NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Salik Company P.J.S.C. (‘Salik’ or the ‘Company’) is a Public Joint Stock Company incorporated on 30 June 2022 in the Emirate of Dubai, United Arab Emirates (UAE) under law no. 12 of 2022 issued by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, the Ruler of Dubai, and started its operations on 1 July 2022. The Company is listed on the Dubai Financial Market on 29th September 2022.
The registered address of the Company is Suite No.400, 4th floor, Festival Tower, Dubai Festival City, PO Box 36003, Dubai, United Arab Emirates.
The Company is owned by the Dubai Investment Fund (“DIF” or the “Parent”) which holds 75.1% of the Company’s shares which is ultimately owned and controlled by the Government of Dubai (“ultimate controlling party”). The remaining shares of 24.9% are publicly traded on the Dubai Financial Market («DFM») stock exchange.
The principal activities of the Company are the operations and maintenance of the existing toll gates throughout Dubai, UAE and for design, construction (including all the civil, electrical, gantry design and manufacturing, system integration, testing and commissioning) of new toll gates, including without limitation, the required tolling equipment, infrastructure and any interface requirements in relation to the new toll gates, but excluding the construction, operation and maintenance of the relevant toll roads. Further, the Company also started the provision of barrier‑free parking management services during the year.
The Company has not purchased or invested in any shares during the years ended 31 December 2024 and 31 December 2023.
These financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the IASB (“IFRS Accounting Standards”). IFRS Accounting Standards comprise the following authoritative literature:
- IFRS Accounting Standards
- IAS Standards
- Interpretations developed by the IFRS Interpretations Committee (IFRIC Interpretations) or its predecessor body, the Standing Interpretations Committee (SIC Interpretations).
These financial statements have been prepared under the historical cost convention. Historical cost is generally based on the fair value of the consideration given in exchange for assets, unless otherwise disclosed.
The financial statements are presented in UAE Dirhams (“AED”), which is also the Company’s functional currency. All values have been rounded to the nearest thousand («000»), unless otherwise disclosed.
New standards, interpretations and amendments to existing standards as adopted by the Company
The following are new standards, amendments and interpretations of IFRS Accounting Standards that have been adopted by the Company. The application of these revised IFRS Accounting Standards, except where stated, have not had any material impact on the amounts reported for the current and prior periods.
- Amendments to IAS 1: amendments regarding the classification of liabilities.
- Amendments to IFRS 16: amendments to clarify how a seller‑lessee subsequently measures sale and leaseback transactions.
- Amendments to IAS 1: amendments regarding the classification of debt with covenants.
- Amendments to IFRS 7: amendments regarding supplier finance arrangements.
- Amendments to IAS 7: amendments regarding supplier finance arrangements.
New standards, interpretations and amendments issued but not yet effective
The following are new standards, amendments, and interpretations of IFRS Accounting Standards that have been issued but not yet effective.
- Amendments to IAS 21 ‑ Lack of Exchangeability (effective for annual periods beginning on or after 1 January 2025).
- Amendments to the Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7 (effective for annual periods beginning on or after 1 January 2026).
- IFRS 19 Subsidiaries without Public Accountability: Disclosures (effective for annual periods beginning on or after 1 January 2027).
- IFRS 18 Presentation and Disclosure in Financial Statements (effective for annual periods beginning on or after 1 January 2027).
The Company has not early adopted any standards, interpretation or amendment that has been issued but is not yet effective. The Company does not expect the adoption of the above new standards and amendments to have a material impact on the future financial statements of the Company.
The material accounting policies used in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
4.1 Property and equipment
Property and equipment are carried at historical cost, less accumulated depreciation and any accumulated impairment loss. The cost of property and equipment is the value of the consideration given to acquire the assets and the costs directly attributable to bringing the asset to its working condition for the intended use.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the statement of profit or loss and comprehensive income during the year in which they are incurred.
Depreciation on property and equipment commences when the assets are ready for their intended use. Depreciation is provided on the straight‑line method over the useful lives of respective assets, as follows:
The residual values, useful lives and method of depreciation of assets are reviewed and adjusted, if appropriate, at each statement of financial position date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.
Any item of property and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised within profit and loss in the statement of profit or loss and comprehensive income.
Capital work‑in‑progress is stated at cost and includes items of property and equipment that are being developed for future use. When commissioned, capital work‑in‑progress is transferred to appropriate category of property and equipment and depreciated in accordance with the Company’s policies.
4.2 Intangibles
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, if any.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. Intangibles recognised as part of service concession agreement are amortised over concession period. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit or loss in the expense category that is consistent with the function of the intangible assets.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash‑generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss and comprehensive income.
4.3 Service concession agreement
SIC 29 ‑ Service Concession Arrangements: Disclosures deals with information about concession agreements to be disclosed in the notes to the financial statements.
IFRIC 12 is the interpretation that specifies the common characteristics of concession agreements:
- the grantor, usually a public authority, is required to provide a public service that it delegates to the concessionaire (determining criterion);
- the concession operator (Salik), is responsible for managing the related infrastructure and performing the actual public service and is not just a simple agent acting on orders;
- the concession operator is entrusted with specific infrastructure expansion or upgrading obligations while maintaining the infrastructure in proper condition; and
- the price and the conditions (regulation) for price revision are set at the origin of the contract.
For a concession contract to be included in the scope of IFRIC 12, the infrastructure must be controlled by the grantor. Control of the infrastructure by the grantor is ensured when the following two conditions are met:
- the grantor controls or regulates the public service, i.e. it controls or regulates the services to be provided through the infrastructure subject to the concession and determines to whom and at what price they should be provided; and
- the grantor controls all residual interest in the infrastructure at the end of the contract. This control is usually reflected through the grantor’s right to take over the infrastructure at the end of the contract.
The Company recognizes an intangible asset arising from a service concession arrangement when it has a right to charge the users for use of the concession infrastructure. An intangible asset received as consideration for providing the upfront fee in a service concession arrangement is measured at fair value on initial recognition.
The concession rights are stated at cost, less accumulated amortisation and accumulated impairment loss, if any. The estimated useful life of an intangible asset in a service concession arrangement is the period from when the Company is able to charge the public for the use of the infrastructure to the end of the concession period.
Intangible assets include the amount of fixed concession fee paid or payable to RTA in accordance with the concession agreement entered with the RTA for the Dubai Tolling Operations. These intangible assets have finite useful life and are measured at cost less accumulated amortisation and accumulated impairment loss, if any.
Amortisation is recognised on a straight‑line basis over the life of the concession term.
4.4 Inventories
Inventories comprise Salik tags and Salik recharge scratch cards and are measured at cost upon initial recognition. The cost of the inventory comprises of purchase cost and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on a weighted average basis, net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
4.5 Financial instruments
Financial assets and financial liabilities (financial instruments) are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets or financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss recognized immediately in the statement of profit or loss and comprehensive income.
The financial assets and financial liabilities are classified as current if they are expected to be realized or settled within operating cycle of the Company or otherwise these are classified as non‑current.
The financial instruments are classified to be measured at Amortized Cost, at Fair Value Through Profit and Loss (FVTPL) or at Fair Value Through Other Comprehensive Income («FVTOCI’») and such classification depends on the objective and contractual terms to which they relate. Classification of financial instruments is determined on initial recognition. The Company’s financial assets consist of trade and other receivables (excluding VAT receivable and advance to supplier), due from related parties, contract asset, short‑term bank deposits and cash and cash equivalents. The Company’s financial liabilities consist of borrowings, lease liabilities, trade and other payables and due to a related party.
- Financial instruments measured at amortized cost:
Financial assets held within a business whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding are measured at amortized cost. The above financial assets and financial liabilities subsequent to initial recognition are measured at amortized cost using Effective Interest Rate («EIR») method.
- Financial asset at fair value through other comprehensive income:
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Subsequent to initial recognition, they are measured at fair value and changes therein are recognised directly in other comprehensive income.
- Financial instrument fair value through profit or loss:
Financial instruments which do not meet the criteria of amortized cost or fair value through other comprehensive income are classified as Fair Value through Profit or loss. These are recognised at fair value and changes therein are recognized in the statement of profit or loss and comprehensive income.
De‑recognition of financial instruments
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire or the Company transfers substantially all risks and rewards of ownership.
On derecognition of a financial asset (except for equity instruments designated as FVTOCI), the difference between the asset’s carrying amount and the sum of the consideration received and receivable are recognized in the statement of profit or loss and comprehensive income.
On derecognition of assets measured at FVTOCI the cumulative gain or loss previously recognised in other comprehensive income is reclassified to profit or loss as a reclassification adjustment unless the asset represents an equity investment, in which case the cumulative gain or loss previously recognised in other comprehensive income are reclassified within equity.
Financial liabilities are derecognized if the Company’s obligations specified in the contract expire or are discharged or cancelled. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in the statement of profit or loss and comprehensive income.
4.6 Trade and other receivables
Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing components when they are recognised at fair value. The receivables are measured at amortised cost using the effective interest method, less provisions for impairment losses for amounts considered uncollectible. Amounts considered uncollectible are estimated on the basis described in Note 4.20.
4.7 Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents comprise of cash held in bank in the current account, deposits held at call with the bank and deposits held with bank with original maturities of three months or less. Deposits are presented as cash equivalents if they have a maturity of three months or less from the date of acquisition and are repayable with 24 hours’ notice with no loss of interest.
4.8 Share capital
Ordinary shares are classified as equity.
4.9 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
4.10 Trade and other payables
These represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. Trade and other payables are classified as current liabilities if payment is due within 12 months after the reporting period. If not, they are presented as non‑current liabilities.
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
4.11 Contract liabilities
A contract liability is the obligation to provide services to a customer for which the Company has received consideration from the customer. If a customer pays consideration before the Company provides the services to the customer, a contract liability is recognised when the payment is made. Contract liabilities are recognised as revenue when the Company performs its obligations under the contract. The Company does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of the promised service to the customer and when the customer pays for that service will be one year or less.
4.12 Provision for employee benefits
(a) End of service benefits to non‑UAE Nationals
An accrual is made for employees employed in the UAE, for the estimated liability for employees’ entitlement to annual leave and leave passage as a result of services rendered by the employees up to the statement of financial position date. Provision is also made for the full amount of end of service benefits due to the non‑UAE Nationals in accordance with the applicable Government of Dubai Human Resources Management Law, for their periods of service up to the statement of financial position date. The entitlement to these benefits is usually based upon the employees’ salary and length of service, subject to completion of a minimum service period.
The accrual relating to annual leave and leave passage is disclosed as a current liability, while that relating to end of service benefits is disclosed as a non‑current liability.
(b) Pension and social security policy
The Company is a member of the pension scheme operated by the Federal General Pension and Social Security Authority. Contributions for eligible UAE National employees are made in accordance with the provisions of Federal Law No. 7 of 1999 relating to Pension and Social Security Law. Contribution expenses are classified as part of Employee Benefit expense in the statement of profit or loss and other comprehensive income.
4.13 Borrowings and borrowing costs
Borrowings are recognised initially at fair value, net of transaction costs which are subsequently carried at amortised cost and any difference between the proceeds (net of transaction costs) and the redemption value is amortised over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities in case settlement is due within 12 months otherwise, they are classified as non‑current liabilities.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payment through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. The future cash payment is estimated taking into account all the contractual terms of the instrument.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw‑down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre‑payment for liquidity services and amortised over the period of the facility to which it relates.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing cost consists of interest and other costs that an entity incurs in connection with the borrowing of funds.
4.14 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where there are a number of similar obligations the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. When the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit or loss and comprehensive income net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre‑tax rate that reflects, when appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as finance costs.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed to the statement of profit or loss and comprehensive income.
4.15 Value added tax
Expenses and assets are recognized net of the amount of tax, except:
- When the tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the tax is recognized as part of the cost of acquisition of the asset or as part of the expense item, as applicable; or
- When receivables and payables are stated with the amount of tax included.
The net amount of tax recoverable from, or payable to, the taxation authority is included as part of VAT receivables or VAT payables in the statement of financial position.
4.16 Earnings per share (“EPS”)
Basic EPS is calculated by dividing the profit for the period attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the period.
Diluted EPS is calculated by dividing the profit for the period attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
4.17 Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. The future cash receipts are estimated taking into account all the contractual terms of the instrument.
4.18 Fair value measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability; or
- In the absence of a principal market in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible to by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non‑financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 ‑ Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
- Level 2 ‑ Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
- Level 3 ‑ Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between Levels in the hierarchy by re‑assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of their nature and characteristics.
4.19 Impairment of non‑financial assets
The Company assesses at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre‑tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
Impairment losses of continuing operations are recognised in the statement of profit or loss and comprehensive income in expense categories consistent with the function of the impaired asset.
An assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss and comprehensive income.
4.20 Impairment of financial assets
Credit‑impaired financial assets
At each reporting date, the Company assesses whether a financial asset carried at amortized cost is credit impaired. A financial asset is credit‑impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Management’s assessment uses the lifetime probability of default method. A credit loss will be calculated as the difference between the cash flows that are due in accordance with the contract/agreement and the cash flows that the Company expects to receive, discounted at the original effective interest rate of the financial instrument.
Trade and other receivables
For trade and other receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix, as disclosed in Note 21, that is based on historical recovery data, adjusted for forward‑looking factors and the time value of money.
The Company applies a practical expedient to calculate ECLs on receivables that do not contain a significant financing component using a provision matrix. This matrix is based on information such as delinquency status and actual credit loss experience (on historical data) and based on current and forward‑looking information on macroeconomic factors. The provision matrix is applied to all outstanding trade receivables by aging and customer group to determine the actual ECL.
Presentation of allowance for ECL
The expected credit loss (“ECL”) allowance for each type of financial asset is deducted from the gross carrying amount of the assets. Impairment losses are shown separately on the face of the statement of profit or loss and comprehensive income.
Write‑off
Write‑offs are recognized when the Company has no reasonable expectations of recovering a financial asset either in its entirety or a portion thereof. For trade receivables arising from fines, write‑offs occur five years after the violation is issued, which is estimated useful life of a customer.
4.21 Revenue recognition
The Company is in the business of providing tolling services to motorists and private parking management services. Revenue from contracts with customers is recognised when control of the goods or services is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
Tolling services
The Company has generally concluded that it is the principal in its revenue arrangement, because it typically controls the goods or services before transferring them to the customer.
- Tolling fees ‑ Revenue from tolling fees are satisfied at a point in time as the vehicle passes through the toll gate. The transaction price is fixed per passage under the toll gate and is typically paid in advance by the customer. Each passage under the tollgate represents a distinct performance obligation.
- Salik tags ‑ Tags and recharge cards are purchased by end‑customers from third party vendors or directly online. A contract is established with each end‑customer when a Salik tag is registered by the end‑customer. The customer pays a one‑time activation fee; thereby giving Salik the right to payment and the customer right of passage to use the tollgates without penalty. Activation of the tag do not meet the criteria to be considered a distinct performance obligation, and therefore the activation fee is combined with the tolling fees and is recognised over the estimated life of the end‑customer. If the tag is deactivated by the customer before the end of estimated life, the unrecognized portion of the tag activation fee is immediately recognised as revenue.
- Fines – Fines are earned for violating rules and regulations of Salik by third parties. They are recognised at the time the Company has the right to receive cash.
- Inactive balance‑write‑off ‑ A customer’s non‑refundable prepayment to an entity gives the customer a right to receive a service in the future. However. customers may not exercise all of their contractual rights. When an entity expects to be entitled to a breakage amount in a contract liability, the entity shall recognise the expected breakage amount as revenue. The Company recognises revenue when the likelihood of the customer exercising its remaining rights becomes remote.
- Variable consideration ‑ If consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for services rendered to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal will not occur when the related uncertainty is subsequently resolved. Dismissals and refunds for fine violations give rise to variable consideration.
- Other ‑ The Company also recognises revenue from delivery of tags to customers and processing fees for recharges, which is recognised at the point in time when control of the asset is transferred to the customer, generally on delivery of the tag at the customer’s location and upon recharge of the account.
Private parking management
Salik started the provision of barrier‑free parking management services during the year, where the Company is entitled to a share of revenue from the parking fares from visitors parking at the customer’s premises. Accordingly, revenue is recognised at a point in time as and when the parking fee is charged to the visitors.
Toll gate construction
Salik has the exclusive rights for the construction of new toll gates for and on behalf of Roads and Transport Authority (“RTA”) (Note 16). The Company has concluded that for such arrangements it is creating an asset controlled by the customer and has an enforceable right to payment for work completed. Therefore, it meets the criteria to recognise revenue over time.
The Company is reimbursed for all costs and expenses associated with toll gate construction at a consideration equal to cost plus a 10% mark‑up. The Company has determined it acts as an agent under IFRS 15 ‘Revenue from Contracts with Customers’ as toll gate construction service is provided using third parties without taking control. Accordingly, revenue is recognised on a net basis (which is equivalent to the 10% markup) as and when the construction progresses.
When the services rendered by the Company exceeds the payment from the customer, a contract asset is recognised. If the payment exceeds the services rendered, a contract liability is recognised.
4.22 Leases
The Company’s leases represent the lease of office space. Rental contracts are typically made for a fixed period. Contracts contain both lease and non‑lease components. The Company allocates the consideration in the contract to the lease and non‑lease components based on their relative stand‑alone prices. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor, but leased assets may not be used as security for borrowing purposes. Assets and liabilities arising from a lease are initially measured on a present value basis.
Lease liabilities include the net present value of the following lease payments:
- fixed payments, including in‑substance fixed payments;
- variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
- amounts expected to be payable under a residual value guarantee;
- the exercise price under a purchase option that the Company is reasonably certain to exercise;
- lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option; and
- penalties for early termination of a lease unless the Company is reasonably certain not to terminate early.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Company, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right‑of‑use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Company:
- where possible, uses recent third‑party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received; and
- makes adjustments specific to the lease, e.g. term, country, currency and security.
If a readily observable amortising loan rate is available to the individual lessee (through recent financing or market data) which has a similar payment profile to the lease, then the Company use that rate as a starting point to determine the incremental borrowing rate. Lease payments are allocated between principal and finance cost. The finance cost is charged to statement of profit or loss and comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right‑of‑use assets are measured at cost comprising the following:
- the amount of the initial measurement of the lease liability;
- any lease payments made at or before the commencement date less any lease incentives received;
- any initial direct costs; and
- restoration costs.
Right‑of‑use assets are generally depreciated over the shorter of the asset’s useful life and the lease term, on a straight‑line basis. If the Company is reasonably certain to exercise a purchase option, the right‑of‑use asset is depreciated over the underlying asset’s useful life. The Company does not revalue right‑of‑use assets held by the Company.
Payments associated with short‑term leases and all leases of low‑value assets are recognised on a straight‑line basis as an expense in statement of profit or loss and comprehensive income. Short‑term leases are leases with a lease term of 12 months or less without a purchase option.
4.23 Current versus non‑current classification
The Company presents assets and liabilities in the statement of financial position based on current/non‑current classification. An asset is current when it is:
- Expected to be realised or intended to be sold or consumed in the normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realised within twelve months after the reporting period; or
- Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non‑current.
A liability is current when:
- It is expected to be settled in the normal operating cycle;
- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting period; or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as non‑current.
4.24 Segment reporting
For management purposes, the Company is organised into one segment. which is the Tolling Business. Accordingly, the Company only has one reportable segment. Management monitors the operating results of the business as a single unit for the purpose of making decisions about resource allocation and performance assessment.
4.25 Dividend distribution
Dividends to the Company’s shareholders are recognised in the financial statements in the period in which the dividends are approved by the Company’s shareholders.
4.26 Income taxes
Income taxes have been provided for in the financial statements in accordance with legislation enacted at the reporting date in the United Arab Emirates, where the Company operates and generates taxable income. The income tax charge comprises current tax and deferred tax, recognised in statement of profit or loss and comprehensive income for the year.
Taxable profits or losses are based on estimates if the financial statements are authorized prior to filing relevant tax returns. Taxes other than on income are recorded within operating expenses.
Deferred income tax is provided using the balance sheet liability method for tax loss carry forwards and temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. In accordance with the initial recognition exemption, deferred taxes are not recorded for temporary differences on initial recognition of an asset or a liability in a transaction other than a business combination if the transaction, when initially recorded, affects neither accounting nor taxable profit and at the time of the transaction, does not give rise to equal taxable and deductible temporary differences. Deferred tax balances are measured at tax rates enacted or substantively enacted at the end of the reporting period, which are expected to apply to the period when the temporary differences will reverse or the tax loss carry forwards will be utilised.
Deferred tax assets for deductible temporary differences and tax loss carry forwards are recorded only to the extent that it is probable that the temporary difference will reverse in the future and there is sufficient future taxable profit available against which the deductions can be utilised.
In the application of the Company’s accounting policies, which are described in Note 4, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
Critical accounting estimates and assumptions ‑ The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
a) Provision for expected credit losses of trade and other receivables
The Company uses a provision matrix to calculate ECLs for trade receivables. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns (i.e., customer type and rating). The Company calibrates the matrix to adjust the historical credit loss experience with forward‑looking information. At every reporting date, the historical observed default rates are updated and changes in the forward‑looking estimates are analysed. The amount of ECL is sensitive to changes in circumstances and of forecast economic conditions. The Company’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future.
During the years presented, management concluded the expected credit losses for trade receivables for customers not arising from fines was not material due to either no balances or an immaterial balance being past due, and due to positive forecasted economic conditions.
To calculate the expected credit losses for trade receivables arising from fines, management has used a credit period of twelve months to calculate the due date as customers generally have up to one year before they are required to pay the violation issued. Management has tracked recoveries for violations for five years as management estimates the average customer useful life to be five years.
Change in accounting estimate
During the year ended 31 December 2024, the Company revised the model used to calculate the provision for ECL on trade receivables arising from fines. The change in the ECL model was implemented to enhance the accuracy of the provision estimate by incorporating an updated methodology in calculating the probability of default and loss given default.
This change in the ECL model represents a change in accounting estimate as defined by IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” and has been applied prospectively as on 31 December 2024 (date of implementation).
The impact of this change in the provision for ECL during the year ended 31 December 2024 resulted in a reduction in the loss allowance on fines receivable of AED 20.1 million.
The Company has determined that this change in estimate provides more relevant and reliable information to users of the financial statements. There has been no change to the underlying accounting policy for impairment of financial assets as disclosed in Note 4.20.
b) Fines dismissals
Customers have the right to dispute wrongful violations. If the violation has been paid, then the customer is entitled to a refund and if the violation has not yet been paid the violation is dismissed. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal will not occur when the related uncertainty is subsequently resolved. Primarily all wrongful violations are dismissed in the year in which the violation is issued and substantially all dismissals occur within two calendar years of the violation issuance, however based on historical information, management can estimate dismissals which will occur in subsequent years after the violation is issued. In determining the impact of variable consideration, the Company uses the “most‑likely amount” method in IFRS 15 whereby the transaction price is determined by reference to the single most likely amount in a range of possible consideration amounts. A 1% increase or decrease change in estimated dismissals beyond the year in which the violation is issued would result in approximately AED 30 thousand (2023: AED 29 thousand) change in revenue recognized for the year ended 31 December 2024.
c) Useful lives of property and equipment, infrastructure and intangible assets
The Company’s management determines the estimated useful lives of its property and equipment, infrastructure, and intangible assets for calculating depreciation and amortisation. This estimate is determined after considering the expected usage of the asset or physical wear and tear. Management reviews the residual value and useful lives annually and future depreciation and amortisation charge would be adjusted where the management believes the useful lives differ from previous estimates.
d) Life of customer contract
The Company’s management determines the estimated useful lives of its customer contracts for calculating the period over which tag activation fee revenue is recognised. Management estimates the average customer life by calculating the weighted average number of days between tag activation and tag deactivation, which is approximately five years. However, the actual useful life may be shorter or longer than five years, depending on when customers deactivate their Salik tag. If the average customer useful life was four years, the carrying amount of contract liabilities would decrease and revenue recognized would increase by AED 8.7 million (2023: AED 0.8 million) as at and for the year ended 31 December 2024. If the average customer useful life was six years, the carrying amount of contract liabilities would increase and revenue recognized would decrease by AED 3.3 million (2023: AED 0.3 million) as at and for the year ended 31 December 2024.
Critical judgements in applying the Company’s accounting policies ‑ The following are the critical judgements, apart from those involving estimations discussed above, that management made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognised in these financial statements.
e) Determining whether RTA’s voluntary right to terminate is substantive or not
As per the terms of the concession agreement, RTA has an option to voluntarily terminate the agreement by giving notice of voluntary termination to the Company and paying the termination value as determined on the termination date based on terms of the concession agreement. The Company applies judgement in evaluating whether it is reasonably certain whether RTA will exercise the option to terminate the agreement. Based on the judgement applied, the Company believes it will not be economically beneficial for RTA to exercise the rights and voluntarily terminate this agreement as the termination payment will significantly exceed the upfront concession payment made by Salik to acquire concession right.
f) Impairment of non‑financial assets
The Company reviews the carrying amounts of its non‑financial assets to determine whether there is any indication that those assets are impaired. In making the assessment for potential indicators of impairment, management is required to make certain judgments when determining whether events or circumstances exist that indicate the carrying amount may not be recoverable. During the years presented, management concluded there were no indicators of impairment that required a further assessment.
g) Consideration of significant financing component in a contract
Customers are required to prepay tolling fees. Using the practical expedient in IFRS 15, the Company does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of the promised good or service to the customer and when the customer pays for that good or service will be one year or less. During the years presented, management concluded the amounts of advances which were likely to transfer after one year were not material and therefore did not require further assessment.
Set out below is the disaggregation of the Company’s revenue:
The operations and maintenance of the tolling and parking management system is outsourced to a third‑party service provider. Operating expenses comprise of account management charges, customer service charges, processing of violations charges, and charges relating to general requirements to operate the tolling and parking business. Maintenance expense comprises back‑office software support, maintaining and replacing equipment, and mobile application maintenance expenses. Operating and maintenance expenses are recorded in the period in which the services are provided.
Salik Company P.J.S.C. entered into a concession agreement with RTA effective 1 July 2022 to undertake the Dubai tolling operations for which Salik (“Operator”) made an upfront concession payment of AED 4,000 million plus VAT of AED 200 million to RTA (“Grantor”) for existing toll gates and an amount to be agreed upon as and when new toll gates are constructed.
Additionally, a variable concession fee of 22.5% effective from 1 April 2024 (prior to 1 April 2024: 25%) of toll usage fees earned excluding tag activation fees, violations revenue, inactive balance write‑off or any other miscellaneous revenue is payable to RTA for each quarter period. The agreement term is 49 years («the concession period») unless terminated or extended as per the terms of the concession agreement. As per the terms of the concession agreement, there are no decommissioning obligations at the end of the contractual period and therefore, no liability has been recorded as of 31 December 2024 and 31 December 2023.
Variable concession fee for the year ended 31 December 2024 amounts to AED 460.58 million (2023: AED 461.37 million), which has been recorded as an expense in the statement of profit or loss and comprehensive income.
Key elements of concession agreement
Tolling Operations, Tolling Systems, Tolling Assets: The Company have the absolute responsibility for the Dubai tolling operations and the operation, maintenance, development and/or upgrade of the tolling system. All costs and expenses incurred in this relation are at expense of the Company. Ownership over tolling assets vests with RTA.
Revisions to toll fee: The Company has the exclusive right to charge, collect and keep for its account toll fees and other road user charges from vehicles utilizing the toll roads. The Company has a right to increase the toll fees to account for increase in operational cost or to consider the impact of inflation. Such increase in toll fees has to be approved by Dubai Executive Council. In case the revision in toll rate is not approved by the Dubai Executive Council, the Company will be compensated for such non approval by reduction in the variable concession fee charged by RTA only if the proposed increase was on account of increased inflation rates. Effective from 1st April 2024, RTA reduced the variable concession fee from 25% to 22.5% of toll usage revenue.
New toll gates: The Company has the exclusive right to undertake any tolling works (construction) with respect to the new toll gates and all costs and expenses incurred for the tolling works will be reimbursed by RTA on a cost plus 10% basis. For obtaining the right to charge users, the Company shall pay to RTA a fee determined based on the valuation of the new toll gate. In case of a difference in the valuation performed by RTA and that performed by Salik by more than 5%, an earnout mechanism will apply, whereby during the period of 5 years following the completion and commissioning of the new toll gate, the Company shall be liable to pay earn‑out payments only if there is a positive traffic delta.
On 19th January 2024, RTA formally assigned Salik to install two new toll gates to optimise traffic flow and reduce congestion on key routes within Dubai. The Company constructed the new toll gates for RTA and earned revenue of AED 6.6 million (Note 6) under the cost‑plus mark‑up arrangement. Both the new gates became operational effective from 24th November 2024 and the addition of two gates increased the total number of gates in Dubai from eight to ten. In accordance with the terms of the concession agreement, valuation for new gates was carried out independently by RTA and Salik. Since the difference between the valuation by both the parties was less than 5% therefore, as per the concession agreement, the average of two valuations was adopted for both the gates, being combined valuation of AED 2,734.28 million.
During the year, the Company recorded revenue of AED 6.6 million (2023: Nil) from toll gate construction. As on 31 December 2024, the unbilled portion associated with toll gate construction amounts to AED 24.4 million which is shown as a contract asset in the statement of financial position.
Replacement of end‑of‑life tolling assets: The Company shall be reimbursed by RTA on a cost plus 5% basis for replacement of each tolling asset upon the end of its useful life.
Termination: The Company may terminate the agreement if RTA is in breach of its obligations and if a change in law were to make it illegal or impossible for the Company to perform substantially all its obligations under the agreement. RTA may terminate the agreement by giving notice to the Company, if an insolvency event occurs, if the Company commits a prohibited act or if certain type of breaches of the agreement occur. Further, RTA also has an option to voluntarily terminate the agreement by giving notice of voluntary termination to the Company. Compensation amounts will have to be paid by either of the parties upon occurrence of certain events, that is, it will have to be paid by RTA in case of exercise of voluntary termination or breach by RTA of its obligations and will have to be paid by the Company if it commits a prohibited act.
Transfer of Assets and Rights: At the end of the agreement, the Operator shall, without consideration, transfer to the Grantor all rights, title and interest of assets, intellectual property rights used in Dubai tolling operations.
i. Right‑of‑use assets
ii. Lease liabilities
Lease liabilities is bifurcated into:
iii. Amounts recognised in profit or loss
iv. Contractual undiscounted cash flows
The contractual undiscounted cash flows associated with the lease are as follows:
The expenditure incurred towards enhancements of the software did not meet the capitalisation criteria and have been expensed in the year in which the expense was incurred. Expenses incurred related to software development were AED 11.9 million for year ended 31 December 2024 and AED 12.9 million for the year ended 31 December 2023.
All inventories are in the form of finished goods. The cost of inventories recognised as expense during the year is disclosed as ‘Cost of tags and recharge cards’ on the statement of profit or loss and comprehensive income. None of the inventories are carried at net realisable value being lower than cost for all years presented. There are no obsolete or slow‑moving inventories. There has been no write‑off of inventory in the years presented.
Break up of trade receivables is as follows:
Trade and other receivables are measured at amortised cost using the effective interest method.
Trade and other receivables from Other Emirates, taxi, gas stations, telecom, banks and others are not secured, non‑interest bearing and are generally on terms of 30 to 90 days. The allowance for expected credit losses or impairment incurred for trade and other receivables from other Emirates, taxi, gas stations, telecom, banks and others is considered to be not material.
Receivables from fines are not secured, non‑interest bearing, and customers are generally required to pay the violation within 12 months from the issuance date. The movement of loss allowance on receivable relating to fines were as follows:
The provision for expected credit losses for the year has been included as “Impairment loss on trade receivables” in the statement of profit or loss and comprehensive income. The Company fully writes off a trade receivable arising from a violation when there is no realistic prospect of recovery, which is estimated by management to be at the end of the average customer useful life, which is five years.
Set out below is the ageing analysis of the Company’s trade receivables from fines using a provision matrix:
Cash in bank represents amounts held in current accounts, call account and Wakala deposits maintained with Emirates NBD Bank PJSC operating in the UAE. The fixed deposits earn expected profits of Nil as there were no fixed deposits as at 31 December 2024 (2023: 5.3%). During the year ended 31 December 2024, the Company earned a profit of AED 48.5 million (2023: AED 30.0 million) on these Wakala deposits and Mudarabah call account.
Related parties comprise the Parent, ultimate controlling party, the shareholders, key management personnel, subsidiaries, joint venture, directors and businesses which are controlled directly or indirectly by the ultimate controlling party, or directors or over which they exercise significant management influence. The Company has availed the exemption under para 25 of IAS 24 Related Party Disclosure and consider the entities controlled by Government of Dubai as non‑related except for RTA, Dubai Taxi Company PJSC (“DTC”), Dubai E‑Government, Dubai Digital Authority, Emirates NBD Bank PJSC (“ENBD”) and Emirates National Oil Company (“ENOC”).
The Company, in the normal course of business, receives services from and provides services to related parties. These transactions comprise the purchase and sale of goods and services in the normal course of business at mutually agreed terms. Additionally, the Company entered into a Service Concession Agreement with RTA (Note 16), Transitional Services agreement with RTA and debt agreement with Emirates NBD Bank PJSC (Note 24).
The following table summarizes related party balances for the relevant financial year.
The above related party payable includes AED 2,162.3 million as on 31 December 2024 in relation to toll operation rights for two new gates.
The toll rights fee in relation to the two new toll gates is payable to RTA semi‑annually over a period of 6 years. Below table shows the movement of long‑term liability related to toll rights fee during the year ended 31 December 2024.
The Company obtained a financing facility with ENBD, a related party, as has been disclosed in Note 24. Bank balances as disclosed in Note 22 are also held with ENBD.
It represents unbilled portion of revenue to RTA, associated with toll gate construction, as detailed in Note 16.
Transactions with related parties
Commission expense
Transactions with ENBD, other than finance cost on borrowings as explained in Note 24, relates to commission paid for collection services provided by ENBD and amounts to AED 2.6 million for the year ended 31 December 2024 (2023: AED 2.7 million). Transactions, gross of commission earned, with ENOC relate to the sale of Salik tag and recharge cards and amounts to AED 130.2 million for the year ended 31 December 2024 (2023: AED 138.9 million).
Tolling fees collected by Dubai Taxi Company PJSC
Dubai Taxi Company PJSC (“DTC”) is ultimately controlled by the Government of Dubai. Tolling fees collected by DTC represent toll fee collection by the taxis operated by DTC within the Emirate of Dubai and are based on trips under tollgates where there is a passenger in the taxi vehicle. Tolling fees collected by DTC are AED 69.1 million (2023: AED 68.8 million).
Service concession arrangement
As part of formation of Salik Company P.J.S.C., the Company entered into a Service Concession Agreement with RTA, pursuant to which RTA grants some of its mandates and powers under Dubai Law No. 17 of 2005 regarding the operation, maintenance and management of Salik i.e. Dubai’s automatic road toll collection system. Refer Note 15 and Note 16 for the financial impact associated with the Concession Agreement. Furthermore, the Company has recorded revenue of AED 6.6 million during the year ended 31 December 2024 (2023: Nil) from the construction of new toll gates (Note 6).
Transitional Service Agreement (‘TSA’)
The Company entered into a transitional services agreement (“TSA”) with RTA, effective from 1 July 2022, wherein RTA provides services to Salik for performance of the tolling operations and back‑office functions such as financial services, information technology (IT), human resources, administration, marketing and communication in accordance with the tolling Concession Agreement. During the year, an amount of AED 5.1 million (2023: AED 6.7 million) has been charged by RTA for such transitional services and these have been included as ‘Transition service expense’ under ‘Other expenses’ in the statement of profit or loss and comprehensive income.
Toll rights for new toll gates
During the year ended 31 December 2024, the Company installed two new toll gates and obtained the rights from RTA, to charge the users for these new gates, for a consideration of AED 2,734.3 million which has been recorded as an addition to intangible assets (Note 15 and 16).
An agreement was reached with RTA to repay the toll rights fee semi‑annually over a period of six years, starting from the end of November 2024. The liability associated to the toll rights fee is initially measured at fair value of AED 2,378.6 million. The difference between the fair value of the long‑term liability and intangible asset recognised amounted to AED 355.7 million, which is recorded as a contribution directly in equity as a transaction between related parties under the same ultimate controlling party.
Key management and directors’ remuneration
On 30 June 2022, the Company and Emirates NBD Bank PJSC entered into an agreement to underwrite a 5‑year, AED 4,200 million unsecured Islamic Mudarabah credit facility (the “Facility”). The Facility is bifurcated further into a term facility commitment of AED 4,000 million and a revolving facility commitment of AED 200 million. On 19 May 2023, the Company agreed with the bank for a partial reduction of Facility B, that is, revolving Murabaha facility commitment, to reduce the commitment to AED 50 million instead of the original commitment of AED 200 million. The purpose of the overall borrowing facility is firstly, towards making an upfront payment under the requirements of the Concession Agreement; and secondly, for general corporate purposes including fees and expenses in relation to the Facility.
Borrowings under the term facility carries variable interest at 3‑month EIBOR plus a margin at a rate per annum of 0.82%. The upfront fee under the Facility is 0.4% flat and the commitment fee on the revolving credit facility is 0.25% per annum, calculated on daily undrawn and available commitments, and payable quarterly in arrears. Transaction costs incurred in relation to the term facility have been deducted from the financial liability amount and considered in the computation of the effective interest rate. The upfront fee allocated to the revolving facility has been capitalised and is amortized on a straight‑line basis over the term of the agreement and is disclosed as an ‘Other asset’ in the statement of financial position.
Principal amounts outstanding under the term facility will be due and payable in full on final maturity which is 5 years from the date of the facility agreement.
The Facility contains customary representations and warranties, subject to limitations and exceptions and customary covenants restricting the Company’s ability to declare dividends or make distributions in the event of outstanding default or a default that may occur as a result of such dividend distribution. The Company is also required to comply with a financial covenant, leverage (Net Debt to EBITDA): 5x or lower tested semi‑annually with testing commencing from June 2023. The Company complied with the financial covenant throughout the year ended 31 December 2024.
As at 31 December 2024, the Company has access to the following borrowing facilities:
In accordance with the provisions of IAS 19, management has carried out an exercise to assess the present value of its obligations as at 31 December 2024 and 2023, using the projected unit credit method, in respect of employees’ end of service benefits payable under the Government of Dubai Human Resources Management law. Under this method, an assessment has been made of the employee’s expected service life with the Company and the expected basic salary at the date of leaving the service. Future salary increases have been estimated on a basis consistent with the natural progression of an employee’s salary in‑line with the Company’s salary scales, past experience and market conditions.
Trade and other payables are short‑term in nature and are non‑interest bearing. These are measured at amortised cost using the effective interest method.
As of 31 December 2024, current contract liabilities of AED 317.2 million (2023: AED 299.7 million) and non‑current contract liabilities of AED 65.0 (2023: AED 53.4 million), either relate to account balances paid in advance by the customer or arise from tag sale activation fees. The Company expects to recognise these unsatisfied performance obligations as revenue over a period of up to 5 years. At the end of 5 years any inactive customer account balances will be released and recognised as revenue.
As of 31 December 2024, contract liabilities of AED 93.1 million (31 December 2023: AED 76.6 million), arising from tag activation fees are expected to be recognised as revenue as follows:
Movements in contract liabilities during the year are as follows:
On 9 December 2022 UAE Federal Decree‑Law no 47 of 2022 was published setting in place a general corporate income tax for the first time. The profit threshold of AED 375,000 at which the 9% tax will apply for the Company’s financial year commencing on 1 January 2024. The Company is required to file its first annual tax return and pay the declared income tax, pertaining to the financial year ended 31 December 2024, before 30 September 2025.
While current taxes are not payable on profits generated before the Company’s financial year commencing on 1 January 2024, the existence of an enacted tax law results in the need to immediately record deferred taxes on assets and liabilities where the carrying amount differs from the tax base. Based on the assessment performed by the management, an immaterial deferred tax impact has been noted as of and for years ended 31 December 2024 and 31 December 2023. As certain other cabinet decisions are pending as on the date of these financial statements, the Company will continue to assess the impact of these pending cabinet decisions on deferred taxes as and when finalized and published.
(i) Components of income tax expense
Income tax expense comprise the following:
(ii) Reconciliation between tax expense and profit or loss multiplied by applicable rate
The income tax rate applicable to the Company’s income is 9%. A reconciliation between the expected and actual taxation charge is as follows:
The share capital of the Company comprised of 7,500,000,000 (2023: 7,500,000,000) shares of AED 0.01 each. All shares are authorised, issued and fully paid up.
In accordance with the UAE Federal Decree Law No. (32) of 2021, 5% of net profit of the Company is to be allocated every year to a statutory reserve. This statutory reserve, as per the Articles of Association, is subject to a maximum of 50%, of the Company’s issued share capital. This reserve is not available for distribution except as stipulated by the law. There was no allocation from net profit to statutory reserve during the years ended 31 December 2024 and 31 December 2023 as the Company has reached the maximum limit for the reserve.
Dividends of AED 1,094,759 thousand were declared and paid during the year ended 31 December 2024 (2023: AED 1,039,334 thousand) with details as follows:
a On 13th August 2024, the Board of Directors approved to distribute a dividend of AED 544,725 thousand (AED 0.07263 per share) to the shareholders, representing 100% of the Company’s distributable net profit for the first half of 2024, which was subsequently paid on 5 September 2024.
b Dividend of AED 550,035 thousand (AED 0.073338 per share) in respect of the year ended 31 December 2023 was declared and approved in Annual General Assembly Meeting held on 2nd April 2024, which was subsequently paid on 22nd April 2024.
The following table reflects the income and share data used in the basic and diluted EPS calculations:
Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary equity holders of the Company by the number of ordinary shares outstanding. Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary equity holders of the Company and the number of shares on formation for the effects of all dilutive potential ordinary shares. There were no instruments or any other items which could cause a dilutive effect on the earnings per share calculation.
33.1 Financial risk factors
The Company’s activities and borrowings potentially expose it to a variety of financial risks including the effects of changes in market risk (including cash flow interest rate risk, price risk and foreign exchange risk), credit risk and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance. Risk management is carried out by the management under policies approved by the Board of Directors.
This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s management of capital. Further quantitative disclosures are included throughout these financial statements.
The Board of Directors have overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board of Directors are responsible for developing and monitoring the Company’s risk management policies.
Market risk
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long‑term debt obligations with floating interest rates.
At 31 December 2024, if interest rates on borrowings had been 1% higher/lower with all other variables held constant, profit for the year would have been AED 39,920 thousand (2023: AED 39,888 thousand) lower/higher, mainly as a result of higher/lower interest expense on floating rate borrowings.
Price risk
Price risk is a risk that the value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to the individual instrument or its issuers or factors affecting all the instruments traded in the market. The Company is not exposed to significant price risk as it does not have significant price sensitive financial instruments.
Foreign exchange risk
Foreign exchange risk is a risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are primarily denominated in a currency that is not the Company’s measurement currency. The Company is not exposed to significant foreign exchange risk as majority of its transactions are denominated in AED.
Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company and arises principally from trade and other receivables, due from related parties, contract assets, cash and cash equivalents and short‑term deposit with bank.
The Company seeks to limit its credit risk with respect to related party balances by continuously monitoring outstanding balances through the parties involved and with respect to bank balances and deposits by only dealing with reputable banks. The Company has well defined trade and non‑trade transactions with related parties. Non‑trade transactions entail pre‑approval by both parties prior to execution of the transactions with the related parties. The balances are reconciled monthly with the related parties through intercompany reconciliations. These balances are unsecured, however, since these balances are with related parties and there has been no prior history of default, management believes there is no significant credit risk in relation to these balances.
Bank balances are limited to high‑credit‑quality financial institution and bank ratings are reviewed on an annual basis. Management expects any credit losses from non‑performance by these counterparties would be insignificant.
The Company evaluates the concentration of risk with respect to trade and other receivables as low. The Company is exposed to credit risk primarily on trade receivables arising from fines. An impairment analysis is performed at each reporting date to measure expected credit losses. The maximum exposure to credit risk at the reporting date is the carrying value of each class of trade and other receivables as disclosed in Note 21.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations from its financial liabilities. The Company’s objective is to maintain a balance between continuity of funding from the shareholders and flexibility through efficient cash management. The Company limited its liquidity risk by ensuring adequate funds from operations and committed credit lines are available.
The table below analyses the Company’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
33.2 Capital risk management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for the shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of profit distributed to the shareholder, repay debt or obtain additional funding.
The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings, due to a related party associated with new gates toll rights fee and lease liabilities less cash and cash equivalents. Total capital is calculated as “equity” as shown in the statement of financial position plus net debt.
The gearing ratio as at 31 December 2024 and 31 December 2023 is as below:
33.3 Fair value estimation
The fair values of the Company’s financial assets and liabilities as at 31 December 2024 and 2023 approximate their carrying amounts as reflected in Note 34 of these financial statements.
The accounting policies for financial instruments have been applied to the line items below:
The table below sets out an analysis of the net debt and the movements in net debt for each of the years presented.
Dividend distribution
On 4th March 2025, the Board of Directors proposed to distribute AED 619,836 thousand dividend to the shareholders (8.2645 fils per share). The proposed dividend is subject to approval by the shareholders at the Company’s General Assembly Meeting in April 2025.
The financial statements were approved by the Board of Directors of Salik Company P.J.S.C. on 4th March 2025 and signed on its behalf by His Excellency Mattar Al Tayer, Chairman of the Board of Directors and Ibrahim Sultan Al Haddad, Chief Executive Officer.