• Income from operations amounted to ISK 2,084 million.
• EBITDA amounted to ISK 1,303 million.
• Profit amounted to ISK 560 million.
• Net cash from operations was ISK 1,029 million.
• The book value of investment properties amounted to ISK 92,852 million. 
• The book value of assets for own use amounted to ISK 3,744. at end of period.
• Changes in value of investment properties totalled ISK 352 million.
• Interest-bearing debt amounted to ISK 58,273 million at end of period.
• Equity ratio was 30.5%.
• Earnings per share were ISK 0.16.

The quarterly financial statements of Eik fasteignafélag hf. (“Eik”) for the period 1 January to 31 March 2019 were approved by the Company's Board of Directors and CEO on 8 May 2019.

Attached are quarterly financial statements for the first three months of the year.

Company operations

The Company's performed well in the first three months of 2019 and in line with management forecasts. Operating income for the period amounted to ISK 2,084 million, an increase of 7.1% YoY. Of this amount, lease income was ISK 1,784 million. EBITDA amounted to ISK 1,303 million. Profit before income tax amounted to ISK 699 million and net profit to ISK 560 million.

The Net Operating Income (NOI) ratio (i.e. operating profit before revaluation and depreciation as a ratio of lease income) was 72.2% for the first quarter of 2019, compared to 73.4% for the first quarter of 2018.

The Company's investment properties are valued at fair value in accordance with International Financial Reporting Standards (IFRS), based in part on the discounted future cash flows of individual assets. Changes in fair value are recognised in changes in value of investment properties, which amounted to ISK 352 million for the period.

Balance Sheet

The Company's total assets amounted to ISK 99,680 million as at 31 March 2019. Of this, investment properties valued at ISK 92,852 million, consist of real estate leased to tenants amounting to ISK 89,890 million, leased assets (property utilisation rights) of ISK 1,932 million, real estate in development of ISK 569 million, building rights and lots of ISK 448 million and pre-paid street construction fees in the amount of ISK 13 million. Assets for own use amounted to ISK 3,744 million and Pósthússtræti 2 (Hótel 1919) is entered as an own asset, since the building houses operations other than leasing of real estate and its operations are performed by a subsidiary of Eik. The Company's equity amounted to ISK 30,418 million at the end of March 2019 and its equity ratio was 30.5%, after taking into consideration the Company's dividend payment in April. Total liabilities amounted to ISK 69,262 million as at 31 March 2019, of which interest-bearing debt was ISK 58,273 million and deferred tax liabilities ISK 6,643 million. 

Economic occupancy rate

The Company’s economic occupancy rate was 95.2% at the end of the quarter and remained unchanged from the beginning of the year.

Dividend policy

The Company's Annual General Meeting (AGM) on 10 April 2019 agreed to pay a dividend of ISK 1,020 million to shareholders. The dividend was paid to shareholders on 30 April 2019. The Board's policy is to pay an annual dividend equivalent to 35% of cash from operations for the year, net of the amount to be used for the purchase of treasury shares until the next AGM is convened. Eik purchased 3 million of its treasury shares in accordance with the share purchase program approved by the Board of Directors on 7 March 2019. Cash from operations for the first three months of this year amounted to ISK 1,029 million.

IFRS 16

The Group has adopted the International Financial Reporting Standard (IFRS) 16 for lease agreements. The implementation of the standard has a minor impact on the Group. The standard requires the Company to recognise utilisation rights in the amount of ISK 1,932 million for third-party premises lease agreements recognised among the Group's investment properties as leased assets and, on the other hand, the obligations, lease liabilities, under the Group's liabilities in the same amount. The standard also affects the Company's operations, as finance expenses are increased by ISK 90 million on an annualised basis, while the Company’s operating profit before changes in value and depreciation increases by the same amount.

Outlook

The Company has reviewed its earnings forecast for 2019. The Company's leasing operations have been performing well this year and the Company expects its lease income to be generally in line with forecasts. It is clear that strikes, the bankruptcy of the airline WOW air, construction work on hotel rooms and collective bargaining agreements have had a negative impact on the performance and profit forecast for Hótel 1919. The Company expects EBITDA for the year to be within a 1% margin of error, but the outcome of the year is likely to be at the lower limit of the forecast.

Company Portfolio

Properties owned by the Group number just over 100 and total almost 310,000 m² in 600 units leased to over 400 tenants. The Company's principal properties are Borgartún 21, 21a and 26; Suðurlandsbraut 8 and 10; Mýrargata 2-16; Pósthússtræti 2; Álfheimar 74 (Nýi Glæsibær); Grjótháls 1-3 and Austurstræti 5, 6, 7 and 17 in Reykjavík; Smáratorg 1 and 3 in Kópavogur and Glerártorg in Akureyri. Its largest tenants are Húsasmiðjan, Icelandair Hotels, Fasteignir ríkissjóðs, Sýn, Rúmfatalagerinn, Landsbankinn, Síminn, Össur, Míla and Deloitte.

The largest share of Eik's real estate portfolio is office space, 45%, followed by commercial premises (24%), hotels (12%), warehouses (12%) and restaurants (3%). Around 91% of the Company's real estate is located in the capital region, of which 36% is in financial and business districts of Reykjavík (mainly in postal codes 105 and 108), 21% in downtown Reykjavik and 19% in the Smárinn-Mjódd shopping centres. Of the remaining 9% located outside the capital region almost 8% is in Akureyri.

Presentation of Results
An open presentation of the results will be held on Thursday, 9 May 2019 at 8:30 am in the meeting hall Goðafoss in Hótel 1919, Pósthússtræti 2, Reykjavík. A light breakfast will be served, commencing at 8:00 am. Garðar Hannes Friðjónsson, CEO of Eik, will present the results and respond to questions following the presentation, together with Lýður H. Gunnarsson, CFO.

2019 Financial Calendar

• Quarterly results Q2 2019     28 August 2019
• Quarterly results Q3 2019     31 October 2019
• 2019 Annual Results              10 March 2020

For further information contact:

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



Attachment

• 19.05.08 Q1 Financial statement