Park Street A/S – Interim Financial Report, 1st half of 2023
Copenhagen, 24 August 2023
In the first half of 2023 Park Street achieved EBVAT (Earnings before value adjustments and tax) of DKK 21.8 million (2022: DKK 23.3 million). Net sales were at DKK 83.4 million (2022: DKK 76.9 million) and the reduction in EBVAT was primarily driven by an increase in financial expenses offset by a decrease in operating and external expense.
The Group's equity as of June 30th 2023 was positive at DKK 1,143 million, against DKK 1,087 million as of December 31st 2022. The marginal increase is primarily due to the progress of Pulse N towards completion, associated increase in valuation, offset by lowered valuations across several regional retail assets.
The Board of Directors of Park Street A/S discussed and today approved the company's Interim report 2023, which contained the following:
The period in outline
- Profit for the period (after tax and valuation adjustments) is DKK 1.2 million for the 1st half of 2023 (1st half of 2022: DKK 22.1 million)
- Park Street achieved EBVAT (earnings before value adjustments and tax) of DKK 21.8 million (1st half of 2022: DKK 23.3 million).Net sales were increased to DKK 83.4 million as compared to DKK 76.9 million in the 1st half of 2022. This was made possible due to achieving higher income on existing properties by reducing the vacancy. The reduction in EBVAT was primarily driven by an increase in financial expenses (+DKK 7 million) offset by operating expenses (-DKK 3.4 million) and other external expenses (-DKK 2.2 million). The construction loan for Pulse N being fully drawn has increased the liabilities of the company, with associated financing costs.
- The Group’s equity as of June 30th 2023 was positive at DKK 1,143 million. Net asset value increased to 20.0 per share as compared to 18.9 per share in the 1st half of 2022.
- Cash flows from operating activities for the 1st half of 2023 were DKK 21.0 million (1st half of 2022: DKK 16.8 million). The increase is due to the higher operating profit (DKK 44.2 as compared to DKK 38.8 in the same period last year. Cash flows from investing activities for the 1st half of 2023 were -DKK 36.0 million (1st half of 2022: DKK -115.2 million). They were significantly lower as compared to last year due to DKK 153 million sale of investment properties in the last year, and an offset of DKK 36 million spent on improvements to investment properties across the portfolio in the first half of 2023. Cash flows from financing activities for the 1st half of 2023 were DKK 17.8 million (1st half of 2022: DKK -260.4 million). The higher cash flow in the previous year were primarily driven by a DKK 159.9 million share buyback and DKK 109.9m repayment of liabilities to credit institutions last year.
Expectations for 2023
Park Street’s EBVAT expectations are refined to a lower range of DKK 45 to DKK 50 million compared to an earlier guidance of DKK 55 million. The change is in view of the lower number of assets, due to sales, and a longer lead time for the new leases to be operational in view of significant refurbishment works for the new leases.
Park Street is making good progress with Pulse Nørrebro project which is expected to be operational by the summer of 2023 and is also taking steps towards initiating Pulse Tåstrup project later this year.
Management comments on the Interim report
In connection with the interim report for H1 2023, CEO Pradeep Pattem states the following:
“Park Street has made positive progress withs signing of 36 new leases worth over DKK 5.5 million for 4,700 sqm. Some of these leases require capex and refurbishment works which are expected to be completed during H2 2023 and will start generating top line cash flow during the year. We have also made some progress with the strategy of reducing assets in the geographies and sector not core to Park Street with the appointment of an external asset manager for these assets. While the sale of asset in the short term will reduce the top and bottom line of company, our focus of investing in core asset to reduce vacancies and improve the properties should in the medium term generate significantly improved quality of revenues and profitability. Park Street will continue to sell asset which are not core to its long term strategy, while investing in the core portfolio, primarily Pulse Living (our Youth Housing Platform) and Spark Offices (Our Managed Office Space Platform) in key cities with sustainable growth potential.
The range of EBVAT expectation is refined to a lower range of DKK 45 to DKK 50 million compared to an earlier guidance of DKK 55 million. The change is in view of the lower number of assets, due to sales, and a longer lead time for the new leases to be operational in view of significant refurbishment work for the new assets.
Park Street is expecting to launch Pulse Nørrebro in Q3, and expect it to be fully leased within the quarter. This is a flagship asset to further develop and scale the Pulse platform.
We are facing an extraordinary market environment, with significant increase in interest rates, high inflation and yet high demand for housing and office space, particularly in Denmark / Copenhagen. The investment market is far more uncertain in terms of the valuations – leading to a relatively slow market for sales and acquisitions. We have prepared the balance sheet and operating platform, which is intensively tech driven with lower cost base, in anticipation of a tougher operating market in the medium term. Further investing in our selective portfolio and developing the Pulse platform remain our focus.”
Attached files
Interim report 2023 is attached to this announcement.
Copenhagen,
Anita Nassar Pradeep Pattem
Chairman CEO
Further information
For further information please contact Pradeep Pattem, CEO at nordicom@nordicom.dk
Company Website: www.psnas.com
Telephone number: +45 33 33 93 03
This company announcement contains some forward-looking statements, including statements about Park Street’s activities. Such forward-looking statements are based on information, assumptions and assessments that Park Street finds reasonable. These forward-looking statements cover known and unknown risks, uncertainties and other material factors that may cause Park Street’s actual profits, growth or performance to differ considerably from the future profits, growth and performance expressed or implied in connection with these forward-looking statements. If one or more of these risk factors or elements of uncertainty is triggered or if an underlying assumption turns out to be incorrect, Park Street’s actual financial position or operating profits may differ considerably from that which is described as assumed, assessed, estimated or expected.
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