During 2023, Equinox recorded sales revenue growth of 6% YoY, an EBITDA increase of 23% YoY, and a net income of EUR 869k, +22% YoY.
Starting off with the general overview of the economy/tourism industry, Equinox noted that while the economy did recover in 2023 and is expected to grow further in 2024/2025 (based on estimates by the Bank of Slovenia and ECB), the growth wouldn’t be so significant. For the tourism industry, 14.7m overnight stays were recorded in 2023, growing by 3% YoY. Of this, 14% of overnight stays were recorded in Ljubljana. Furthermore, 41% of all overnight stays were in hotels.
In this environment, Equinox recorded a total of EUR 7.78m of sales revenue, increasing by 6% YoY. Of this, rental income amounted to EUR 7.15m, growing by 10% YoY, and accounting for 92% of the total sales revenue, growing by 3.3 p.p. YoY. Equinox signed deals with Hotusa Group for the rental of its hotels (Hotel Lev, Grand Union Hotel, and uHotel) in 2022. In the agreement, besides the fixed rent, there is also the variable part which was paid out for the 1st time in 2023, contributing to this growth. A similar agreement was signed with Mogotel in 2022, for the lease of Fuzzy Log Hotel (and Hotel Central from IP Central d.o.o.), which also contributed to the growth.
Besides rental revenue, Equinox’s service revenue declined by 25% YoY and amounted to EUR 632.7k, mainly as a result of no more revenue from UHC which amounted to EUR 230k in 2022.
In terms of operating expenses, in total they amounted to EUR 7.54m, growing by 23% YoY. In absolute terms, the large increase came from revaluation expenses for intangible assets and tangible fixed assets, which amounted to EUR 1.8m in 2023 (2022: EUR 8k), and this is related to the write-offs of proportional parts of buildings due to renovations (e.g. Grand Hotel Union’s upper floor renovations). Besides this, depreciation grew by 10% YoY and amounted to EUR 3.76m. On the other hand, material costs and services costs both decreased, by 6% and 43%, respectively, as the inflationary pressures continued to wound down during the year. The Company has no employees and as such no labour costs.
Combined, this led to an EBITDA of 5.94m, an increase of 23% YoY, implying an EBITDA margin of 76.3%, an increase of 10.6 p.p. YoY. One other indicator of the performance of real estate companies is funds from operations (FFO), which is also used as a gauge for dividend payments by the Company. In 2023, FFO amounted to EUR 6.44m, an increase of 56% YoY, mainly as a result of significantly higher write-offs (this includes both depreciation and revaluation expenses).
Moving on to net financial result, it amounted to EUR 603.6k (2022: EUR -554k), as a result of significantly higher financial income (EUR 1.24m, +3.2x YoY), while financial expenses decreased (EUR 638k, -25% YoY). Inside the financial income category, we can see that the largest contributions came from the loans that the Company granted during the year, as well as financial income from equity investments (this includes both income from shares – dividends, as well as bonds – coupons). On the other hand, financial expenses decreased, mainly as a result of lower financial expenses from other financial investments. On the other hand, financial expenses from loans increased during the year.
All taken together, this led to a net income of EUR 869k, an increase of 22% YoY. This would also imply a net income margin of 11.2%, an increase of 1.5 p.p. YoY.
Equinox key financials (2023 vs. 2022, EUR ‘000)
Source: Equinox, InterCapital Research
