Year-end report Quartiers Properties January – December 2022

Quartiers Properties AB (publ) today publishes the company's year-end report for the period January to December 2022.

JANUARY–DECEMBER 2022

• Net sales in 2022 totalled SEK 203,387 (156,476) thousand, corresponding to 30% growth.
• Revenue from operator activities was SEK 89,116 (64,513) thousand, corresponding to 38% growth. Proceeds from the divestment of properties during the period totalled SEK 114,271 (91,963) thousand and relate to the sale of 29 apartments in hacienda collection.
• The company's cash flow from the sale of project and operating properties totalled SEK 109,460 thousand, which was an increase of SEK 25,829 thousand compared to 2021. The cash flow has been used to reduce short-term liabilities by SEK 14,726 thousand and for investments in project properties in the amount of SEK 13,923 thousand. The operating cash flow also includes an increase in short-term receivables of SEK 8,720 thousand, which will be settled in early 2023. Operating cash flow including property sales was recorded at a total of SEK 30,592 (71,837) thousand.
• Gross profit grew by SEK 7,858 thousand and totalled SEK -1,429 (-9,287) thousand. Operating profit before depreciation and amortisation totalled SEK 7,208 (-8,664) thousand. The operating profit includes investments in branding and marketing of SEK 2,945 (181) thousand and legal and court costs of SEK 2,753 (403) thousand, which are reported under central administration.
• Income after tax was SEK -41,923 (-54,496) thousand. Earnings per share for 1 January–31 December 2022 were SEK -0.79 (-1.03).
• Reported equity on 31 December 2022 was SEK 240,380 (246,783) thousand.
• The company’s net asset value on 31 December 2022 was SEK 315,342 (320,588) thousand, which equates to SEK 5.47 (5.85) per share. The net asset value has been adjusted for preference shareholders’ share of equity, corresponding to SEK 81,328 thousand, and accumulated unpaid dividends, as well as default interest on unpaid dividends totalling SEK 20,727 thousand.

SIGNIFICANT EVENTS IN THE FOURTH QUARTER

• An external valuation of the Boho Club property in October showed an increase in value of 4.2% compared to the last valuation on 30 June. The increase in value should be seen in the context of generally higher yield requirements and thus, all else being equal, lower valuations in the market.

SIGNIFICANT EVENTS SINCE THE END OF THE PERIOD

• No significant events have occurred since the end of the period.

OCTOBER–DECEMBER 2022

• The fourth quarter recorded net sales of SEK 36,032 (49,784) thousand. Of net sales, apartment sales accounted for SEK 20,283 (33,901) thousand, and income from the operator activities, SEK 15,749 (15,881) thousand. 
• During the quarter, investments in the boho brand and marketing were made and a new service concept for the restaurant was implemented. Already in the fourth quarter, we began seeing the results of this, with a 34% increase in restaurant revenue compared to the fourth quarter of 2021. This is despite the fact that occupancy at the hotel fell short of expectations after having exceeded them for most of the year. However, we see this as a temporary decline related to a weak tourist period in Marbella in the autumn. Compared to hotels with similar target groups, we have performed well throughout the period.
• The company’s operating cash flow, including property sales, was SEK -465 (24,549) thousand. The deterioration compared to the fourth quarter of 2021 can be attributed to fewer apartment sales, taxes paid, amortisation of short-term liabilities and a temporary increase in short-term receivables.
• Gross profit totalled SEK -3,945 (-1,386) thousand.
• Income after tax was SEK -18,339 (-9,865) thousand. Earnings per share were sek -0.32 (-0.19).

Message from the CEO

I am proud of our talented team who have broken the 200 million barrier in sales – a 30% increase compared to 2021. If you add to this the fact that this year's refinancing with Alantra resulted in savings of around SEK 10 million per year on the bottom line, with full impact in 2023, the situation is different from just a year ago. As a result, we are now much better equipped to face new challenges including higher electricity costs, inflation, higher market interest rates, and our own growth ambitions.

In a challenging travel market, it is positive to see that, through the Boho Club restaurant, we have been even more successful in attracting the local market, with fourth quarter restaurant sales up 34% compared to 2021. It confirms that the focus on service, hospitality and quality, as well as increased investment in marketing and sales, has paid off. A more stand-alone restaurant that is independent of the hotel not only creates an important stability in the business but also underscores our operational expertise, which is a tool we intend to use to grow the brand in more destinations and properties. An early sign of spring is that apartment sales have picked up again. The fourth quarter underperformed but the first quarter looks good, and my forecast is for nine apartment sales. Hotel bookings and rental activities are also moving in the right direction, and I expect much better figures for the full year for the hotel business compared to 2022. With continued improvements in the restaurant business, combined with stronger hotel and apartment sales, we are clearly heading for a bright spring.

Accounting technicalities mean that earnings do not fully reflect activities during the year. For example, the apartments we are now selling were valued before we started selling, which means that the acquisition value of apartments sold corresponds to the previous valuation and not the real acquisition value. Adjusted for this, the result would have been about SEK 52 million better for the full year. Nevertheless, our ambition is, of course, to continuously improve performance and profitability.

This year's refinancing with Alantra, as mentioned above, has a positive impact of SEK 10 million per year in the current interest rate environment, which has been an important step in optimising the cost base. Further optimisations will be made as the business enters a more normalised stage. However, I believe that the best solution is growth, where operational synergies and economies of scale are exploited for higher profitability. An example of investments in this direction is the completion of ten new detached villas for the Boho Club hotel, which is expected to contribute to a high contribution margin as early as April and thus improve the profitability of the Boho Club and the business as a whole.

With the strong foundation we have in the company today, I believe that all shareholders expect us to capitalise on our strengths and grow the company immediately through strategic investments to increase sales and profitability. In order to start this journey now and find a solution to the preference share situation, which is the aftermath of Covid-19, we are analysing a balanced way to compensate the preference shareholders that benefits all shareholders and the company, even if it would imply some concessions in terms of accumulated dividends and resumption of ordinary dividends. It should be possible to present a concrete solution that benefits all shareholders and the company shortly.

Marcus Johansson Prakt
CEO

Quartiers Properties AB (publ) is required to disclose this information under the EU Market Abuse Regulation. This information was provided for publication through the agency of the contact person above at 8.30 a.m. on 23 February 2023.

Please address questions to:

Quartiers Properties

Marcus Johansson Prakt, Chief Executive Officer
Email: marcus.prakt@quartiersproperties.se
Phone: +46 72 018 59 98

The company in brief
Quartiers Properties is a Swedish property development company with a focus on excellent design and quality, and is active on the Spanish Costa del Sol. The company was founded in 2014, since when it has built up a portfolio of investment properties and project properties. The company develops, sells and rents out properties.

Quartiers Properties owns and manages Boho Club, which is a boutique resort in Marbella’s Golden Mile district with a restaurant and 30 hotel rooms. The project has won awards for its design and architecture, and since its launch in 2019, both the hotel and the restaurant have established themselves as leading venues in Marbella. Visit Boho Club website www.bohoclub.com to book a hotel room or reserve a table at the restaurant. The restaurant is open daily, serving breakfast, lunch and dinner.

Quartiers Marbella Apartments is an apartment complex in Benahavís, the neighbouring municipality to Marbella, where Quartiers runs apartment rental operations. The apartments are ideal for short- and long-term accommodation and are popular among families, as well as groups visiting Marbella for leisure purposes, fitness holidays or to play golf. Visit our website www.quartiersmarbella.com to book your apartment.

Hacienda Collection is an apartment project in Benahavís just outside Marbella, where Quartiers Properties is selling apartments that are ready for immediate occupancy. The apartments are located in a gated community featuring wonderful views of the Mediterranean. These apartments feature a large, open floorplan with big windows, high-end kitchen, separate laundry room and 2–3 bedrooms. The spacious terraces offer plenty of scope for spending time with family and friends. Visit the website for additional information and to book an online or in-person viewing:  www.haciendacollection.es.

Mangold is the company’s Certified Adviser. Mangold can be contacted on +46 (0)8 503 015 50 or by emailing ca@mangold.se.