Parkin delivers Q2 revenue growth of 12%, while EBITDA increases 42% in the quarter

Parkin Company PJSC (“Parkin” or the “Company”), the largest provider of paid public parking facilities and services in Dubai, today reports its operational and financial results for the second quarter (“Q2” or “second quarter”) and the first half (“H1” or “first half”) of the year, ended 30 June 2024.

Key Takeaways: Q2 2024 vs. Q2 2023

- Total revenues of AED 205.5 million (+12%)

- EBITDA of AED 134.0 million (+42%), with margin expanding to 65% (from 51%)

- Net profit of AED 95.0 million (+7%), despite introduction of 9% corporate tax rate in January

- Average public parking utilisation rate +1.8 percentage points to c.26%

- c.2,900 new public parking spaces added (+2%)

- c.3,000 developer-owned parking spaces added to portfolio (+17%) on a net basis

- Company on track to meet FY 2024 guidance disclosed at listing, with a H1 2024 dividend expected to be paid in late October

Key Operational Highlights

 

 

 

Key Financial Highlights

 

AED million	Q2 2023	Q2 2024	% ∆		H1 2023	H1 2024	% ∆
Total revenue	184.3	205.5	12%		383.2	421.0	10%
Public parking	83.4	89.6	7%		172.7	188.9	9%
Developer parking	13.4	14.3	7%		27.9	30.9	11%
Public MSCPs	4.4	2.6	-40%		9.2	5.6	-39%
Seasonal permits	32.2	37.2	15%		63.9	74.1	16%
Fines	42.9	54.6	27%		94.9	107.1	13%
Other(1)	8.0	7.2	-10%		14.7	14.3	-3%
EBITDA	94.2	134.0	42%		198.2	272.2	37%
EBITDA margin (%)	51	65	14 p.p		52	65	13 p.p
Capital expenditure	0.4	0.0	n/m		4.2	1,100	n/m
Net profit	89.2	95.0	7%		188.1	198.8	6%
Free cash flow to equity(2)	n/a	135.6	n/m		n/a	135.6	n/m
Cash conversion (%)(3)	n/a	100	n/m		n/a	100	n/m

 

Ahmed Bahrozyan, Chairman of Parkin’s Board of Directors, commented:

“With a track record spanning three decades, Parkin is the largest provider of paid public parking facilities and services in the Emirate of Dubai. The Company operates an extensive, digitally enabled, parking portfolio at strategic locations as part of the city’s critical infrastructure, with a systemic role in enabling mobility.

Our second quarter results highlight continued momentum in our core business of public parking and clear execution on key initiatives as part of our growth strategy.

As Dubai’s population and economy continues to grow and prosper, Parkin will continue to play a key role in supporting the ambitious expansion plans of the Emirate, while seeking to deliver long-term, sustainable, shareholder value.”

Eng. Mohamed Al Ali, CEO of Parkin, added:

“We continued to deliver profitable growth in the second quarter, underpinned by higher transaction volumes in our public and developer parking segments, greater demand for seasonal permits, improved public parking utilisation rates and enhanced enforcement practices.

The Company delivered revenue growth of 12% in Q2 compared to the same period in 2023, with total average parking revenue per day reaching a record level, notwithstanding the impact of the extreme rainfall that Dubai experienced in April and the slightly lower number of chargeable days in the period. I am also pleased to report that EBITDA increased by 42% with a margin of 65%.

Our best-in-class operational, technological and enforcement capabilities are delivering results. The strong operating performance during the quarter was complemented by the addition of c.7,500 new private developer spaces and our visionary EV partnership with DEWA, which aims to develop Dubai’s EV charging infrastructure to create a more sustainable future for our city’s transport network.

Following this strong operational and financial performance, and in line with our commitment made during the IPO process, Parkin plans to reward shareholders with a dividend for the first half of the year, payable towards the end of October.”

 

Q2 2024 Operational Performance

Total Active Parking Spaces

The Company increased its total number of parking spaces by 3% to 200.4k (Q2 2023: 195.4k).

Public Parking

Parkin’s core business and key growth driver is public parking, which includes 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 by 2.9k (+2%), from 174.1k spaces in Q2 2023 to 177.0k spaces in Q2 2024. In terms of new additions, zone C saw the largest increase with c.2.0k spaces added.

Zone	On / Off-Street	Premium / Standard	Hourly Tariff	Total Parking Spaces (‘000)
				Q2 2023	Q2 2024	% ∆
A	On-Street	Premium	AED4	26.6	26.6	0%
B	Off-Street	Standard	AED3	3.0	3.3	9%
C	On-Street	Premium	AED2	106.9	108.9	2%
D	Off-Street	Standard	AED2	37.6	38.2	2%
			Total	174.1	177.0	2%

 

Developer Parking

Although the developer parking segment currently accounts for less than 10% of total revenues, paid parking in private developer areas represents a significant growth opportunity for the Company.
Developer spaces increased +17% from 17.2k in Q2 2023 to 20.2k in Q2 2024. As announced on 6 June 2024, Parkin signed an agreement to add c.7.5k spaces across six key locations in Dubai. As at 30 June 2024, the Company was operating and enforcing parking at c.3.7k of these new spaces. By the end of July 2024, c.6.9k spaces were fully phased in, with the remainder scheduled for commissioning by the end of August 2024.

As previously disclosed by the Company, an expected change in the terms of an agreement with a developer in the Al Sufouh area is set to result in a reduction of c.7.7k spaces. Initial estimates indicated that the reduction in spaces at Al Sufouh will be complete by the end of Q2 2024. However, the slower than expected phasing out of these spaces means that the Company continues to benefit from revenue generated by this asset. It is now anticipated that the reduction will be finalised by the end of Q3 2024.

Total Developer Parking Spaces (‘000)

Q1 2024 End Q2 Additions Q2 Reduction Q2 Net Additions Q2 2024 End

17.9 +3.7 -1.4 +2.3 20.2

Additions made in Q2 2024 refers to the c.3.7k new private developer spaces that commenced operation as at 30 June 2024 (out of c.7.5k), while the reduction of c.1.4k spaces refers to the spaces being phased out as part of the Al Sufouh portfolio.

Multi-story Car Parking (MSCPs)

The MSCP segment generated less than 2% of the Company’s revenue in Q2 2024. MSCP spaces decreased by 22% from 4.1k spaces in Q2 2023, to 3.2k in Q2 2024. As disclosed in the previous quarter, this was 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 remains on track to re-open towards the end of Q4 2024, which will restore access to c.500 MSCP parking spaces at the newly refurbished location.

Parking Transactions

The total number of parking transactions increased +4% from 27.5 million in Q2 2023 to 28.7 million in Q2 2024, primarily driven by increased transactions across the public parking segment. 90% of all parking transactions during the quarter were cashless.

Utilisation and Weighted Average Hourly Tariff

Across the Company’s public parking facilities, the utilisation rate increased by 2 percentage points to c.26% both in Q2 2024 and H1 2024. This was primarily driven by increased utilisation in zones C and D, notwithstanding the addition of c.2.0k new spaces in zone C, thanks to higher economic activity. The weighted average public parking hourly tariff remained broadly stable at AED 2.01 in Q2/H1 2024 (Q2/H1 2023: AED 2.02).

Seasonal Permits

The total number of seasonal permits issued by the Company increased by 39% to 30.7k in Q2 2024 (Q2 2023: 22.1k). This was driven by a 47% increase in the issuance of seasonal permits with a short-term validity period of 0-3 months.

Fines

The total number of fines issued increased 26% from 291k in Q2 2023 to 365k in Q2 2024, with a fine collection rate of 87% during the quarter. The majority of the fines issued was as a result of public parking enforcement.

Parkin continued to enhance its enforcement capabilities via the use of its fleet of smart inspection scan cars.

These vehicles have expanded the Company’s ability undertake enforcement across new areas and with higher accuracy, reducing reliance on physical inspections. In addition to the overall increase in the number of customers and transactions, initiatives such as optimisation of scan routes, improvements to shift patterns and a change in the way permits are verified without the need for time consuming manual checks, contributed to the total number of fines generated by scan cars more than doubling in Q2 2024 vs. Q2 2023.

This impressive growth underscores Parkin's commitment to leveraging cutting-edge technology to enhance service delivery and operational efficiency, solidifying its position as a leader in smart enforcement solutions.

Q2 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 increased by 12% to AED 205.5 million in Q2 2024, driven by an increase in revenue generated by public and developer parking, seasonal permits and fines. The uptick in revenues is despite a slightly lower number of chargeable days in the period (Q2 2024: 70 days vs. Q2 2023: 71 days) and the impact of the unprecedented record rainfall for a period of 3 days during mid-April.

As previously communicated during the Company’s Q1 2024 results, the extreme weather had a minimal effect on operations and assets, with a revenue impact of AED c.4.0 million due to lower parking utilisation both during and in the days following the record rainfall. Total revenue in H1 2024 increased 10% to AED 421.0 million.

Public parking revenue was up 7% to AED 89.6 million, due to a higher volume of parking tickets issued during the period, particularly in zone C (H1 2024: AED 189.0 million, +9% vs. H1 2023).
Seasonal permits revenue increased 15% to AED 37.2 million due to a greater volume of seasonal permits sold during the period (H1 2024: AED 74.1 million, +16% vs. H1 2023).
Revenue from developer parking increased 7% to AED 14.3 million in the period due to higher ticket volumes (H1 2024: AED 30.9 million, +11% vs. H1 2023).

Revenue generated from fines increased by 27% to AED 54.6 million in Q2 2024. This was driven by a higher number of customers, transactions and an enhanced enforcement framework underpinned by a pool of smart inspection scan cars. Expansion of enforcement coverage into new areas, alongside various optimisation initiatives, enabled more fines to be issued with improved efficiency and better accuracy.

Total fines revenue generated from scan cars more than doubled year on year in the second quarter, representing around 40% of total enforcement revenue. Total fines revenue increased 13% to AED 107.1 million in H1 2024.

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.

 

Concession Fee Expense

As part of its concession agreement with the Roads & Transport Authority (“RTA”), Parkin began paying the RTA a variable concession fee). The variable concession fee amounted to AED 26.7 million in Q2 2024 (H1 2024: AED 55.4 million), representing 20% of all company revenue with the exception of fines and developer parking.

Staff Costs

Employee benefits expense decreased by 29% to AED 25.5 million in Q2 2024. In Q2 2023, the RTA’s cost centre allocation was based on c.450 employees whereas Parkin’s headcount stood at 311 as at the end of Q2 2024. However, it should be noted that employee benefits expense is expected to increase in the coming quarters due to ongoing hiring and the re-alignment of salaries from RTA to Parkin contracts from Q2 2024 onwards. Employee benefits expense decreased by 39% to AED 43.9 million in H1 2024.

Parkin will continue to grow its headcount throughout the remainder of the year as it looks to build up its internal capabilities, resulting in higher staff costs in H2 2024.

EBITDA

EBITDA increased 42% in Q2 2024 to AED 134.0 million, representing an EBITDA margin of 65%, up 14 percentage points on Q2 2023.

This margin expansion was driven by Parkin’s growing platform, enabling scale efficiencies and continued digitalisation across the Company’s operations. In H1 2024, EBITDA increased 37% to AED 272.3 million, at a margin of 65%, up 13 percentage points.

 

Net Profit

Net profit increased 7% to AED 95.0 million. The increase in EBITDA was partially offset by an increase in depreciation and amortisation expense, higher finance cost and the introduction of corporate tax. A 9% corporate tax rate for UAE companies came into effect on 1 Jan 2024. Net profit was up 6% to AED 198.8 million in H1 2024.
Free Cash Flow and Cash Conversion

 

The Company generated cash of AED 135.6 million in the second quarter. During the remainder of 2024, in addition to our current receivables, the business will also focus on collecting legacy receivables from related parties generated in prior periods and novated to Parkin.

During Q2 2024, the cash conversion rate was 100%, thanks to Parkin’s capex light business model, solid revenue performance and stable cost base (H1 2024: 100%).

Borrowings

In Q1 2024, 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 the end of the second quarter, Parkin’s net debt position was AED 846.6 million.

Including the Murabaha revolving credit facility, which remains fully undrawn, the Company has available liquidity of AED 357.1 million. The increase in liquidity is due to the collection of receivables undertaken by the Company during Q2.

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 H1 2024.

For FY 2024 and thereafter, the Company expects to pay a minimum dividend payout of the higher of: (i) 100% of net 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.