Eik fasteignafélag hf.: Financial Statements 2023

Main results from the Company’s financial statement of the year 2023:

• Income from operations for the year amounted to ISK 11,224 millon.
  • Thereof revenue from lease income amounted to 9,514 million.
• Operating profit before changes in value and depreciation amounted to 7,475 million.
• Total comprehensive income amounted to ISK 7,279 million.
• Net cash provided by operating activities amounted to ISK 4,083 million.
• The book value of investment properties amounted ISK 132,106 million at the end of the period
• The book value of assets for own use amounted to ISK 5,975 million at the end of the period.
• Changes in value of investment properties amounted to ISK 7,513 million.
• Revaluation of assets for own use amounted to ISK 1,784 million.
• Cash equivalents amounted to ISK 984 milllion at the end of the period.
• Interest-bearing debt amounted to ISK 75,567 million at the end of the period.
• Equity ratio was 34.6%.
• Profit per share was ISK 1.71.
• Economic occupancy rate was 94.3% at the end of the period.
• Weighted indexed interest rates were 3.12% at the end of the period.
• Weighted unindexed interest rates were 9.63% at the end of the period
• The loan-to-value ratio (net loss-bearing debt / value of real estate, building permits and plots) was 54.8% at the end of the period.
• The Board of Directors proposes a dividend payment of ISK 2,540 million

The financial statements of Eik fasteignafélag were approved by the Company’s Board of Directors and CEO on 15 February 2024.

Attached is an interim financial report which contains Condensed Consolidated Financial Statements for the year 2023 together with further information on the Company’s operations than are included in the announcement.

In case of any discrepancy in the English and the Icelandic versions of this announcement or the Financial Statements, the Icelandic version shall prevail.

Operation of the year

The Company's operations went well in 2023 and the profit of the year exceeded the Company's initial expectations despite that the year was characterized by demanding challenges.

The Company's operating revenues amounted to ISK 11.224 million in 2023. Of that, rental income was ISK 9.514 million. Operating expenses amounted to ISK 3.924 million and the reversal of previously recognized impairment losses on trade receivables resulted in a positive impairment reversal of ISK 175 million. Operating profit before changes in fair value and depreciation amounted to ISK 7.475 million and increased by about 13% between years. Profit before income tax amounted to ISK 7.318 million, net profit amounted to ISK 5.853 million. Other comprehensive income amounted to ISK 1.427 million. The Company's total comprehensive income for 2023 amounted to ISK 7.279 million.

One-time items had an unusually large impact on the company's EBITDA in 2023. Reversal of doubtful accounts provision had a positive impact of ISK 195 million. Cost that inncured due to takeover bid, merger discussion and other items had negative impact of ISK 53 million. The Radisson Hotel Group, the operator of Hotel 1919, estimated that the earthquakes on the Reykjanes and the uncertainty associated with them had about ISK 40 million negative impact on the last six weeks of the year and the company granted a discount on rent of ISK 28 million. due to the overhaul of one of the company's properties. Adjusted for one-time items, operating profit before valuation changes and depreciation amounted to ISK 7,400 million. during the year.

The Net Operating Income (NOI) ratio (i.e. operating profit before changes in value and depreciation correct for one time items as a ratio of lease income) was 74.6% for the year 2023, compared to 74.1% for the year 2022.

Balance sheet

Total assets of the Company amounted to ISK 141,629 million as at 31 December 2023, whereof investment properties amounted to ISK 132,106 million, assets for own use ISK 5,975 million and development properties ISK 1.079 million. The Company’s equity at year end 2023 amounted to ISK 49,023 million and equity ratio was 34.6%. The Company’s Annual General Meeting on 30 March 2023 approved an ISK 2,00 million payment of dividend to shareholders for the operating year 2022 and it was paid on 12 April 2023.

The Company’s total liabilities amounted to ISK 92.606 million as at 30 December 2023, of which interest-bearing debt was ISK 75.567 million and deferred tax liability ISK 12.648 million. The loan-to-value ratio (net loss-bearing debt / value of real estate, building permits and plots) was 54.8% at the end of the period.

Company Portfolio

In the fourth quarter the Company acquired 820 square meters of office and retail space at Hafnarstræti 7, 101 Reykjavík. Following the purchase, the Company owns the entire area bounded by Pósthússtræti 2, Tryggvagötu 24-28, and Hafnarstræti 5-9. Earlier in the year, the Company had acquired Ármúli 2 and a portion of Síðumúli 20-22.

Proposal for payment of dividend

The policy of the Board of Directors is to pay the shareholders up to 50% of net cash provided by operating activities less the amount used for repurchasing of own shares up until the call for the Annual General Meeting. The Board of Directors proposes a dividend payment of ISK 2,540 million to shareholders for the operating year 2023, taking into account the Company’s dividend policy and considering the historically low loan-to-value ratio. The proposal will be submitted at the annual general meeting which is planned on 11 April 2024.

Outlook

According to the financial budget for 2024, the Company estimates that its operating revenues will be in the range of 11,250 – 11,710 million ISK at a fixed price level based on the consumer price index in January 2024. The Company also estimates that its EBITDA for the year will be in the range of 7,250 – 7,560 million ISK.

Rentals have been successful so far this year. New leases have been signed for approx. 4,500 sq.m. of non-revenue generating spaces that become revenue generating as the year progresses.

The Company sees significant opportunities in its asset portfolio, and by investing in its development, the Company can unlock considerable value for its shareholders, both in the form of higher rental income and the realization of the value of development assets. On that basis, the Company's management believes that there is potential for increased profitability. Further discussion of the Company's financial plan for 2024, as well as its outlook for the future, can be found in the attached Annual Report.

Briefing session
An open briefing sessionfor market participants will be held on Friday 16 February 2024 at 8:30 AM at Hilton Reykjavík Nordica, Suðurlandsbraut 2, second floor. A light breakfast will be served from 8:00 AM. Garðar Hannes Friðjónsson CEO and Lýður H. Gunnarsson CFO will present the results and respond to questions following the presentation.

A live stream from the session and registration for the electronic presentation is here:

https://vimeo.com/event/4092938/a5ea76e65a

Following registration, participants will receive an e-mail with further information.

Market participants can send questions before or during the meeting to the e-mail address fjarfestatengsl@eik.is. Management encourages marketers to submit questions prior to the meeting so that answers can be prepared, if needed. Questions will be answered after the presentation.

Financial Calendar

Following are planned dates for publishing of interim and annual results:

Annual General Meeting                                                         11 April 2024
Quarterly results Q1 2024                                                         2 May 2024
Quarterly results Q2 2024                                                   15 August 2024
Quarterly results Q3 2024                                                  31 October 2024
2024 Annual Results                                                        13 February 2025

Announcements of financial information will be published after closing of markets.

Further information will be provided by:

Garðar Hannes Friðjónsson CEO, gardar@eik.is, tel. 590-2200
Lýður H. Gunnarsson CFO, lydur@eik.is, tel. 820-8980

Attachment

• Eik fasteignafélag - Condensed Consolidated Financial Statement 2023

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