Pandox Annual Report 2011
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Pandox Annual Report 2011 Pandox Annual Report 2011 Document Transcript

  • Pandoxa greatway to mix PANDOX BUSINESS OPERATIONS REPORT 2011 118 Hotel PROPERTIES24,500 ROOMS 58 LOCATIONS 10 COUNTRIES 20 BRANDS one of the leading hotel property companies in europe
  • WE WE OWNThe Holiday Inn Brussels Airport was acquired in 2007. Thehotel was totally refurbished in 2009–2010 and is now one ofthe leading business hotels close to Brussels’ internationalairport. Pandox operates the hotel under a franchise agree-ment with the InterContinental Hotels Group.
  • OWN 118 hotel properties and one congress and fair centre totalling 24,500 rooms, with operations in 10 countries and 58 strategic cities.
  • OWN OWN OPERATIONSHotel Berlin, Berlin was acquired in 2006 and has sincebeen successfully repositioned towards the profitablemeeting and events segment. The hotel is centrally located next to the tourist-popularKurfürstendamm, and with 701 rooms is the third largesthotel in Berlin.
  • OPERat Pandox’ own operations embrace 11 hotels operated on local strategies, and are located in Berlin, Brussels, Ant- werp, Montreal, Helsinki and the Bahamas. Together they generate total revenues of SEK 1.3 billion.
  • scandichiltonhyattradisson blupark innintercontinentalcrown plazaholiday innclarion hotelquality hotelcomfort hotelelite hotels WErica hotelsfirst hotelsbest westernibis hotelomena hotelsrantasipi
  • CO-OPEWE CO-OPERATE with 12 hotel chains under 20 different brand names. All are well-known, established and successful.
  • WE WE DEVELOPPandox oftenacquires hotels thatunder-perform, whichimplies that the hotelsneed to be developedin order to reach fullpotential through, forexample, reposition-ing and investments.
  • DEVEL Hyatt Montreal was acquired in 2008 and has since been successfully developed to one of the city’s leading meeting and leisure hotels. With 605 rooms, it is one of Montreal’s largest hotels. The location is strategic and central – right in the centre of the entertainment and shopping district.
  • WE GE WE GENERATEThe Hotel Brussels – hotel property and operations – was acquiredin 2010. The hotel is currently undergoing comprehensive productdevelopment that is estimated to be completed in two years. Thepicture shows the magnificent view from the top floor of the hotel.
  • NERAT Pandox’ strategy and business model has generated an average annual return of approximately 19 percent since the Company was formed.
  • WELCOMETO PANDOX WORLD! first part To describe Pandox, we have assembled the Company’s different parts in a visualhotel building where each floor represents a separate part of the Company’s business chain. Welcome to Pandox World and an exciting tour through our hotel building. Let’s start on the ground floor. SECOND PART CEO commentary, 54–57 Workforce – Pandox’ heart and mind, 58–59 Hotel properties and summary list, 60–75 Economic and financial information, 76–100
  • TOP Floor 7046 We manage 7048 Board of Directors and auditorsWE MANAGE 7050 Senior executives6th FLOOR 6040 Growth and cash flow 6042 Pandox’ developmentWE GENERATE 6044 Market communication 6045 Social responsibility5th FLOOR 5034 Investments 5036 The Shark ProjectWE DEVELOP 5038 Success Stories4th FLOOR 4030 Network and cooperationwE CO-OPERATE 4032 Pandox’ partners 3024 Active ownwership3rd FLOOR 3026 Pandox’ Tool Box 3026 Environmental workOWN OPERATIONS 3028 Hotel managers2nd FLOOR 2020 Operational strategies 2021 Main processesBUSINESS MODEL 2022 Types of lease1st FLOOR 1018 The portfolio 1019 Geographical spread and breadthWE OWN 0012 Vision and business conceptGROUND FLOOR 0013 Pandox’ characteristics 0014 Strategy 0016 Value-growth chain
  • 0012 // ground floor // V ision and business c on c eptT ground6 Floor543210 Who do we think WE ARE? The driving forces for Pandox’ successful and rapid develop- ment are to be found in the Company’s specialist expertise, well-defined strategy, professional employees, and industrial owners. A special characteristic is the Pandox Spirit – our c ­ orporate culture where nothing is impossible! Vision Business concept Pandox’ vision is to be one of the world’s leading hotel property com- Pandox’ business concept – based on expertise within hotel proper- panies with regard to specialist expertise in both hotel and property ties, hotel operations and business development – is to actively own, operations, and active ownership. develop and lease hotel properties. For the vision to become reality, the Company must retain its spe- cialist expertise regarding the value-growth chain, and that the balance Overall goal between international and national revenues, brand names and types Pandox’ overall goal, through specialist expertise within hotels, hotel of hotel be maintained. Another important aspect is to constantly properties and business development, is to achieve optimal yield and develop the business model so as to adapt to each situation and value-growth in the hotel property portfolio. Specific goals are set each choose the strategy that is best suited to local conditions. year for the operating net, return on investment, value-growth objec- tives in the existing hotel property portfolio, and the equity/assets ratio. The goals are then broken down to each individual property and act as guidance during investment decisions.
  • 1 Pandox characteristic s // ground floor // 0013 WELL-DEFINED AND FOCUSED STRATEGY Pandox has a well-defined strategy where country, city, hotel type, form of partnership and 4 yield requirements have been consistently followed since the Company was formed. >> Further information about Pandox’ strategy is available on pages 0014–0015 ACTIVE OWNERS AND RAPID DECISIONS Pandox’ shareholders and Board of Directors possess industrial expertise in the Company’s three most important disciplines: hotel operations, hotel properties and business development. Their knowledge and experience create con­ d­ nce, which enables us to take rapid decisions within, for example, fi e different acquisition questions. This is a competitive advantage in a significantly slower world at large. Pandox’ shareholders and Board of Directors set distinct goals for operations, which provide excellent guidance for the Company.EXPERTISE AND NETWORK 2International network enables access to unique expertise.Pandox has a small management organisation. The model provides majorbenefits with rapid decision-making paths, a high level of interactivity and KNOWLEDGE AND BUSINESS INTELLIGENCe 5 One of Pandox’ most important cornerstones is to constantly develop its areas of competence and expertise. The business model is based onconsiderable individual freedom. In order to be able to maintain momen- well-developed methodology that enables Pandox’ skilledtum in all business processes, the organisation is supplemented by a employees to focus on development and the 6national and international network. The model places demands on both creative process.visionary and operative leadership, as well as an ability to create forms ofcollaboration with individuals with different backgrounds. 3 STRUCTURED WAY OF WORKINGCORPORATE CULTURE – THE PANDOX SPIRIT Neat and orderly.Pandox has established an informal management style where a high Pandox’ operations are structured in five main pro­ -level of competence is combined with minimum bureaucracy and cesses that in a clear and simply way describe the Company’seffective monitoring methods. Our keywords are inspiration, ongoing position. This in turn creates prerequisites for asimplicity, rapidity, expertise and prominent leadership. situation-adapted and commercially inspired way of working.
  • 0014 // ground floor // S trate gyT6 CONSISTENT543210 ENABLES STABILITY AND RISK-SPREADING ONE TYPE OF ASSET – HOTEL PROPERTIES The Hotel, Brussels A hotel property has distinctive features and differs from other types of property, which demands specialist expertise in order to maintain active ownership. Pandox therefore invests only in one type of asset – hotel properties. Business position: Pandox portfolio contains 118 hotel properties and one congress and fair centre. GEOGRAPHIC MARKET Geographical spread, proportion of hotel rooms Focusing on one type of asset requires a broad geographic ­ arket m Sweden, 51% Finland, 13% so as to create growth prerequisites and benefit from changes in Norway, 10% the hotel economic cycle. Belgium, 9% Other Europe, 7% Denmark, 5% Business position: Pandox has operations in ten countries, where Sweden is largest. Canada/Bahamas, 5% Other major submarkets are Brussels, Copenhagen, Helsinki, Gothenburg and Montreal. Overall, Pandox is established in 58 locations that represent a mix of international and ­domestic demand. BUSINESS MODEL Lease structure – rent revenues 2011 In order to maximise the value-growth of each hotel, Pandox has a Revenue-based leases with guarantee, 61% flexible business model that enables a situation-adapted strategy Revenue-based leases, 22% based on the hotel’s local prerequisites. Own operation and manage- ment agreements, 12% Other, 5% Business position: The largest form of business model in the Pandox portfolio consists of leases, which represent 83 percent of revenues, while the Company’s own-operated hotels and management agreements amount to 12 percent.
  • Strate gy // ground floor // 0015STRATEGYLOCATION AND SIZE Billingen, SkövdeLarge hotels with strong locations provide the best businessp­ rerequisites, while simultaneously reducing risks. Such hotelshave higher liquidity and are easier to finance. Business position: All Pandox hotels have strong and natural locations with an average of 206 rooms, which is significantly higher than the average hotel in each respective market.TYPE OF HOTEL Bastionen, OsloThe hotels shall belong to the upper-medium and high-pricesegment. Business position: The portfolio contains a mix of upper-medium and high-priced hotels. The medium-priced hotels include many Scandic hotels, as well as the Hotel Berlin, B ­ erlin. Examples of high-priced hotels include InterContinental Montreal and Hilton Stockholm Slussen.CHOICE OF BRAND NAMES AND PARTNERSEach hotel shall have the best possible brand name thats­ trengthens the profile. This requires that Pandox maintains abroad network within national and international hotel companies. Business position: Pandox currently works together with 12 hotel chains under 20 w ­ ell-known and established brand names, as well as a number of independent distribution channels – thus providing a unique position and a broad network.
  • 0016 // ground floor // Val ue g rowth c h ainT65432 VALUE GROWTH10 The value-growth chain in a hotel property forms the basis for Pandox’ vision, strategy and choice of lease structure. Knowledge of the entire chain is a precondition for success. 10. Financing and taxes 1. Macro economy The choice of financing and legal structure represents The activity level (global, regional or local) represents an a key issue that creates prerequisites for stable important component for how demand develops in the value growth. hotel market. Macro also affects the economic course, which in turn can imply choosing different points in time to enter a specific market. 9. Lease structure 2. Hotel economic cycle The hotel industry has many forms of lease that The hotel economic cycle is part of the macro economy, affect a hotel’s profitability, financing and value- and can be divided into five different phases: downturn, growth. In general, a lease shall contain mutual declining rate of downturn, levelling-out, growth, incentives so that the parties work in the same and peaking. Knowledge of the pattern of a hotel direction. economic cycle can be utilised when investing in different geographic markets, and endeavouring to limit risk in markets that have poorer outlooks. 8. Asset management 3. Location and size The hotel industry is capital-intensive and Two important factors are that hotels must have ­ equires specialist expertise within both hotel r strong and natural locations, as well as the right operations and property so as to effectively size so as to obtain critical volume and thereby manage and develop the hotel properties. good preconditions for profitability. 4. Competition – new capacity 7. Investments – different market positions To continuously develop a hotel is a necessity in Each market is unique, and considerable knowledge order to maintain a strong market position. of local conditions is required to create a product that provides sustainable profitability. 6. Operations and management 5. Brand names Hotel operations are complicated and demand a high level of A strong brand name strengthens the hotel’s market expertise, considerable presence and good leadership. position and competitiveness in the chosen A good local hotel team creates both satisfied customers product segment. and employees, as well as a high level of profitability.
  • Value g rowth chain // ground floor // 0017Hyatt Regency, Montreal
  • 11018 // we own // T h e po r tf olioT6 floor we543210 own PROBABLY the best mix! Pandox’ principal strategy is to own one type of asset – hotel properties. The portfolio currently embraces 118 hotel properties and one congress and fair centre with 24,500 rooms where the majority belong to the profitable full- service segment or stable medium-priced products. Operations are located in 10 countries and 58 locations. About 60 per­­ cent of revenues come from international markets such as Brussels, London, Mon- treal, Stockholm, Gothenburg, Malmö, Copenhagen, Berlin, Helsinki and Oslo. The remaining 40 percent are characterised by domestic demand in regional towns and cities in Scandinavia and Germany. The mix of locations and brand names creates stable demand that gives a portfolio with good potential and limited risk. 118 Hotels >> 24 , 500 rooms >>
  • Ge og raph i cal spr e ad and b r e adth // we own // 1019 Hyatt Regency, Montreal AL SPREAD AN P HIC DB G RA RE AD EO G TH canada NORWAY 2 hotels 14 hotels 1 city 10 citiesbahamas FINLAND 1 hotel 14 hotels 1 city 1 congress and fair centreEngland 8 cities 1 hotel 1 cityBELGIUM SWITZERLAND GERMANY DENMARK SWEDEN 8 hotels 1 hotel 4 hotels 5 hotels 68 hotels 2 cities 1 city 4 cities 1 city 29 cities58 LOCATIONS >> 10 COUNTRIES >>
  • 22020 // BUSINESS MODEL // O p er at ional st r at egi e sT6543 floor21 BUSINESS mODEL0 Hyatt Regency, Montreal PANDOX’ BUSINESS MODEL Depending on local preconditions, Pandox can choose between four operational strategies: 1. Lease with a professional operator where Pandox remains 3. Manage operations under a franchise agreement with a well-known strategic partner brand name 2.  Management agreement where another party manages daily 4. Retain own operations via independent distribution systems. o ­ perations on behalf of Pandox The business model provides excellent potential to create a situation-adapted strategy – asset by asset.
  • Ma in p r oc ess e s // BUSINESS MODEL // 2021 Pandox’ five main processes are used to describe the Company’s business situation, understand external and internal driving forces, and how they interact. 1 2 3 MARKET MAPPING Asset management THE PANDOX MODEL Create knowledge of the market situation Daily maintenance and major investments and change patterns. The Company’s methodology so as to increase the value of properties increases cash flow and limits risk in the long-term. for each respective hotel. 4 5 ECONOMIC AND MARKET COMMUNICATION FINANCIAL REPORTING Pandox regularly carries out market activities towards its target groups. Operations are monitored through established goals, evaluations and appraisals.THE PANDOX MODEL – AND ITS FOUR PHASESMarket analysis Market strategy Profitability optimisation Lease optimisationA market analysis is performed in A strategic plan for each hotel In view of that the value of a property The optimal cash flow of eachorder to assess a hotel’s profitability p ­ roperty is established based on is influenced by the profitability of the respective hotel property is thenpotential and subsequent ability to each respective hotel’s specific related hotel operations, the opera- divided among the operator, Pandoxpay the agreed rent. The local p ­ rerequisites, the local market, and tor is Pandox’ most important part- and other related parties. The leasem­ arket is identified and analysed its position in the hotel economic ner. The hotel operator is constantly is formulated in such a way that allwith regard to demand, competition cycle. The property’s continued assessed in order to ensure positive parties involved are given an incen-and the current and future offer. area of use is unconditionally developments of the hotel’s opera- tive to continuously improve the hotel e ­ valuated during the preparation tions and the value of the property. property’s overall profitability. of the strategic plan. Possibility to Action plan acquire the hotel with concrete property measures Market analysis Market strategy Profitability Lease ­optimisation ­optimisation Evaluation of each respective hotel property and the portfolio Sale in accordance with the strategy
  • 2022 // BUSINESS MODEL // typ e s of l eas eT6543210 InterContinental, Montreal The hotel industry has many forms of lease, which influence a hotel’s profitability, financing and value growth. TYPES OF LEASE The value of a hotel property is Optimal lease framework 1. Rental agreements/leases Pandox’ flexible business model is reflected in the Revenue-based hotel lease determined to a considerable different types of lease. The design and formula- Revenue-based hotel leases are linked to the degree by how the underlying tion of leases and agreements are guided by fac- sales generated by the hotel business. This form tors such as anticipated market trends, local com- of lease provides Pandox with a share of growth in lease or agreement is formulated. petition, planned investments, as well as choice of both the market as a whole and in the market Pandox endeavours to find operator and distributor. A mixture of different share. To limit the risk, these leases generally types of lease/agreement provides Pandox with a specify a minimum guaranteed rent. agreements that create optimal structure that increases cash flow in good times preconditions for maximum and, with rental guarantees, protects against Result-based hotel lease receding markets. A result-based lease implies that Pandox receives development for both parties. Depending on local preconditions, Pandox is a share of the hotel operator’s operating net. This able to choose to mix several possible types of type of lease requires that Pandox be informed of lease/agreement: and have insight to the operating company’s finances and accounts. This form of lease can also have a guaranteed rent.
  • typ e s of le as e // BUSINESS MODEL // 2023 Radisson Blu, Lillehammer Pandox’ leases are formulated so that all parties involved are encouraged to continuously improve each hotel property’s overall profitability.Fixed-fee lease 3. Franchise agreements Lease structure – rental revenues 2011Fixed-fee hotel leases are used in mature markets Franchise agreements can be entered into with aand in well-established hotel products. A fixed-fee hotel company for Pandox’ own operations. Pan- Revenue-based leaseslease limits the risk but also the potential. dox thereby benefits from a large system that with guarantee, 61% Revenue-based takes care of the hotel’s overall marketing and leases, 22%2. Management agreements sales. This implies that Pandox owns the hotel Own operation and manage-A management agreement can be perceived as a operations as well as the hotel property. ment agreements, 12% Other, 5%sort of agent contract, where Pandox owns thehotel business. Through a management agree-ment, a hotel company is assigned to operate andmanage the hotel on behalf of Pandox. Thisimplies that Pandox owns the hotel operations aswell as the hotel property.
  • 33024 // own operations // A ct ive own ersh i pT6 floor5 own op43210 KNOWLEDGE generates BUSINESS! A natural part of Pandox’ active ownership is to manage its own operations. Pandox’ operations currently embrace 11 hotels with close to 4,000 rooms and total sales of SEK 1.3 billion. The hotels are located in Berlin, Helsinki, Brussels, Antwerp, Montreal and the Bahamas. The philos- ophy behind Pandox’ operations is to build each hotel’s strategy and competence locally. Pandox’ vision is to be one of the world’s leading hotel prop- erty companies with regard to specialist competence in both hotel and property operations, as well as active ownership. To manage its own hotel operations is an important part of Hotel BLOOM!, Bryssel P ­ andox’ active ownership.
  • Act i ve own er sh ip // own operations // 3025erationThe business cultures differ among Pandox’ vari- Hotels operated by Pandoxous geographic areas. In the Nordic Region, CIty Hotel Brand name No. of rooms Situationleases dominate, while in North America manage- Antwerp Crowne Plaza Antwerpen Crowne Plaza 262 City centrement and franchise agreements are most com- Berlin Hotel Berlin, Berlin Independent 701 City centremon. Europe has a mix of both. It is therefore Brussels Crowne Plaza Brussels – Le Palace Crowne Plaza 354 City centre Hotel BLOOM! Independent 305 City centreimportant to master different strategies in order to Hilton Brussels City Hilton 283 City centresuccessfully work in an international hotel environ- The Hotel Brussels Independent 433 City centrement. To have one’s own operational expertise Holiday Inn Brussels Airport Holiday Inn 310 Airportalso implies possessing specialist knowledge so Montreal Hyatt Regency Hyatt Regency 605 City centreas to be able to evaluate the operators with whom InterContinental Montreal InterContinental 357 City centreone has leases, and be able to complete acquisi- Helsinki, Espoo Korpilampi Independent 151 Ring road Bahamas Pelican Bay Independent 186 Centraltions where both the property and operations are Total 3,947included. In view of that the sector-trend is for hotel com- panies to increasingly be management compa- have been rented with long leases to well-knownpanies to increasingly be management compa- nies, it is also natural for Pandox to integrate verti- operators – thus creating prerequisites for newnies, it is also natural for Pandox to integrate verti- cally and to take over responsibility for operations. acquisitions.cally and to take over responsibility for operations. In recent years, five under-performing opera- The philosophy behind Pandox’ operations is In view of that the sector-trend is for hotel com- tions that were acquired and thereafter developed, to establish each hotel’s strategy and competence locally. This implies that most decision-making is delegated, and reporting is made to a board of directors with external members elected for their specialist knowledge. To be successful in these business processes requires the ability to attract the best management, and that these persons be given substantial influence over operations. Hotel Berlin, Berlin – a real Berliner located centrally in the tour- ist-frequented district of Kurfürstendamm. The hotel is the city’s third largest with 701 rooms and excellent meeting facilities.
  • 3026 // own operations // pandox tool box /e n vi r onm ental wo r kT654 pandox tool box32 Pandox is an active owner. Over the years, the Company has1 developed various specialist competences, of which a number0 have been assembled and structured into management tools as support for decisions taken in daily operations. We call this the Pandox Tool Box – tools that are actively used for successful analysis, forecasts, cost-control and high productivity. PROFITABILITY OPTIMISATION Tool 1. Reservations status Tool 3. Implementation Information about the exact reservations status for each given The implementation of the two first tools takes place in all time period and each segment enables detailed analyses and parts of the hotel – conferences, breakfast, restaurant, etc. correct forecasts. Tool 4. High-quality forecast tools Tool 2. Revenue management High-quality forecast tools that enable to provide accurate The consistent use of a Property Management Software system daily, weekly and monthly forecasts is a precondition for that includes information about late cancellations, early check- good planning both in the short and long-term. outs and check-ins and other guest information, creates pre- conditions for effective forecasts and right pricing. ENVIRONMENTAL WORK We strive to reduce our own and our operators’ environmental impact. The hotel industry has placed considerable focus measures are often implemented in cooperation tured as possible in our daily work, examples of for many years on environmental and sustainability with the operators. For example, we have suc- which can be simple things such as minimising procedures. Scandic, which was one of the pio- cessfully endeavoured to actively and systemati- the use of paper and energy in our premises. We neers, has purposefully endeavoured for a very cally reduce the CO2 emissions and thereby sort waste and recycle as much as possible. And long time to minimise their impact on the environ- reduce the environmental impact. of course, the coffee and fruit in our premises are ment. We at Pandox perceive an active environ- Internally within Pandox, we weigh in the envi- ecological and KRAV-labelled. ment process not only as being quite natural, but ronmental aspects as systematically and struc- also as a necessity where we shall do all we can to contribute to long-term sustainable development. This implies that Pandox endeavours to fulfil with a good margin the environmental demands of the countries where the Company has operations, that we monitor the energy and water consump- tion of all of our hotels, and that we primarily use suppliers, contractors and consultants that have an established environment policy. Development
  • pandox tool box /e n vi r onm e ntal wo rk // own operations // 3027 COST CONTROL AND FLEXIBILITY Tool 5. Time reporting Tool 7. Organisation Detailed reporting of hours worked spread by day, week, month Personnel costs can be kept down, at the same time as obtain- and department enable rationalisation measure and correct ing a stable organisation, by allowing the hotel’s fundamental profit assessments. organisation and number of permanent employees to be based on the year’s weakest month of occupancy, and to adapt the Tool 6. Work rotation / multi-tasking remaining workforce to seasonal requirements. Cooperation among the hotel’s departments increases effi- ciency, strengthens personnel development and reduces the Tool 8. Conversion number of recruitment processes. Flexible cost volumes enable adaptation when revenues ­fluctuate. strategic tools Tool 9. Business plan Tool 11. Action plan and log A tangible and well-embodied business plan with budget, Distinct and measurable activity goals with clear allocation of f ­ orecasts and investments guides the organisation to the right responsibility and timetable are necessary to maintain focus and priorities. to continuously monitor and improve operations. Tool 10. Early-warning system An early and clear warning system based on daily analyses of revenues and costs increases the possibility to take active measures and the right action at an early stage.in practiceSUCCESSFUL ENVIRONMENT PROCEDURES AT THE CROWNE PLAZA BRUSSELS – LE PALACE.The Crowne Plaza Brussels is one hotel where ronment procedures at the hotel. Most of the been reduced as follows: electricity –46 percent,Pandox has successfully and systematically improvement measures were carried out in order to gas –15 percent, and water –17 percent.worked together with the hotel management to optimise operations, enhance controls and to find The reduced consumption has led to 40 per-reduce total energy consumption and the negative alternative energy solutions. The investments have cent lower energy costs and 35 percent lower car-environmental impact. proven to be both effective and profitable. For the bon dioxide footprint (to 1,300 kCO2 per annum). An energy analysis performed in 2008 marked full-year 2011, measurements show that the hotel’s The largest part of the energy savings comesthe beginning of intensive and comprehensive envi- energy consumption, compared with 2008, has from operational optimisation in the form of energy- saving lighting systems, environment-economising shower taps, as well as the installation of an ownELectricity gas water district-heating plant driven with natural gas. The -46% -15% -17% district-heating plant is very effective compared with other electricity-driven systems, which implies that the hotel receives financial compensation from the Belgian state in accordance with green certifi- cate practice.
  • 3028 // own operations // H ot e l manag er sT6543 montreal brussels210 Bernard Chênevert, hotel manager Erik van Dalsum, hotel manager Employed since 2008. Employed since 2004. Bernard is a graduate of the Lausanne Hotel Manage- Erik is a graduate of the Lausanne Hotel Management ment School and has more than 15 years’ experience of School and has held several leading positions at large the hotel industry and the repositioning of hotels, includ- hotels across the world within Hilton, Shangri-La Hotels ing the prize-winning W in Montreal. In 2011, Bernard & Resorts, and Radisson SAS. Under Erik’s manage- obtained the prestigious award of Hotel Manager of the ment, the Crowne Plaza Brussels – Le Palace received Year within the whole of IHG America. the distinction of Hotel of the Year IHG Hotels Group EMEA in 2007. energy& creativity professional leaders WITH SERVICE IN THEIR BLOOD brussels MONTREAL antwerp Christel Cabanier, hotel manager Raymond Soumako, hotel manager Hans Wils, hotel manager Employed since 2008. Employed since 2009. Employed since 2009. Christel has extensive and solid experience from several Raymond is a graduate of Montreal University in industrial Hans has extensive experience of the hotel industry from hotels in Antwerp. Her hotel career started as receptionist, economy, and has more than 30 years’ experience of the Marriott, Golden Tulip, Accor and Sofitel, and worked most and via a number of different positions Christel became at hotel sector from both IHG and the Starwood Group, as recently at the Lafayette Square in Washington DC, USA. 25 years of age the youngest hotel manager in Belgium. well as previous hotel repositioning. Raymond is a mem- Christel is also a well-known TV-profile in ­ elgium. B ber of the Hotel Association of Greater Montreal and is board member of IAHI.
  • H ot e l manag er s // own operations // 3029 bahamas berlin brussels airportMagnus Alnebäck, hotel manager Cornelia Kausch, hotel manager Charles Boelen, hotel managerEmployed since 2005. Employed since 2006. Employed since 2007.Magnus is a graduate of SHM-Les Roches in Switzer- Cornelia is a graduate of the Lausanne Hotel Charles came to IHG and the Crowne Plaza Brussels inland, and has previously worked for InterContinental, M ­ anagement School and has many years’ international 2001, after ten years within Hilton in Belgium, the Nether-Cunard, Radisson/SAS and Forte Hotels in Switzerland e ­ xperience from leading positions at hotels in the upper lands and France. Charles has been the driving forceand London. He was also hotel manager of Ladera segment. With strong visions and broad competence, behind the successful refurbishment of the Holiday InnResort, St Lucia from 1996 to 2004. Cornelia has successfully led the transformation of the Brussels Airport and introduced “the FUN experience” as hotel to one of Berlin’s leading and most creative a creative and appreciated feature of the new hotel. ­meeting places. Pandox’ basic management philosophy is more about inspiration than control, and more about the individual than the system. It is the individual people at Pandox that make the Company so unique. The principal ingredients are experience, entrepreneurship, the will to constantly improve, to find new opportunities and to win – as well as a good dose of responsibility and power of initiative. brussels Espoo brusselsJan Joris Kriele, hotel manager Kari Hiltonen, hotel manager Aldert Schaaphok, Vice President OperationsEmployed since 2011. Employed since 2011. Employed within Pandox since 2004.Jan Joris is a graduate of the Leeuwarden Hotel Manage- Kari has many years’ international experience from lead- Aldert is a member of Pandox’ management team andment School, and has more than 10 years’ experience of ing positions at hotels in the upper segment. Kari’s most is responsible for the Company’s own hotel operations.the hotel industry including at Hilton hotels in Scotland, recent position was as GM of the Radisson Blu Hotel Lat- Aldert has also been acting hotel manager of The HotelFrance and the Netherlands. Jan Joris’ most recent posi- vija, and before that as Country Manager at Reval Hotels Brussels during the takeover phase. The recruitment oftion was as Director of Business Development at the Pan- Latvia, and from 2004 to 2007 as CEO/GM of Sokos a new hotel manager is currently in progress.dox-owned Stockholm Hilton Slussen. Hotel Viru Estonia.
  • 44030 // we co-operate // net work a n d cooper ationT6 floor5 we4321 co-0OPERATE Pandox currently works together with 12 hotel chains that via 20 well- known brand names market the hotels. This way of working provides a unique position and a broad network, and thus an excellent platform to continuously develop our competence base.   The hotels are situated in 10 countries and 58 locations. Pandox’ most comprehensive partner is Scandic, which operates 55 of the hotels and one congress and fair centre in the Pandox portfolio – followed by Nordic Choice Hotels with 20 hotels. Other partners include Hilton, Hyatt, R ­ adisson Blu, InterContinental, ­ oliday Inn, Park Inn by Radisson and H Elite Hotels. 11 of the hotels are managed under independent flags, including Hotel BLOOM! and The Hotel in ­ russels, Pelican Bay in the B Bahamas, Mr Chip in Stockholm, and ­ orpilampi in Helsinki. K
  • net w ork a nd cooper ation // we co-operate // 4031IT’S MORE to it than TALent! Hyatt Regency, Montreal >>Each hotel is handled and analysed based on its prerequisites and surroundings. The business model, partnership and lease arechosen adapted to each situation in order to create optimal preconditions for maximum development for both parties.
  • 4032 // we co-operate // Pa n d ox partnersT6543210 Pandox Partners Well-known and established brand names Pandox has a unique network in the hotel market, and currently works together with several of the large hotel chains under 20 different well-known and established brands. This enables a strong position and a broad network, and thus an excellent platform to continuously develop our competence base.
  • Pa nd ox pa rtners // we co-operate // 4033 A PROUD PARADEEach market is unique, and thorough knowledge of local conditions is required to create a productthat provides sustainable profitability. A strong brand strengthens the hotel’s market position andc­ ompetitiveness in the chosen product segment.
  • 55034 // WE DEVELOP // I nv estmentsT6 floor5 we de43210 we see OPPORTUNITIES WHERE OTHERS SEE PROBLEMS Over the years, Pandox has successfully developed a large number of hotel properties and hotel operations. A further SEK 2 billion will be invested in the next three years for the upgrading of existing hotels, including the creation together with Scandic of the new generation of highway hotels – one of the largest hotel ventures in the Nordic Region. SEK 2 BILLION >>
  • // WE DEVELOP // 5035velop The Radisson Blu Hotel Malmö is one of southern Sweden’s leading business hotels with an excellent location in central Malmö close to the business and shopping districts. The hotel has 229 rooms, 12 conference rooms, a relaxation centre, and restaurant. In 2011, the hotel was nominated best meeting hotel by the leading conference organiser, Congrex.
  • 5036 // WE DEVELOP // the pro j ect sh a rkT654 One of the Nordic Region’s3 largest hotel investments2 ever seen!10 SEK 1.6 billion is being invested in the upgrading and development of 38 existing Scandic hotels. The investment is a joint venture between by Pandox and Scandic, and is one of the largest joint hotel ventures ever realised in the Nordic Region between a hotel operator and a property owner. The project, which has been named “Shark”, will be implemented over the next three years. The challenge is now in planning the numerous sub-projects c ­ overed by the overall investment. Pandox acquired Norgani for SEK 9.7 billion in Scope of the project the autumn of 2010. The hotel portfolio was Scandic’s origins are in the classic highway composed of 73 hotels in Sweden, Norway, hotels that were created to offer the motorist Denmark and Finland. In general, the hotels overnight accommodation and facilities in the were in need of refurbishment and upgrading. A 1960s. The hotel segment with highway hotels major contract was signed with Scandic in 2011, is now established over the entire Nordic where the parties agree to invest SEK 1.6 billion Region. The Shark investment includes the in the development of 38 existing Scandic hotels, Moby sub-project with the vision of developing as well as a congress and exhibition centre. the new generation of highway hotels. Several The Shark investment is one example of the of Scandic’s highway hotels are covered by the ongoing restructuring and development of the Moby project, including well-known and popular Norgani portfolio. Since the acquisition of Nor- highway hotels such as Kungens Kurva by the gani, four non-strategic hotels have been sold E4/E20 on Stockholm’s southern approach, and new agreements with related investment Backadal by the E6 on Gothenburg’s western programs have been entered into for 40 hotels. approach, Klarälven on Karlstad’s E18 ring road, Scandic Upplands Väsby
  • the pro j ect sh ark // WE DEVELOP // 5037 The Moby project, with new concept for the new generation of highway hotels, is now part of the major Shark project. The first h ­ ighway hotel to implement the new design concept is the Scandic Upplands Väsby.and Elmia in Jönköping. The first hotel to imple- c ­ omplete focus on the guests’ needs andment the new design concept will be the Scandic w ­ ell-being. The concept also implies that theUpplands Väsby. h ­ istory of Scandic and each respective hotel be The hotels in central city locations covered by integrated into the design element and layout,the Shark investment include the Malmen in that the informal home-feeling at the hotels beStockholm, Continental and Hilton Strand in Hel- strengthened, that more social meeting places besinki, as well as the KNA hotel in Oslo. created, and that the rooms obtain new and com- plete furnishings and design. Technology will alsoNew Concept be upgraded throughout – so that the hotels willThe new hotel concepts are characterised by be well-equipped to meet future needs andfl­ exibility and untraditional solutions, taking into requirements in the best possible way.consideration new family constellations, travelhabits and trends. The whole way from the carpark to the reception, lobby, conference facilitiesand restaurant to the hotel room – and with 1.6 Shark is a joint investment program between Scandic and Pandox, and embraces a total of 26 hotels in Sweden, 10 hotels and one c ­ ongress and fair centre in Finland, and 2 hotels in Norway. Most of the highway hotels covered by the project are located in Sweden. Approximately sek Billion
  • 5038 // WE DEVELOP // S uccess storiesT654 success stories3 INVESTMENTS IN DEVELOPMENT2 AND REPOSITIONING10 Over the years, Pandox has purchased and sold 174 hotels. Many of them have undergone considerable investment development programs. Some of the successful repositioning projects of recent years as well as ongoing projects are presented below. Crowne Plaza Antwerp Total make-over in Antwerp The Crowne Plaza Antwerp was acquired in 2007. The Investment program: EUR 3.7 million hotel is operated under a franchise agreement with the Realised: Total upgrading with a new design con- cept called “Welcome in ’t Stad”. The concept InterContinental Hotels Group. A total upgrading and uses the city’s architecture and history as theme modernisation was completed in the autumn of 2011 and inspiration. Different characteristic design ele- covering the lobby, restaurant & bar, sky bar, conference ments from the city can be seen throughout the various parts of the hotel. facilities and rooms, as well as a completely new event spa and fitness centre with the capacity to hold various activities, seminars and parties. Further to the upgrad- ing, the hotel is now one of the city’s leading business and meeting hotels.
  • Success stories // WE DEVELOP // 5039 Hotel Berlin, Berlin start of the LAST PHASE IN BERLIN Hotel Berlin, Berlin was acquired in 2006. The hotel is the third largest in ­ erlin with 701 rooms. Since the acquisition, the hotel B has been successfully repositioned towards the meeting and business segment through a comprehensive investment pro- gram of approximately EUR 7.5 million that has now been com- pleted. Via active ownership, Pandox has also supported the local management for the implementation of effective and mod- ern operations. The upgrading of 200 rooms in the hotel’s oldInterContinental Montreal Classic Wing remains to be carried out in 2012 in order to create a uniform product standard.center of attractionAND AWARD-WINNING! Investment program: EUR 5.5 million (total investment since ­acquisition: approximately EUR 13 million) Program for 2012: Refurbishment and development of 200 roomsInterContinental Montreal was acquired by Pandox in 2007 as a traditional including fittings, bathrooms, corridors, technology, etc.business and meeting hotel with international style. The product lacked alocal profile and primarily competed through its location. This was the strate-gic starting point for a comprehensive investment and upgrading program.Through changes in layout, design, management and style, the hotel hascreated a new concept with a more boutique feeling. Since completing theinvestment in 2010, the hotel has strengthened its position and is now oneof the city’s leading hotels with regard to RevPAR development. During a large IHG conference held in Las Vegas in October, hotel man-ager Bernard Chênevert was designated Hotel Manager of the Year 2011within InterContinental in America – a very prestigious award. The InterConti-nental Montreal is the first Canadian hotel to receive this distinction.Investment program: CAD 13 millionRealised: In 2008–2010, refurbishment and modernisation of all 357 hotel rooms,development of the restaurant and bar concept, as well as upgrading of the lobby andmeeting facilities. Radisson Blu Basel COMPLETE UPGRADING IN Basel The Radisson Blu Basel was acquired in 2005. The hotel is centrally located close to the old town and shopping district, and contains 206 rooms, conference facilities, restaurant and large relaxation centre. Since the acquisition, the hotel has undergone a comprehensive investment program where all parts have been upgraded and modernised, including a total facelift of the fitness and spa centre. The Pool Inn Club, which was inaugurated in 2010, has an unparalleled indoor pool, large relaxation centre, sauna and a large complete and modern fitness centre. After total refurbishment, the hotel has continued to expand its ­ arket share and show stable and good profitability. m Investment program: EUR 10 million Realised: In 2008–2010, total refurbishment including rooms, conference facilities, bar and relaxation centre.
  • 66040 // WE GENERATE // Grow t h a n d ca s h f l owT65 floor we ge43210 with a sense of humor & passion for BUSINESS Pandox most important success factors are above all the thoroughly planned and consistent strategy, the flexible business model and the unique special expertise contained in the Company and its network. Enthusiastic and committed people with the courage to do the unexpected.
  • Gr ow th and cash flow // WE GENERATE // 6041 879*nerate 831* cash flow from 1995, SEK M 445 446 389 318 299 301 266 267 272 228 119 97 5312 21 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 *Refers to 100 percent of Norganis and Pandox ongoing cash flow for each respective full-year. +19%Pandox’ strategy and business model generates Key indicators Number of hotels* Number of hotel rooms 2011 118 24,500 2010 120 24,800value. Pandox has generated an average annual Property revenues, SEK M 1,782 1,730return of 19 percent since the Company was Cash flow, SEK M 879 831formed in 1995. During the same period, the world * As well as one congress and fair centre.has undergone three finance crisis.
  • 6042 // WE GENERATE // Pa nd ox d e ve lo pme n tT65432 FROM FINANCE CRISIS1 TO SUCCESSFUL0 HOTEL PROPERTY COMPANY When Pandox started in 1995, the Companys operations were com- posed of 18 hotels with 3,000 rooms located in nine Swedish towns and cities. The business model was new and untried. The Company had weak profitability and limited capital.   The road to success has been to acquire under-performing hotels that have been developed, and to increase the Companys cash flow and value – which in turn has been used to further expand. All in all, transactions for more than SEK 20 billion have been completed. With a consistent strategy, Pandox has shown durable and profitable growth, along with a greater geographical spread.  At the end of 2011, Pandox had 118 hotels and one congress and fair centre with a total of 24,500 rooms situated in 58 strategic locations in 10 different countries in the Nordic Region, northern Europe, and North America. ­ andox is thereby one of the leading hotel property companies P in the European market. 120 118 Pandox development from 1995 Number of hotels 46 46 44 45 44 44 45 46 36 39 28 31 18 20 14 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 At the end of 2011, Pandox had a total of 118 hotel properties and one congress and fair centre. Four transactions were completed in 2011: The hotel property Park Inn by Radisson, Solna was acquired. The hotels Scandic Bromma, First Linköping and Scandic Luosto in northern Finland were sold.
  • Pandox d e v e lo pme n t // WE GENERATE // 6043 Acquisitions for more than SEK 20 billionFounded in 1995. Pandox has its origins in the Internationalisation. In 2000, Pandox enlarged Leading in Europe. In August 2010, Pandoxfinance and property crisis in the beginning of the its geographical strategy to Northern Europe announced the close to SEK 10 billion acquisition1990s. The Company was formed in 1995 by through the acquisition of Hotellus with 16 hotel of Norgani Hotels with a portfolio of 73 hotels inSecurum and Skanska. The mission was to take properties. Sweden, Finland, Norway and Denmark.over and restructure the hotel portfolio, and pre- Further to the acquisition, Pandox is one ofpare it for sale. Privatised again in 2004. Pandox is bought out Europes leading pure hotel property companies from the stock market in 2004, with new industrial with regard to geographic spread and number ofThe original hotel property portfolio. In the owners through Eiendomsspar AS and Sundt AS. hotels and brands. Since starting in 1995, Pandoxbeginning, Pandox consisted of 18 hotel proper- has carried out acquisitions for a total of moreties and three small operating units. All of the Stronger in Europe. The transaction tempo than SEK 20 billion composed of 174 hotels at thehotels were in Sweden, and most of them were increased further to the privatisation and several end of 2011.small with weak locations and in bad condition. large hotels were acquired in Berlin, Brussels, The value of the Companys hotel property Stock-exchange listing. Pandox was floated Basle, Copenhagen, Stockholm and Malmö – portfolio amounted to approximately SEK 24 bil-on the Stockholm Stock Exchange in 1997 with a thus strengthening Pandox as one of the leading lion at the end of 2011 – which implies that thenew and untried business concept. The Compa- hotel property players in Europe. value has increased about 20 times since thenys portfolio was valued at SEK 1.3 billion and the Company was formed. This has been achievedmarket capitalisation at SEK 520 million. The list- Expansion to North America. In 2007–2008, through a good hotel market, active ownership,ing gave 4,000 new shareholders. Pandox continued its international expansion with sound expertise and profitable acquisitions. Further to the listing, Pandox expanded sub- two acquisitions in Montreal.stantially with acquisitions of large hotels in stronglocations, while its smaller hotels were sold. TRANSACTIONS COVERING 174 HOTELS
  • 6044 // WE GENERATE // M a r ket C ommu n ic ation AR KET c OM M U N IC AT IONT65 MARKET COMMUNICATION43 The concept of a hotel market day was introduced by Pandox in 1996. The principal reason21 was that the Company, and the hotel industry, needed to be presented to the capital mar-0 ket prior to being listed on the stock market, which took place the following year. From the start, the Hotel Market Day has been an annual recurring event and has been developed into a dynamic meeting place for the hotel industry. hotel market day The Hotel Market Day is held each year in the hotel industry, the significance of shopping tour- 2011 highlighted the question from the hotel middle of November at the Pandox-owned ism for a destination, as well as the signification industrys perspective. The list of speakers was Hilton Stockholm Slussen hotel. Recent years of the term "brand profitability". The theme for as usual of top quality, with several speakers have seen a full house with more than 300 2010 was the economic situation and its conse- with considerable commitment to the subject p ­ eople taking part, with an increasingly larger quences for the hotel industry, as well as social and with long experience of international CSR proportion of international guests. During the media and their effect on the sector. work. The main speaker was Lars H. Thunell, day, the participants are offered interesting talks, In 2011, the Hotel Market Day was about the previously CEO of SEB and now in a top interna- an occasion to form networks and meet new contemporary subject of Corporate Social tional position within the World Bank Group as contacts, as well as to obtain Pandox hotel Responsibility (CSR). Today it is not a question Executive Vice-President and CEO of the Inter- forecast for forthcoming years. The event is of whether a company shall take social respon- national Finance Corporation (IFC). Other speak- closed in the evening with a mingle and dinner sibility, but how it should do so. Companies are ers during the day included Bicky Chakraborty, in a pleasant and relaxed environment. placed with new challenges and new areas to owner and CEO of Elite Hotels of Sweden, and In recent years, the theme for the day has handle, and developments are being driven by Lyndall De Marco, Managing Director of Only included the effect of low-price airlines on the increased globalisation. The Hotel Market Day in Sustainability. pandox upgrade REGULAR MARKET INFORMATION 2011 Up de n Our newsletter, Pandox Upgrade, contains information about Subscribe now! Pandox Upgrade is free of charge Autum market developments, hotel trends and transactions, as well as and may be ordered from Pandox either by telephone Gra ES PA N I COM OP ERTY news from the Pandox sphere. When Pandox was formed in 1995, at +46 (0)8-506 205 50 or by sending an email to OTE L PR ING H LEAD PE’S URO OF E ONE OX – PA N D ROM ION F R M AT INFO KET MAR the publication of a newsletter was started in order to market the info@pandox.se ery Company vis-à-vis the capital market prior to being listed on the Recov st markets on mo stock exchange. The newsletter later went over to presenting public >> Pandox Upgrade can also be downloaded in reports distributed by the Company. In spite of Pandox no longer PDF format in Swedish and English at www.pandox.se n IM PO r tA n Ce nG I Cr eAsI IA In being listed on the Stockholm Stock Exchange, we continue to ed AL M sOCI T LIGH SPOT ds | tren r tic yea A fantas sh 9 edi : for Sw ll Theme 8 handba m ­ aintain the flow of information to people interest in the hotel sector Where are we Social projec ts P. 6 ort g? Rep P. headin t.E! from Ho and the hotel property market, which is why Pandox Upgrade is still P. regularly issued with normally three issues per year.
  • So ci al r e sp ons ibi l it y // WE GENERATE // 6045Social responsibility health and handballPandox has operations at 58 locations in 10 countries. To achieve our vision as oneof the worlds leading hotel property companies requires responsible entrepreneur-ship with focus on sound business ethics and profitability, prioritised environmentprocedures, and a number of social projects that galvanise the Company andwhere we can contribute to improving the existence of less-favoured people.Within this spirit, we established during the key to strengthened self-esteem, improved study courses regarding issues related to society toyear the project known as Pandox Youth motivation, an active and healthy lifestyle, and the a ­ ttitudes. Pandox has also given support throughHandball Movement in the town of Nyeri in opportunity to be part of a greater social context. obtaining club premises and providing the clubKenya. The overall objective is to provide children The project is managed in close cooperation with items such as balls and training kit.and young people with purposeful leisure time with the Mount Kenya Sports Group handballthrough sport and handball training. The project club, with more than 500 members, and thecan then also contribute with advice about dis- P ­ artille Cup – the worlds largest and most inter- >> Further information about the Mountease, issues related to society and attitudes, as national handball tournament for young people. Kenya Sports Group and the project iswell as other social projects. Pandox believes that Pandox support consists of preparing a available at www.msgkenya.comsport and purposeful leisure time is one of the detailed operational plan that enables good proj-most natural methods to come into contact with ect management and prioritisation of measureschildren and young people who need various and action to be taken. Other tasks are to trainforms of support. Greater interest is created for handball trainers, which takes place through Pan-sport by investing in club life, which we believe is a dox network, as well as to arrange lectures and freeset Pandox has also chosen to support the fair-trade company Freeset in Calcutta by pur- chasing their products for several hotels. The company offers employment to women who have been drawn into prostitution in Calcuttas largest and most notorious area for sex-traffick- ing – Sonagacchi. More than 10,000 women are forced every day into prostitution in this area. They come primarily from Bangladesh, Nepal and rural India. Many of them have fallen victims to trafficking while others only have severe poverty as an alternative. Through Freeset, the women are given the opportunity to learn how to sew, and they produce handbags, cloth bags and T-shirts that are then sold to companies. They also have the chance to learn to read and write. >> Read more about Freeset at their website: www.freesetglobal.com.
  • 7046 // we manage //T top6 Floor543210 we The Crowne Plaza Antwerp was acquired in 2007. Pandox oper- ates the hotel under a franchise agreement with InterContinental Hotels Group. Further to a comprehensive refurbishment that was completed in the autumn of 2011, the hotel is one of the leading business hotels in Antwerp. The picture shows the e ­ xquisite new event pool.
  • // we manage // 7047manage Industrial competence and experience create confidence and ability to take action.
  • 7048 // we manage // Boa rd of d i rect ors a n d a udit or sT6543210 board of DIRECTORS AND AUDITORS CHRISTIAN RINGNES Chairman. CEO of Eiendomsspar AS. Member of the Board of Pandox since 2004. Other appointments: Chairman of NSV-Invest AS, Sundt AS, Dermanor AS, Oslo Flaggfabrikk AS and Mini Bottle Gallery AS. Board member of Schibsted ASA and Thor Corporation AS. BENGT KJELL CHRISTIAN SUNDT CEO of AB Handel och Industri. Board member of Sundt AS. Member of the Board of Pandox since 1996. Member of the Board of Pandox since 2008. Other appointments: Other appointments: Chairman of Indutrade AB and Hemfosa Fastigheter AB. Owner and chairman of CGS Holding AS. Board member of Höganäs AB, Helsingborgs Dagblad AB, Board member of Sundt Air Holding AS, Sundt Sepa AS, Swegon AB and Skånska Byggvaror AB. Sundt Helene AS, Sundt Air AS, Sundt Eiendom II AS and Sundt Eiendom I AS.
  • B oar d of d i rect or s and a u dit or s // we manage // 7049 BOARD OF DIRECTORS In an international hotel property company such as Pandox, competence and experience within the following areas are important: hotel operations and hotel market, financing, properties and the property sector, business development, brand strategies, and development of international com- panies. The Board of Directors of Pandox pos- sesses broad experience and knowledge from these areas. Rules of procedure The Board of Directors has adopted Rules of Pro- cedure for its work, directives to the Chief Execu- tive Officer, as well as management instructions with regard to reporting. Pandox Board of Direc- tors establishes and documents the objectives and strategy of the Company each year. The Board has also adopted a finance policy, an approval policy and guidelines for decision-mak- ing, as well as a particular strategy regardingLEIV ASKVIG olaf Gauslå acquisitions.CEO of Sundt AS. Finansdirektör i Eiendomsspar AS. The Board of Directors of Pandox holds fourMember of the Board of Pandox since 2004. Ledamot i Pandox styrelse sedan 2004. ordinary meetings each year. The meetings followOther appointments: an established annual agenda with themes andChairman of Oslo Børs VPS Holding ASA, items requiring decisions. The meetings review andOslo Børs ASA and Alfarveg AS. discuss the external and internal reporting of oper-Board member of Eiendomsspar AS, Verdipairsentralen ating results as well as various business matters.VPS ASA, Skips AS Tudor, Astrup Fearnley AS Other items that are reviewed annually include mar-and Agder OPS Vegselskap AS. keting, strategy and budget issues. Related mate- rial and documentation is sent to the Board mem- bers approximately one week in advance. The Companys auditors attend at least one meeting each year to present a report of their audit and their review of the Companys internal control systems. In addition to their ongoing audit, the Compa- nys auditors were also commissioned by the Board during the year to carry out special reviews of major lease agreements. AUDITORS The task of the auditors is to examine the Compa- nys accounts, administration and financial infor- mation. The audit results in an Audit Report where the auditors give an opinion as to whether the annual accounts and financial statements have been prepared in accordance with the Swedish Annual Accounts Act and generally accepted accounting principles.HELENE SUNDT MATS WÄPPLING Per GustafssonBoard member of Sundt AS. President and CEO of SWECO AB (publ).Member of the Board of Pandox since 2008. Member of the Board of Pandox since 2003. Authorised Public Accountant KPMGOther appointments: Other appointments:Owner and chairperson of Sundt Helene AS. Board member of SWECO AB (publ), Willard Möller Vasakronan AB (publ) and Besqab AB (publ).Chairman of Dronningen Eiendom AS and Lanternen Authorised Public AccountantEiendom AS. SET Revisionsbyrå ABBoard member of Sundt Sepa AS, Sundt ChristianGruner AS, Bergesens Almennyttige Stiftelse and SundtAir Holding AS.
  • 7050 // we manage // M a na geme n tT6 ANDERS NISSEN5 CEO4 Employed since 1995.3210senior LIIA NÕU NILS LINDBERG Senior Vice President Senior Advisor CFO Finance Employed since 2007. & Insurance. Employed since 1995. LARS HÄGGSTRÖM MIKAEL PLANELL Senior Vice President Vice President Asset ­Management. Business Area Employed since 2000. other Europe, Denmark, Finland and southern Sweden. Employed since 2005. executives ALDERT SCHAAPHOK ERIK HVESSER Vice President Vice President Operations Belgium Business Area and Canada. Stockholm, northern Employed and eastern Sweden. since 2004. Employed since 2006.
  • Mana geme n t // we generate // 7051LEIF KRISTEN OLSENVice PresidentBusiness AreaNorway, Gothenburgand western Sweden.Employed since 2010. corporate Johnny 2000–2006JONAS TÖRNERHead of BusinessControl & ­ntelligence. IEmployedsince 2005. MAGNE RAMLO Vice President Property Manager Norway, Denmark and part of Sweden. Employed Enzo 2007–2010 since 2010. JOSEFIN BERGQVISTSenior Analyst, Business Control &­Intelligence. Employed since 2006.  dogs Mr. Harry 2011 –
  • 52 // part II // pandox part Vildmarkshotellet is located outside Norrköping next to Scandinavias largest wildlife park, Kolmården, about 150 kilometres from Stockholm. The complex has 213 rooms, large conference facilities, restaurant with a wildlife-park theme, a lobby bar, as well as a family spa centre with waterway, relaxation areas and treatment room.
  • // part II // 53II contents 54–57 CEO commentary 58–59 Workforce 60–75 Hotel properties and summary list 76–100 Economic and financial information
  • 54 // part II // ce o co mme n ta ry CEO COMMENTARY high level of dynamics in the portfolio! 2011 was a new successful Good start in 2011 Demand increased and the positive trend from 2010 continued. The first half-year was characterised by year for Pandox with increasing optimism driven by hope of an approaching global economic recovery. The hotel market subsequently revenues, profitability and cash reacted with higher prices, improved profitability and rapidly rising property values. Some analysts warned that there were signs of a bubble, that the market was doped and that the underlying problems had flow. Property management rev- remained or even increased. enues rose to SEK 1,846 mil- We will never know how many new hotel projects were adopted during this period. In the light of events of last autumn, they stand out as being high-risk projects. When anxiety regarding government debt lion. Cash flow amounted to exploded in the summer, the hotel market became covered by a very dark cloud. Most forecasters, who SEK 879 million, and profit had spoken during the spring of the hotel markets bright future, changed opinion and painted a sombre picture of our sector. However, things did not turn out quite as anticipated, and in general the end of the before tax was SEK 826 million. year was stable. Overall, we will remember 2011 as a reasonably good but dramatic hotel year. 2012 will be The good growth in profit- significantly more interesting and difficult to analyse. When studying the sub-markets where Pandox is represented, Gothenburg and Antwerp were run- ability is primarily due to the ners-up in 2011 with a RevPAR improvement of around 6 percent. London, which has had strong trends in acquisition of Norgani, but the the past two years, showed surprisingly good demand in the summer and, despite 2010 being a record year, RevPAR rose by more than 8 percent. Impressive! Brussels, which came from high levels from the last Company has also had a good quarter last year, fulfilled expectations with a rise in revenues of 4 percent for the full-year. The main part of year for comparable units with these increases was due to price rises. Montreal, Stockholm, Helsinki, Copenhagen and Oslo had a stable year, while Berlin and Malmö showed negative trends. Pandox original portfolio con- Gothenburg also experienced a negative short-term trend after the market turned downwards after the tinuing to perform better than summer further to pressure on prices. the market. A very active year for Pandox Our work was primarily characterised by internal processes where the hotels acquired in 2010 were eval- uated and prepared for various development programs. The largest activity is a mega-project with Scan- dic. The parties will invest a total of SEK 1.6 billion in one of the largest development projects carried out between an owner and an operator in this part of the world. The program embraces 38 hotels and one congress and fair centre in Sweden, Norway and Finland, including 26 classic highway hotels that are
  • ce o co mme ntary // part II // 55 Crowne Plaza – Le Palace, Brusselsstrongly associated with Scandic and that now first-class meeting product. During the year, the where all top international shopping brand namesneed to be modernised and developed. The other hotel received the distinction of being Swedens are represented. An agreement was reached dur-part of the project is a number of large city-centre best conference hotel. Congratulations to all those ing the year with the local trade unions, which willhotels that are to be upgraded – Malmen in Stock- who were involved! enable the formation of a modern and flexibleholm will be completed, the KNA in Oslo and the Other major investments started in 2011 organisation. The business plan has also beenContinental in Helsinki will be totally refurbished, included the Scandic Copenhagen, which is fine-tuned and the project has reached the phasewhile the Grand Marina in Helsinki will be undergoing total refurbishment with the objective where refurbishment of the rooms has started.improved. The program will start in the spring of becoming one of Scandinavias best meeting The development of new conference and meet-of 2012 and continue for at least three years. hotels with a city-centre location. The hotels 486 ing facilities will be intensified in 2013 The prop-Exciting! rooms, lobby and F&B areas are currently under ertys technology and standard are being Another large project carried out during the development. The Hotel Berlin, Berlin is upgrading upgraded in parallel in order to improve theyear was the upgrading of the Hyatt Regency in 200 rooms, after which the entire hotel will have hotels efficiency. The total investment is esti-Montreal. The hotel is located in the centre of the been refurbished and repositioned from a tourist mated to amount to SEK 550 million, of whichfestival area where, among other things, the Jazz hotel to one of Berlins most creative meeting around SEK 270 million for the acquisition. TheFestival is held. In order to strengthen the hotels places. The Hilton Stockholm Slussen is currently project will be completed in 2014.position and potential of being part of the dynam- getting new rooms, as well as upgraded confer-ics of the area, a comprehensive development ence and meeting facilities. The Comfort Bør- Integration of Norgani as plannedprogram was implemented so as to raise the sparken, Oslo has obtained 50 new rooms and Pandox acquired Norgani at the end of the sum-sense of entertainment. The lobby, bar, food & the lobby a more modern touch. mer 2010. The purchase embraced a portfolio ofbeverage (F&B) as well as the public areas were more than 70 hotel properties in Sweden, Norway,given an exciting new design and new features A key investment in Brussels Finland and Denmark. One initial prioritised ques-with a greater fun-factor, with the same atmo- The efforts to develop The Hotel Brussels has tion was to merge the two organisations and uti-sphere that characterises Montreal – a relaxed continued by implementing the plans drawn up lise the companies various areas of expertise withand pleasant style. when the hotel was acquired. The hotel, which the goal that one plus one would become more The Radisson Blu Malmö was completed in was acquired in 2010 under the Hilton brand, is than two. As part of this integration, six workshopsthe autumn after a development program of sev- now being repositioned to an independent hotel were held up to the end of 2011 where differenteral stages. Without doubt, the hotel has strength- and is undergoing considerable development. forms of cooperation were established and keyened its role as Malmös leading full-service hotel, The prerequisites are good in view of the magnifi- competences were identified and discussed.with large functional rooms, modern lobby and a cent location of the hotel on Boulevard Waterloo ­Systems, methodology and personal relations are
  • 56 // part II // ce o co mme n ta ry Handball in Kenya InterContinental, Montreal now starting to work effectively. New employees child why those who have a lot must always have uncertain. Furthermore, the problem is accentu- from Norgani have vitalised Pandox organisation more when some people have nothing. ated by the tightening of the credit market. New and the old "Pandoxers" have inspired their new Pandox is currently supporting two projects: regulations will lead to more restrictive lending, colleagues. Many thanks to all those who have Freeset in Calcutta, which produces bags that are where capital will be more expensive and condi- contributed to everything functioning so well! The sold to hotels and other companies. The bags and tions to borrow more difficult. There is subse- true Pandox Spirit! other items are produced by former prostitutes, quently a risk that the financial shivers and the In addition to organisational questions, focus who are thus given the opportunity to renounce banks new regulations lead to pushing the eco- has also been on handling and developing the their previous activity. The products are of good nomic spiral downwards. The longer such contin- Norgani portfolio. In general, most of the hotels quality and are used in our hotels. In Kenya, we ues, the more probable the situation will spread to have good prerequisites, although considerable have started the Pandox Youth Handball Move- other sectors of society. Judging by the steady investment and development of the offer in a num- ment. The movement has been established for a stream of reports with different perceptions as to ber of hotels is required. Forms of cooperation with number of years in the town of Nyeri, where how the crisis should be handled, there are none- the operators that run the hotels must also be enthusiasts are trying to establish handball as a theless a number of brighter aspects. Most seem improved so that joint business plans can be leisure-time activity for young people as a coun- to agree about which political decisions are established as underlying data for cost-efficient terforce to criminality and drugs. The local organ- required. The question that follows is whether investments. A lot of this work is currently in prog- isation is also endeavouring to proactively help political leadership exists. Can individual politi- ress. The mega-project with Scandic is one exam- young people at an early stage and inform about cians manage to put special interests and party ple of what has happened so far, and we expect to AIDS and other diseases. There are currently more politics to one side? Let us hope so. be able to present more investments in the portfo- than five hundred young people who regularly Demand in the hotel market will be affected by lio in 2012, albeit not of the same size. Four of the train handball within the project – half are girls and the above situation. The business segment is Norgani hotels have been sold with good capital half are boys. Pandox support consists primarily directly related – should the level of activity gains, which indicates that the book values are of training leaders and handball coaches, as well decline, there will be less business travel. The conservative. So far, the restructuring of Norgani as to ensure that the movement has an estab- meeting market has a longer perspective, and has gone well and is in line with the plans we lished plan that is followed and evaluated together conferences and conventions that are already adopted at the time of the acquisition. with the local organisation. planned are often maintained. The risk here is more as to how the autumn will be. Tourism is Social responsibility Market appraisal expected to continue to increase, particularly The Hotel Market Day 2011 was about compa- From a global perspective, according to institu- short journeys to major cities with good offers. nies social responsibility. An important subject tions such as the IMF, growth in the global econ- With the information and data available at the end that must be given top priority by modern compa- omy will continue to deteriorate in 2012. The of 2011, Pandox is forecasting a gradual deterio- nies that wish to be a part of positive social devel- underlying problems with major financial imbal- ration during the year – rather like a slow puncture opments, where taking responsibility is quite sim- ances have made financial markets nervous, and – but not like 2008/2009 when we saw a rapid ply part of their DNA. Short-term gain and greed stock markets have fallen. As long as this situation and dramatic downturn. Declines in RevPAR will must be eliminated, and is a side of capitalism is not properly organised, the outlook for stabilisa- probably be more due to volume than price. And makes me feel unwell. It is difficult to explain to a tion of the economy is deemed to be extremely there is reason to believe that demand will be
  • ce o co mme ntary // part II // 57uneven, with strong and weak months followingeach other, which will place considerabledemands on cost-adaptation and flexible organ-isations. We believe that 2012 will be more aboutgaining market shares and improving productivity,and less about increasing revenues in animproved market. There will be a shortage offinancing, which will lead to fewer new projectsand lower levels of product development. Para-doxically, the transaction market seems to begood, with primarily hotels that need to be refi-nanced being sold. Most of these were purchasedin the middle of the 2000s when generous financ-ing packages supported many deals. Those timesare now over, so property agents will have a toughbut profitable year ahead of them. The new state of affairs in the capital marketwill affect the strategies of hotel companies. Thepreviously acclaimed "asset light" will perhapsbecome "asset like" – at least if expansion plansare to be maintained. The letter P, which hasbecome a symbol for Pipeline – meaning adescription of how many new hotels will be addedto the portfolio of each respective brand name –will perhaps be exchanged for the word Produc-tivity. In a certain way, it is assumed that the dis-cussion concerning brand standards will continue,with owners increasing their focus on cash flowinvestments – which would benefit the entire sector.Outlook 2012The outlook for Pandox in 2012 can be consid-ered as being relatively stable. A further active yearis waiting where large investments in existinghotels will start. The work will partly disrupt thehotels operations and profitability, but at the sametime create good future potential. For comparabil-ity, the years profit is expected to be in line withthat of 2011. I would like to take this opportunity to thank all"Pandoxers", owners, board of directors and keypersons in our network for your commitment andenergy during 2011. Good luck in the New Year! Itis now important to understand each local market,be able to act swiftly, and take shrewd decisions.ROCK ON!!Anders NissenCEO PANDOX WORKFORCE >>
  • 58 // part II // T h e emp loy ees anders.nissen@pandox.se lars.haggstrom@pandox.se aldert.schaaphok@pandox.com Pandox employees CEO Senior Vice President, Asset Management P Vice President, Operations erik.hvesser@pandox.se frédéric.sturbois@pandox.com marika.hilldoff@pandox.se christer.juujarvi@pandox.se Vice President, Business Area s Property Manager, Asset Management Analyst, Marketing & PR, Business Control & Intelligence i Facility Manager, Asset Management magne.ramlo@pandox.com nils.lindberg@pandox.se liia nou@pandox.se marit-synove.johannesen@pandox.com Vice President, Property Manager Senior Advisor, Finance & Insurance Senior Vice President, CFO b Analyst, Asset Management petter.kristensen@pandox.com josefin.bergqvist@pandox.se goran.jedlov@pandox.se annelie.aguilar@pandox.se Property Manager, s Senior Analyst, i Property Manager, Asset Management Business Control & Intelligence Asset Management Executive Assistant vassilis.syropoulos@pandox.com susanne.jusslin@pandox.se tomas.skeppstrand@pandox.se jonas.torner@pandox.se Director of Revenue, Pandox Belgium e Property Accountant, Accounting & Finance Property Accountant, Accounting & Finance s Head of Business Control & Intelligence
  • Th e emp loy ee s // part II // 59 ann-sophie.forsmark@pandox.se monica.forsen@pandox.se marjut.mikkola@pandox.com a Property Accountant, Accounting & Finance Property Accountant, Accounting & Finance s Property Support, Asset Management louise.ceder@pandox.se ulrika.norrbrink@pandox.se torbjorn.stensen@pandox.com jacob.rasin@pandox.se Property Support, Asset Management Property Accountant, Accounting & Finance Property Accountant, Accounting & Finance o Analyst, Business Control & Intelligence n therese.blomqvist@pandox.se mikael.planell@pandox.se josefin.nilsson@pandox.se Hyatt Regency, Montreal Property Support, Asset Management Vice President, Business Area u Receptionist and supportkate.vansteenkiste@pandox.com ulrika.stahl@pandox.se stefan.kornhammar@pandox.se mr.harry@pandox.se Commercial Manager, Pan- dox Belgium Group Controller Accounting & Finance Property Manager, Asset Management n Mr. Harry, Corporate Dog jan.van.loock@pandox.com staffan.olsson@pandox.se leif.kristen.olsen@pandox.se Senior Advisor, Property Development Europe Director of Health, Sports & Coaching s Vice President, Business Area Pandox, Head Offce
  • 60 // the Hotel properties // the hotel PROPERTIES 24,500 ROOMS IN 58 STRATEGIC LOCATIONS IN 10 COUNTRIES Scandic Highway City centre Resort No. hotels Sweden 23 18 41 Norway 1 1 2 Finland* 1 6 1 8 Denmark 1 1 Germany 1 1 Belgium 1 1 2 TOTAL 55 * In addition, Pandox owns one congress and fair centre in Finland.
  • // the Hotel properties // 61ScandicScandic is the Nordic Region’s leading hotel centre under the Scandic brand name, repre- overnight accommodation and facilities. Thechain and currently has 160 hotels in nine coun- senting 45 percent of revenues in the total Pan- hotel segment with highway hotels in strategictries in the Nordic Region and Northern Europe. dox portfolio. locations is now established across the NordicSince 1994, Scandic has consciously worked Scandic has two principal product sege- Region. The Pandox portfolio contains 26 high-with environmental issues with the goal of con- ments – city-centre hotels and highway hotels. way hotels. Scandic and Pandox have createdtributing to a socially and ecologically sustain- The city-centre hotels in Pandox’ portfolio are a specific project, with a joint vision of develop-able society. Today, more than 120 of Scandic’s represented by Scandic Park at Karlavägen and ing the new generation of highway hotel. Readhotels are eco-labelled. Scandic Hasselbacken at Djurgården in Stock- more on pages 5036–5037. Pandox and Scandic have a long business holm, Scandic Grand Marina and Scandic Conti-relationship and have maintained close coopera- nental in Helsinki, as well as Scandic KNA in Oslo.tion since Pandox was first established. Today, Scandic’s origins are the classic highwayPandox has 55 hotels and one congress and fair hotels that were designed to offer the motorist city-centre hotels Stockholm -Hasselbacken -Malmen -Park -Star Sollentuna HELSINKI -Grand Marina -Continental OSLO -KNA KIRUNA TEMPERE and others highway hotels ÖREBRO VÄST järva krog BACKADAL NORRKÖPING NORD LINKÖPING VÄST KARLSTAD KLARÄLVEN VÄSTERÅS and others
  • 62 // the Hotel properties // Hilton Hotels & Resorts Country City No. rooms Hilton London Docklands UK London 365 Hilton Stockholm Slussen Sweden Stockholm 289 Hilton Brussels City Belgium Brussels 283 Hilton Helsinki Kalastajatorppa Finland Helsinki 238 Hilton Helsinki Strand Finland Helsinki 190 Hilton Bremen Germany Bremen 235 Hilton Dortmund Germany Dortmund 190 TOTAL 1,790 Hilton Hilton is a global hotel company with American origins. There are several BRussels groups of hotel chains across the world within the Hilton Group – Hilton World- STOCKHOLM wide. These include Hilton Hotels & Resorts, Waldorf Astoria Hotels & Resorts, LONDON Conrad Hotels & Resorts and DoubleTree. All of the company’s shares are helsinki owned since 2007 by the American private-equity company Blackstone. BREMEN Seven of the hotels are contained in Pandox’ portfolio, of which the loca- tions include London, Brussels, Helsinki and Stockholm. A joint refurbishment DORTMUND program is currently in progress at the Hilton Stockholm Slussen.
  • // the Hotel properties // 63Nordic Choice HotelsNordic Choice Hotels is the Nordic Region’s fastest growing hotelcompany and is one of Pandox’ largest partners with a total of 20hotels in the portfolio. The hotels in the Choice family represent 12percent of revenues in the Pandox portfolio. The hotel companyembraces five brands: Clarion Hotels, Clarion Collection, ComfortHotel, Quality Hotel, and Quality Hotel & Resort. Pandox has allbrands in its portfolio, where Quality has the largest number with12 hotels located in Norway and ­ weden. S InterContinental InterContinental Hotels Group is one of the world’s largest hotel companies with more than 4,500 hotels in 100 countries. IHG owns brands such as Inter- Nordic Choice Hotels Country No. hotels Continental, Crowne Plaza, Holiday Inn and Hotel Indigo. Most of the compa- Clarion Hotel Sweden 3 ny’s hotels are operated in franchise form. Pandox’ portfolio includes four Clarion Collection Norway, Denmark 3 hotels located in Antwerp, Brussels and Montreal. Quality Hotel Norway, Sweden 9 InterContinental Montreal was acquired in 2007 and has since been devel- Quality Hotel & Resort Norway 3 oped and repositioned. In conjunction with a large IHG conference held in the Comfort Hotel Norway 2 autumn of 2011, the hotel’s manager was designated Hotel Manager of the Year TOTAL 20 within InterContinental in America. The InterContinental Montreal was also nomi- nated during the year to the Top 40 best Canadian hotels by Condé Nast Maga- zine. It is the first time that the hotel reaches the top of the prestigious list and is the only IHG hotel in Canada to have done so. CLARION Collection OSLO copenhagen CLARION Karlstad Östersund comfort OSLO BERGEN qUALITY resort fagernes ØYER KRISTIANSAND qUALITY MOLDE LINKÖPING gothenburg stockholm KRISTIANSTAD SÖDERTÄLJE LULEÅ and others
  • 64 // the Hotel properties // Crowne Plaza Holiday Inn The Crowne Plaza brand name is The Holiday Inn brand name is owned and marketed by the InterCon- owned and marketed by the Inter- tinental Hotels Group. Pandox owns Continental Hotels Group. The Pan- two hotel properties operated under dox portfolio includes the Holiday Inn the Crowne Plaza brand name – both Brussels Airport, which was acquired located in Belgium. in 2006 when the hotel required sub- Crowne Plaza Brussels – Le Palace stantial refurbishment and develop- was acquired in 2003 and thereafter ment. With the vision of creating the underwent an important investment best upper-medium-priced hotel in program. The hotel has since become the area, the change process and one of Brussels’ leading business and total refurbishment during 2009– meeting hotels, and continues to rooms and is strategically located by 2010 has been successfully com- increase its market share. The hotel is Antwerp’s ring road just 10 minutes pleted based on the keywords of full owned and operated by Pandox under from the airport. The Crowne Plaza service, attractive design and high a franchise agreement with IHG. Antwerp has undergone an extensive efficiency. Today, the hotel is runner- The Crowne Plaza Antwerp, refurbishment program that was com- up in its market adjacent to Brussels acquired in 2007, is also owned and pleted in the autumn of 2011, and is International Airport. The hotel is operated by Pandox under a franchise now one of the leading business and owned and operated by Pandox agreement with IHG. The hotel has 262 meeting hotels in the city. under a franchise agreement with InterContinental Hotels Group. InterContinental Hotels & Resorts Country City No. hotels Crowne Plaza Belgium Antwerp, Brussels 2 Holiday Inn Belgium Brussels 1 antwerp InterContinental Canada Montreal 1 brussels TOTAL 4 montreal
  • // the Hotel properties // 65 stockholm Malmö linköping lillehammer bodØ Basel SOLNA Radisson Blu The Radisson Blu brand is managed by Rezidor Hotel Groups, which is one of the world’s fastest growing hotel companies. Rezidor has Scandinavian origins, but is now listed on the stock market and headquartered in Brussels. The hotels in Rezidor’s portfolio are mainly operated under three key brands – Radisson Blu, Park Inn by Radisson and Hotel Missoni. Radisson Blu is a first-class hotel Rezidor Country City No. rooms brand in the upper segments. Pandox Radisson Blu Arlandia Hotel Sweden Stockholm 335 has a long relationship with Rezidor Radisson Blu Hotel, Malmö Sweden Malmö 229 Radisson Blu Lillehammer Hotel Norway Lillehammer 303 and currently owns five hotel properties Radisson Blu Hotel Bodø Norway Bodø 191 located in Sweden, Norway and Swit- Radisson Blu Hotel, Basel Switzerland Basel 206 zerland that are marketed under the Park Inn by Radisson Solna Sweden Stockholm, Solna 247 Radisson Blu brand. TOTAL 1,511 Park Inn by Radisson The Park Inn by Radisson brand name is also managed by Rezidor Hotel Groups. Pandox’ portfolio includes the hotel property Park Inn by Radisson Solna since 2011. Park Inn by Radis- son is a innovative and dynamic medium-class chain. The number of hotels in the Park Inn by Radisson portfolio has grown rapidly in recent years, and now embraces more than 140 hotels in the EMEA region.HyattHyatt is an American, stock-market-listed hotel company with headquarters in The Hyatt Regency Montreal has 605 rooms and extensive meeting andChicago. The company has eight different brands, including Pandox’ hotel in conference facilities with place for 1,000 people.Montreal operated under the Hyatt Regency brand. The Hyatt Regency has astrategically important position in central Montreal within walking distance tothe Palais des Congrès – Montreal’s exhibition and congress centre. Hotel Country City No. rooms Pandox acquired the hotel in 2006 and has since strategically developed it Hyatt Regency Montreal Canada Montreal 605jointly with Hyatt. A comprehensive refurbishment program was completed atthe end of 2010, which has successfully placed the hotel among the leadingleisure and meeting hotels in the city.
  • 66 // the Hotel properties // Elite Hotels Elite Hotels is a privately owned hotel chain with 22 hotels, and has special- ised in operating classic hotels. The Pandox portfolio contains the Elite Park Avenue Hotel on Gothenberg’s most fashionable avenue, the Elite Stora Hotellet in Jönköping, and the Elite Stora Hotellet in Linköping with a total of close to 550 rooms. Hotel Country City No. rooms Elite Park Avenue Hotel Sweden Gothenburg 317 gothenburg Elite Stora Hotellet Jönköping Sweden Jönköping 135 jönköping Elite Stora Hotellet Linköping Sweden Linköping 92 LINKÖPING TOTAL 544 Bodø Hamar Rica Hotels Rica Hotels has more than 80 hotels in Norway and Sweden, and two of the Nor- Hotel Country City No. rooms wegian hotels are included in Pandox’ portfolio. The Rica Hotel Bodø is located Rica Hotel Bodø Norway Bodø 113 within walking distance of the town centre, and has 113 rooms as well as confer- Rica Hotel Hamar Norway Hamar 176 TOTAL 289 ence facilities with place for 250 participants. The Rica Hotel Hamar is a business and conference hotel located centrally in Østlandet with 176 rooms and confer- ence facilities with place for 600 people.
  • // the Hotel properties // 67 stockholm borås halmstad copenhagenFirst HotelsFirst Hotels is a Scandinavian hotelchain with 57 hotels in centrallocations in selected cities situatedin Norway, Denmark and Sweden.The Pandox portfolio contains fivehotels, of which three are in Swedenand two in Denmark under this brandname. All hotels in First Hotels areunique with regard to style, atmos­phere and furnishing. First Hotels Country City No. rooms First Hotel Royal Star Sweden Stockholm 103 First Hotel Grand Borås Sweden Borås 158 First Hotel Mårtenson Sweden Halmstad 103 First Hotel Excelsior Denmark Copenhagen 100 First Hotel Twentyseven Denmark Copenhagen 200 TOTAL 664 Best Western Hotels Best Western Hotels is a global hotel chain with operations in 90 countries and more than 4,000 hotels. The hotels are owned and operated pri- vately but marketed under the joint name of Best Western. The Pandox portfolio contains three hotels that are members of Best Western Hotels. The Best Western Mora Hotell & Spa and the Best Western Royal Corner in Växjö are two centrally located four- Best Western Country City No. rooms star hotels. The Best Western Hotel Best Western Mora Hotell & Spa Sweden Mora 140 Pilotti is located in Vantaa, Finland,mora Best Western Royal Corner Sweden Växjö 159 close to Helsinki airport.växjö Best Western Hotel Pilotti Finland Vantaa 112vantaa TOTAL 441
  • 68 // the hotel properties // Rantasipi Restel operates nearly 50 hotels in F ­ inland under several brands, among them Cumulus and Cumulus. The Pandox-owned Rantasipi Imatran V ­ altion Hotel is a spa hotel, located in Independent a castle environment, with generous conference areas and a complete spa. hotels stockholm copenhagen imatra Hotel, other brand names Country City No. rooms Ibis Stockholm Hägersten Sweden Stockholm 190 Omena Hotel Copenhagen Denmark Copenhagen 230 Rantasipi Imatran Valtion Hotel Finland Imatra 135 TOTAL 555 brussels Omena Omena Hotels is a Finnish chain with a self-service concept in central loca- tions. The chain opened five new hotels in 2011 and now has 13 hotels, of which 12 are in Finland and one in Denmark. Also, during the spring 2012 a new Omena hotel will open on Tors- gatan in Stockholm. The Pandox- owned Omena Hotel Copenhagen is Ibis centrally located in Copenhagen with Accor is one of the world’s largest hotel 230 rooms and a café. companies with operations in 90 countries and 15 different brands in all segments – including the Ibis brand name for low-priced hotels represented in 43 countries. The Pandox portfolio includes the Ibis Stockholm Hägersten, located in southern Stockholm, just 10 minutes from Stockholmsmässan and 15 minutes from central Stockholm. The hotel has 190 rooms, a restaurant, and several conference rooms.
  • // the Hotel properties // 69Independent hotels Country City No. roomsHotel Berlin, Berlin Germany Berlin 701The Hotel Brussels Belgium Brussels 433Hotel BLOOM! Belgium Brussels 305Pelican Bay Bahamas Lucaya 186Vildmarkshotellet Kolmården Sweden Norrköping 213Mr Chip, Kista Sweden Stockholm 150Stadshotellet Princess Sandviken Sweden Sandviken 84Airport Hotel Bonus Inn Finland Vantaa 211Hotel Korpilampi Finland Espoo 151TOTAL 2,434 Hotel BLOOM! Pandox acquired Hotel BLOOM! in 2005, which since 2007 has been refurbished and undergone a complete facelift. Today, the Hotel BLOOM! is a unique hotel product with its own concept based on art and design. It is a distinct challenger in the Brussels hotel market with 305 rooms and large conference facilities in the city centre that compe- tes with the major hotels. That the concept has been successful is also confirmed with Trip- Advisor’s annual and prestigious award based on guest reviews. Hotel BLOOM! attracts a lot of attention and was awarded a fantastic 6th place among Europe’s trendiest hotels – and a 13th place among all of the world’s hotels in the Trip- Advisor Traveler’s Choice 2012 ”Trendiest 25 Hotels of the World”. Hotel BLOOM! is both owned and operated by Pandox. The Hotel Brussels The Hotel Brussels was acquired in 2010 and is one of Brussels’ largest and best-known hotels. The hotel property is located on Boulevard Water- loo next to the city’s most prestigious shopping street, Avenue Louise. The hotel, which is a land- mark, has 433 rooms on 26 floors with several conference areas, two restaurants, as well as a fi ­ tness and spa centre. Pandox’ vision is to recre- ate the hotel’s historically strong position as one of the city’s leading business and meeting hotels in the premium segment through comprehensive product development. All rooms are being impro- ved with a completely new design concept. The actual lobby and reception are being converted to create place for attractive shopping surfaces. The business plan and the new concept can be sum- marised with three keywords: Cosmopolitan, Fashionable, Sophisticated Elegance. The Hotel is both owned and operated by Pandox.
  • 70 // the hotel properties // Hotel Berlin, Berlin Since the acquisition of the hotel in 2006, Pandox has created the meeting place of the future in one of Berlin’s largest hotels. A comprehensive re-profiling program has brought the Hotel Berlin, Berlin back to the top. It is now establis- hed as one of the leading meeting hotels and is one of Berlin’s most creative meeting places. The hotel has 701 guest rooms and 22 conference rooms, as well as several restaurants and bars. The hotel is both owned and operated by Pandox. Pelican Bay The Pelican Bay Hotel is located in the beautiful Bahamas, on Grand Bahama Island. The hotel has been repositio- ned since Pandox took over the mana- gement agreement, and is now one of the leading business and meeting hotels in the Bahamas. Pandox has an asset management agreement for the hotel and is responsible for operations. The hotel has 186 rooms. bahamas
  • // the Hotel properties // 71 berlin Vildmarkshotellet Vildmarkshotellet is one of Sweden’s best-known resort and tourist complexes. The hotel is located outside Norrköping, about 150 kilome- tres from Stockholm, next to Scandinavia’s largest wildlife park, Kol- mården. The complex has 213 rooms, of which most are family-adap- ted, extensive conference facilities with capacity for 370 persons in the largest room, a large restaurant and a lobby bar. A new family spa cen- tre was completed in 2010 with waterway, relaxation areas and treat- ment room.Mr Chip, Kista Airport Hotel Bonus Inn, Vantaa Hotel Korpilampi, Espoo Stadshotellet Princess, SandvikenMr Chip, Kista is strategically located in The Airport Hotel Bonus Inn has 211 Hotel Korpilampi is located in The Stadshotellet Princess, Sandvikencentral Kista, one of Stockholm’s most rooms and is located just 5 minutes’ Espoo, less than half an hour’s is located right in the centre of Sandvi-expansive areas that is also the centre drive from Helsinki-Vantaa airport drive from the centre of Hel- ken with 84 rooms, conference roomfor leading companies within the IT and and 30 minutes from Helsinki railway sinki and from the Helsinki- with capacity for 80 people, a restau-telecom sectors. The hotel has 150 station. The hotel is next to the Leija Vantaa airport. The hotel has rant, and own spa.rooms, conference facilities, as well as Business Park – a shopping and lei- 151 rooms, 17 conferencebar and restaurant, oriented towards sure centre. rooms, a restaurant and bathbusiness travellers. and sauna facilities.
  • 72 // the hotel properties // Name and location Portfolio1) Operator/Brand Type of lease2) Country Town/city Situation Best Western Best Western Mora Hotell & Spa Norgani Private OG Sweden Mora City centre Best Western Royal Corner, Växjö Norgani Private OG Sweden Växjö City centre Best Western Hotel Pilotti, Vantaa Norgani Private OG Finland Vantaa Airport Nordic Choice Hotels Clarion Collection Hotel Mayfair, Copenhagen Norgani Choice Hotels/Clarion Collection Hotel O Denmark Copenhagen City centre Clarion Collection Hotel Arcticus, Harstad Norgani Choice Hotels/Clarion Collection Hotel O Norway Harstad Ring road Clarion Collection Hotel Bastion, Oslo Norgani Choice Hotels/Clarion Collection Hotel O Norway Oslo City centre Comfort Hotel Holberg, Bergen Norgani Choice Hotels/Comfort O Norway Bergen City centre Comfort Hotel Børsparken, Oslo Norgani Choice Hotels/Comfort O Norway Oslo City centre Quality Hotel Alexandra, Molde Norgani Choice Hotels/Quality O Norway Molde City centre Quality Hotel & Resort Fagernes Norgani Choice Hotels/Quality Hotel & Resort O Norway Fagernes Ring road Quality Hotel & Resort Kristiansand Norgani Choice Hotels/Quality Hotel & Resort O Norway Kristiansand Ring road Quality Hotel & Resort Hafjel, Øyer Norgani Choice Hotels/Quality Hotel & Resort O Norway Øyer City centre Clarion Hotel Grand, Helsingborg Pandox Choice Hotels/Clarion OG Sweden Helsingborg City centre Clarion Hotel Grand, Östersund Pandox Choice Hotels/Clarion OG Sweden Östersund City centre Clarion Hotel Plaza, Karlstad Pandox Choice Hotels/Plaza Hotell & Rest Karlstad AB OG Sweden Karlstad City centre Quality Hotel Winn, Gothenburg Norgani Choice Hotels/Quality OG Sweden Gothenburg Ring road Quality Hotel Grand Kristianstad Norgani Choice Hotels/Quality OG Sweden Kristianstad City centre Quality Hotel Ekoxen, Linköping Norgani Choice Hotels/Quality OG Sweden Linköping City centre Quality Hotel Luleå Norgani Choice Hotels/Quality OG Sweden Luleå City centre Quality Hotel Prisma, Skövde Norgani Choice Hotels/Quality OG Sweden Skövde City centre Quality Hotel Prince Phillip, Stockholm Norgani Choice Hotels/Quality OG Sweden Stockholm Ring road Quality Hotel, Nacka Pandox Choice Hotels/Quality OG Sweden Stockholm Ring road Quality Hotel Park, Södertälje Pandox Choice Hotels/Quality FR Sweden Södertälje City centre Crowne Plaza Crowne Plaza Antwerp Pandox Pandox/Crowne Plaza FR Belgium Antwerp City centre Crowne Plaza Brussels – Le Palace Pandox Pandox/Crowne Plaza FR Belgium Brussels City centre Elite Hotels Elite Stora Hotellet, Jönköping Pandox Elite OG Sweden Jönköping City centre Elite Stora Hotellet, Linköping Norgani Elite OG Sweden Linköping City centre Elite Park Avenue Hotel, Gothenburg Pandox Elite OG Sweden Gothenburg City centre First Hotels First Hotel Grand, Borås Pandox Private/First OG Sweden Borås City centre First Hotel Mårtenson, Halmstad Norgani First OG Sweden Halmstad City centre First Hotel Excelsior, Copenhagen Norgani First OG Denmark Copenhagen City centre First Hotel Twentyseven, Copenhagen Pandox First OG Denmark Copenhagen City centre First Hotel Royal Star, Stockholm Norgani Private OG Sweden Stockholm Exhibition centre Hilton Hilton Brussels City Pandox Pandox/Hilton M Belgium Brussels City centre Hilton Helsinki Kalastajatorppa Norgani Scandic/Hilton OG Finland Helsinki Ring road Hilton Helsinki Strand Norgani Scandic/Hilton OG Finland Helsinki City centre Hilton London Docklands Pandox Hilton O UK London City centre Hilton Stockholm Slussen Pandox Hilton O Sweden Stockholm City centre Hilton Bremen Pandox Hilton O Germany Bremen City centre Hilton Dortmund Pandox Hilton O Germany Dortmund Exhibition centre Holiday Inn Holiday Inn Brussels Airport Pandox Pandox/Holiday Inn FR Belgium Brussels Airport Hyatt Hyatt Regency, Montreal Pandox Pandox/Hyatt M Canada Montreal City centre Ibis Hotel Ibis Stockholm Hägersten Norgani Accor/Ibis OG Sweden Stockholm Ring road InterContinental InterContinental Montreal Pandox Pandox/InterContinental M Canada Montreal City centre Rezidor Radisson Blu Hotel Bodø Norgani Rezidor/Radisson Blu O Norway Bodø City centre Radisson Blu Lillehammer Hotel Norgani Private O Norway Lillehammer City centre Radisson Blu Hotel, Basle Pandox Rezidor/Radisson Blu OG Switzerland Basel City centre Park Inn by Radisson Solna Pandox Rezidor/Park Inn by Radisson/Winn Hotels OG Sweden Stockholm Radisson Blu Arlandia Hotel, Arlanda Pandox Rezidor/Radisson Blu OG Sweden Stockholm Airport Radisson Blu Hotel, Malmö Pandox Rezidor/Radisson Blu OG Sweden Malmö City centre Rantasipi Rantasipi Imatran Valtionhotelli Norgani Restel/Rantasipi OG Finland Imatra City centre Rica Hotels Rica Hotel Bodø Norgani Rica O Norway Bodø City centre Rica Hotel Hamar Norgani Rica O Norway Hamar City centre Pandox 1)  owns 50 percent of the Norgani portfolio through Sech Holding AB. The remaining portion is owned in equal parts by Eiendomsspar AS and the Sundt Family through companies. Pandox has a full asset management agreement for the entire Norgani portfolio’s operation and development. 2) O = Revenue-based; OG = Revenue-based with guaranteed rent; OR = Revenue and result-based; R = Result-based, F = Fixed; IO = Internal revenue-based; M = Management agreement; FR = Franchise, AM = Asset Management agreement Operated by Pandox (Pandox operation of own hotels)
  • // the Hotel properties // 73No. rooms 2011 Total surface (m2) Of which hotel (m2) Property designation Pandox market segment 140 9,161 7,670 Stranden 37:3 159 7,112 6,888 Elden Södra 17 Proportion of total number of rooms 112 3,068 3,068 92-51-317-1 Sweden Number of hotels 68 106 3,805 3,805 Matr.nr 214 Number of rooms 12,484 75 3,540 3,443 Gnr 61 Bnr 331, Snr 12- 22 Property revenues, SEK M 988 99 4,688 4,688 Grnr 207 Bnr 262 og 265 51% 149 5,720 5,720 Gnr 165 Bnr 1083 Snr 1 og 2 198 7,374 7,274 Gnr 207 Bnr 343 og 344 163 17,421 17,033 Gnr 24 Bnr 812, 815 og 1312 138 10,310 10,310 Gnr22 Bnr 177, Gnr 25 Bnr 4, and others 210 9,940 7,075 Gnr 63 Bnr 760, 822 og 823 Proportion of total 210 9,540 9,540 Gnr 17 Bnr 25 number of rooms 158 8,555 7,325 Högvakten 8 Rest of Nordic Region 176 8,766 8,766 Borgens 6 Number of hotels* 33 131 5,907 5,907 Höken 1 Number of rooms 6,596 121 5,800 5,800 Backa 149:l & 866:39 Property revenues, SEK M 518 137 7,524 7,075 Hovrätten 41 27% 190 14,671 12,221 Ekoxen 9 & 11 *In addition, one congress and fair centre. 209 12,166 12,166 Tjädern 19 107 3,687 3,687 Liljekonvaljen 14 208 7,400 7,400 Måsholmen 25 Proportion of total 162 10,830 8,090 Sicklaön 363:2 number of rooms 157 10,292 10,110 Herkules 13 Europe Number of hotels 14 Number of rooms 4,106 262 18,340 16,780 – Property revenues, SEK M 298 354 28,095 28,095 – 17% 135 11,378 9,379 Alhambra 1 92 6,354 4,543 Bolaget 1 317 21,998 21,998 Lorensberg 28:4 Proportion of total 158 9,593 9,365 Prometeus 3 number of rooms International 103 6,657 6,350 Gillestugan 1 Number of hotels 3 100 3,600 3,600 Matr.nr 212-213 seksjon 1-2 Number of rooms 1,148 200 7,568 7,568 169 Vester Kvarter København Property revenues, SEK M 42 103 4,900 4,900 Herrgården 2 5% 283 13,850 13,850 Saint-Josseten-Noode (1div) 032 238 23,291 23,291 91-30-1-5,91-30-3-2-LI 190 10,250 10,250 91-11-300-7 365 22,800 21,500 HM Land Registry: SGL465779 Proportion of total 289 18,416 15,725 Överkikaren 31 number of rooms Pandox own hotel operations 235 21,000 15,100 Grundbuch Altstadt IV, Blatt 60 Number of hotels 11 190 12,500 11,300 Grundbuch Dortmund, Blatt 897 Number of rooms 3,947 Property revenues, SEK M 1,253 310 21,072 21,072 – Operating net, SEK M 207 16% 605 44,148 29,000 – 190 8,685 5,700 Fotsacken 1 357 31,091 31,091 – 191 15,546 13,064 Gnr 138 Bnr 3502 303 18,000 18,000 Gnr 59 Bnr 103, 104, 138, 275, 432, 434 og 468 206 17,800 17,000 – 247 12,585 11,316 Del av Banken 9 och Banken 10 335 15,260 15,260 Benstocken 1:5 229 18,969 18,969 Carolus 33 135 10,097 10,097 153-12-1-1 113 8,381 7,981 Gnr.138 Bnr 2189 og 2247 176 9,250 9,250 Gnr 790 Bnr 228 Snr 2
  • 74 // the hotel properties // Name and location Portfolio1) Operator/Brand Type of lease2) Country Town/city Situation Scandic Scandic Antwerp Pandox Scandic O Belgium Antwerp Ring road Scandic Grand Place, Brussels Pandox Scandic O Belgium Brussels City centre Scandic Copenhagen Pandox Scandic O Denmark Copenhagen City centre Scandic Continental, Helsinki Norgani Scandic OG Finland Helsinki City centre Scandic Espoo Norgani Scandic OG Finland Espoo Ring road Scandic Grand Marina, Helsinki Norgani Scandic OG Finland Helsinki City centre Scandic Jyväskylä Norgani Scandic OG Finland Jyväskylä City centre Scandic Kajanus, Kajaani Norgani Scandic OG Finland Kajaani Exhibition centre Scandic Kuopio Norgani Scandic OG Finland Kuopio City centre Scandic Marina Congress Center, Helsinki Norgani Scandic O Finland Helsinki City centre Scandic Rosendahl Norgani Scandic OG Finland Tampere City centre Scandic Tampere City Norgani Scandic OG Finland Tampere City centre Scandic Bergen Airport Norgani Scandic O Norway Bergen Airport Scandic KNA, Oslo Norgani Scandic O Norway Oslo City centre Scandic Alvik, Stockholm Norgani Scandic OG Sweden Stockholm Ring road Scandic Backadal, Gothenburg Norgani Scandic OG Sweden Gothenburg Ring road Scandic Billingen, Skövde Pandox Scandic O Sweden Skövde City centre Scandic Bollnäs Norgani Scandic OG Sweden Bollnäs City centre Scandic Crowne, Gothenburg Pandox Scandic O Sweden Gothenburg City centre Scandic Elmia, Jönköping Norgani Scandic O Sweden Jönköping Exhibition centre Scandic Ferrum, Kiruna Norgani Scandic OG Sweden Kiruna City centre Scandic Grand, Örebro Pandox Scandic O Sweden Örebro City centre Scandic Gävle Väst Norgani Scandic OG Sweden Gävle Ring road Scandic Hallandia, Halmstad Pandox Scandic O Sweden Halmstad City centre Scandic Hasselbacken, Stockholm Norgani Scandic OG Sweden Stockholm City centre Scandic Helsingborg Nord Norgani Scandic OG Sweden Helsingborg Ring road Scandic Järva Krog, Stockholm Pandox Scandic O Sweden Stockholm Ring road Scandic Kalmar Väst Norgani Scandic OG Sweden Kalmar Airport Scandic Klarälven, Karlstad Norgani Scandic OG Sweden Karlstad Ring road Scandic Kramer, Malmö Pandox Scandic O Sweden Malmö City centre Scandic Kungens Kurva, Stockholm Norgani Scandic OG Sweden Stockholm Ring road Scandic Linköping Väst Norgani Scandic OG Sweden Linköping Ring road Scandic Luleå Norgani Scandic OG Sweden Luleå Ring road Scandic Malmen, Stockholm Norgani Scandic OG Sweden Stockholm City centre Scandic Mölndal, Gothenburg Pandox Scandic O Sweden Gothenburg City centre Scandic Norrköping Nord Norgani Scandic OG Sweden Norrköping Ring road Scandic Park, Stockholm Pandox Scandic O Sweden Stockholm City centre Scandic Plaza, Borås Pandox Scandic OG Sweden Borås City centre Scandic S:t Jörgen, Malmö Pandox Scandic OG Sweden Malmö City centre Scandic Segevång, Malmö Norgani Scandic OG Sweden Malmö Ring road Scandic Skogshöjd, Södertälje Pandox Scandic O Sweden Södertälje City centre Scandic Star Sollentuna Norgani Scandic OG Sweden Stockholm Ring road Scandic Star, Lund Pandox Scandic OG Sweden Lund City centre Scandic Sundsvall Nord Norgani Scandic OG Sweden Sundsvall Ring road Scandic Swania, Trollhättan Pandox Scandic O Sweden Trollhättan City centre Scandic Södertälje Norgani Scandic OG Sweden Södertälje Ring road Scandic Umeå Syd Norgani Scandic OG Sweden Umeå Ring road Scandic Uplandia, Uppsala Norgani Scandic OG Sweden Uppsala City centre Scandic Upplands Väsby Pandox Scandic O Sweden Stockholm Ring road Scandic Uppsala Nord Norgani Scandic OG Sweden Uppsala Ring road Scandic Winn, Karlstad Pandox Scandic OG Sweden Karlstad City centre Scandic Västerås Norgani Scandic OG Sweden Västerås Ring road Scandic Växjö Norgani Scandic OG Sweden Växjö Ring road Scandic Örebro Väst Norgani Scandic OG Sweden Örebro Ring road Scandic Östersund Syd Norgani Scandic OG Sweden Östersund Ring road Scandic Lübeck Pandox Scandic O Germany Lübeck Ring road Omena Hotels Omena Hotel Copenhagen Norgani Omena F Danmark Köpenhamn City Independent hotels Mr Chip Hotel, Kista Pandox Private OG Sweden Stockholm Ring road Hotel BLOOM!, Brussels Pandox Pandox IO Belgium Brussels City centre The Hotel, Brussels Pandox Pandox IO Belgium Brussels City centre Hotel Berlin, Berlin Pandox Pandox IO Germany Berlin City centre Vildmarkshotellet, Kolmården Pandox Private O Sweden Norrköping Resort Airport Hotel Bonus Inn, Vantaa Norgani Private OG Finland Vantaa Airport Stadshotellet Princess, Sandviken Norgani Private OG Sweden Sandviken City centre Pelican Bay, Lucaya, Grand Bahama Island Pandox Sundt GB Management/Pandox AM Bahamas Lucaya Resort Hotel Korpilampi, Espoo Norgani Pandox IO Finland Espoo Ring road Pandox 1)  owns 50 percent of the Norgani portfolio through Sech Holding AB. The remaining portion is owned in equal parts by Eiendomsspar AS and the Sundt Family through companies. Pandox has a full asset management agreement for the entire Norgani portfolio’s operation and development. 2) O = Revenue-based; OG = Revenue-based with guaranteed rent; OR = Revenue and result-based; R = Result-based, F = Fixed; IO = Internal revenue-based; M = Management agreement; FR = Franchise, AM = Asset Management agreement Operated by Pandox (Pandox operation of own hotels)
  • // the Hotel properties // 75No. rooms 2011 Total surface (m2) Of which hotel (m2) Property designation 204 13,200 13,200 24th div, Borgerhout 1st div, Ar 100 4,500 4,500 – 486 31,500 25,200 99943-2 514 30,000 30,000 91-14-468-3 96 5,245 5,245 49-54-17-7 462 23,660 23,660 91-8-187-8 150 7,360 7,360 179-3-52-23 191 10,468 10,468 205-14-7-5 138 7,113 7,113 297-1-41-6-LI 0 11,500 0 – 213 14,662 14,662 837-134-495-1-LI 263 14,457 13,705 837-112-187-35,837-112-187-37 197 9,654 9,654 Gnr 114 Bnr 213 189 11,218 11,218 Gnr 209 Bnr 275 325 12,075 12,075 Racketen 9 236 9,397 9,397 Backa 105:1 124 7,743 6,844 Fjolner 7 111 5,150 5,150 Sundsbro 10 338 24,380 21,800 Stampen 5:5 220 9,576 9,576 Åminne 1 171 11,100 11,100 Hovmästaren 1 221 12,900 10,900 Mältaren 1 200 7,382 7,382 Valbo-Backa 6:12 154 7,617 6,813 Erik Dahlberg 14 & 15 112 10,025 10,025 Hasselbacken 1 237 9,399 9,399 Floretten 1 215 11,300 11,300 Tanken 2 148 5,485 5,485 Hammaren 4 143 5,694 5,694 Sandbäcken 1:3 113 6,913 6,913 Gripen 1 257 11,581 9,456 Radien 1 150 6,105 6,105 Osten 2 160 5,565 5,565 Mjölkudden 3:45 332 15,130 15,130 Gråberget 29 208 11,000 11,000 Laken 1 150 6,768 6,768 Blyet 8 201 12,290 10,290 Lönnen 30 169 10,592 7,961 Balder 6 288 21,485 14,655 S:t Jörgen 11 166 6,284 6,284 Kirseberg 14:95 225 14,115 14,115 Yxan 8 269 18,573 18,573 Centrum 12 196 15,711 15,711 Porfyren 2 159 4,948 4,948 Värdshuset 1 198 10,399 10,399 Svan 7 131 5,630 5,630 Reparatören 2 161 5,955 5,955 Reparatören 4 133 5,402 5,275 Dragarbrunn 16:4 150 6,955 6,955 Vilunda 6:48 184 7,518 6,486 Kvarngärdet 3:2 199 10,580 10,580 Tingvallastaden 3:2 174 7,285 7,285 Sågen 1 123 3,982 3,982 Kocken 3 204 7,621 7,621 Vindmotorn 2 129 4,019 4,019 Särrimner 1 158 9,700 8,800 Grundbuch Lübeck, Blatt 54545 230 8,000 7,300 Matr.nr 89 150 5,517 5,517 Knarrarnäs 7 305 23,445 23,445 – 433 33,000 33,000 – 701 41,093 41,093 – 213 10,300 10,300 Marmorbrottet 1:18 211 8,414 8,414 92-51-203-4 84 7,003 4,890 Grillen 8 186 7,983 7,983 – 150 9,777 9,777 49-429-3-216
  • 76 // finances // F inancia l ov e r v ie w Well-weighted risk profile Financial policy foreign currencies. Pandox’ policy is to hedge the an average fixed-interest period of 4.7 years (4.5). The basic objective of Pandox’ financial opera­ majority part of its exposure by raising loans in the The average interest rate on loans at 31 Decem­ tions is to achieve the lowest possible financing local currency of each respective country and by ber was 3.7 percent (3.3). The financing of hotel costs while simultaneously limiting the risks hedging with appropriate currency hedging instru­ properties is raised in each respective local cur­ related to interest rates, foreign currencies and ments. rency in accordance with the financial policy. The borrowings. The interest rate risk is the risk that Group’s liquid funds amounted to SEK 337.9 M changes in interest rate levels which could nega­ Methodology and systems (385.1). In addition, there was an unutilised credit tively affect the Group’s results. Currency risk is Pandox has developed and implemented systems facility of SEK 711 M. the risk that the Group’s balance sheet and income and procedures to enable the continuous monitor­ statement which could be negatively affected by ing and reporting of interest rate risk trends. Equity capital changes in the value of the Swedish krona. Finally, The Group’s equity capital as per the balance the borrowing risk is the risk that external financing Financing strategy sheet at 31 December 2011 amounted to SEK may become more difficult to find. In order to gain flexibility and administrative bene­ 3,108.3 M of which SEK 528.1 M was restricted fits, Pandox has centralised when possible all equity and SEK 2,580.2 M unrestricted equity. Interest rate risk/interest rate strategy b ­ orrowing in the Parent Company. The objective is The Pandox Group’s cash flow from current Pandox’ basic objective is that interest rate expo­ to work with long-term framework agreements operations, including 50 percent of Norgani’s sure shall be adapted so that increased costs as a that provide scope for borrowing with varying cash flow, amounted to SEK 691.2 M. result of reasonable changes in interest rates shall maturities and fixed margins. Derivative instru­ be compensated by higher revenue. The interest ments such as swaps are preferably used for the Working capital rate risk must therefore be limited through con­ extension of fixed interest rate periods. Pandox receives rental revenue in advance and tracting periods of varying lengths with the aim of pays most of its operating costs and interest creating an optimal due date structure and fixed Capital structure expense in arrears while hotel operations normally interest periods. The long term objective is that The objective for the Group’s capital structure is receive revenues in arrears. Altogether the Group the average fixed interest period be matched with that the equity/asset ratio long term should meet normally has a relatively small working capital to the average point in time when rental revenues, internal and external financial strength require­ finance. based on underlying leases, are estimated to be ments in order to enable continued expansion. affected by a change in interest rates. Interest swaps are mainly used for extension of fixed inter­ Financing est rate periods. As of 31 December, the Pandox Group’s interest bearing liabilities amounted to SEK 7,406.6 M Currency risk/currency risk strategy (7,025.8). The loan portfolio has a spread due- Pandox is exposed to currency risks due to cer­ date structure with an average fixed-capital period tain of the Group’s assets being denominated in of 6.0 years is without financial covenants and has INTEREST STRUCTURE1), SEK M Year due SEK DKK EUR GBP CHF CAD Total Share,% Interest, %2) 2012 531.9 366.3 734.5 273.3 99.3 134.2 2,139.5 28.9 4.5 2013 75.0 – 178.9 – – 129.6 383.5 5.2 3.6 2014 350.0 – 357.8 – – – 707.8 9.6 3.2 2015 100.0 120.3 348.9 – 132.4 – 701.6 9.5 3.7 2016 250.0 – 178.9 – – – 428.9 5.7 3.7 2017 and later 1,650.0 144.4 1,001.8 – – 249.1 3,045.3 41.1 3.2 Total 2,956.9 631.0 2,800.8 273.3 231.7 512.9 7,406.6 100.0 3.7 Share, % 40 9 37 4 3 7 100 Average interest rate, % 4.1 2.6 3.7 2.3 3.2 3.1 3.7 Average interest rate period, years 6.1 2.8 4.5 0.2 1.8 3.2 4.7 1)  Converted to SEK. 2)  Average interest rate in percent.
  • S ensiti v it y ana ly sis // finances // 77Factors that affect PandoxPandox’ operations and profitability are profitability. Factors that may influence risks asso­ market’s most competitive and powerful opera­affected by a number of factors, of which the ciated with variable leases are the hotel property’s tors with well established brand names, reducesmost important are described below. location, market segment and brand name/oper­ both the related operative and financial risks. ator. Pandox’ strategy is to operate in a selected P ­ andox’ largest tenants in terms of revenue areThe hotel market market segment, which in combination with its Scandic, Hilton, Rezidor, Elite Hotels, InterConti­The development of Pandox’ earnings and the hotels market expertise and systems, limits the nental Hotels Group, Nordic Choice Hotels andvalue of its hotel properties are dependent upon agreement risk. First Hotels, which together accounted for 85 per­trends within the hotel market, which in turn cent of all rental revenue in 2011.closely follow general economic developments. Partners Business travel and conference activities nor­ Pandox’ agreement structure, with a large propor­ Leasing levelmally increase during periods of high economic tion of variable leases, means that the Company is The leasing level in Pandox’ wholly owned port­activity, while there is a corresponding decrease more dependent on the individual tenant/opera­ folio as of 31 December was 99.8 percent. Vacantduring periods of low economic activity. There is tor’s business than other property companies. The space amounting to 1,430 sqm consisted entirelythus a strong connection between economic Company’s strategy to actively cooperate with the of store and office premises.trends (GDP) and trends within the hotel market.Developments of GDP can be closely monitored,whereas factors that influence local hotel marketsare significantly more complex. The most impor­tant influential factors are local economic condi­tions, the proportion of new hotel capacity in themarket, how well developed a market is concern­ing brand names and segments, currency fluctua­tions, aswell as extraordinary events.New capacityNew capacity introduced to the market implies anincreased risk for local players. Depending uponexisting demand, additional hotel rooms throughthe construction of a new hotel can lead to a rapidnegative influence on occupancy rates and aver­age prices. To deal with this risk, Pandox hasdeveloped an information system that continuallymonitors planned new constructions within itsmarket areas, and thus enabling Pandox to beprepared and proactive.Agreement structurePandox has a large proportion of variable leases,which represented 95 percent of total rental reve­nue in 2011 for Pandox wholly owned properties. About 32 percent of variable leases containeda guaranteed rent, meaning that 62 percent ofrental revenues were fully variable downwards.A change in the occupancy rate and the averageroom revenue consequently affects Pandox verydifferently, depending on the direction of change. The choice of agreement is based on optimaldistribution of cash flow between Pandox and theoperator so that both parties are motivated to InterContinental, Montrealcontinuously increase the hotel property’s overall
  • 78 // finances // S ensiti v it y ana ly sis If for any reason a hotel operator should Decisions by public authorities the estimated market value of the land in question. choose to terminate its lease agreement, Pandox The hotel market can be affected by decisions Site leasehold rents generally run for periods of 10 may either select a new suitable operator as ten­ made by public authorities. Two examples of such to 20 years. ant or operate the hotel under its own manage­ decisions are changes in taxation related to claims ment. With Pandox’ specialist expertise in the for travel expenses or rules concerning value Interest rates hotel sector, the risk of vacant hotel space is seen added tax both in general and for the hotel and Interest expense is Pandox’ largest single cost as being extremely low. restaurant industry in particular. item. Fluctuations in interest rates will therefore For other commercial space, which represents have an impact on Pandox’ earnings. In order to approximately 8.1 percent of total space in the Property tax limit its financial risk, the Company’s average fixed Company’s properties, Pandox is exposed to the Property tax on Pandox’ Swedish properties interest period is 4.7 years. The full effect of a same fluctuations in supply and demand for prem­ amounts to 1.0 percent of the tax assessment change in interest rates is accordingly not felt by ises experienced by other property owners. value. Changes in the tax rate or in the tax assess­ Pandox until after this period. ment value affect Pandox’ earnings. However, an Changed risk potential increase only has a limited impact on the earnings Currency risk Historically, the hotel industry and hotel property because many lease agreements are formulated Pandox’ policy is to hedge the major part of its sector have always been associated with high so that the property tax be passed on to the ten­ currency exposure, including shareholders’ equity, risk. The market has however changed signifi­ ant. Property tax on properties outside Sweden is by financing properties in local currencies and cantly in recent years. Owners have become more generally less than one per cent of the book value. by hedging through means of appropriate professional with restructured companies and About 55 percent of the property tax was debited c ­ urrency instruments. Transaction exposure is focused strategies, with a greater holistic view and to tenants in 2011, which means that the net effect l ­imited as revenue and costs are usually in the specialised expertise. Reports from public com­ on Pandox’ earnings amounted to SEK 22.4 M. same currency. panies have substantially improved information about the transparency of the market. The pro­ Site leasehold rents portion of established strong brand names with In the wholly owned portfolio as of 31 December efficient operations has increased. For streamlined 2011, Pandox held seven properties via site lease­ companies with own expertise in hotel operations, hold rights. Rents on these properties are cur­ hotel properties and business development, and rently calculated in such a manner that a munici­ who are active owners, the potential risk is consid­ pality that normally owns the land receives what is erably lower than it has been in historic terms. deemed to be a reasonable real rate of interest on Hotel BLOOM!, Brussels
  • Va lu ati on and ta x sit uati on // finances // 79Hotel property portfolio valueThe valuation of hotel properties with their develop in this market. The operator company’s • Operating costs are assumed to increase inspecific characteristics demands extensive results and forecasts, together with the formula­ line with inflation.know­edge and expertise of the hotel market l tion of the agreement, provide underlying data to • The rate of interest used in the calculation isand hotel operations. estimate revenues, which subsequently constitute based on the real interest rate plus a risk pre­ the basis of the cash flow calculation. The value mium based on location, lease, and form ofCash flow valuation calculated is the present value of the next ten ownership.Pandox continuously evaluates all of its hotel years’ cash flow, with a supplement for the pres­p­ roperties in accordance with a valuation model ent value of the hotel properties’ residual value An internal valuation of Pandox’ wholly ownedbased on the properties’ cash flow, and which is after ten years. hotel properties in accordance with this methodadapted to the characteristics specific to the hotel The valuation model is based on the following resulted in a total value as of December 2011 thatindustry. assumptions: substantially exceeds the book value. In accor­ The cash flow calculation is built up from • Changes in rental revenue during the calcula­ dance with current accounting principles, eachunderneath, with the property operator’s income tion period are based on the formulation of indi­ individual property’s recovery value was recon­statement as the point of departure. This in turn is vidual agreements and on underlying factors. ciled with its book value, further to which it wasbased on assumptions as to how the underlying • Inflation is assumed to amount to an average noted that no write downs were necessary.hotel market will develop in terms of occupancy of 2.0 percent annually during the calculationand average rates, as well as how each specific period.operator’s respective key ratios and figuresThe Company’s tax situationThe Pandox Group’s property holdings are tive legal unit. The difference in value has arisen as remaining deficit deductions totalling SEK 502 Mreported for accounting purposes as fixed an effect of surplus value upon acquisitions of in the Swedish companies. The valuation ofassets. The consolidated book value as of property in companies, known as pure intrinsic deferred tax claims is based on their potential utili­31 December 2011 amounted to SEK acquisitions, as well as fiscal depreciation that sation against future taxable profits, and is calcu­8,976.2 M excluding equipment, of which exceeds book depreciation. Tax deduction for lated according to the applicable tax rate. Conse­the consolidated surplus values amounted annual depreciation of properties has normally quently, minor deficit deductions in non-Swedishto SEK 1,808.6 M. been made at the rate of 3 to 5 percent of a prop­ companies were reported at the end of 2011. erty’s acquisition cost. As a result, the amount ofAccounting of deferred tax fiscal depreciation exceeds that of book deprecia­Pandox applies the Swedish Accounting Stan­ tion, and the difference between the book valuedards Board’s general recommendation on and the fiscal value of a property increases year onincome tax accounting (BFNAR 2001:1). In short, year. The deferred tax liability generated by assetthe recommendation implies that both deferred acquisitions has been calculated using the pres­tax liabilities and tax claims are to be included in ent value method based on the shortest period ofthe financial statements and that any changes will ownership estimated for each property, and corre­affect the income statement as deferred tax. sponds to an average tax rate of approximately 10 Pandox’ consolidated balance sheet as of 31 percent. This is based on regulation for assessingDecember 2011 includes a deferred tax liability in deferred tax upon pure intrinsic acquisitions,the net amount of SEK 244.1 M corresponding to where the tax effect is taken into considerationthe difference between a deferred tax liability of when calculating the acquisition price. TheSEK 424.8 M and a deferred tax claim of SEK deferred tax relating to the difference between180.7 M. The deferred tax liability refers mainly to book depreciation and fiscal depreciation is calcu­the estimated deferred tax based on the differ­ lated based on the applicable tax rate.ence between the properties’ consolidated book The deferred tax claim pertains mainly to defi­value and the fiscal residual value of each respec­ cit deductions. At the end of 2011, there were
  • 80 // finances // T en- y ea r ov er v ie w Condensed consolidated income statement SEK M 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Property operations Rental revenue 536.2 535.1 562.7 548.8 605.0 747.5 872.3 850.6 884.2 923.1 Other property revenue 26.0 26.5 30.2 25.2 29.9 34.7 43.2 44.6 39.1 38.3 Total property revenue 562.2 561.6 592.9 574.0 634.9 782.2 915.5 895.2 923.3 961.4 Operating and maintenance costs –93.2 –100.1 –118.7 –103.8 –111.5 –126.3 –132.8 –117.0 –140.6 –141.8 Operating net 469.0 461.5 474.2 470.2 523.4 655.9 782.7 778.2 782.7 819.6 Depreciation –63.2 –64.3 –70.3 –78.2 –91.3 –129.3 –163.8 –193.6 –194.3 –191.3 Income from property operations 405.8 397.2 403.9 392.0 432.1 526.6 618.9 584.6 588.4 628.3 Hotel operations Operating revenue 60.1 81.3 216.8 250.2 420.0 788.8 1,105.3 1,095.0 1,208.6 1 244.0 Operating costs –58.2 –75.7 –204.4 –239.4 –407.7 –768.2 –1,084.5 –1,129.0 –1,202.8 –1 241.7 Operating income hotel operations 1.9 5.6 12.4 10.8 12.3 20.6 20.8 –34.0 5.8 2.3 Gross income 407.7 402.8 416.3 402.8 444.4 547.2 639.7 550.6 594.2 630.6 Administrative costs –34.5 –35.5 –39.3 –42.5 –51.9 –55.4 –64.6 –68.3 –72.4 –82.3 Other revenue/realisation results 28.8 7.4 – 444.4 39.9 3.4 6.9 – – – Operating income 402.0 374.7 377 804.7 432.4 495.2 582.0 482.3 521.8 548.3 Non-recurring financial income & costs – – –56.1 – – – – 79.5 431.2 63.6 Profit from associate companies – – – – – – – – 5.7 156.2 Net financial items for current operations –171.0 –159.2 –148.4 –137.4 –166.4 –232.4 –294.7 –229.8 –214.0 –254.5 Income after financial items 231.0 215.5 172.5 667.3 266 262.8 287.3 332.0 744.7 513.6 Deferred tax –44.2 –50.3 –47.6 36.8 –33.0 –23.5 34.2 –10.1 –65.7 –46.1 Tax –0.1 11.4 –0.2 –15.8 –31.4 –9.3 –22.2 –20.4 –111.2 –55.2 Income/loss for the year 186.7 176.6 124.7 688.3 201.6 230.0 299.3 301.5 567.8 412.3
  • T en- yea r ov er v ie w // finances // 81Condensed consolidatedbalance sheetSEK M, as of 31 December 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011AssetsProperties including hotel equipment 4,961.4 5,276.7 5,262.8 5,477.5 6,907.5 8,223.8 9,212.5 9,348.0 9,200.5 9,549.6Other fixed assets 6.9 7.2 6.9 113.7 172.8 139.0 794.6 843.3 1,170.3 1,277.4Current assets 29.5 34.6 58.6 201.7 174.4 223.1 241.2 158.4 276.0 443.4Cash and bank 213.2 137.5 58.0 236.4 174.1 272.8 347.7 326.4 385.1 337.9Total assets 5,211.0 5,456.0 5,386.3 6,029.3 7,428.8 8,858.7 10,596.0 10,676.1 11,031.9 11,608.3Equity and liabilitiesShareholders’ equity 1,853.9 1,919.2 1,923.0 2,307.7 2,272.3 2,407.7 2,729.2 2,996.7 2,977.5 3,108.3Deferred tax liability 83.5 135.9 184.3 208.5 279.7 352.5 335.2 363.0 389.1 424.8Interest bearing liabilities 3,070.6 3,211.9 3,080.4 3,165.3 4,398.5 5,516.8 6,808.6 6,850.5 7,025.8 7,406.6Non-interest bearing liabilities 203.0 189.0 198.5 347.8 478.3 581.7 723.0 465.9 639.5 668.6Total equity and liabilities 5,211.0 5,456.0 5,386.3 6,029.3 7,428.8 8,858.7 10,596.0 10,676.1 11,031.9 11,608.3Key dataProperty related key dataBook value of properties includinghotel equipment, SEK M 4,961.4 5,276.7 5,262.8 5,477.5 6,907.5 8,223.8 9,212.5 9,348.0 9,200.5 9,549.6Total property revenue, SEK M 562.2 561.6 592.9 574.0 634.9 782.2 915.5 895.2 923.3 961.4Operating net, SEK M 469.0 461.5 474.2 470.2 523.4 655.9 782.7 778.2 782.7 819.6Financial key dataInterest coverage ratio, multiple 2.6 2.7 2.2 3.2 2.9 2.7 2.5 4.5 3.5 3.9Return on equity, % 10.3 9.4 6.5 32.5 8.8 9.8 11.7 10.5 19.5 13.4Equity/assets ratio, % 35.6 35.2 35.7 38.3 30.6 27.2 25.8 28.1 27.0 27.0Cash flow from current operations, SEK M 265.8 272.4 298.9 301.4 317.6 389.0 444.5 446.4 518.9 691.2Investments excluding acquisitions, SEK M 67.3 60.8 70.5 165.1 282.6 274.9 269.3 312.5 197.7 349.2Property acquisitions, SEK M – 370.7 – 661.3 1,327.8 1,063.4 370.9 163.3 332.0 206.4
  • 82 // finances // Qu a r terly data 2 0 1 0 –2 0 1 1 Quarterly data 2010–2011 CONDENSED INCOME STATEMENTS 2010 2011 SEK M Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total property revenue 201.2 234.4 241.2 246.5 208.4 256.0 245.4 251.6 Operating net 167.7 199.8 210.4 204.8 172.7 220.4 211.9 214.6 Income from property operations 119.9 149.6 161.5 157.4 127.9 170.5 162.3 167.6 Income from hotel operations –24.1 14.5 3.9 11.5 –22.5 25.5 –5.1 4.4 Operating income 78.7 145.6 148.3 149.2 89.7 179.4 143.2 136.0 Net financial items –12.0 –50.4 341.3 –56.0 35.7 –21.6 –18.6 –31.2 Income after financial items 66.7 95.2 489.6 93.2 125.4 157.8 124.6 104.8 Income after tax 55.0 73.6 353.0 86.2 115.7 117.5 92.6 105.7 CONDENSED CONSOLIDATED BALANCE SHEETS 2010 2011 SEK M 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 31 Dec Assets         Properties including hotel equipment 9,138.8 9,128.7 9,130.2 9,200.5 9,333.4 9 506.3 9 587.1 9 549.6 Other fixed assets 737.4 724.3 230.7 1,170.3 1,012.6 1 205.6 1 225.5 1 277.4 Current assets 144.0 190.9 197.2 276.0 435.8 476.4 489.3 443.4 Cash and bank 472.2 659.2 1,351.1 385.1 471.4 337.3 337.8 337.9 Total assets 10,492.4 10,703.1 10,909.2 11,031.9 11,253.2 11,525.6 11,639.7 11,608.3 Equity and liabilities Shareholders’ equity 2,906.7 2,715.8 3,045.0 2,977.5 3,062.4 3,066.9 3,129.1 3,108.3 Deferred tax liability 376.4 394.9 403.6 389.1 422.8 448.9 466.5 424.8 Interest bearing liabilities 6,711.1 7,086.5 6,920.6 7,025.8 7,140.8 7,431.8 7,488.5 7,406.6 Non-interest bearing liabilities 498.2 505.9 540.0 639.5 627.2 578.0 555.6 668.6 Total equity and liabilities 10,492.4 10,703.1 10,909.2 11,031.9 11,253.2 11,525.6 11,639.7 11,608.3 FINANCIAL KEY DATA 2010 2011 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Interest coverage ratio, multiple 2.5 3.9 3.4 4.2 3.2 3.8 4.0 3.9 Return on equity, % 7.5 9.0 22.4 19.5 12.8 14.1 13.4 13.4 Equity/assets ratio, % 27.7 25.4 27.9 27.0 27.0 27.0 26.9 26.8 Cash flow from current operations, SEK M 76.1 146.1 139.6 157.1 165.2 182.6 180.7 162.7 Investments excluding acquisitions, SEK M 41.3 53.8 45.5 57.1 61.2 103.6 59.7 124.7 Property acquisitions, SEK M – – 332.0 – 206.4 – – –
  • Rep or t of the B oar d of di r ecctor s // finances // 83financial report ofstatements the board2011 of directors The Board of Directors and Chief Executive ­Officer of Pandox AB, Swedish corporate registration number 556030-7885, hereby submit the annual report and ­ onsolidated accounts of the c C ­ ompany for the financial year 2010. Operations and strategy Pandox is one of Europe’s leading hotel property companies. TheProperty revenues and total revenues Company has built up specialist expertise within the key areas of hotel markets, hotel operations, hotel properties and businessPandox’ property revenues for 2011, including development. Active ownership, with well developed strategic50 percent of the profits in Norgani, amounted plans for each hotel, enables the creation of good prerequisites for stable and improved cash flows, and thereby growth in valueto SEK 961.4 M (923.3), which for ­ omparable c for the shareholders.units, including adjustment for currency effects, Pandox’ strategy is to own one type of property – hotel prop­ erties. Its focus is strengthened by a prioritised market segment.represented an increase of 3.3 percent against Pandox is to own large hotel properties in Sweden, major2010. The Group’s total revenue amounted to locations in Europe, as well as developing regions in Eastern Europe and North America.SEK 1,993.9 M (1,917.9). The hotels should be in central and strong locations such as city centres, airports and exhibition centres. The hotels should be in the upper medium to high price range and focus on the busi­Cash flow ness and leisure segments.The hotels owned by Pandox areCash flow from ongoing operations, excluding operated and marketed by the most powerful players in the hotelshare of profits from associate companies and market, who with well known brands and dynamic independent distribution channels create strong market positions and therebycapital gains, ­ mounted to SEK 691.2 M a stable revenues.(518.9). Revenues are created by flexible agreements related to the operator’s turnover and results or through management agree­ ments where Pandox assigns a third party to manage operations,Acquisitions during the year or alternatively through its own management. Irrespective of the form of operation, Pandox contributes via its active ownership toOn 28 January Pandox, acuired Park Inn by increasing total cash flows and reducing risks.Radisson, Solna. The acquisition price was At the end of the year, the Company’s portfolio contained 118 hotel properties and one congress and fair centre, of whichSEK 206.4 M, and covers the hotel property. 47 in the Pandox portfolio and 71 in the Norgani portfolio. P ­ andox operates eleven hotels of which one via an asset man­ agement assignment and one in the Norgani portfolio. PandoxProfits owns and develops assets in Sweden, ­ enmark, Finland, DProfit before tax, excluding non-recurring items, N ­ orway, Belgium, Germany, Switzerland, the United Kingdom,rose to SEK 457.5 M (313.5), and to SEK Canada and the Bahamas.513.6 M (744.7) including non-recurring items. Accounting principlesProfit after tax amounted to SEK 412.3 M Pandox does not apply IFRS. As an unlisted company, Pandox is not subjected to IFRS reporting requirements. Pandox applies(567.8). the Swedish Annual Reports Act and generally accepted accounting principles, as well as the recommendations of the Swedish Accounting Standards Board unless otherwise stated. The Group’s properties are reported in the balance sheet at their acquisition cost less accumulated depreciation. Ownership situation Pandox is owned by the Norwegian companies Eiendomsspar AS, Helene Sundt AS and CGS Holding AS.
  • 84 // Finances // Rep or t of the Bo ar d of D irect ors The Hotel Market Europe as a whole, driven by both higher prices hotel’s classic wing is currently in progress in Global economic statistics in the last quarter and improved occupancy, although for most order to create a more even product standard. were in line with the forecasts of most macro- large international cities, RevPAR is primarily The refurbishment is expected to give the hotel a experts. The crisis in the euro zone is however driven by average rates. However, the short- positive price effect as of the second quarter. still placing stress on the market, and there is a term trend shows a decline in growth in the Bremen, Dortmund and Lübeck saw weak risk that the Swedish economy could slow major international markets. trends in general during the year. slightly. On the other hand, the United States is The markets that are currently developing Of the Belgian hotels, Holiday Inn Brussels showing positive economic signs and growth the strongest are Istanbul, Venice, Paris and Airport showed best growth with a successful gradually increased during the year with rising Amsterdam. London showed surprisingly strong segmenting strategy in the competitive and company investments and a certain improve­ demand in the summer, and RevPAR improved growing market around Brussels airport. The ment in household consumption, despite weak by 8 percent on an annual basis despite 2010 Crowne Plaza Brussels – Le Palace also had a developments in their disposable income. The being a record year. strong year, driven by an increase in meeting vol­ beginning of 2012 is also showing positive signs, For markets where Pandox is established, umes. Similarly, the Hilton Brussels and Hotel with surprisingly strong labour market statistics, London, Gothenburg and Antwerp developed BLOOM! saw positive developments with relatively strong retail trade, and stable order best. In the Nordic region, all capitol cities strengthened market shares. The Hotel Brussels intakes in industry. The United States is not how­ showed positive RevPAR trends. Oslo, Helsinki is essentially following the strategic plan pre­ ever unaffected by the public debt crisis in and Copenhagen closed the year with RevPAR pared in conjunction with the acquisition. Europe, and the initial positive trends could be up by 5.5 percent while Stockholm, despite con­ The Hilton London Docklands continues to threatened in the first half-year 2012 further to siderable additional capacity, saw a rise in develop slightly more slowly than the market due the situation within the euro zone. RevPAR of 4 percent. On the other hand, the to a lower proportion of conferences and meet­ For growth markets, the economic situation Malmö market declined during the year, and ings. The decline against the market is however is generally strong, although analysts believe Gothenburg and Copenhagen have seen a slowing and the outlook for 2012 is good. that the anticipated decline in demand in Europe downturn in the short-term. Copenhagen’s hotels are performing below will affect the export figures of growth countries m ­ arket average, due primarily to the total refur­ in the future. Pandox’ portfolio bishment of the Scandic Hotel ­ openhagen. C Within this global situation, Pandox’ hotel Pandox’ hotel property portfolio continued to property portfolio has performed well. Property perform well. Most Stockholm hotels developed Norgani’s portfolio management revenues grew by 7.4 percent in better than the market, although the Hilton Slus­ Norgani’s hotel property portfolio has performed the reporting period, representing 3.3 percent sen has declined slightly due to the ongoing well, and rental revenues increased by 4.5 per­ for comparable units and adjusted for currency refurbishment program. In Gothenburg, the Elite cent in 2011 compared with comparable units effects. The rate of improvement was better than Park Avenue continued to perform better than and currency rates. the market on average, which implies that the the market, and both the Scandic Crown and The Stockholm market showed an increase hotels in Pandox’ portfolio in general took mar­ Scandic Mölndal improved and are now in line in RevPAR of close to 4 percent in 2011, and ket shares. Profits and cash flows continued to with or above the market on average. In Malmö, Norgani’s Stockholm portfolio is in general rise, driven basically by an improved hotel mar­ the refurbishment of the Radisson Blu has given p ­ erforming well. The best trends were seen at ket, the Company’s strategy, high quality in the desired results. The hotel is now performing well the Scandic Star Sollentuna and Scandic Mal­ portfolio, lower financing costs, and the Compa­ and has taken market shares, particularly within men. The Scandic Södertälje also had a strong ny’s active ownership. the meeting segment. Regional towns and cities year, while the hotels in southern Stockholm were relatively stable. experienced uneven developments. Other Stable and good developments Of the international hotels, both the Inter­ hotels south of Stockholm, the Ibis Stockholm in the United States Continental and the Hyatt in Montreal showed Syd and Scandic Kungens Kurva, are in line The hotel market in the United States was stable stable trends with increased market shares in with or marginally below the market. The with good developments as a whole in 2011. For both rates and occupancy. The InterContinental S ­ candic Alvik and Scandic Hasselbacken are the full-year, RevPAR increased by 6 percent is now performing steadily at the top of its performing below the market on average further compared with last year, due essentially to a rise c ­ ompetition group. For the Hyatt, 2011 was a to refurbishment in Alvik and at Hasselbacken’s in average rates. However, growth declined refurbishment year with total upgrading of public Cirkus scene. slightly towards the end of the year, prices stabi­ and F&B areas. The hotel has nonetheless The Gothenburg market developed strongly lised, and the short-term trend is that RevPAR is showed relatively good trends for the full-year, during the whole year with a total RevPAR being driven by occupancy. and is expected to continue to take market increase around 6 percent, although the short- Like last year, the luxury segment has seen shares in 2012. term trend shows a downturn. Both Norgani the greatest growth, driven by both higher prices The Hotel Berlin, Berlin showed stable devel­ hotels in Gothenburg, the Scandic Backadal and and stronger demand. opments during the year, although it lost slightly Quality Winn, are performing well and above against its market group due primarily to the market levels. Demand has returned to Europe meeting segment not being as large as antici­ Norgani’s hotels in Helsinki continue to RevPAR increased by close to 6 percent for pated. The refurbishment of 200 rooms in the p ­ erform in line with or better than the market.
  • Rep or t of the B oard of Dir ector s // finances // 85The Hilton Helsinki developed strongly and Portion of profits from Norgani subsidiaries carried out in 2005. The decisionshowed good trend well above the market. Pandox’ portion of the profits in Norgani has been appealed to the county administrativeThe Scandic Continental and Hilton Helsinki amounted to SEK 156.2 M before tax, and is court. The case has been put on hold awaitingKalastajatorppa performed in line with the reported under net financial items. the Supreme Administrative Court’s judgement­market. in another (non-Pandox related) case. The Com­ The Oslo market had a stable year, driven Profit pany is of the opinion that all transactions and primarily by an increase in volumes. Of Norgani’s The Group’s profit before tax and excluding claims have been made in accordance with hotels in Oslo, the Scandic KNA and Clarion n ­ on-recurring items amounted to SEK 457.5 M applicable laws and therefore no reserves haveCollection Hotel Bastion showed the strongest (313.5), and to SEK 513.5 M (744.7) including been booked in the Groups’ accounting. trends, and both hotels performed stably and non-recurring items. The Group’s profit after tax well above the market. The outlook for 2012 also amounted to SEK 412.3 M (567.8). Personnel looks promising. Developments at the Comfort Central administration counted 24 employees as Hotel Børsparken have been partly disrupted by Financing and cash flow at 31 December. Figures concerning average the total renovation of the ground floor (with new Net financial items relating to current operations number of employees, as well as salaries and reception, public areas and restaurant) as well as for the period January–December 2011 other remuneration are set out in Note 16. the building of 50 additional rooms that will be amounted to SEK –254.5 M (–214.0). The completed in September. Despite this situation, Group’s interest-bearing liabilities amounted as The work of the Board of Directors 2011 the hotel is performing well and only marginally of 31 December 2011 to SEK 7,406.6 M During 2011, the Board has held five ordinary below the market. (7,025.8). The loan portfolio has a spread due- meetings in accordance with the established date structure with an average fixed-interest annual agenda. The meetings have reviewedRevenues and operating net – period of 4.7 years. The average interest rate on and discussed external and internal report­ng of iproperty operations loans at 31 December 2011 was 3.7 percent. operating results and the Company’s financialProperty management revenues for the year Financing of Swedish properties has been made position as well as various business matters.amounted to SEK 961.4 M (923.3). For compa­ in Swedish kronor (SEK), while properties out­ Other important items that are regularly studiedrable units and currencies, the portfolio side Sweden have essentially been financed in and reviewed each year are markets, strategy,improved by 3.3 percent. This increase is mainly each respective local currency. Available liquid finance, and budget issues.attributable to a continued strong underlying funds, including unutilised bank overdraft andhotel economic climate and that last year’s refur­ credit facilities totalling SEK 711 M amounted to Parent Companybishment projects have been completed and are SEK 1,049 M (1,349). Cash flow before changes Property activities in the Group’s property-­now being operated with full capacity. However, in working capital, investments, and excluding owning companies are administered by staffat the hotel property level in each respective non-recurring items and tax, amounted to SEK employed by the Parent Company, Pandox AB.submarket, there are relatively large differences 691.2 M (518.9) including Pandox’ portion of the The cost of these services has been invoiced toin results depending on the location, market cash flow from the Norgani Group amounting to the Group’s subsidiaries. Invoicing in 2011segment, type of agreement and operator. Prop­ SEK 188.1 M. amounted to SEK 70.4 M (57.8). The profit forerty costs excluding depreciation amounted to the year amounted to SEK –29.4 M (56.7).SEK 141.8 M (140.6). The rise is mainly due to Investmentshigher property taxes further to the new acquisi­ The Pandox Group’s investments, excluding Outlook for 2012tion of the Park Inn by Radisson, Solna. The acquisitions, amounted for the period to SEK The outlook for Pandox for 2012 is consideredoperating net increased overall by SEK 36.9 M 349.2 M (197.7). Investments included the refur­ to be stable. A further active year lies aheadto SEK 819.6 M (782.7). bishment programs at the Scandic Hotel with the start of major investment programs in Copenhagen, The Hotel Brussels and the Hyatt existing hotels. This will partly disturb the hotels’Revenues and profit – hotel operations Regency Montreal, as well as product improve­ operations and profitability, but at the sameTotal revenues from hotel operations amounted ments at a large number of properties. The net time create good future potential. For compara­to SEK 1,244.0 M (1,208.6). For comparable book value of hotel properties amounted to SEK bility, the year’s profit is expected to be in lineunits and adjusted for currency effects, revenues 9,549.6 M (9,200.5). The market value of the with 2011.rose by 3.7 percent, and where the Crowne hotel properties significantly exceeds their bookPlaza Brussels – Le Palace and Holiday Inn value.Brussels Airport contributed most. The overallprofit from hotel operations amounted to TaxesSEK 2.3 M (5.8), which includes a market-level The Swedish Tax Agency has in a reassessmentrent that is reported under property manage­ notice dated October 2007, decided to increasement revenues. The renovation of The Hotel, the assessed income of a number of Pandox’sBrussels which begun in 2011, have had a subsidiaries by in total SEK 430 M (correspond­n­ egative effect on the overall profit from the ing tax effect of SEK 120.4 M) as a consequencehotel operations. of the sale of real estate through non-Swedish
  • 86 // Finances // I nc ome statement Income statement Group Parent Company SEK M 2011 2010 2011 2010 Property operations Rental revenue note 1, 2, 3 923.1 884.2 – – Other property revenue 38.3 39.1 – – Total property revenue 961.4 923.3 – – Property costs ––141.8 –140.6 – – Operating net 819.6 782.7 – – Depreciation as per plan note 4 –191.3 –194.3 – – Income from property operations 628.3 588.4 – – Hotel operations Operating revenue 1,244.0 1,208.6 – – Operating costs –1,241.7 –1,202.8 – – Operating income from hotel operations note 1, 2, 16 2.3 5.8 – – Gross income 630.6 594.2 – – Administrative costs note 4, 15, 16 –82.3 –72.4 –96.8 –71.8 Other revenue note 5 – – 70.4 57.8 Operating income 548.3 521.8 –26.4 –14.0 Interest income note 6 10.1 5.7 162.5 1,044.5 Interest expense –255.6 –212.0 –237.5 –177.1 Portion of profits from associate companies 156.2 5.7 – – Other financial income and costs note 6 54.6 423.5 61.6 –787.9 Net financial items –34.7 222.9 –13.4 79.5 Income before tax 513.6 744.7 –39.8 65.5 Tax note 7 –55.2 –111.2 10.4 –8.8 Deferred tax note 7 –46.1 –65.7 – – INCOME FOR THE YEAR 412.3 567.8 –29.4 56.7 Specification of external revenue Revenue from property operations 961.4 923.3 – – Of which internal rentals –211.5 –214.0 – – Revenue from hotel operations 1,244.0 1,208.6 – – Total external revenue 1,993.9 1,917.9 – –
  • I nc o me statement // finances // 87Comments on the income statementRental revenue Maintenance costs Operating netRental revenue pertains to hotel premises, hotel Maintenance costs are costs incurred to main­ The operating net for 2011 amounted to SEKfurniture and equipment, and other commercial tain the standards of buildings and equipment. 819.6 M, representing an increase of SEK 36.9 M.premises. Rental revenue for 2011 increased in Pandox’ leases are in most cases structuredrelation to the previous year and amounted to sothat the tenants – the hotel operators – are Hotel operationsSEK 923.1 M (884.2). responsible for the greater part of interior main­ For accounting purposes, the hotel operations tenance of the properties. conducted by Pandox are charged with internalOther property revenue rent. The internal rent is linked to the operator’sOther property revenue is primarily comprised of Ground rent revenue and based on what are deemed to becosts debited for heat, electricity and property A total of seven properties owned by Pandox are market conditions. The internal rent is debited totax. held under site leasehold rights. The conditions hotel operations and credited to revenue in and maturities in all cases are based on prevail­ property management.BREAKDOWN OF OTHER PROPERTY REVENUE ing market terms. Nine wholly owned hotel operations remainsSEK M 2011 2010 in Pandox portfolio at the end of 2011 of whichPayment for operating costs 10.8 12.6 Property tax three were directly operated by Pandox and sixInvoicing of property tax 27.5 26.5Total 38.3 39.1 Pandox’ Swedish hotel properties are liable to via management contracts. property tax at the rate of 1 percent of the tax assessment value. Properties located outside Administrative costsProperty costs Sweden are subject to varying percentages and Administrative costs relate to central administra­Operating costs underlying basis. tion, as well as foreign hotel property administra­Operating costs are costs that directly pertain to tion. All central administrative staff is based atthe operation of the properties, such as heat, Other costs the Stockholm office. The remuneration of staffwater, electricity, and maintenance. Costs are These costs include costs of legal counsel on and auditors is set out in Notes 15 and 16.reported gross, meaning that the portion of leasing matters, insurance premiums, and costscosts debited to tenants is reported as revenue of leasing external premises.under the heading Other Property Revenue, andthat total costs are reported among costs in their BREAKDOWN OF PROPERTY COSTSfull amount. SEK M 2011 2010 Operating costs 25.4 24.4 Maintenance costs 52.9 53.8 Ground rents 7.5 7.9 Property tax 49.9 47.9 Other costs 6.1 6.6 Total 141.8 140.6
  • 88 // Finances // B al ance sheet Balance sheet Group Parent Company SEK M 2011 2010 2011 2010 ASSETS Fixed assets Tangible fixed assets Properties note 8 8 973.8 8,613.4 – – Equipment note 9 578.2 588.2 2.4 1.1 9,552.0 9,201.6 2.4 1.1 Financial fixed assets Shares and participations in subsidiaries note 10 – – 3,424.2 3,310.6 Other shares and participations note 11 1,181.5 916.6 1,029.3 904.3 Amounts due by Group companies – – 4,414.8 3,883.6 Other long-term receivables 93.5 66.9 88.2 65.9 1,275.0 983.5 8,956.5 8,164.4 Deferred taxes recoverable 180.7 185.7 – – Total fixed assets 11,007.7 10,370.8 8,958.9 8,165.5 Current assets Inventories 8.2 8.3 – – Accounts receivables 94.9 167.4 – – Tax receivables 5.2 2.2 – – Other receivables 96.1 13.5 2.1 2.8 Prepaid costs and accrued revenue 58.3 84.6 15.1 48.4 Cash and bank 337.9 385.1 171.0 447.9 Total current assets 600.6 661.1 188.2 499.1 TOTAL ASSETS 11,608.3 11,031.9 9,147.1 8,664.6 Comments on the balance sheet Properties and equipment At the end of the year, the book value of the quarterly and monthly in advance, amounts out­ One hotel property was acquired in 2011. properties, including hotel furniture, fixtures and standing at year-end mainly comprise accrued Depreciation of properties amounted to SEK equipment, amounted to SEK 9,552.0 M. Other revenue-based rents. 114.9 M (112.0), and the year’s investments to items consist of administration equipment with a SEK 283.2 M (105.0). The book value of equip­ book value of SEK 2.4 M. Other receivables ment, including hotel furniture and fixtures Short-term receivables such as those pertaining amounted to SEK 578.2 M (588.2). Depreciation Other long-term receivables to costs that are to be debited to external par­ amounted to SEK 77.1 M (82.7) and invest­ Pertain to a long-term promissory note and to a ties. ments to SEK 69.2 M (92.9). pledged deposit. The greater part of the book value of furni­ Prepaid costs and accrued revenue ture, fixtures and equipment, representing SEK Inventories This item is comprised mainly of prepaid costs 578.2 M, pertains to that used by hotel opera­ Relate to stocks of consumables in the hotel for the following year, such as insurance premi­ tors. In certain cases, these items are included operations. ums and rents. as an unspecified portion of the revenue-based rent that the operator is being charged. When Trade accounts receivable Cash and bank deposits these items are included in rental revenues, Pan­ Pandox’ accounts receivable normally consists The liquidity of the Pandox Group is primarily dox includes their value in the property value of rental receivables and trade receivables in managed by the Parent Company through a used to calculate direct yield from the properties. hotel operations. Since rent is generally paid central bank account structure where liquidity is
  • Ba l ance sheet // finances // 89 Group Parent CompanySEK M 2011 2010 2011 2010EQUITY AND LIABILITIESEquityRestricted equityShare capital 373.5 373.5 373.5 373.5Restricted reserves 154.6 993.7 10.1 830.0Total restricted equity 528.1 1,367.2 383.6 1,203.5Unrestricted equityUnrestricted reserves 2,167.9 1,042.5 866.2 134.9Profit for the year 412.3 567.8 –29.4 56.7Total unrestricted equity 2,580,2 1,610.3 836.8 191.6Total shareholders’ equity 3,108.3 2,977.5 1,220.4 1,395.1ProvisionsDeferred tax liabilities note 7 424.8 389.1 – –Pension provisions 3.7 3.1 3.7 3.1Total provisions 428.5 392.2 3.7 3.1LiabilitiesLiabilities to credit institutions note 12 7,406.6 7,025.8 4,523.5 4,235.2Trade accounts payable 136.1 117.1 35.6 35.7Liabilities to Group companies 19.2 – 3,304.9 2,956.3Tax liabilities 15.6 10.2 – 1.4Other liabilities 188.1 219.1 6.6 3.3Accrued expenses and prepaid revenue note 13 305.9 290.0 52.4 34.5Total liabilities 8,071.5 8,054.4 7,923.0 7,266.4TOTAL EQUITY AND LIABILITIES 11,608.3 11,031.9 9,147.1 8,664.6Pledged assets note 14 5,375.4 5,071.8 – 12.2Contingent liabilities note 14 3.7 3.1 3,195.4 2,647.6assembled in a joint interest-bearing transaction Deferred tax liabilityaccount. Surplus liquidity can also be invested In 2011 the deferred tax items are accounted foras a fixed term bank deposit. In addition, Pan­ on a gross basis. Further details are set out indox has unutilised credit facilities for a total of the Pandox’ Tax Situation section on page 79.SEK 711 M. Accrued expenses and prepaid incomeLiabilities to credit institutions The amount pertains essentially to accruedAs at 31 December 2011, Pandox’ total interest- interest expense and prepaid rent.bearing liabilities amounted to SEK 7,406.6 M,spread over five lenders and six currencies. Pledged assetsBecause financing is arranged mainly through This item refers mainly to property mortgageslong-term credit agreements, the majority of the pledged to credit institutions as collateral fordebt is considered as long-term. As regards loans.fixed interest rates, debt amounting to SEK2,139.5 M carries a fixed interest rate for a period Contingent liabilitiesof less than one year. Further details are set out The Parent Company’s contingent liabilities referin the Financial Overview section on page 76. mainly to guarantees to banks with regard to subsidiaries’ debts.
  • 90 // Finances // C hanges in eq u it y Changes in equity Restricted Unrestricted Profit SEK M Share capital reserves reserves for the year Total Group 2010 Opening balance 373.5 1,051.1 1,270.6 301.5 2,996.7 Appropriation of profits – – 301.5 –301.5 – Other changes – 3.1 –3.1 – – Dividend – – –373.5 – –373.5 Group contribution – – –88.8 – –88.8 Translation differences – –68.7 –64.2 – –132.9 Equity fund relating to associate companies – 8.2 – – 8.2 Profit for the year – – – 567.8 567.8 373.5 993.7 1,042.5 567.8 2,977.5 Group 2011 Opening balance 373.5 993.7 1,042.5 567.8 2,977.5 Appropriation of profits – – 567.8 –567.8 – Other changes – –810.8 810.8 – – Dividend – – –174.3 – –174.3 Group contribution – – –94.9 – –94.9 Translation differences – –28.3 16.1 – –12.2 Equity fund relating to associate companies – – – – – Profit for the year – – – 412.3 412.3 373.5 154.6 2,167.9 412.3 3,108.3 Parent Company 2010 Opening balance 373.5 830.0 129.1 400.0 1,732.6 Appropriation of profits – – 400.0 –400.0 – Dividend – – –373.5 – –373.5 Group contribution – – –20.7 – –20.7 Profit for the year – – – 56.7 56.7 373.5 830.0 134.9 56.7 1,395.1 Parent Company 2011 Opening balance 373.5 830.0 134.9 56.7 1,395.1 Appropriation of profits – – 56.7 –56.7 – Other changes – –819.9 819.9 – – Dividend – – –174.3 – –174.3 Group contribution – – 29.0 – 29.0 Profit for the year – – – –29.4 –29.4 373.5 10.1 866.2 –29.4 1,220.3 The number of shares as at 31 December 2011 amounted to 24,900,000 with one vote per share and a nominal value of SEK 15 per share.
  • Cash f low statement // finances // 91Cash flow statement Group Parent CompanySEK M 2011 2010 2011 2010Current operationsProfit/loss before financial items 548.3 521.8 –26.4 –14.0Depreciation 192.0 194.7 1.5 0.4Interest received 63.2 5.7 72.5 89.1Interest paid and other financial costs –255.6 –216.4 –179.1 –54.0Tax paid –29.5 –80.1 –1.4 –Cash flow from current operations before change in working capital and investments 518.4 425.7 –133.0 21.5Change in working capitalIncrease/decrease (±) in operating receivables 16.3 –120.7 34.1 –72.3Increase/decrease (±) in operating liabilities –122.8 –142.0 36.7 15.2Total change in working capital –106.5 –262.7 70.8 –57.1Cash flow from current operations after change in working capital and investments 411.9 163.0 –62.2 –35.6Investment operationsChange in shares and participations –108.6 147.0 –238.7 –904.3Investments in properties and equipment –417.4 –197.9 –2.8 –0.2Acquisition of properties and equipment –113.7 –261.1 – –Change in interest-bearing receivables –26.8 –51.1 –401.8 –38.9Total investments –666.5 –363.1 –643.3 –943.4Cash flow after investments –254.6 –200.1 –705.5 –979.0Financing operationsChange in financial fixed assets – – – –Change in interest-bearing loans 380.9 649.6 602.9 1,601.1Dividend –174.3 –373.5 –174.3 –373.5Cash flow from financing operation 206.6 276.1 428.6 1,227.6Change in liquid funds –48.0 76.0 –276.9 248.6Liquid funds at the beginning of the year 385.1 326.4 447.9 199.3Exchange rate difference in liquid assets 0,8 –17.3 – –Liquid funds at the end of the year 337.9 385.1 171.0 447.9Change in liquid funds –48.0 76.0 –276.9 248.6
  • 92 // Finances // A cc ounting pr incip les Accounting principles The annual report and accounts have been The internal rent is linked to the operating companies’ Leasing prepared in accordance with the Swedish revenue and based on what are deemed to be market Pandox reports all leasing contracts as operational. conditions. The internal rent is expensed to hotel oper­ Leasing contracts entered into concern private cars Annual Accounts Act and generally ations, and carried as revenue in property operations. and office machines. They are not significant in size and accepted accounting principles, as well as do not therefore influence an assessment of the taking into account the recommendations Tangible fixed assets Group’s results and financial position. of the Swedish Accounting Standards When new construction and additions are carried out, Board if not stated otherwise. Pandox’ all direct costs including project costs are capitalised. In Revenue the case of refurbishments, direct costs related to the Management revenue pertains to rental revenue as well accounting and evaluation principles are in improvement of properties compared with their original as re-debited operating costs and property tax. Reve­ general unchanged compared with last condition are capitalised. nue and costs related to the operations of hotel opera­ year. Costs of repairing a property to its original condition tors are reported separately in the consolidated income are not capitalised. An exception to this principle statement. Rental revenue is spread over a period of Consolidated accounts involves the costs of measures taken further to time in accordance with the terms of each lease. This The consolidated accounts for the Group include all neglected maintenance established at the time of an implies that rent paid in advance is reported as prepaid subsidiaries as at financial year-end. acquisition, and where the acquisition price is adjusted rental revenue. The consolidated accounts have been prepared in accordingly. accordance with the purchase method, whereby Costs of tenant-related modifications that imply that Shares and participations assets and liabilities have been taken over at market the rent may be increased are capitalised and depreci­ Shares and participations in subsidiaries and subsidiar­ value in accordance with an acquisition analysis. The ated over the remaining period of the lease. ies of subsidiaries have been stated at acquisition value difference between acquisition value and acquired Depreciation according to plan is calculated on the with the exception of holdings that may have been writ­ shareholders’ equity has been added to land and build­ acquisition value at the following percentages: ten down to their estimated actual value. ings as surplus value. Surplus value is amortised in % accordance with the same principle used for proper­ Buildings 1.0 Financial instruments ties. Estimated deferred tax liability with respect to Building fixtures 4–6.7 Interest swaps are used to change underlying financial Group surplus value and estimated deferred tax recov­ Land improvements 3.5 liabilities’ interest-due structure. Revenue and costs erable are reported net as a deferred tax liability in the Equipment 6.7–33 related to interest swaps are reported net as interest balance sheet. costs, and are spread over the duration of each con­ Pandox changed the depreciation rate for buildings tract. Tax from 1.5 percent to 1 percent with effect from 2000. Pandox applies the Swedish Accounting Standards Depreciation according to plan is calculated on the International subsidiaries Board’s general recommendation regarding income tax acquisition value and a residual value of SEK 0. International subsidiaries are stated as per the current accounting (BFNAR 2001:1). Briefly, the recommenda­ rate method, which implies that the income statement tion implies that both deferred tax liabilities and tax Associate companies is restated at the average exchange rate of the period, recoverable shall be included in the financial state­ Shares in associate companies are accounted for and the balance sheet at the exchange rate prevailing ments, and that any changes shall affect the income under the equity method. The book value of shares in on the closing day. The exchange rate difference that statement as deferred tax. The deferred tax relating to associate companies corresponds to the Group’s share arises as a result of this method is recorded directly the difference in book depreciation and fiscal deprecia­ of the equity in the associate companies plus any con­ against the Group’s equity. Any companies acquired tion shall be calculated using the prevailing tax rate. solidated surplus or deficit values. In the Group’s during the year are included in the Group at an amount Acquisitions based on the deferred tax liability relat­ income statement ’Portion of profits from associate relating to the period following such acquisition. ing to asset acquisitions shall be based on the acquisi­ companies’ includes the Group’s share of associates’ tion price and be calculated from each respective prop­ profits after financial items adjusted for any depreciation Receivables and liabilities expressed in erty’s shortest estimated period of ownership, resulting of consolidated surplus or deficit values. The Group’s ­foreign currencies in an average tax rate of approximately 10 percent. share of reported taxes are included in the consolidated Receivables and liabilities expressed in foreign curren­ The deferred tax recoverable pertaining to esti­ tax expenses. Share of profits earned after the acquisi­ cies are restated at the rate of exchange prevailing on mated tax recoverable related to deficit deductions in tion of associate companies which have not yet been balance sheet date. Any differences that may arise are the Company are valued based on the estimated realized through dividends, are allocated to the equity either credited or debited to income. When loans or for­ potential utilisation against future taxable profits, and fund that forms part of the Group’s restricted reserves. ward contracts are entered into to hedge investments are calculated based on the prevailing tax rate. in international subsidiaries, any exchange rate differ­ Write-down of fixed assets ences that may arise are offset in the Group by an Property operations The Group’s properties are continuously valued in amount corresponding to the differences arising from The Group’s properties are reported in the balance accordance with an internal cash flow model, which the recalculation of the net assets of international sub­ sheet as fixed assets in view of the purpose of the hold­ also fulfils the requirement to calculate the utilisation sidiaries. ings being the long-term ownership, management and value in accordance with current accounting principles development of the properties. whereby the recoverable value, which is the greater of Other receivables and liabilities the net sales value and the utilisation value, is com­ Receivables have been stated in the amounts expected Hotel operations pared with the property’s book value in order to assess to be received. Other assets and liabilities have been The hotel operations conducted by Pandox are the need for a possible write-down. stated at nominal values. charg­ d with internal rent for accounting purposes. e
  • No tes // finances // 93NotesNOTe 1  SEGMENT REPORTINGPrimary segmentPandox’ primary segment is comprised of two operating branches – property operations and hotel operations.Information in accordance with segment reporting is presented in the ­ onsolidated income statement and balance sheet. cSecondary segmentYear 2011 Stockholm Gothenburg Öresund Rest of Sweden International Adjustment TotalProperty revenue 228.9 93.6 160.3 138.9 339.8 –211.5 750.0Property costs –41.1 –10.5 –35.2 –23.1 –31.9 – –141.8Operating net 187.8 83.1 125.1 115.8 307.9 –211.5 608.2Book value of properties 1,611.6 740.8 1,527.3 1,072.6 4,597.2 – 9,549.5Investments 44.1 5.5 90.6 69.5 139.5 – 349.2Operating revenue – hotel operations – – 6.5 – 1,237.5 – 1,244.0Operating costs – hotel operations – – –6.7 – –1,235.0 211.5 –1,030.2Operating profit – hotel operations – – –0.2 – 2,5 211.5 213.8Year 2010 Stockholm Gothenburg Öresund Rest of Sweden International Adjustment TotalProperty revenue 206.0 87.2 158.0 133.9 338.2 –214.0 709.3Property costs –37.3 –9.3 –31.5 –20.0 –42.5 – –140.6Operating net 168.7 77.9 126.5 113.9 295.7 –214.0 568.7Book value of properties 1,391.8 749.2 1,461.2 1,020.1 4,578.2 – 9,200.5Investments 32.5 7.0 37.5 37.4 83.3 – 197.7Operating revenue – hotel operations – – 7.6 – 1,201.0 – 1,208.6Operating costs – hotel operations – – –7.6 – –1,195.2 214.0 –988.8Operating profit – hotel operations – – 0.0 – 5.8 214.0 219.8NOTE 2  RENTAL REVENUE NOTE 4  DEPRECIATION ACCORDING TO PLANRevenues from hotel operations pertain to three businesses operated under manage­ Group Parent Companyment agreements with Hilton, InterContinental and Hyatt respectively, as well as the SEK M 2011 2010 2011 2010six hotels operated by Pandox. Rent and remuneration for other property costs which Buildings –113.9 –111.2 – –were paid by these hotel operator companies to the property company are reported Land improvements –1.0 –0.8 – –gross, i.e. they have not been ­ liminated in the income statement. This is done to e Equipment –77.1 –82.7 –0.7 –0.4p­ rovide a more accurate picture of the operating net generated by the property com­ Total depreciation –192.0 –194.7 –0.7 –0.4pany and the operating income of the hotel operating company. The elimination of Depreciation amounts to a total of SEK 192.0 M of which SEK 191.3 M (194.3) refersthese items would imply that the total management revenue and the operating com­ to property operations and SEK 0.7 M (0.4) to administration.pany’s operating costs would be ­ educed by SEK 211.5 M for the year 2011 (214.0). rNOTE 3  HYRESINTÄKTERNAS GEOGRAFISKA FÖRDELNING NotE 5  OTHER REVENUE Property activities in the Group’s property-owning companies are administered by% 2011 2010 staff employed by the Parent Company. The cost of these services has been invoicedSweden 56 54 to the Group’s subsidiaries. Invoicing in 2011 amounted to SEK 70.4 M (57.8), whichDenmark 6 7 of 20.3 M has been invoiced to associated companies.United Kingdom 5 5Germany 11 12Belgium 14 14 NotE 6  INTEREST INCOME AND OTHER FINANCIALSwitzerland 3 3 INCOME AND COSTSCanada 5 5Total 100 100 The interest income of the Parent Company is divided into SEK 151.7 M (86.6) from Group companies, SEK 6.8 M (2.5) from external parties, and SEK 0 M (955.4) from dividends from subsidiaries. Of SEK –237.5 M (–787.9) in other financial income and cost in the Parent Company, SEK 9.1 M (178.2) pertains to currency effects in valua­ tion of liabilities in foreign currency at closing date exchange rate. Of SEK 10.1 M (5.7) in Group interest income, SEK 10.1 M (4.6) refers to external interest income and SEK 0 M (1.1) refers to dividends from other shares and participations. Other finacial and costs in the Group amounts to SEK 54.6 M (423.5) of which last year SEK 431.2 M (79.5) pertains to capital gains further to the sale of shares in HOST Hotels & Resorts Inc.
  • 94 // Finances // No tes NOTE 7  DEFERRED TAX AND ACTUAL TAX Group Parent Company SEK M 2011 2010 2011 2010 Deferred tax expense for the year Deferred tax expense relating to temporary differences –28.8 –24.0 – – Deferred tax expense relating to deficit deductions –2.9 –47.5 – – Deferred tax expense relating to other provisions –2.4 1.8 – – Deferred tax expense relating to associate companies –12.0 4.0 – – Deferred tax reported in the income statement –46.1 –65.7 – – Actual tax in the income statement –55.2 –111.2 10.4 –8.8 of which relating to associate companies –2.7 –5.5 – – Difference between reported tax and nominal tax rate Reported profit before tax 513.6 744.7 –39.8 65.5 Tax as per applicable tax rate –135.1 –195.8 10.5 –17.2 Tax effect due to nontaxable income 8.4 22.1 5.9 272.7 Tax effect of nondeductible costs and other tax adjustments 7.3 –32.3 –6.0 –264.3 Tax effect relating to foreign operations 18.1 29.1 – – Reported tax expense –101.3 –176.9 10.4 –8.8 Deferred tax recoverable Deficit deductions 170.3 173.4 – – Other deferred tax recoverable 10.4 12.3 – – Total deferred tax recoverable 180.7 185.7 – – Deferred tax liabilities Differences between book value and fiscal value of properties 424.8 389.1 – – Total deferred tax liabilities 424.8 389.1 – – Total deferred tax liabilities/recoverable net –244.1 –203.4 – – The Group’s nominal tax rate is estimated at 26.6 percent and in the Parent Company it amounts to 26.3 percent. The effective income tax rate in the Group amounted in 2011 to 19.7percent (23.8) and in the Parent Company to 26.3 percent (13.4). NOTE 8  LAND AND BUILDINGS Group SEK M 2011 2010 Opening acquisition value 9,755.2 9,798.7 Reclassified as equipment – –0.6 Acquisition of properties 206.4 320.6 Investments 283.2 105.0 Disposals – – Translation differences – balance sheet –14.3 –468.5 Closing accumulated acquisition value 10,230.5 9,755.2 Opening depreciation –1,141.8 –1,062.9 Disposals – – Depreciation for the year –114.9 –112.0 Translation differences – balance sheet – 33.1 Closing accumulated depreciation –1,256.7 –1,141.8 Closing residual value 8,973.8 8,613.4 Tax assessment value of Swedish properties 2,900.8 2,900.8 Of which land 858.7 858.7 Book value Swedish properties 4,952.4 3,945.2
  • No tes // finances // 95NOTE 9  EQUIPMENT Group Parent CompanySEK M 2011 2010 2011 2010Opening acquisition value 1,054.8 1,037.9 4.8 4.6Reclassified from land and buildings – 0.6 – –Acquisition of equipment – 11.3 3.1 –Investments 69.2 92.9 – 0.2Disposals – – – –Translation differences – balance sheet –1.4 –87.9 – –Closing accumulated acquisition value 1,122.6 1,054.8 7.9 4.8Opening depreciation –466.6 –424.4 –3.7 –3.3Disposals –1.1 – –1.1 –Depreciation for the year –77.1 –82.7 –0.7 –0.4Translation differences – balance sheet 0.4 40.5 – –Closing accumulated depreciation –544.4 –466.6 –5.5 –3.7Closing residual value 578.2 588.2 2.4 1.1NOTE 10  SHARES AND PARTICIPATIONS IN SUBSIDIARIES Registered Number Percent Corp. Reg. No. office of shares Par value owned Book valueParent CompanyHotab Förvaltnings AB 556475-5592 Stockholm 1,000 100 100 285.1Pandox Förvaltning AB 556097-0815 Stockholm 5,500 100 100 304.7Hotab 6 AB 556473-6352 Stockholm 1,000 100 100 0.1Fastighets AB Grand Hotel i Helsingborg 556473-6329 Stockholm 1,000 100 100 15.9Solna Torg Fastighets AB 556711-8236 Stockholm 1,000 100 100 113.7Pandox Fastighets AB 556473-6261 Stockholm 1,000 100 100 0.1Fastighets AB Mora Hotell 556475-9370 Stockholm 1,000 100 75 5.7Fastighets AB Stora Hotellet i Jönköping 556469-4064 Stockholm 1,000 100 100 30.1Pandox Belgien AB 556495-0078 Stockholm 1,000 100 100 4.0Pandox Hotel Management AB 556469-9782 Stockholm 1,000 100 100 0.1Hotellus Holding AB 556475-9446 Stockholm 1,000 100 100 16.1Pandox Luxemburg AB 556515-9216 Stockholm 10,000 10 100 68.3Fastighets AB Porpur 556349-8327 Stockholm 10,000 100 100 0.1Pandox i Halmstad AB 556549-8978 Stockholm 1,000 100 100 8.7Pandox i Borås AB 556528-0160 Stockholm 1,000 100 100 61.5Grand i Borås Fastighets AB 556030-7083 Stockholm 6,506 100 100 10.0Hotell Värmdövägen 84 AB 556286-4826 Stockholm 1,000 100 100 4.3Hotellus International AB 556030-2506 Stockholm 7,480,000 100 100 970.2KB Lorensberg 49:2 916833-3269 Gothenburg – – 100 0.0Hotellus Östersund AB 556367-3697 Stockholm 1,000 100 100 3.0Ademrac Holding 1 AB 556683-3371 Stockholm 10,093 100 100 219.4Ademrac Holding 2 AB 556683-3363 Stockholm 10,010 100 100 219.6Ademrac AB 556426-2748 Stockholm 1,790,042 100 6,6 3.4Le Nouveau Palace SA 446188 Brussels 3,000 – 100 291.4Convention Hotel International AG 270.3.001.168-3 Basle 14,000 – 100 6.2Hotellus Denmark A/S 28970927 Copenhagen 5,000 – 100 61.5Hotel Bloom SA 0476.704.322 Brussels 68,808 – 100 67.3Pandox Belgium SA 0890.427.732 Brussels 100,000 – 100 471.6Pandox i Malmö AB 556704-3723 Stockholm 1,000 100 100 142.0Ypsilon Hotell AB 556481-4134 Stockholm 1,000 100 100 39.8Pandox Kolmården AB 556706-8316 Stockholm 100,000 1 100 0.1Hotellus Sverige Ett AB 556778-8699 Stockholm 1,000 100 100 0.1Hotellus Sverige Två AB 556778-8707 Stockholm 1,000 100 100 0.1Total Pandox AB 3,424.2
  • 96 // Finances // No tes NOTE 10  SHARES AND PARTICIPATIONS IN SUBSIDIARIES, cont. Registered Registered Corp. reg. no. office Corp. reg. no. office Group Elba Leasehold BVBA – Belgium Arlanda Flyghotell KB 916500-8021 Stockholm Elba Freehold BVBA – Belgium Fastighetsbolaget Utkiken KB 916611-7755 Stockholm Holcro NV – Belgium Fastighets AB Hotell Kramer 556473-6402 Stockholm Hotellus Suomi OY – Finland Hotellus Nordic AB 556554-6594 Stockholm Hotellus Nord OY – Finland Hotellus Järva Krog AB 556351-7365 Stockholm Euro Lifim BV – Netherlands Hotellus Mölndal AB 556554-6636 Stockholm Hotellus Europe BV – Netherlands Bioeffect AB 556244-5030 Stockholm Pandox Holland BV – Netherlands Vestervold KB 916631-9534 Stockholm Pandox Holland 2 BV – Netherlands Pandox Mellansverige AB 556745-4656 Stockholm Hotellus Luxembourg Sarl – Luxemburg Skogshöjd Handels & Fastighets AB 556066-0432 Stockholm Hotellus Deutschland GmbH – Germany Grand Hotel Brussels NV – Belgium Atlantis mbH – Germany Hotellus Belgium NV – Belgium Pandox Berlin GmbH – Germany Town Hotel SA – Belgium Hotellus Canada Holdings Inc – Canada Elba Belgium Holding BVBA – Belgium Hotellus Montreal Holdings Inc – Canada NOTE 11  OTHER SHARES AND PARTICIPATIONS Other shares and participations of SEK 1,181.5 M (916.6) in 2011 refers to the shareholding of Sech Holding AB that during the autumn 2010 acquired 100 percent of the shares in Norgani Hotels AS. Pandox ownership of Sech Holding AB amounts to 50 percent and is reported according to the equity method. NOTE 12  LIABILITIES TO CREDIT INSTITUTIONS Group Parent Company SEK M 2011 2010 2011 2010 Liabilities that fall due within one year following balance sheet date 122.0 810.0 – 793.6 Liabilities that fall due between one and four years following balance sheet date 1,010.0 1,000.7 835.6 700.0 Liabilities that fall due five or more years following balance sheet date 6,274.6 5,215.1 3,687.9 2,741.6 Total 7,406.6 7,025.8 4,523.5 4,235.2 NOTE 13  ACCRUED ASSETS AND CONTINGENT REVENUE Group Parent Company SEK M 2011 2010 2011 2010 Prepaid rents 55.2 50.1 – – Accrued interest expenses 25.9 22.9 15.9 18.3 Property tax 7.8 7.8 – – Unrealised hedge results 1.6 3.4 1.6 3.4 Other 215.4 205.8 34.9 12.8 Total 305.9 290.0 52.4 34.5 NOTE 14  PLEDGED ASSETS AND CONTINGENT LIABILITIES Group Parent Company SEK M 2011 2010 2011 2010 Pledged assets for loans from credit institutions Property mortgages 5,368.4 5,052.6 – – Pledged deposit 7.0 19.2 – 12.2 Contingent liabilities 3.7 3.1 3,195.4 2,647.6
  • No tes // finances // 97NOTE 15  AUDIT FEES AND REMUNERATION Group Parent CompanySEK M 2011 2010 2011 2010KPMGAudit assignments 3.7 3.4 0.8 0.8Other assignments 0.9 1.5 – –SET RevisionsbyråAudit assignments 0.1 0.1 0.1 0.1OtherOther assignments 0.1 0.1 – –Total 4.8 5.1 0.9 0.9NOTE 16  PERSONNEL Group Parent Company 2011 2010 2011 2010Average number of employeesMen 600 509 13 8Women 648 517 11 8Total 1,248 1,026 24 16Of whom employed in Sweden 24 16 24 16Of whom employed in Belgium 622 436 – –Of whom employed in Germany 218 196 – –Of whom employed in Canada 384 378 – –Board of directors and senior managers and executivesMen 11 11 10 10Women 2 2 2 2Total 13 13 12 12Wages, salaries and other remuneration, SEK MBoard of Directors and CEOWages, salaries and other remuneration 5.6 5.5 5.6 5.5Social security costs 1.6 1.6 1.6 1.6Pension costs 15.2 0.7 15.2 0.7Total 22.4 7.8 22.4 7.8Other employeesWages, salaries and other remuneration 411.4 369.4 21.8 17.0Social security costs 87.6 79.3 6.6 5.3Pension costs 34.2 11.7 9.3 4.1Total 533.2 460.4 37.7 26.4Wages, salaries and other remuneration per country, SEK MSwedenBoard of Directors and CEO 5.6 5.5 5.6 5.5Other employees 21.8 17.0 21.8 17.0Belgium other employees 188.3 141.9 – –Germany other employees 38.5 44.5 – –Canada other employees 157.2 166.0 – –Total 411.4 352.4 27.4 22.5Personnel employed in Belgium relate to the operator activities of the Crowne Plaza Brussels – Le Palace, the Holiday Inn Brussels Airport, the Crowne Plaza ­ ntwerp, AThe Hotel Brussels, the Hilton Brussels City, and the Hotel BLOOM!. ­ ersonnel employed in ­ ermany to Hotel Berlin, Berlin and in Canada to InterContinental Montreal P Gand Hyatt Regency Montreal. The remuneration of the Members of the Board is established by the Annual General Meeting of Shareholders. The remuneration of the Chief Executive Officer (CEO) is­ omposed of a basic salary, a bonus, a company car, and a retirement pension scheme. During 2011 the CEO recived an extra pension on 14.5 M. The age of retirement ofcthe CEO is 65 years, with the possibility of retiring at the age of 60. In the case of ­ ermination, the CEO shall be given a period of notice of 24 months by the Company, with a tdeduction clause. Upon resignation by the CEO, a period of notice of 6 months shall apply. Sickness absence in the Parent Company amounted to 0.1 percent (0.5).
  • 98 // Finances // P ro po sed disp o siti on o f ear nings Proposed disposition of earnings The following profits are at the disposition of the forthcoming Annual General Meeting of Shareholders: Balance brought forward SEK 866,205,989 Profit for the year SEK –29,450,021 SEK 836,755,968 The Board of Directors and Chief Executive Officer propose that the accumulated profits be appropriated as follows: Dividend to the shareholders, SEK 7.50 per share SEK 186,750,000 Amount to be carried forward SEK 650,005,968 SEK 836,755,968 Stockholm, 16 February 2012 Christian Ringnes Chairman Leiv Askvig Christian Sundt Olaf Gauslå Bengt Kjell Helene Sundt Mats Wäppling Anders Nissen Chief Executive Officer Our audit report pertaining to this annual report and consolidated financial statements was submitted on 16 February 2011. Per Gustafsson Willard Möller Authorised Public Accountant Authorised Public Accountant
  • Au dit or ’ s Rep or t // finances // 99Auditor’s reportTo the annual meeting of the shareholders of Pandox AB, corporate Accounts Act. The statutory administration report is consistent with theidentity number 556030-7885 other parts of the annual accounts and consolidated accounts. We therefore recommend that the annual meeting of shareholdersReport on the annual accounts and consolidated accounts adopt the income statement and balance sheet for the parent companyWe have audited the annual accounts and consolidated accounts of and the group.P­ andox AB for the year 2011. The annual accounts and consolidatedaccounts of the company are included in the printed version of this Report on other legal and regulatory requirementsd­ ocument on pages 83–98. In addition to our audit of the annual accounts and consolidated accounts, we have examined the proposed appropriations of the company’s profit orResponsibilities of the Board of Directors and the Managing Director for loss and the administration of the Board of Directors and the Managingthe annual accounts and consolidated accounts Director of Pandox AB for the year 2011.The Board of Directors and the Managing Director are responsible for thepreparation and fair presentation of these annual accounts and consoli­ Responsibilities of the Board of Directors and the Managing Directordated accounts in accordance with the Annual Accounts Act, and for such The Board of Directors is responsible for the proposal for appropriations ofinternal control as the Board of Directors and the Managing Director the company’s profit or loss, and the Board of Directors and the Managingd­ etermine is necessary to enable the preparation of annual accounts and Director are responsible for administration under the Companies Act.consolidated accounts that are free from material misstatement, whetherdue to fraud or error. Auditor’s responsibility Our responsibility is to express an opinion with reasonable assurance onAuditor’s responsibility the proposed appropriations of the company’s profit or loss and on theOur responsibility is to express an opinion on these annual accounts and administration based on our audit. We conducted the audit in accordanceconsolidated accounts based on our audit. We conducted our audit in with generally accepted auditing standards in Sweden.accordance with International Standards on Auditing and generally As a basis for our opinion on the Board of Directors’ proposed appropria­accepted auditing standards in Sweden. Those standards require that we tions of the company’s profit or loss, we examined the Board of Directors’comply with ethical requirements and plan and perform the audit to obtain r ­ easoned statement and a selection of supporting evidence in order to be ablereasonable assurance about whether the annual accounts and to assess whether the proposal is in accordance with the Companies Act.c­ onsolidated accounts are free from material misstatement. As a basis for our opinion concerning discharge from liability, in addi­ An audit involves performing procedures to obtain audit evidence about tion to our audit of the annual accounts and consolidated accounts, wethe amounts and disclosures in the annual accounts and ­ onsolidated c examined significant decisions, actions taken and circumstances of theaccounts. The procedures selected depend on the auditor’s judgement, company in order to determine whether any member of the Board ofincluding the assessment of the risks of material misstatement of the annual D ­ irectors or the Managing Director is liable to the company. We alsoaccounts and consolidated accounts, whether due to fraud or error. In mak­ e ­ xamined whether any member of the Board of Directors or the Managinging those risk assessments, the auditor considers internal control relevant to Director has, in any other way, acted in contravention of the Companiesthe company’s preparation and fair presentation of the annual accounts and Act, the Annual Accounts Act or the Articles of Association.consolidated accounts in order to design audit procedures that are appropri­ We believe that the audit evidence we have obtained is sufficient andate in the circumstances, but not for the purpose of expressing an opinion on appropriate to provide a basis for our opinion.the effectiveness of the company’s internal control. An audit also includesevaluating the appropriateness of accounting policies used and the reason­ Opinionsableness of accounting estimates made by the Board of Directors and the We recommend to the annual meeting of shareholders that the profit beManaging Director, as well as evaluating the overall presentation of the appropriated in accordance with the proposal in the statutory administrationannual accounts and consolidated accounts. report and that the members of the Board of Directors and the Managing We believe that the audit evidence we have obtained is sufficient and Director be discharged from liability for the financial year.appropriate to provide a basis for our audit opinion.OpinionsIn our opinion, the annual accounts and consolidated accounts have been Stockholm, February 16, 2012prepared in accordance with the Annual Accounts Act and present fairly, inall material respects, the financial position of the parent company and the group as of 31 December 2011 and of their financial performance and Per Gustafsson Willard Möllercash flows for the year then ended in accordance with the Annual Authorized Public Accountant Authorized Public Accountant
  • 100 // Finances // D efiniti ons Definitions of key data Property related key figures Financial key figures Hotel market related key figures Operating net Return on equity Occupied rooms Hotel property revenue less operating and mainte­ Profit after tax as a percentage of average equity. Number of sold room nights during a given period nance costs, property tax, ground rent and other of time – normally one year. property costs. Interest coverage ratio Profit before tax less depreciation and net financial Available rooms Property related administration items (EBITDA) in relation to net financial items. Available room capacity during a given period of The portion of total administration costs that is time – normally one year. directly related to the management and develop­ Equity/asset ratio ment of a property. Other administration costs Equity at the end of the year as a percentage of Occupancy rate include central administration and costs for total assets. Number of occupied rooms as a percentage of administration of non-Swedish entities. the number of available rooms. Total property revenue Average room rate The sum of rental revenue and other property Total revenue from sold rooms divided by the ­revenue. n ­ umber of occupied rooms. RevPAR (Revenue Per Available Room) Total revenue from sold rooms divided by the n ­ umber of available rooms. Market penetration The performance of an individual hotel in relation to the average of the market. GOP (Gross Operating Profit) Net profit in hotel operator companies before depreciation, rent, net financial items and taxes. Production: Pandox in cooperation with Hallvarsson & Halvarsson. Photo: Ulf Blomberg, Peter Hoelstad and others. Printing: Elanders, Falköping, 2012.
  • Hotel BLOOM!, Brussels
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