 million.
Including the Murabaha revolving credit facility, which remains undrawn, the Company has available liquidity of AED 202.9 million.
Update on Recent Weather Impact
Following the unprecedented weather in the UAE during the week of Monday 15th April, the Company responded swiftly and decisively in deploying teams to assess and reduce the potential impact of the record rainfall across its operations. As a result, disruption to Parkin’s operations and services was minimised during this period. However, due to challenges affecting the broader transport network, the Company estimates an impact on Q2 2024 revenues of up to approximately AED 4.0 million. A further update will be provided as part of the Company’s Q2 2024 operational and financial results.
Dividend Policy
The Company intends to pay a semi-annual dividend in April and October, with the first payment expected in October 2024 in respect of the full first half of 2024.
For FY 2024 and thereafter, the Company expects to pay a minimum dividend payout of the higher of: (i) 100% of profit for the year, or (ii) free cash flow to equity, subject to distributable reserves requirements.
FY 2024 Outlook
Notwithstanding the effect of seasonality on operations and revenue in later quarters, the management team consider that the business will perform in line with guidance provided to the market during the listing process in Q1 2024.
