Q3-2013 Results Wolfgang M. Neumann, President & CEO Knut - - PowerPoint PPT Presentation

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Q3-2013 Results

Wolfgang M. Neumann, President & CEO Knut Kleiven, Deputy President & CFO October 22, Sochi

Radisson Blu Resort & Congress Centre, Sochi

/ 2 Q3-2013 Results

Rezidor in Russia Hotels Rooms

In operation 22 6,900 In pipeline 21 5,200

Rezidor in Sochi Hotels Rooms

In operation 4 1,200 In pipeline 3 870

• Sochi: Winter Olympics in Feb 2014; venue of Formula 1 Grand Prix

2014 and FIFA world cup 2018; Russia’s largest resort/beach destination; significant infrastructure investment, promising MICE destination

• Russia: Lack of international branded supply in key cities, favorable

economic outlook, significant growth driver; represents 20% of pipeline

In Sochi since 1993; portfolio of 7 hotels in one of Russia's most dynamic destinations

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Q3-2013: higher market share and profitability

• L/L RevPAR growth of 5.9%, driven by both occupancy and rate
• Reported RevPAR growth of 0.8%, negatively impacted by the

strengthening of the Euro

• Market share (RGI) up 2.3% August YTD
• Strict cost control and the 2012 terminations of unprofitable leases

led to solid conversion of revenue to EBITDA

• EBITDA up MEUR 5 to MEUR 23 and margin up by 2.6pp to 10.0%.
• EBIT up MEUR 7 to MEUR 15 and margin up by 3.1pp to 6.7%
• Cash Flow from operating activities up by MEUR 17 YTD
• New Asset Management transaction in October
• Rezidor and Formosa have mutually agreed to end the alliance

agreement for Regent

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10% EBITDA Margin

+2.6pp

RevPAR

+5.9%

(L/L) €15m EBIT

+€7m

€23m EBITDA

+€5m

Q3-2013 Results

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6.5% 3.0% 2.3% 3.2% 5.6% 5.9% 4.6% 4.2% 5.7% 6.0% 5.9%

• 2%

0% 2% 4% 6% 8% 10%

L/L Occupancy L/L Average Room Rate L/L RevPAR

L/L RevPAR improvement of 5.9% driven by both occupancy and rate growth

4 Q3-2013 Results

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Emerging Markets driving RevPAR led by Russia, the Baltics, South Africa and UAE

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NORDICS EASTERN EUROPE REST OF WESTERN EUROPE MIDDLE EAST & AFRICA

Q1 Q2 Q3 Q4 Q1 Q2 Q3 2012 2013 1.7% 1.8% 0.8% 3.4% 0.7% 8.8% 3.8%

• 5%

5% 15% 25%

L/L Occupancy L/L Average Room Rate L/L RevPAR 3.1% 2.0% 3.6% 2.2% 1.2% 4.2% 4.8%

• 5%

5% 15% 25%

L/L Occupancy L/L Average Room Rate L/L RevPAR 12.2% 11.9% 6.1% 5.7% 4.0% 1.2% 8.4%

• 5%

5% 15% 25%

L/L Occupancy L/L Average Room Rate L/L RevPAR

10.8% 17.1% 13.0% 7.9% 20.5% 13.5% 7.8%

• 5%

5% 15% 25%

L/L Occupancy L/L Average Room Rate L/L RevPAR

Q1 Q2 Q3 Q4 Q1 Q2 Q3 2012 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2012 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2012 2013 Q3-2013 Results

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Margin improvement on track in pursuit of Route 2015 objectives

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EBITDA, MEUR / EBITDA margin, % EBITDAR, MEUR / EBITDAR margin, %

Q3-2013 Results

29% 30% 31% 32% 33% 34% 35% 20 40 60 80 100 120 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 Q2 Q3 EBITDAR, MEUR EBITDAR margin %, Rolling 12-months

0% 2% 4% 6% 8%

• 20
• 10

10 20 30 40 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 Q2 Q3 EBITDA, MEUR EBITDA margin %, Rolling 12-months

EBITDAR margin:

• Route 2015 gaining momentum
• Solid progression since Q3-2011
• 3rd party benchmark confirms a leading

EBITDAR margin

EBITDA margin:

• Steady increase since Q4-2011
• Margin target of 10-12% remains
• Cost optimisation program yields the

targeted saving objectives

• Revenue optimisation in close

cooperation with Carlson and Asset Management are the key drivers

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Asset Management contributes more than MEUR 5 on the EBITDA improvement in 2013

In MEUR Exit Fee Revenue Impact 2013 EBITDA Impact

Exit from seven leases in France 11.5 14.8 1.9 Exit from two leases in Sweden 0.9 10.2 0.9 Exit from a committed management contract

• 1.0

0.9 Contract extensions, renovation/restructuring two leases in ROWE

• 0.2

0.5 Rent restructuring one lease in ROWE

• 1.0

Total

12.4 26.2 5.2

• EBITDA margin impact of 0.7% from above listed Asset Management deals
• Further progress expected in Q4

Q3-2013 Results 7

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Q3 comments:

• First hotel in Algeria with the Radisson Blu Algiers Hydra
• Key Focus Countries: Saudi Arabia, Turkey and Russia

Q3 signings emphasize strategic focus on emerging markets

Park Inn Pulkovo Airport, St. Petersburg

100%

Fee-based

100%

Emerging Markets

>60 60%

Radisson Blu Q3 2013

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SIGNINGS Q3 2013 Q3 2012 YTD 2013 YTD 2012 Hotels 8 9 24 26 Rooms 1,400 2,000 4,300 5,900

Radisson Blu Hotel, Istanbul Tuzla Radisson Blu Hotel Algiers Hydra, Algeria

2 strategic extensions

in Copenhagen with conversion from managed to leased

Q3-2013 Results

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Lower Q3 openings but our pipeline remains strong

Q3 comments:

• Park Inn by Radisson Astana, Kazakhstan
• Radisson Blu Resort & Thalasso, Hammamet, Tunisia

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OPENINGS Q3 2013 Q3 2012 YTD 2013 YTD 2012 Hotels 2 4 10 13 Rooms 560 640 2,300 2,900

>90%

Fee based

>90%

Emerging Markets

>55%

Radisson Blu Q3 2013

Park Inn by Radisson Astana, Kazakhstan Radisson Blu Resort & Thalasso, Hammamet, Tunisia

Q3-2013 Results

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Selected Future Openings (2013-2014)

Radisson Blu Rooms

Istanbul Tuzla, Turkey 249 Sochi, Russia 508 Istanbul Şişli, Turkey 291 Okoume Palace Libreville, Gabon 180 Mammy Yoko Freetown, Sierra Leone 171 Chelyabinsk, Russia 211 Oslo Alna, Norway 142 Sheremetyevo Airport Moscow, Russia 391 Sohar, Oman 179 Belgrade, Serbia 237

Park Inn by Radisson Rooms

Göttingen, Germany 114 Petrozavodsk, Russia 180 Yaroslavl, Russia 167 Pulkovo Airport St Petersburg, Russia 200 Lund, Sweden 190 Libreville, Gabon 140 Abeokuta, Nigeria 173 Istanbul Ataturk Airport, Turkey 144 Troyitska Kyiv, Ukraine 199 Oslo Alna, Norway 206

• Balanced openings between the brands
• Continued focus on Emerging Markets & key focus countries (Turkey, Russia)
• Only management and franchise contracts

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Financial Update

Knut Kleiven, Deputy President & CFO

Radisson Blu Hotel, Istanbul Pera

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Q3 Highlights:

• 10 MEUR in revenue:
• Negative FX impact and exit of 9

leases +1.6pp in EBITDAR margin:

• Cost reduction launched in Q3 2012

+2.6pp in EBITDA margin:

• Exit of 9 leases
• Rent adjustment and provisions from
• ne onerous contract in Q3 2012
• FX impact

+3.1pp EBIT margin:

• Lower write-downs of fixed assets in

2013 vs 2012

• High tax rate due to losses which are

not capitalized

Strong improvement in profitability

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MEUR Q3 2013 Q3 2012 YTD 2013 YTD 2012 Revenue 227.4 237.3 683.5 683.1 EBITDAR 81.7 81.3 237.4 222.0 EBITDAR Margin 35.9% 34.3% 34.7% 32.5% EBITDA 22.8 17.6 54.9 35.3 EBITDA Margin 10.0% 7.4% 8.0% 5.2% EBIT 15.1 8.6 31.3 7.8 EBIT Margin 6.7% 3.6% 4.6% 1.1% Tax

• 5.3
• 3.8
• 14.3
• 10.9

NET RESULTS 9.7 4.4 15.9

• 3.5

Q3-2013 Results

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Healthy flow through in the L/L portfolio

Q3-2013 vs Q3-2012 Reported Change FX Hotel Exits New Hotels One-offs 2012 Change in Marketing Net Spend L/L Revenue

• 9.9
• 9.3
• 7.7

2.4

• 0.4

4.3 EBITDAR 0.5

• 3.4
• 1.7

1.1 0.9

• 0.5

4.1 EBITDA 5.3

• 1.0

0.0 1.0 3.3

• 0.5

2.5 EBIT 6.5

• 0.6

0.2 1.1 4.1

• 0.5

2.2

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Q3 comments:

• FX had a negative impact of MEUR 9.3 on revenue and MEUR 1.0 on EBITDA
• Hotel exits had a negative impact on revenue, but a small positive impact on EBIT
• One-offs in 2012 relate to a rent adjustment, consultancy costs and a provision for an
• nerous management contract. Furthermore, write-downs of fixed assets were MEUR

0.8 higher in Q3 2012 compared to Q2 2013

Q3-2013 Results

YTD-2013 vs YTD-2012 Revenue 0.4

• 9.5
• 19.4

7.3

• 2.0

20.0 EBITDAR 15.4

• 3.4
• 3.3

2.0 3.2 2.5 14.4 EBITDA 19.6

• 1.0

2.3 1.3 5.3 2.5 9.2 EBIT 23.5

• 0.6

2.5 1.3 8.8 2.5 9.0

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Nordics:

• Revenue down due to FX and 2 leases

converted to franchise contracts

• EBIT margin up 1.7 pp to 6.9% mainly

explained by a MEUR 1.7 rent adjustment in 2012

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Rest of Western Europe:

• Revenue down due to FX and the exit of

7 leases

• EBIT margin up 1.9 pp to 0.3%, due to

exits and lower write-downs compared to 2012

Q3 Leased Business Substantial EBIT improvement with ROWE turning positive

Q3-2013 Results

50 100 150 200 250 NO RoWE Total

Leased Revenue, MEUR

Q3 2013 Q3 2012

• 4
• 2

2 4 6 8 NO RoWE Total

EBIT, MEUR

Q3 2013 Q3 2012

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Eastern Europe:

• Fee revenue down due to FX, one

hotel switching to a franchise contract

• EBIT margin down by 7.7 pp to 68.6%

due to FX and increased provisions for bad debt Middle East, Africa & Others:

• Fee revenue up due to new hotels and

a positive RevPAR improvement

• EBIT margin up by 3.4 pp to 64.9%

Q3 Fee Business Solid performance despite negative FX impact

Q3-2013 Results

5 10 15 20 25 30 35 NO RoWE EE MEAO Total

Fee Revenue, MEUR

Q3 2013 Q3 2012 5 10 15 20 NO RoWE EE MEAO Total

EBIT, MEUR

Q3 2013 Q3 2012

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2013 vs 2012 Q3 2013 Q3 2012 YTD 2013 YTD 2012 Cash flow before working capital 17.9 15.8 39.1 21.1 Change in working capital 1.5 4.0

• 13.1
• 12.0

Cash flow from operating activities 19.4 19.8 26.0 9.1 Investments

• 13.8
• 9.4
• 34.4
• 21.6

Free Cash Flow 5.6 10.4

• 8.4
• 12.5

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• Strong focus on upgrading leased

hotels

• Refers mainly to refurbishment of

guest rooms

• To enhance our competitive

position

Strong development in cash flow from operating activities

Q3-2013 Results

Investments YTD 2013 In MEUR Radisson Blu, Trondheim

• 6.4

Radisson Blu, Manchester Airport

• 5.1

Park Inn Heathrow

• 2.8

Radisson Blu Arlandia, Stockholm

• 1.9

Radisson Blu SkyCity, Stockholm

• 1.7

Other

• 16.5

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2.8pp EBITDA margin expansion YTD in line with Route 2015 goals

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Assumes RevPAR growth covers inflation

• Revenue initiatives
• Fee based room

growth

• Cost savings
• Asset management /

deleveraging

• CapEx

Profitability Target EBITDA margin of 12% over a business cycle Balance Sheet Small positive average net cash position Dividend Policy Approximately one third of annual after-tax income to be distributed to shareholders

Rezidor’s Initiatives

FOCUS AREAS EBITDA MARGIN UPLIFT FINANCIAL TARGETS

+ Market Recovery over and above inflation 6-8% + Asset Management

Q3-2013 Results

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Q&A

Park Inn by Radisson Amsterdam Airport Schiphol