Pandox AB (publ) interim report January–June 2022

Strong earnings growth

April–June 2022

• Revenue from Property Management amounted to MSEK 858 (568), including government grants of MSEK 68 (2). For comparable units the increase was 39 percent, adjusted for currency effects
• Net operating income from Property Management amounted to MSEK 761 (470). For comparable units the increase was 39 percent, adjusted for currency effects
• Net operating income from Operator Activities amounted to MSEK 238 (10), including government grants of MSEK 88 (98)
• EBITDA amounted to MSEK 970 (447), an increase of 117 percent
• Cash earnings amounted to MSEK 647 (162), equivalent to SEK 3.51 (0.88) per share
• Unrealised changes in the value of investment properties and derivatives amounted to
  MSEK 388 (-105) and MSEK 632 (24) respectively. Unrealised changes in the value of operating properties amounted to MSEK 251 (-4) (reported for information purposes only)
• Profit for the period amounted to MSEK 1,372 (-6), equivalent to SEK 7.45 (0.04) per share
• On 10 June 2022 Pandox and Scandic announced lease extensions for 15 hotel properties in the Nordics

January–June 2022

• Revenue from Property Management amounted to MSEK 1,492 (1,122), including government grants of MSEK 68 (12). For comparable units the increase was 26 percent, adjusted for currency effects
• Net operating income from Property Management amounted to MSEK 1,304 (932). For comparable units the increase was 25 percent, adjusted for currency effects
• Net operating income from Operator Activities amounted to MSEK 189 (-70), including government grants of MSEK 105 (142)
• EBITDA amounted to MSEK 1,438 (797), an increase of 80 percent
• Cash earnings amounted to MSEK 828 (247), equivalent to SEK 4.48 (1.37) per share
• Unrealised changes in the value of investment properties and derivatives amounted to MSEK 667 (-456) and MSEK 1,562 (351) respectively. Unrealised changes in the value of operating properties amounted to MSEK 381 (3) (reported for information purposes only)
• Profit for the period amounted to MSEK 2,416 (30), equivalent to SEK 13.12 (0.18) per share

 
Comment from CEO Liia Nõu

Strong growth in revenue and net operating income
The hotel market experienced a very strong trend in the second quarter, with rising occupancy and higher average prices in all of Pandox’s markets. This strong growth is explained in part by continued normalisation of travel with increased underlying demand, and in part by pent-up demand following the pandemic, particularly in the leisure segment.

For comparable units, Pandox’s total net sales and total net operating income increased by 99 percent and 84 percent respectively in the second quarter, compared with the corresponding period in 2021. Occupancy for comparable units in the Property Management and Operator Activities business segments was around 64 percent (29) and 65 percent (20) respectively in the second quarter. In June individually, occupancy for comparable units in the Property Management and Operator Activities segments amounted to around 69 percent (36) and 76 percent (26) respectively. The amount contributed by revenue-based rent increased to around MSEK 258 (51). The tenants’ financial position improved and the amount of delayed rents decreased to MSEK 537, compared with MSEK 558 in the first quarter.

Important lease extensions and business-focused organisation
In the second quarter Pandox extended 15 hotel leases with Scandic in the Nordics. The extensions include a joint investment programme of around MSEK 700 for product development, repositioning and increased guest comfort. This is an important milestone; one that shows that the lease model works and that both property owner and tenant have a strong incentive to take a long-term approach based on a common, commercial perspective.

During the quarter Pandox also further strengthened the organisation’s business focus, and I am delighted that we recruited Tobias Ekman to serve as the new head of Property Management Nordics. Tobias has long experience from leading roles in the hotel industry and will start his new job on 1 September when he will also join Pandox’s group management team. This ensures a very strong team with extensive hotel and property expertise as we enter a new market phase.

Consistent financing strategy...
Pandox has two sources of financing: the Company’s equity and bank loans secured by underlying properties. We have no market financing in the form of bonds.

Pandox’s financing model is based on long-term relationships with shareholders and banks and is the same as when the Company was formed. In the second quarter, Pandox increased the number of lenders from 11 to 13, adding Swedbank and AMF Tjänstepension AB as new lenders. In total, Pandox refinanced loans equivalent to around MSEK 4,570 during the second quarter, whereof the majority with maturity in three to four years and with stable credit margins. During the pandemic, hotel properties were seen as a more risky asset class than other types of properties. This resulted in refinancing with shorter maturities and higher credit margins. Now when cash flow is improving, it is possible to refinance with longer maturities again

... and good financial flexibility
Pandox’s financial position is stable. As of 30 June 2022, the loan-to-value ratio was 47.8 percent, and cash and cash equivalents plus unutilised credit facilities amounted to MSEK 4,091. Pandox’s loan-to-value ratio has fluctuated between 46.0 and 50.8 percent since the stock exchange listing in 2015. The quarterly outcomes have consistently been at the lower end of the financial target range of 45–60 percent. The loan-to-value ratio is also lower than before the pandemic, which is the result of an effective business model and good risk management.

Good starting point for future quarters
A large percentage of Pandox’s revenue is variable, which normally offers protection against both increased costs and higher interest rates. We therefore have a good starting point in terms of growth and profitability as we head into future quarters. A good financial position and strong cash flow also enables future investments to be made in the existing portfolio, as well as in add-on acquisitions. With the rising cost of input goods and more expensive financing, our primary focus is investment projects and acquisitions with high value creation potential. Our emphasis is on profitable growth. Opportunities exist for us to further optimise our portfolio through selective divestments if the price is right.

Our assessment is that the conditions for Pandox to report good growth in revenue and earnings in 2022 are good.

Liia Nõu, CEO

Presentation of the interim report
Pandox will present this interim report to investors, analysts and the media in a conference call webcast on 15 July at 14:00 CEST. As a service to Pandox’s stakeholders there will also be an external update on the hotel market.

To follow the webcast, go to https://tv.streamfabriken.com/pandox-q2-2022

To participate by phone, please use one of the following phone numbers:

SE: +46 8 505 163 86
UK: +44 20 319 84 884
US: +1 412 317 6300
Pin code: 1545315#

Attachment: Interim report January–June 2022
 

FOR FURTHER INFORMATION, PLEASE CONTACT:
Liia Nõu, CEO, +46 (0) 702 37 44 04
Anneli Lindblom, CFO, +46 (0) 765 93 84 00
Anders Berg, SVP Head of Communications and IR, +46 (0) 760 95 19 40

This information is information that Pandox AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted, through the agency of the contact persons set out above, for publication on 15 July 2022 at 07:00 CEST.

About Pandox
Pandox is a leading owner of hotel properties in Northern Europe with a focus on sizeable hotels in key leisure and corporate destinations. Pandox’s hotel property portfolio comprises 156 hotels with approximately 35,500 hotel rooms in 15 countries. Pandox’s business is organised into Property Management, which comprises hotel properties leased on a long-term basis to leading hotel operators, and Operator Activities, which comprises hotel operations executed by Pandox in its owner-occupied hotel properties. Pandox was founded in 1995 and the company’s B shares are listed on Nasdaq Stockholm. www.pandox.se

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