VANCOUVER, BRITISH COLUMBIA - Parkit Enterprise Inc. ("Parkit" or "the Company")(TSX VENTURE:PKT)(OTCQX:PKTEF) has recently filed its audited financial statements and management discussion and analysis for the year ended October 31, 2016 (the "Annual Filings") on SEDAR (www.sedar.com) and is pleased to report on its first full year financial results following the OP Holdings joint venture and Nashville Fly-Away Airports Parking ("Fly-Away") transactions during 2015.
Given the fundamental change in the business during 2015 and the multiple one-time items in the 2015 financial statements, the reported results for 2016 are not directly comparable to the prior year and therefore this news release is focused on results for the 2016 fiscal year. For a more full explanation of the Company's 2016 results, please refer to the Company's Annual Filings. The financial and operational highlights for the year include:
- Net income of $615,860, or $0.02 per share;
- Share of profit from joint ventures of $1,122,447, which includes a contribution from PAVe (OP Holdings and Nashville Fly-Away Airports Parking) of $1,213,104 that was partly offset by a loss of $90,657 from 880 Doolittle Dr. in the process of being wound up;
- Asset management fee income of $258,405;
- Share of profit from Associate of $1,006,162, which represents the fair value increase of the contingent consideration, including that portion realized upon achieving the first earn-out contingent consideration;
- General and administrative expenses of $1,882,584,which include one-off costs of $776,000 and a further $268,000 of costs incurred that have already been eliminated going forward;
- Cash generated of $296,521 and cash as at the year end of $1,552,160; and
- Net assets of $16,755,556, equivalent to $0.52 per share
The Company is pleased with the performance of the OP Holdings portfolio of properties during the year, which achieved same-store net operating income ("NOI") growth of 6.1% over the prior year. NOI growth has resulted in a 1.9% yield improvement since acquisition of the portfolio, approaching the optimization improvements of 2% - 3% targeted for the life of the investment. However, properties held by the Company's joint venture are not marked-to-market, and therefore the carrying book value of the Company's PAVe joint venture does not necessarily reflect any uplift in fair values, resulting in a potential gap between the book and intrinsic value of the properties.
The PAVe joint venture distributed cash during the year of $1,150,074, with OP Holdings generating an annualized cash yield for the investment since acquisition in excess of 12%. The Company believes this will continue to be positively impacted with expected further optimization.
The Company's new management, together with the support of the directors, has now re-focused its effort on the pursuit of growth opportunities for the Company. Recently, the CEO and Chairman of the Board met in New York with the both of the Company's joint venture partners, Parking Real Estate, LLC and Och-Ziff, to discuss strategic matters relating to the OP Holdings joint venture. Both partners reaffirmed their commitment to the joint venture partnership.
In the time since its appointment, management has been actively identifying and evaluating prospective assets for investment or purchase. To date none of the opportunities reviewed has met the investment objectives of the Company or its joint venture partners.
To more fully take advantage of the North America wide joint venture agreement, the Company has initiated discussions with potential strategic partners to assist in the provision of deal flow for future acquisitions.
Significant general and administrative cost reductions already achieved
As noted above, the Company's general and administrative expenses for 2016 included certain one-off expenses or non-cash charges of approximately $0.8 million. These include costs directly related to the proxy contest, transaction expenses previously capitalized and amounts accrued in connection with confidential settlements reached with the Company's former Chief Financial Officer and Chief Investment Officer.
Additionally, as a result of the changes to the Company's management, a reduction in the size of the Company's board of directors, a decision to relocate the Vancouver office to smaller premises and other cost saving initiatives, the Company has already realized further net annualized cash cost savings. The annualized net cost savings of management's compensation is $488,000 and the reduction in the number of independent directors (from five to three) will result in a further $50,400 annual savings. In addition, the recent relocation and down-sizing of its Vancouver office will result in a further $45,000 of annual cost savings from rent and communication costs. Accordingly, the Company anticipates that its general and administrative expenses for fiscal 2017 will approximate $840,000 before any one-off items, equivalent to a reduction of $0.03 per share against that reported for fiscal 2016.
Compensation paid to a director
In recognition of the extraordinary amount of time and effort contributed by Mr. Pace Goldman, Independent Director, in coordinating the Company's engagement with the dissident group of shareholders, and the defeat of the dissidents' proposals and the eventual removal of the former officers from office, the other directors (the "Disinterested Directors") have elected to compensate Mr. Goldman for his services. The Disinterested Directors have valued the services provided by Mr. Goldman at $47,125 and have agreed to pay Mr. Goldman cash compensation of $25,000, with the balance settled in shares of the Company. Accordingly, subject to the approval of the TSX Venture Exchange, the Company will issue Mr. Goldman 65,073 shares in the Company, having a deemed value of $22,125 based on the Company's closing share price on March 6, 2017 of $0.34. The shares issued to Mr. Goldman will also be restricted from sale for a period of 12 months.
Parkit Enterprise Inc. is engaged in the acquisition, optimization and asset management of income producing parking facilities across North America. The Company's shares are listed on TSX VENTURE (Symbol: PKT) and on the OTCQX (Symbol: PKTEF).
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking statements. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them.
Chief Executive Officer
Chief Financial Officer