Public Offer to the Shareholders in Rezidor Hotel Group AB (Publ) – in Accordance with the Rules Governing Mandatory Offers
Public offer to the shareholders in Rezidor Hotel Group AB (publ) – in accordance with the rules governing mandatory offers
IMPORTANT INFORMATION General This offer document, including the related acceptance form, contains important information and should be read carefully before any decision is made with respect to the offer by HNA Sweden Hospitality Management AB, company registration number 559073-9503 (“HNA Sweden”), an indirect wholly-owned subsidiary of HNA Tourism Group Co., Ltd. (“HNA Tourism Group”), to the shareholders in Rezidor Hotel Group AB (publ), company registration number 556674-0964 (“Rezidor”), to tender all outstanding shares in Rezidor (the “Offer”). The information in this offer document purports to be accurate only, although not complete, as of the date of this offer document. No representation is made that it was or will remain accurate on any other date. The information in this offer document is furnished solely for the purpose of the Offer and may not be relied upon for any other purposes. References to HNA Sweden shall include references to HNA Tourism Group where appropriate. The information regarding Rezidor on pages 8–36 in the offer document is based on Rezidor’s annual report for 2015, Rezidor’s interim report for 1 January – 30 September 2016, Rezidor’s website and other publicly available company information, if not otherwise stated. The information on these pages has not been reviewed by the Board of Directors of Rezidor. HNA Sweden does not represent that the information included herein with respect to Rezidor is accurate or complete, and does not take any responsibility for such information being accurate or complete. The Offer shall be governed by and construed in accordance with the substantive laws of Sweden, without regard to any conflict of law principles leading to the application of the laws of any other jurisdiction. Nasdaq Stockholm’s Takeover Rules (the “Takeover Rules”) and the Swedish Securities Council’s (Sw. Aktiemarknadsnämnden) rulings and statements regarding the interpretation and application of the Takeover Rules are applicable to the Offer. In accordance with the Swedish Takeover Act (Sw. lagen (2006:451) om offentliga uppköpserbjudanden på aktiemarknaden), HNA Sweden has on 22 December 2016 undertaken towards Nasdaq Stockholm to comply with the Takeover Rules, the Swedish Securities Council’s rulings and statements regarding the interpretation and application of the Takeover Rules, and submit to the sanctions that Nasdaq Stockholm may decide upon in event of a breach of the Takeover Rules. HNA Sweden has on 22 December 2016 informed the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) (the “SFSA”) about the Offer and the above mentioned undertakings towards Nasdaq Stockholm. The courts of Sweden shall have exclusive jurisdiction over any dispute arising out of or in connection with the Offer and the City Court of Stockholm (Sw. Stockholms tingsrätt) shall be the court of first instance. This offer document is available both in Swedish and English. In the event of any discrepancy between the English and Swedish language versions, the Swedish language version shall prevail. The Swedish language version of this offer document has been approved by and registered with the SFSA in accordance with Chapter 2, Section 3 of the Swedish Takeover Act and Chapter 2 a, Section 9 of the Swedish Financial Instruments Trading Act (Sw. lagen (1991:980) om handel med finansiella instrument). The SFSA’s approval and registration do not imply that the SFSA guarantees that all information in the offer document is correct or complete. The Offer is not being made to persons whose participation in the Offer requires that any additional offer document is prepared or registration effected or that any other measures are taken in addition to those required under Swedish laws and regulations. This offer document and any documentation relating to the Offer are not being distributed and must not be mailed or otherwise distributed or sent in or into any country in which the distribution or offering would require any such additional measures to be taken or would be in conflict with any applicable law or regulation in such country. Any such action will not be permitted or sanctioned by HNA Sweden. Any purported acceptance of the Offer resulting directly or indirectly from a violation of these restrictions may be disregarded. The Offer is not being made, directly or indirectly, in or into Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States by use of mail or any other means or instrumentality (including, without limitation, facsimile transmission, electronic mail, telex, telephone and the Internet) of interstate or foreign commerce, or of any facility of national security exchange, of Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States, and the Offer cannot be accepted by any such use, means, instrumentality or facility of, or from within, Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States. Accordingly, this offer document and any documentation relating to the Offer are not being and should not be mailed or otherwise distributed, forwarded or sent into Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States. HNA Sweden will not deliver any consideration from the Offer into Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States. Any purported acceptance of the Offer resulting directly or indirectly from a violation of these restrictions will be invalid and any purported acceptance by a person located in Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States or any agent, fiduciary or other intermediate acting on a non-discretionary basis for a principal giving instructions from within Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States will be invalid and will not be accepted. Each holder of shares participating in the Offer will represent that it is not an Australian, Canadian, Hong Kong, Japanese, New Zealand, South African, Swiss or a United States person, is not located in Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States and is not participating in such Offer from Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States or that it is acting on a non-discretionary basis for a principal that is not an Australian, Canadian, Hong Kong, Japanese, New Zealand, South African, Swiss or a United States person, that is located outside Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States and that is not giving an order to participate in such Offer from Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States. J.P. Morgan Securities (Asia Pacific) Limited (“J.P. Morgan”) is acting as financial adviser to HNA Tourism Group and HNA Sweden1), and no one else, in connection with the Offer. J.P. Morgan will not be responsible to anyone other than HNA Tourism Group and HNA Sweden for providing advice in relation to the Offer. The information in this offer document has been provided by HNA Sweden and, with respect to Rezidor, by Rezidor and taken from Rezidor’s publicly available information. J.P. Morgan has not assumed any obligation to independently verify, and disclaims any liability with respect to, the information herein. Neither J.P. Morgan nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of J.P. Morgan in connection with this offer document, any statement contained herein, the Offer or otherwise.
Forward-looking statements Statements in this offer document relating to future status or circumstances, including statements regarding future performance, growth and other trend projections and the other benefits of the Offer, are forward-looking statements. These statements may generally, but not always, be identified by the use of words such as “anticipates”, “intends”, “expects”, “believes”, or similar expressions. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There can be no assurance that actual results will not differ materially from those expressed or implied by these forward- looking statements due to many factors, many of which are outside the control of HNA Sweden and Rezidor. Any such forward-looking statements speak only as of the date when the offer document is made public and HNA Sweden has no obligation (and undertakes no such obligation) to update or revise any of them, whether as a result of new information, future events or otherwise, except for in accordance with applicable laws and regulations.
1) Through its parent company HNA Tourism Group. Table of Contents
Public offer to the shareholders in Rezidor ...... 2 Background and reasons for the Offer ...... 4 Terms, conditions and instructions ...... 5 Press release from the Board of Directors of Rezidor ...... 7 Brief description of Rezidor ...... 8 Financial information in summary ...... 9 Share capital and ownership structure ...... 12 Rezidor’s Board of Directors, senior executives and auditors ...... 14 Articles of association of Rezidor ...... 16 Rezidor’s interim report for 1 January – 30 September 2016 ...... 17 Brief description of HNA Sweden and HNA Tourism Group and the financing of the Offer . . . . 37 Tax issues in Sweden ...... 38 Adresses ...... 40
The Offer in brief Price per share: SEK 34.861) in cash Acceptance period: 3 February 2017 – 10 March 2017 Preliminary date of settlement: 7 April 2017
1) The offered price is subject to adjustment should Rezidor pay any dividend or make any other value transfer to shareholders prior to the settlement of the Offer, and will accordingly be reduced by the amount of any such dividend or value transfer.
Public offer to the shareholders in Rezidor Hotel Group AB (publ) 1 Public offer to the shareholders in Rezidor
The Offer The offered price is below the closing price of the Rezidor On 22 December 2016, HNA Sweden Hospitality Manage- shares on Nasdaq Stockholm of SEK 37.20 on 22 December ment AB (“HNA Sweden”), an indirect wholly-owned sub- 2016, being the last trading day prior to the announcement of sidiary of HNA Tourism Group Co., Ltd. (“HNA Tourism the Offer. The offered price represents a premium of approx- Group”), announced a mandatory tender offer to the share- imately 7.7 per cent compared to the volume-weighted holders in Rezidor Hotel Group AB (publ) (“Rezidor” or the average price (VWAP) for the Rezidor shares of SEK 32.38 “Company”) to acquire all outstanding shares in Rezidor for during the last six months up to and including 27 April 2016 SEK 34.861) in cash per share in Rezidor (the “Offer”).2) The (the last trading day prior to the announcement that HNA shares in Rezidor are admitted to trading on Nasdaq Stock- Tourism Group had entered into an agreement to acquire holm. The Offer does not include the 87,552,187 shares in Carlson Hotels). Rezidor held by HNA Tourism Group via its wholly-owned subsidiary Carlson Hotels, Inc. (“Carlson Hotels”). Condition for the Offer The Offer complies with the mandatory bid rules of Completion of the Offer is conditional upon the Offer, Nasdaq Stockholm’s Takeover Rules (the “Takeover Rules”), the settlement of the Offer and the acquisition of Rezidor and will therefore, conditional upon regulatory approvals, be receiving all necessary regulatory, governmental or similar completed irrespective of acceptance level. clearances, approvals and decisions in each case, on terms The aggregate value of the Offer amounts to approxi- that are acceptable to HNA Sweden. For further information, mately SEK 2.9 billion.3) see page 5 below under Terms, conditions and instructions. The acceptance period for the Offer commences on 3 Feb- ruary 2017 and ends on 10 March 2017. Press release from the Board of Settlement is expected to commence on 7 April 2017, sub- Directors of Rezidor regarding the Offer ject to the condition for the Offer being fulfilled or waived. According to a press release dated 23 December 2016, the Settlement of the Offer will require that HNA Sweden obtains Board of Directors of Rezidor will evaluate the Offer and the necessary regulatory approvals to transfer funds out from obtain a fairness opinion. Rezidor’s Board of Directors will no China to be used for settlement. Such regulatory approvals later than two weeks prior to the expiry of the acceptance may only be obtained once the acceptance period has ended period announce its opinion of the Offer, including the rea- and the final settlement amount has been determined. If the sons for its opinion. Trudy Rautio and Wendy Nelson4) will final regulatory approvals for the transfer of funds out from not, due to conflict of interest following the sale of Carlson China to be used for settlement are not obtained before Hotels to HNA Tourism Group, participate in the Board’s pro- 7 April 2017, the settlement may be postponed until such cessing of, or any other resolutions concerning, the Offer. final regulatory approvals have been obtained, in total up to This press release is included in its entirety on page 7 in this nine months from the initiation of the acceptance period. offer document. Once the condition for the Offer is fulfilled or waived, HNA Sweden will be obligated to complete the Offer irrespective Rights under Rezidor’s incentive of whether the settlement is postponed. programs No commission will be charged in connection with the The Offer does not include any rights granted by Rezidor Offer. to its employees under any incentive program implemented by Rezidor, including the long-term equity settled perfor- mance-based incentive programs to executives approved by 2014, 2015 and 2016 Annual General Meetings. HNA Sweden intends to procure fair treatment for participants in such programs, where necessary due to the completion of the Offer.
1) The offered price corresponds to the volume-weighted average price (VWAP) paid for the Rezidor shares during the 20 trading days immediately preceding the date of announcement of entering into the agreement to acquire Carlson Hotels, announced on 27 April 2016, which, in accordance with rulings received from the Swedish Securities Council (see rulings AMN 2016:10 and AMN 2016:27), is the minimum price to be paid in the Offer. See further below under Rulings from the Swedish Securities Council. 2) The offered price is subject to adjustment should Rezidor pay any dividend or make any other value transfer to shareholders prior to the settlement of the Offer, and will accordingly be reduced by the amount of any such dividend or value transfer. 3) Based on 170,808,498 outstanding shares in Rezidor, excluding the shares held by HNA Tourism Group via its wholly-owned subsidiary Carlson Hotels. 4) According to a press release dated 27 January 2017, David P. Berg has with immediate effect resigned from his position in the Board of Directors.
2 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Public offer to the shareholders in Rezidor
HNA Tourism Group’s holding in Rezidor formulation of the condition of the Offer, including that HNA Tourism Group holds, via its wholly-owned subsidiary settlement may take place up to one month following the Carlson Hotels, 87,552,187 shares in Rezidor, corresponding end of the acceptance period in the Offer, with the possi- to 51.3 per cent of the outstanding shares and votes in bility to further postpone the settlement until final regulatory Rezidor.1) The shares in Rezidor were acquired through the approvals for the transfer of funds out from China to be used completion of the acquisition of Carlson Hotels. for settlement in the Offer have been obtained, in total up Apart from the above mentioned acquisition, HNA to nine months from the initiation of the acceptance period. Tourism Group, HNA Sweden or any other group company Once the condition for the Offer is fulfilled or waived, HNA have not acquired or agreed to acquire any Rezidor shares or Sweden will be obligated to complete the Offer irrespective any financial instruments that give financial exposure equiv- of whether the settlement is postponed (see ruling AMN alent to shareholding in Rezidor during the six-month period 2016:27). preceding the announcement of the Offer. For the Swedish Securities Council’s rulings in their entirety, HNA Sweden may acquire, or enter into arrangements see www.aktiemarknadsnamnden.se. to acquire, shares in Rezidor outside the Offer during the acceptance period. Any purchases made or arranged will Close relationships be made in accordance with Swedish law and disclosed in HNA Tourism Group is, via Carlson Hotels, the parent com- accordance with applicable rules. pany of Rezidor. Section III of the Takeover Rules applies to the Offer meaning, for example, that Rezidor must obtain Financing of the Offer and publish a fairness opinion. Trudy Rautio and Wendy The Offer is fully financed by available funds within HNA Nelson have, under the Takeover Rules, a conflict of interest Tourism Group. following the sale of Carlson Hotels to HNA Tourism Group and are not taking part in Rezidor’s dealing with the Offer. Rulings from the Swedish Securities Council Compliance with the Takeover Rules HNA Tourism Group has obtained rulings from the Swedish The Offer shall be governed by and construed in accordance Securities Council (Sw. Aktiemarknadsnämnden) to the effect with the substantive laws of Sweden, without regard to any that the minimum price to be paid in the Offer should be conflict of law principles leading to the application of the determined as not less than the volume-weighted average laws of any other jurisdiction. price (VWAP) paid for the Rezidor shares during the 20 The Takeover Rules and the Swedish Securities Council’s trading days preceding the date of announcement of rulings and statements regarding the interpretation and entering into the agreement to acquire Carlson Hotels, which application of the Takeover Rules are applicable to the Offer. was announced on 27 April 2016 (see rulings AMN 2016:10 In accordance with the Swedish Takeover Act (Sw. lagen and AMN 2016:27). (2006:451) om offentliga uppköpserbjudanden på aktie- The Swedish Securities Council has further approved that marknaden), HNA Sweden has on 22 December 2016 HNA Tourism Group’s indirect wholly-owned subsidiary HNA undertaken towards Nasdaq Stockholm to comply with the Sweden, makes the Offer, instead of HNA Tourism Group, Takeover Rules, the Swedish Securities Council’s rulings and the parent company of the group (see ruling AMN 2016:27). statements regarding the interpretation and application of According to public information made available to HNA the Takeover Rules, and submit to the sanctions that Nasdaq Tourism Group by Euroclear Sweden AB (”Euroclear”) as per Stockholm may decide upon in event of a breach of the Take- 30 December 2016, shareholders in the United States hold over Rules. 9.97 per cent of the outstanding shares in Rezidor, share- HNA Sweden has on 22 December 2016 informed the holders in Switzerland hold 0.39 per cent of the outstanding Swedish Financial Supervisory Authority (Sw. Finansinspek- shares in Rezidor, shareholders in Japan hold 0.11 per cent tionen) about the Offer and the above mentioned undertak- of the outstanding shares in Rezidor, shareholders in Canada ings towards Nasdaq Stockholm. hold 0.01 per cent of the outstanding shares in Rezidor, The courts of Sweden shall have exclusive jurisdiction over shareholders in Hong Kong hold 0.01 per cent of the out- any dispute arising out of or in connection with the Offer and standing shares in Rezidor and shareholders in Australia hold the City Court of Stockholm (Sw. Stockholms tingsrätt) shall 0.001 per cent of the outstanding shares in Rezidor. There be the court of first instance. are no shareholders in New Zealand or South Africa. The Swedish Securities Council has approved that shareholders in Advisers Australia, Canada, Hong Kong, Japan, New Zealand, South HNA Tourism Group and HNA Sweden2) have retained Africa, Switzerland and the United States are excluded from J.P. Morgan and Benedetto, Gartland & Company as finan- the Offer (see ruling AMN 2016:27). cial advisers and Hogan Lovells and Advokatfirman Lindahl as The Swedish Securities Council has further approved the legal advisers in connection with the Offer.
1) There are 174,388,857 issued shares in Rezidor, of which Rezidor as of 30 December 2016 holds 3,580,359, corresponding to 2.05 per cent of all the shares in Rezidor. HNA Tourism Group holds, via its wholly-owned subsidiary Carlson Hotels, 51.3 per cent of the shares and votes in Rezidor when calculated on the number of outstanding shares (170,808,498) in Rezidor. 2) Through its parent company HNA Tourism Group.
Public offer to the shareholders in Rezidor Hotel Group AB (publ) 3 Background and reasons for the Offer
HNA Tourism Group is a wholly-owned subsidiary of HNA Group Co., Ltd., a Fortune Global 500 company with operations across aviation, tourism, hospitality, finance and online services among other sectors. On 27 April 2016, HNA Tourism Group and Carlson Hospitality Group, Inc. announced that they had entered into an agreement for HNA Tourism Group’s acquisition of Carlson Hotels (the “Acquisition”), which owns the Quorvus Collection, Radisson Blu®, Radisson®, Radisson RED, Park Plaza®, Park Inn® by Radisson, Country Inns & Suites By CarlsonSM brands and the Club CarlsonSM global hotel rewards program. The Acquisition is consistent with HNA Tourism Group’s strategy to develop a global hospitality platform supported by recognized brands and premium operators across Asia, the Americas and Europe. The Acquisition included 87,552,187 shares in Rezidor held by Carlson Hotels, corresponding to 51.3 per cent of the outstanding shares and votes in Rezidor. The Acquisition was completed on 7 December 2016 and triggered an obligation for HNA Tourism Group to make a mandatory tender offer to the remaining shareholders in Rezidor. As a result hereof, HNA Sweden, an indirect wholly-owned subsidiary of HNA Tourism Group, hereby announces this Offer to the remaining shareholders in Rezidor in accordance with the mandatory bid rules. The Offer enables the shareholders who wish to sell their shares in Rezidor due to the change of ownership control in Rezidor to do so in an orderly manner. HNA Tourism Group views significant value on the competence of Rezidor’s management and its employees. There are cur- rently no decisions on any material changes to Rezidor’s management or employees, including the terms of employment and locations of business.
Further reference is made to the information in this offer document, which has been prepared by HNA Sweden for the pur- pose of the Offer. The description of Rezidor on pages 8–36 in this offer document has not been reviewed by Rezidor’s Board of Directors. HNA Sweden does not represent that the information included herein with respect to Rezidor is accurate or complete, and does not take any responsibility for such information being accurate or complete. With the exception of the information made public by Rezidor, the Board of Directors of HNA Sweden assures that, to the best knowledge of the Board of Directors, the information presented in this offer document conforms to actual conditions.
Stockholm, Sweden on 1 February 2017
HNA Sweden Hospitality Management AB The Board of Directors
4 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Terms, conditions and instructions
The Offer to and including 10 March 2017, at 17:00 (CET), sign and HNA Sweden offers SEK 34.86 in cash for each share in submit a duly filled in acceptance form to: Rezidor. The offered price is subject to adjustments should Handelsbanken Capital Markets, Issue Department Rezidor pay any dividend or make any other value transfer (“Handelsbanken”), at the address stated on the accept- prior to the settlement of the Offer, and will accordingly be ance form. reduced by the amount per share of any such dividend or The acceptance form may also be handed in at bank value transfer. offices or delivered to other securities institutions in Sweden The offered price corresponds to the volume-weighted to be forwarded to Handelsbanken, provided that the accept- average price (VWAP) paid for the Rezidor shares during the ance form is handed in or delivered well in advance of the 20 trading days immediately preceding the date of announce- last day of the acceptance period so that it may be received, ment of entering into the agreement to acquire Carlson in original, by Handelsbanken no later than 17:00 (CET) on Hotels, announced on 27 April 2016, which, in accordance 10 March 2017. with rulings received from the Swedish Securities Council (see This offer document, a pre-printed acceptance form and rulings AMN 2016:10 and AMN 2016:27), is the minimum a self-addressed envelope will be mailed to the directly reg- price to be paid in the Offer. See further above on page 3 istered holders of Rezidor shares, except for those domiciled under Rulings from the Swedish Securities Council. in Australia, Canada, Hong Kong, Japan, New Zealand, The total value of the Offer amounts to approximately South Africa, Switzerland or the United States. The securities SEK 2.9 billion.1) account (Sw. VP-konto) and the current number of shares No commission will be charged in connection with the held in Rezidor will be pre-printed on the acceptance form. Offer. The person who executes and submits the acceptance form The offered price is below the closing price of the Rezidor is responsible for checking that the pre-printed information shares on Nasdaq Stockholm of SEK 37.20 on 22 December in the acceptance form is correct. Shareholders who are 2016, being the last trading day prior to the announcement of included on the list of pledgees and trustees connected to the Offer. The offered price represents a premium of approx- the share register, will not receive an acceptance form, but imately 7.7 per cent compared to the volume-weighted will be notified separately. average price (VWAP) for the Rezidor shares of SEK 32.38 Please note that acceptance forms which are filled in during the last six months up to and including 27 April 2016 incompletely or incorrectly may be disregarded. No changes (the last trading day prior to the announcement that HNA may be made to the text on the pre-printed acceptance form. Tourism Group had entered into an agreement to acquire Shareholders in Rezidor accepting the Offer authorise and Carlson Hotels). direct Handelsbanken to deliver tendered shares in Rezidor to HNA Sweden in accordance with the terms and conditions Condition for the Offer for the Offer. Completion of the Offer is conditional upon the Offer, the settlement of the Offer and the acquisition of Rezidor Nominee registered holdings receiving all necessary regulatory, governmental or similar Holders of shares in Rezidor whose holdings are registered clearances, approvals and decisions in each case, on terms in the name of a nominee, e.g., a bank or other nominee, that are acceptable to HNA Sweden. will receive neither this offer document nor the pre-printed HNA Sweden reserves the right to withdraw the Offer in acceptance form from HNA Sweden. Instead, applications the event that it is clear that the above condition is not ful- must be made in accordance with instructions from the nom- filled or cannot be fulfilled. However, such withdrawal will inee. only be made provided that the defective fulfillment of such condition is of material importance to HNA Sweden’s acquisi- Pledged holdings tion of the shares in Rezidor. If shares in Rezidor are pledged in the Euroclear system, both HNA Sweden reserves the right to waive, in whole or in the shareholder and the pledgee must sign the acceptance part, the condition above in accordance with applicable laws form and confirm that the pledge will cease to exist if the and regulations. Offer is completed.
Acceptance Offer document and acceptance form Shareholders in Rezidor whose holdings are directly regis- This offer document and the acceptance form are avail- tered with Euroclear and who wish to accept the Offer must, able on the Offer website (www.hnagroup.com/en/discl/ during the period from and including 3 February 2017 up HNA_Website2017/legal.html), Handelsbanken’s website (www.handelsbanken.se/investeringserbjudande) and the
1) Based on 170,808,498 outstanding shares in Rezidor, excluding the shares held by HNA Tourism Group via its wholly-owned subsidiary Carlson Hotels.
Public offer to the shareholders in Rezidor Hotel Group AB (publ) 5 Terms, conditions and instructions
Swedish Financial Supervisory Authority website (www.fi.se) Please note that, even if the shares in Rezidor are pledged, (offer document only). payment will be made in accordance with the above.
Confirmation of acceptance Extension of the Offer After Handelsbanken has received and registered a duly com- HNA Sweden reserves the right to, on one or several times, pleted and signed acceptance form, the shares in Rezidor to extend the acceptance period for the Offer. HNA Sweden will which such acceptance form relates will be transferred to a announce any such extension(s) of the acceptance period by new blocked securities account which has been opened for press release in accordance with applicable laws and regula- each shareholder in Rezidor (Sw. apportkonto). In connec- tions. tion therewith, Euroclear will send a notification (Sw. VP-avi) showing the withdrawal of shares in Rezidor from the original Right to withdraw acceptance securities account and a notification showing the number of Shareholders in Rezidor are entitled to withdraw their accept- shares in Rezidor that have been entered in the newly opened ance of the Offer. To be valid, such withdrawal must have blocked securities account. been received in writing by Handelsbanken (address: Han- delsbanken Capital Markets, HCXS-O/Issue Department, Settlement SE-106 70 Stockholm, Sweden) before HNA Sweden has Settlement will, subject to regulatory approval, begin when announced that the condition for the completion of the HNA Sweden has announced that the condition for the Offer has been satisfied or, if such announcement has not Offer has been satisfied or that HNA Sweden has otherwise been made during the acceptance period, no later than resolved to complete the Offer. Such announcement will 17:00 (CET) on the final day of the acceptance period. Share- include a preliminary date on which settlement is expected to holders in Rezidor holding nominee-registered shares wishing begin. Assuming that such announcement is made no later to withdraw their acceptance shall do so in accordance with than on 15 March 2017, settlement is expected to begin on instructions from the nominee. or about 7 April 2017. The Swedish Securities Council has If the condition for the Offer, which HNA Sweden has approved that settlement may take place up to one month reserved the right to waive, remain unsatisfied and has not following the end of the acceptance period in the Offer (see been waived during any extension of the Offer, the right to ruling AMN 2016:27). withdraw a submitted acceptance will apply in the same HNA Sweden reserves the right to, on one or several manner throughout any such extension of the Offer. times, postpone the date for settlement if HNA Sweden has The right to withdraw a submitted acceptance will apply not received all necessary regulatory, governmental or sim- in the same manner throughout a postponement of the date ilar clearances, approvals and decisions for the settlement. for settlement. HNA Sweden will announce any postponement(s) of the date for settlement by press release in accordance with appli- Compulsory acquisition and delisting cable laws and regulations. The Swedish Securities Council If HNA Sweden together with group companies has approved that HNA Sweden may further postpone the becomes the owner of shares representing more than settlement until final regulatory approvals for the transfer of 90 per cent of the total number of shares in Rezidor, funds out from China to be used for settlement in the Offer HNA Sweden intends to initiate a compulsory acqui- have been obtained, in total up to nine months from the ini- sition procedure under the Swedish Companies Act tiation of the acceptance period. Once the condition for the (Sw. aktiebolagslagen 2005:551), to acquire all remaining Offer is fulfilled or waived, HNA Sweden will be obligated to shares in Rezidor. In connection hereto, HNA Sweden intends complete the Offer irrespective of whether the settlement is to promote a delisting of Rezidor’s shares from Nasdaq postponed (see ruling AMN 2016:27). Stockholm. Settlement of the Offer will be arranged by sending a con- tract note to the shareholders who have accepted the Offer. Other information If the holding is registered in the name of a nominee, settle- No customer relationship is established between share- ment will be provided for by the nominee according to their holders accepting the Offer and Handelsbanken due to Han- routines. delsbanken´s involvement as settlement agent with regards The settlement amount will be paid to the yield account to the Offer. that is linked to the shareholder’s securities account. Share- holders in Rezidor who do not have a yield account linked to Questions about the Offer their securities account or whose yield account is incorrect or For questions regarding the Offer, please contact Michael whose yield account is a PlusGiro account will receive settle Henson, Sard Verbinnen & Co at +44 (0) 20 3178 8914 or ment in accordance with the instructions on the contract [email protected] or Robert Rendine, Sard Verbinnen note. In connection with the settlement, the shares in Rezidor & Co at +1 (212) 687 8080 or [email protected]. Infor- will be withdrawn from the blocked securities account, which mation is also available on Handelsbanken’s website at will then be closed. No notice of the de-registration of the www.handelsbanken.se/investeringserbjudande and the Rezidor shares from the blocked securities account will be Offer website at www.hnagroup.com/en/discl/HNA_Website sent to the shareholders. 2017/legal.html.
6 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Press release from the Board of Directors of Rezidor
Brussels, December 23, 2016
The Board of Rezidor evaluates the offer from HNA Tourism Group
HNA Tourism Group Co, Ltd. (“HNA”) has yesterday announced a mandatory public offer to the shareholders in Rezidor Hotel Group AB (publ) (“Rezidor”) to acquire all shares in Rezidor for a cash consideration of SEK 34.86 per share (the “Offer”). HNA owns, directly and indirectly, 51.3% of all outstanding shares in Rezidor following the acquisition of Carlson Hotels Inc.
According to HNA’s announcement it intends to make an offer document available around 2 February 2017, which will be distributed to the shareholders in Rezidor. HNA has further informed that the offer period will start on 3 February 2017 and end on 10 March 2017.
The Board will now evaluate the Offer and obtain a fairness opinion. The Board will no later than two weeks prior to the expiry of the acceptance period announce its opinion of the Offer, including the reasons for its opinion.
Trudy Rautio, Wendy Nelson and David Berg will not, due to conflict of interest following the sale of Carlson Hotels Inc. to HNA, participate in the Board’s processing of, or any other resolutions concerning, the Offer. The remaining members of the Board, being Staffan Bohman, Anders Moberg, Charlotte Strömberg and Göran Larsson, have for the purposes of the Offer appointed Staffan Bohman as chairman.
The Board has engaged SEB Corporate Finance as financial advisor and Gernandt & Danielsson Advokatbyrå as legal advisor in relation to the Offer. The Board has further appointed DNB Markets to provide a fairness opinion in relation to the Offer.
For further information regarding the Offer, please refer to HNA’s press release announcing the Offer, which is available at www.hnagroup.com.
For further information, please contact: Knut Kleiven, Deputy President & CFO at [email protected].
This information is information that Rezidor Hotel Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, on 23 December 2016 at [0750] CET.
Public offer to the shareholders in Rezidor Hotel Group AB (publ) 7 Brief description of Rezidor
The below description of Rezidor is, if nothing else is explicitly stated, based on Rezidor’s annual report for 2015, Rezidor’s interim report for 1 January – 30 September 2016, Rezidor’s website and other publicly available company information.
Description of Rezidor’s business Strategies Rezidor is focused on hotel management and operates the The hotels in Rezidor’s portfolio are either operated by core brands Radisson Blu and Park Inn by Radisson. In 2014, Rezidor itself under a lease contract, by providing man- Rezidor announced together with Carlson Hotels the launch agement services for a hotel owner under a management of two additional brands; Radisson RED, an upscale “lifestyle contract, or by a separate operator using one of the brands select” brand inspired by the millennial lifestyle, and Quorvus under a franchise contract. Rezidor’s strategy is to grow with Collection, a new generation of distinctive five star hotels. management and franchise contracts and only selectively Rezidor also holds 49 per cent in prizeotel, a young hotel with leases, since management and franchise contracts offer chain in the economy segment. a higher profit margin and more stable income streams. The Rezidor’s portfolio consists of approximately 475 hotels strategy is furthermore also to focus its expansion in the in operation or under development with 104,000 rooms in emerging markets of Eastern Europe, the Middle East and more than 80 countries. Africa, since these markets represent long term attractive Rezidor’s strategy is to grow with management and fran- development opportunities that are fueled by strong growth chise contracts and only selectively with leases. The strategy in room demand combined with undersupply and low oper- is furthermore also to focus its expansion in the emerging ating costs. However, compared to the mature markets in markets of Eastern Europe, the Middle East and Africa. Western Europe, the emerging markets face greater uncer- During 2015, Rezidor had approximately 5,561 employees. tainties when it comes to financing and a higher risk of delays Rezidor is a member of the Carlson Rezidor Hotel Group. and cancellations of hotel projects. Rezidor’s shares are listed on Nasdaq Stockholm, Mid Cap. For more information, see www.rezidor.com. Legal structure Rezidor, with corporate registration number 556674-0964, is Revenue the parent company of the Rezidor group and is a Swedish Rezidor’s revenue in 2015 amounted to MEUR 997.0 and limited liability company with its registered office in Stock- the profit after tax for the period amounted to MEUR holm, Sweden. The corporate head office is based in Brussels, 34.2. Rezidor’s revenue in 1 January – 30 September 2016 Belgium. amounted to MEUR 718.1 and the profit after tax for the For further information on Rezidor, see www.rezidor.com. period amounted to MEUR 9.5.
8 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Financial information in summary
The information below is a brief overview of Rezidor’s financial development for the last three financial years and 1 January – 30 September 2016. The information is extracted from the audited annual reports for the financial years 2015 and 20141) and the 1 January – 30 September 2016 interim report2). The 1 January – 30 September 2016 interim report, which is included in its entirety on pages 17–36, has not been audited by Rezidor’s auditor.
Rezidor’s consolidated financial statements for the financial were applied in the company’s annual report for the year years 2015, 2014 and 2013 have been prepared in accord- ended 31 December 2015, except for the impact of the adop- ance with International Financial Reporting Standards (IFRS)/ tion of the standards and interpretations described below. International Accounting Standards (IAS) as endorsed by There have been amendments to IFRS 2, IFRS 3, IFRS 5, the EU and the Swedish Annual Accounts Act (Sw. årsredo IFRS 7, IFRS 8, IFRS 11, IFRS 13, IAS 1, IAS 16, IAS 19, IAS 24, visningslagen (1995:1554)). In addition, RFR 1 Supplemen- IAS 27, IAS 34 and IAS 38. The new amendments have had tary Rules for Groups has been applied, issued by the Swedish no impact on the reported results or financial position of the Financial Accounting Standards Council. group. ESMA’s guidelines on “alternative performance meas- The 1 January – 30 September 2016 interim report has ures” have been applied from 3 July 2016. The guidelines been prepared in accordance with the Swedish Annual involve disclosure requirements related to financial measures Accounts Act and International Accounting Standard (IAS) that are not defined under IFRS. 34 Interim Financial Reporting. The interim report has been The audited annual reports and unaudited 1 January – prepared using accounting principles consistent with Interna- 30 September 2016 interim report for Rezidor are available tional Financial Reporting Standards (IFRS). on Rezidor’s website, see www.rezidor.com. The 1 January The same accounting policies, presentation and methods – 30 September 2016 interim report is also included in its of computation have been followed in this interim report as entirety on pages 17–36.
Summary of the consolidated financial statements
1 January – 30 September 1 January – 31 December MEUR (except stated otherwise) 2016 2015 2015 2014 2013 Income statement Revenue 718.1 741.6 997.0 937.3 919.5 EBITDAR 235.9 253.3 341.0 313.8 317.0 EBITDA 56.2 68.6 101.1 71.3 80.7 EBIT 13.3 35.0 57.3 30.7 44.2 Financial income & expense, net – – –0.7 –1.5 –1.7 Profit/loss for the period 9.5 19.9 34.2 14.2 23.2
2016 2015 2015 2014 2013 Balance sheet Balance sheet total 489.3 – 464.3 427.5 381.7 Total equity attributable to equity holders of the parent 247.1 – 246.7 219.4 155.0 Total investments (tangible and intangible investments) 50.3 – 74.0 53.8 49.1
Cash flow Cash flow from operating activities 38.5 52.8 85.8 41.2 54.6 Cash flow from investing activities –63.3 –45.9 –74.6 –53.3 –48.8 Cash flow from financing activities –4.6 –5.2 –5.7 40.8 –7.2
1) The 2014 annual report includes comparative figures for financial year 2013. 2) The 1 January – 30 September 2016 interim report includes comparative figures for 1 January – 30 September 2015.
Public offer to the shareholders in Rezidor Hotel Group AB (publ) 9 Financial information in summary
2016 2015 2015 2014 2013 Financial key figures4) EBITDAR Margin, % – – 34.2 33.5 34.5 EBITDA Margin, % 7.8 9.3 10.1 7.6 8.8 EBIT Margin, % 1.9 4.7 5.7 3.3 4.8 Return on capital employed, % – – 39.1 27.2 33.4 Return on equity, % – – 14.7 7.6 15.4
Operational key figures4) Number of hotels1) – – 355 340 337 Number of rooms1) – – 78,628 76,609 75,277 Number of employees3) – – 5,561 5,518 5,360 Occupancy %2) – – 67 66 66 RevPAR EUR2) – – 72 68 69
Share related key figures4) Basic average number of shares 170,716,960 170,707,719 170,707,719 161,019,085 146,320,902 Diluted average number of shares 173,504,452 172,718,703 172,902,764 162,608,506 148,123,048 Basic earnings per share, EUR 0.06 0.12 0.20 0.09 0.16 Diluted earnings per share, EUR 0.05 0.12 0.20 0.09 0.16 Dividend per share, EUR – – 0.07 0.03 – 1) Includes leased, managed and franchised hotels in operation. 2) Including managed and leased hotels in operation. 3) Including consolidated entities (leased hotels and administrative units). 4) Definitions of key figures are found on page 11.
10 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Financial information in summary
Definitions
1 January – 30 September 2016 interim report retirement benefit obligations as well as liabilities related Rezidor presents certain financial measures in this interim to investments in hotels under management contracts, for report that are not defined under IFRS. The Company believes which repayments are linked to fees collected. that these measures provide useful supplemental information to investors and the Company’s management as they allow Annual reports for the financial years 2015 and 2014 evaluation of the Company’s performance. Because not all Definitions used in Rezidor’s annual reports for the financial companies calculate these financial measures similarly, these years 2015 and 2014. are not always comparable to measures used by other com- panies. These financial measures should not be considered a Capital employed substitute for measures defined under IFRS. Total assets less interest-bearing financial assets and cash and cash equivalents and non interest-bearing operating liabili- IFRS Measures ties, including pension liabilities, and excluding tax assets and Revenue tax liabilities. All related business revenue (including rooms revenue, food & drinks revenue, other hotel revenue, fee revenue and other Earnings per share non-hotel revenue from administration units). Profit for the period, before allocation to minority interest divided by the weighted average number of shares out- Earnings per Share standing. Profit for the period, before allocation to non-controlling interests, divided by the weighted average number of shares EBIT outstanding. Net profit before net financial items and tax.
Basic Average Number of Shares EBITDA Weighted average number of ordinary shares outstanding Net profit before depreciation and amortisation and gain on during the period. sale of shares and fixed assets and net financial items and tax.
Non-IFRS Measures – Alternative Performance EBITDA margin Measures EBITDA as a percentage of Revenue. EBIT Operating profit before net financial items and tax. EBITDAR Operating profit before rental expense and share of income EBIT Margin in associates and before depreciation and amortisation and EBIT as a percentage of Revenue. gain on sale of shares and of fixed assets and net financial items and tax. EBITDA Operating profit before depreciation and amortisation, costs Occupancy (%) due to termination/restructuring of contracts, net financial Number of rooms sold in relation to the numbers of rooms items and tax. available for sale.
EBITDA Margin Return on capital employed EBITDA as a percentage of Revenue. (ROA – Return on Assets) Operating profit, excluding restructuring costs and impair- EBITDAR ment losses divided by average capital employed. Operating profit before rental expense and share of income in associates, depreciation and amortisation, costs due to ter- Revenue mination/restructuring of contracts, net financial items and All related business revenue (including rooms revenue, food tax. & beverage revenue, other hotel revenue, fee revenue and other non-hotel revenue from administration units). EBITDAR Margin EBITDAR as a percentage of Revenue. RevPAR Revenue Per Available Room – Rooms revenue in relation to Net Cash (Debt) rooms available. Cash & cash equivalents plus short-term interest-bearing assets (with maturity within three months) minus inter- est-bearing liabilities (short-term & long-term), excluding
Public offer to the shareholders in Rezidor Hotel Group AB (publ) 11 Share capital and ownership structure
Share information Ownership structure Rezidor’s shares are since 2006 admitted to trading on Nasdaq The table below shows the ten largest shareholders of Stockholm, under the Mid Cap segment. The shares are listed Rezidor as of 31 August 2016. The total number of Rezidor under the symbol REZT with ISIN code SE0001857533. shareholders was 3,674 as of 30 December 2016. As of the date of this offer document, the share capital of Rezidor amounts to EUR 11,625,765.69. As of the same Number Shares/votes Shareholders of shares (%)1) date, the number of issued shares amount to 174,388,857. At shareholders’ meetings, each share carries one vote and Carlson Hotels2) 87,552,187 50.21 % each shareholder is entitled to vote for the full number of J.P. Morgan3) 7,533,368 4.32 % shares such shareholder holds in the Company. Rezidor has Fidelity 5,298,158 3.04 % only one class of shares. Neither the Articles of Association Group SSB 4,351,484 2.50 % nor any applicable law stipulate restrictions on the right to CBNY-Norges Bank 4,194,776 2.41 % transfer shares from one owner to another. Group Provobis 4,000,000 2.29 % Rezidor Hotel Group 3,639,553 2.09 % Fjärde AP-Fonden 3,589,419 2.06 % Nordea 3,510,264 2.01 % AMF Aktiefond Sverige 3,009,231 1.73 % 1) Of the total number of shares/votes in the Company (174,388,857). 2) Carlson Hotels holds 51.3 per cent of the shares when calculated on the number of outstanding shares as of 30 December 2016 (170,808,498). 3) The 7,533,368 shares listed in the table above include shares held by affiliates of J.P. Morgan in its capacity as custodian. An affiliate of J.P. Morgan was the beneficial owner of 22,170 shares as of 31 August 2016.
Source: Euroclear and www.rezidor.com.
Share price development The chart below shows the closing price and volume of trade of the Rezidor shares over the past five years (30 January 2012 – 30 January 2017), compared with OMX Nasdaq Stockholm, Mid Cap index during the same period.
Rezidor’s share price (SEK) Daily volume of trade 80 10,000,000
70 8,000,000 60
50 6,000,000
40
30 4,000,000
20 2,000,000 10
0 0 2012-01-30 2013-01-30 2014-01-30 2015-01-30 2016-01-30 2017-01-30
Rezidor volume of trade Rezidor share price OMX Stockholm Mid Cap (indexed to Rezidor share price)
Source: Nasdaq.
12 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Share capital and ownership structure
Shareholders’ agreements Seven members of the Executive Committee participate According to Rezidor’s annual report for 2015, the Board of in the 2016 program entitling them to a maximum total of Directors of Rezidor is not aware of any agreements between 718,479 shares. 25 other members of management par- shareholders of the Company that can impose restrictions on ticipate in the program, entitling them to a maximum of the right to transfer shares from one owner to another. 417,350 shares in total.
Dividend policy Maximum number of shares Plan that can be awarded Rezidor has a long-term policy to distribute approximately one third of the annual net income. 2014 plan 690,332 2015 plan 1,077,145 Ownership of treasury shares 2016 plan 1,135,829 Rezidor holds 3,580,359 treasury shares. Total 2,903,306
Share-based incentive programs Rezidor has share-based incentive programs as described Outstanding warrants and convertibles below. Rezidor has no outstanding warrants or convertibles.
Long-term equity-settled performance-based incentive Authorisations to resolve on new issue programs of shares The purpose of the long-term equity-settled perfor- Rezidor’s Board of Directors has not been authorised by any mance-based incentive programs is to ensure that remuner- shareholders’ meeting to resolve to issue new shares or war- ation within the group helps aligning executives with share- rants. holders’ interests and that a suitable proportion of remunera- tion is linked to company performance. In order to implement Share buy-back the performance based share program in a cost efficient and The Board of Directors of Rezidor has not been authorised by flexible manner, the Board of Directors of Rezidor has been any shareholders’ meeting to resolve to buy back the Com- authorised by the Annual General Meetings to decide on pany’s shares. acquisitions of its own shares on the stock exchange. Authorisations for the Board of The 2014, 2015 and 2016 programs Directors to resolve on transfers of In 2014, 2015 and 2016, the Annual General Meetings have own shares approved long-term equity settled performance-based incen- In order to cover social security contributions and other costs tive programs to be offered to executives within Rezidor. The related to the 2016 incentive program, the Board of Direc- structure of the three programs is similar. The programs are tors was on the 2016 Annual General Meeting authorised to comprised of both matching shares and performance shares. resolve on transfers of up to 222,662 own shares already held The President and CEO and other members of the Executive by Rezidor on a regulated market under certain conditions. Committee have been offered the opportunity to participate in the performance share part as well as the matching share Change of control clauses part of the programs. Other key executives have been offered According to Rezidor’s annual report for 2015, certain lease to participate in the performance share part of the programs. and management contracts entered into by members of the Six members of the Executive Committee participate in the Company contain change of control clauses in relation to 2014 program entitling them to a maximum total of 491,843 such members or their parents leading to possible changes shares. 18 other members of management participate in the in commercial terms and/or early termination. None of these program, entitling them to a maximum of 198,489 shares in clauses refer to a change of control of the ultimate parent total. company, Rezidor. The agreements for Rezidor’s long-term, Seven members of the Executive Committee participate committed credit lines carry customary clauses related to in the 2015 program entitling them to a maximum total of change of control and delisting. 674,620 shares. 25 other members of management par- ticipate in the program, entitling them to a maximum of 402,525 shares in total.
Public offer to the shareholders in Rezidor Hotel Group AB (publ) 13 Rezidor’s Board of Directors, senior executives and auditors
The information in this section is, if nothing else is explicitly stated, based upon information on Rezidor’s website (www.rezidor.com) as per 30 December 2016.1)
Board of Directors Trudy Rautio Anders Moberg Chairman of the Board of Directors since September 2012 Board member since 2011. and board member since 2005. Born: 1950. Born: 1952. Other assignments: Anders Moberg is the Chairman of Other assignments: Trudy Rautio also serves on the Board of Byggmax AB and a Board member of ITAB AB, Bergendahls Directors for Cargill, The Donaldson Company, Inc., Securian AB, Hema BV, Amor GmbH, Ahlstrom OY, and SLK OY. Holding Company, Merlin Entertainment PLC, and the Bemidji Shareholding in Rezidor: 35,000.2) State University Foundation. Shareholding in Rezidor: 0. Charlotte Strömberg Board member since 2014. Staffan Bohman Born: 1959. Board member since 2011. Other assignments: Charlotte Strömberg is a Board member Born: 1949. of Intrum Justitia AB, Karolinska Institute, Skanska AB, Ratos Other assignments: Staffan Bohman is the Chairman of the AB, Bonnier Holding AB, and the Swedish Securities Council; Board of Cibes Lift Group AB and of Höganäs AB, and the and chairs the Board of Castellum AB. Vice Chair of the Swedish Corporate Governance Board. Shareholding in Rezidor: 12,000. He is a member of the Board of Directors of Atlas Copco AB, Boliden AB and Ratos AB; and is a member of the Royal Göran Larsson3) Swedish Academy of Engineering Sciences (IVA). Employee representative since 2009. Shareholding in Rezidor: 58,333. Born: 1960. Other assignments: No information. Wendy Nelson Shareholding in Rezidor: 0. Board member since 2010. Göran Larsson is employed by the Radisson Blu Royal Viking Born: 1968. Hotel, Stockholm (Sweden). Other assignments: Wendy Nelson serves on the Boards of Northwestern University, the Bush Foundation (Vice Chair), Carlson, the Carlson Family Foundation (Vice President), Carlson Holdings, Inc. and Carlson Real Estate Company, Carlson School of Management at the University of Minnesota, Guthrie Theatre, Gold Medal Park Conservancy and Super Bowl Lll Legacy Fund (Co-Chair). Wendy Nelson also serves on Advisory Boards for the Women’s UN Report Network and the Women’s Foundation of Minnesota’s initiative “MN girls are not for sale”. Since 2002, she has held various executive positions with Carlson. Shareholding in Rezidor: 0.
1) According to a press release dated 27 January 2017, David P. Berg has with immediate effect resigned from his position in the Board of Directors. 2) Held indirectly through an endowment assurance. 3) The information about Göran Larsson is based upon information in Rezidor’s annual report for 2015.
14 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Rezidor’s Board of Directors, senior executives and auditors
Senior executives Auditors Wolfgang M. Neumann Erik Olin President and Chief Executive Officer since 2013 and At the 2016 Annual General Meeting, the auditing firm employed since 2011. Deloitte AB was re-elected as the Company´s auditor until the Born: 1962. end of the 2017 Annual General Meeting, with the author- Other assignments: No information. ised public accountant Erik Olin as auditor-in-charge. Erik Shareholding in Rezidor: 84,994. Olin has been auditor-in-charge of the Company since 2016.
Knut Kleiven Deputy President and Chief Financial Officer since 1994 and employed since 1986. Born: 1954. Other assignments: No information. Shareholding in Rezidor: 173,989.
Olivier Harnisch Executive Vice President and Chief Operating Officer since 2013. Born: 1967. Other assignments: No information. Shareholding in Rezidor: 17,624.
Eric De Neef Executive Vice President & Chief Commercial Officer since 2011. Born: 1964. Other assignments: No information. Shareholding in Rezidor: 23,115.
Michael Farrell Senior Vice President Human Resources since 2011. Born: 1956. Other assignments: No information. Shareholding in Rezidor: 14,641.
Elie Younes Senior Vice President, Head of Group Development since 2013 and employed since 2010. Born: 1977. Other assignments: No information. Shareholding in Rezidor: 14,000.
Jenny Winkler Senior Vice President & General Counsel since 2015. Born: 1975. Other assignments: No information. Shareholding in Rezidor: 1,500.
Public offer to the shareholders in Rezidor Hotel Group AB (publ) 15 Articles of association of Rezidor
Rezidor Hotel Group AB (publ) corporate reg. no. 556674- In order for a shareholder to be entitled to attend a share- 0964 holders’ meeting, such shareholder must first be registered in the transcript of the Company’s share ledger reflecting the Adopted at annual general meeting on 21 April 2016 ownership conditions five week days before the meeting and must further give notice of attendance to the Company no § 1 later than four o’clock p.m. on such last day as is indicated The name of the Company is Rezidor Hotel Group AB (publ). in the notice convening the shareholders’ meeting. This day The Company is a public company. may not be a Sunday, other public holiday, Saturday, Midsum- mer’s Eve, Christmas Eve or New Years Eve and may not be a day falling earlier than the fifth week day before the day of § 2 the shareholders’ meeting. The Board shall have its registered office in Stockholm. § 10 § 3 The Company shall have one annual general meeting of the The objects of the Company are to own shares in hotel com- shareholders to be held in Stockholm before the end of the panies and real properties, directly or indirectly, to operate month of June each year. or by contract grant to a third party the operation of hotel- The following matters shall be addressed at the annual and accommodation business and other activity compatible general meeting of the shareholders. therewith. 1. Election of a Chairman for the meeting and keeper of § 4 the meeting. The accounting currency of the company shall be Euro. 2. Election of one or two persons to attest the correctness of the minutes. § 5 3. Preparation and adjustment of the voting register. The share capital shall be not less than 5,000,000 Euro and 4. Approval of the Board’s proposal for the agenda. not more than 20,000,000 Euro, divided into not less than 5. Examination of whether or not the meeting has been 150,000,000 and not more than 600,000,000 shares. duly convened. 6. Presentation of the annual report and auditor’s report, § 6 and where applicable, the consolidated Group accounts The shares of the Company shall be registered in a public and auditor’s report for the consolidated Group accounts. register in accordance with the Swedish Law on Balanced 7. Resolutions in respect of Accounts for Financial Instruments (lag (1998:1479) om a) adoption of the profit and loss account and balance kontoföring av finansiella instrument). sheet and, where applicable, the consolidated profit and loss account and consolidated balance sheet, § 7 b) allocation of the Company’s profit and loss in accord- The Board of Directors shall consist of no less than three ance with the adopted balance sheet, (3) ordinary members and no more than fifteen (15) ordi- c) discharge from liability of the directors and the Chief nary members. The Board of Directors shall be elected at the Executive Officer. annual general meeting for a period until the end of the next 8. Where applicable, determination of fees for the mem- annual general meeting. bers of the Board of Directors and fees for the auditors 9. Election of the Board of Directors. § 8 10. Where appropriate, election of auditor and deputy For the purpose of auditing the Company’s annual report and auditor. accounts, as well as the management by the Board of Direc- 11. Other matter to be dealt with at the meeting pursuant to tors, one auditor in charge with an alternate auditor, or one the Companies Act or the Articles of Association. registered firm of auditors, shall be appointed and the annual general meeting of the shareholders. § 11 Each owner of shares in the company is entitled to vote for § 9 the full amount of such shares at a meeting of shareholders, Notices convening meetings of the shareholders shall be without any voting limitations. effected by public announcement in the Swedish Official Journal (Post- och Inrikes Tidningar) and on the company’s § 12 website. That notice has been made shall be published in the Votes at the shareholder’s meeting will be effected by open Swedish daily newspaper Svenska Dagbladet. voting, unless the meeting decides on secret voting. Notice of ordinary meetings of the shareholders and extraordinary meetings concerning changes to the Compa- § 13 ny’s articles of association shall be effected no earlier than The Company’s financial year shall be the calendar year. six weeks and no later than four weeks prior to the meeting. Notices for other extraordinary meetings of shareholders shall be effected no earlier than six weeks and no later than three weeks before the meeting.
16 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Rezidor’s interim report for 1 January – 30 September 2016
January-September 2016 Third Quarter 2016 . Like-for-like (“L/L”) RevPAR for leased and managed hotels was up by 5.3%. The growth is mainly due to an increase in average room rate. . Revenue decreased by 3.9% to MEUR 251.3 (261.4). The positive impact of the like-for-like RevPAR development has been offset by the strengthening of the Euro and the exit of four leases in the Nordics. On a L/L basis revenue increased by 3.5%. . EBITDA amounted to MEUR 29.0 (35.8) and the EBITDA margin decreased to 11.5% (13.7). In addition to the decrease in revenue, EBITDA is negatively impacted by redundancy costs of MEUR 4.0. . EBIT amounted to MEUR 16.4 (24.4) and the EBIT margin decreased to 6.5% (9.3). EBIT is negatively impacted by higher costs for depreciation and impairment of fixed assets of MEUR 2.3, partially offset by lower termination costs of MEUR 1.2. The performance of the hotels in Brussels, Nice and Paris are significantly impacted by the recent terrorist attacks and are in total MEUR 4.4 below last year on EBIT. . Profit for the period amounted to MEUR 14.9 (17.9), positively impacted by a lowered tax rate. . Basic and diluted earnings per share were EUR 0.09 (0.10). . 1,879 (2,300) new rooms were contracted, 292 (1,348) new rooms opened and 515 (0) rooms left the system.
Nine months ended September 2016 . L/L RevPAR for leased and managed hotels was up by 3.4%. . Revenue decreased by 3.2% to MEUR 718.1 (741.6). On a L/L basis revenue increased by 3.7%. . EBITDA amounted to MEUR 56.2 (68.6) and the EBITDA margin decreased to 7.8% (9.3). . EBIT amounted to MEUR 13.3 (35.0) and the EBIT margin decreased to 1.9% (4.7). . Profit for the period amounted to MEUR 9.5 (19.9). . Basic and diluted earnings per share were EUR 0.06 (0.12) and EUR 0.05 (0.12) respectively. . Cash flow from operating activities amounted to MEUR 38.5 (52.8). . 6,411 (7,071) new rooms were contracted, 2,678 (2,777) new rooms opened and 1,247 (1,152) rooms left the system.
MEUR Q3 2016 Q3 2015 Jan-Sep 2016 Jan-Sep 2015 Revenue 251.3 261.4 718.1 741.6 EBITDA 29.0 35.8 56.2 68.6 EBIT 16.4 24.4 13.3 35.0 Profit for the period 14.9 17.9 9.5 19.9 EBITDA margin, % 11.5 13.7 7.8 9.3 EBIT margin, % 6.5 9.3 1.9 4.7
Public offer to the shareholders in Rezidor Hotel Group AB (publ) 17 Rezidor’s interim report for 1 January – 30 September 2016
Comments from the CEO Fragile trading environment in some key markets impacted results, but cost restructuring and exit of loss-making hotels will support future profitability improvement Market conditions continue to be fragile, especially in France and Belgium where the terrorist attacks are still affecting trading, with results in Brussels, Paris and Nice negatively impacting EBIT for the quarter by €4.4m. Also Turkey and Saudi Arabia continue to suffer from unrest and the depressed oil price. We are carefully monitoring these countries and are concentrating on operational efficiency. In response to the ongoing challenges in some key markets, we have launched a cost containment plan targeting a total saving of €10m. Our focus is on central cost reductions as well as on a further increase of procurement efficiencies which leads to restructuring costs of ca €5m, of which €4m are accounted for in the third quarter. It is encouraging to see that after a strong summer in Scandinavia the stressed market in Norway shows signs of recovery, while Denmark and Sweden continue to perform well. In Norway, we have further optimised our leased portfolio and exited three lease agreements at a cost of €11.7m (accrued for in previous quarters), but creating an annual positive EBIT of ca €4m as from September 2016. Two of the agreements have been converted to franchise contracts. We continue to make solid progress in pursuit of our long-term strategy and sustainable network growth, while adapting to external factors. Management is focussed on vigilant cost containment and further margin enhancing initiatives to drive profitability. Wolfgang M. Neumann, President & CEO
Sources: STR Global Ltd. © 2016 – European Hotel Review – Constant Market RevPAR Development YTD Currency Edition (September 2016); Hotel | trends by Benchmarking | Market RevPAR across Europe was up 2.2% (at constant Alliance © 2016 exchange rates) September YTD with improvement driven Rezidor RevPAR Development Q3 primarily via room rate (2.0%). L/L RevPAR for leased and managed hotels increased by RevPAR in the mature Western European market is below 5.3% compared to last year, with average room rate being last year (-0.3%) as a result of a decline in occupancy the main driver (4.1%). L/L RevPAR for leased hotels (-1.1%). Belgium (-16.2%) and France (-10.9%), negatively increased by 5.1%, with the growth more evenly split impacted by terrorist attacks, offset the gains in the between average room rate and occupancy. majority of the other key countries. Three of the four regions reported L/L RevPAR growth In Northern Europe, 3.7%, the growth was mainly due to over last year with the strongest development in Eastern improved room rate (3.3%). In the Nordics all four key Europe. The only region below last year was the Middle countries had positive developments: Denmark 10.6%, East, Africa & Others linked to the ongoing political Finland 9.3%, Norway 1.0% and Sweden 7.6%. turbulence in some areas. Eastern Europe reported the strongest RevPAR growth Reported RevPAR decreased by 2.2%. It was negatively (14.3%), with room rate (8.5%) and occupancy (5.4%) impacted by -4.8% due to the strengthening of the Euro both driving the growth. The key drivers were Russia and -2.7% via new openings, renovations and off-line (21.1%) and Poland (13.4%). hotels. Trading in the Middle East and Africa continued to be negatively impacted by political turmoil and the low oil price with RevPAR 9.3% below last year. The development by country remains mixed with South Africa (12.1) continuing to performing well, but with other markets significantly below last year including the United Arab Emirates (-9.6%) and Saudi Arabia (-7.0%).
L/L RevPAR growth by quarter L/L Occupancy growth by quarter L/L Room Rates growth by quarter
10% 5% 5% 8% 4% 4% 6% 3% 3% 2% 4% 2% 1% 2% 1% 0% 0% 0% -1% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 -2% 2015 2016
Rezidor Hotel Group – Interim Report January-September 2016 p. 2/20
18 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Rezidor’s interim report for 1 January – 30 September 2016
Income Statement Nine months ended September 2016 Total revenue decreased by 3.2%, or MEUR 23.5, to Third quarter 2016 MEUR 718.1 (741.6). The decrease is mainly due to the Total revenue decreased by 3.9%, or MEUR 10.1, to strengthening of the Euro and the exit of four leased MEUR 251.3 (261.4). The decrease is mainly due to the hotels in the Nordics. strengthening of the Euro, versus mainly the British Pound and the Norwegian Krona (in total MEUR -10.4), On a L/L basis revenue increased by 3.7%. and the exit of four leased hotels in the Nordics, three of The change in revenue compared to the same period last which occurred as of September 1. year is presented in the table below. On a L/L basis revenue increased by 3.5%, which is mainly MEUR L/L New Out FX Change due to the favourable L/L RevPAR development, partly Rooms Revenue 21.3 -2.6 -16.4 -15.4 -13.1 offset by a one-off fee income of MEUR 1.7 last year. F&D Revenue 1.9 -0.6 -6.0 -6.6 -11.3 The change in revenue compared to the same period last Other Hotel Revenue 1.8 -0.2 -1.6 -1.0 -1.0 year is presented in the table below. Total Leased Revenue 25.0 -3.4 -24.0 -23.0 -25.4 MEUR L/L New Out FX Change Fee Revenue -0.3 7.1 -3.3 -4.4 -0.9 Rooms Revenue 7.5 -0.6 -6.1 -6.4 -5.6 Other Revenue 2.9 — — -0.1 2.8 F&D Revenue 1.4 -0.1 -2.1 -2.3 -3.1 Total Revenue 27.6 3.7 -27.3 -27.5 -23.5 Other Hotel Revenue 0.2 -0.1 -0.7 -0.4 -1.0 EBITDA decreased by MEUR 12.4 to MEUR 56.2, due to Total Leased Revenue 9.1 -0.8 -8.9 -9.1 -9.7 the weak performance in Q1 and Q3, impacted by the Fee Revenue -0.2 2.4 -1.5 -1.2 -0.5 challenging trading in some areas, as well as higher Other Revenue 0.2 — — -0.1 0.1 central costs, of which the majority is due to redundancies. Total Revenue 9.1 1.6 -10.4 -10.4 -10.1 The performance of the hotels in Brussels, Nice and Paris EBITDA decreased by MEUR 6.8 to MEUR 29.0. In addition have been heavenly impacted by the terrorist attacks. In to the impact of lower revenue, EBITDA was negatively addition, one of the hotels in Brussels was closed for impacted by redundancy costs of MEUR 4.0 and higher renovation and re-branding during 3.5 months in the costs for long-term incentive programmes of MEUR 1.4. beginning of the year. The eight hotels in the three cities Rent as a percentage of leased hotel revenue decreased are in total MEUR 7.0 below last year on EBITDA. from 28.0% to 27.4%, partly due to the positive impact of Rent as a percentage of leased hotel revenue was 29.0% a re-negotiated rent agreement in Germany. (28.7). FX had a negative impact of ca MEUR 2.6 on FX had a negative impact of ca MEUR 1.3 on EBITDA. EBITDA. EBIT decreased by MEUR 8.0 to MEUR 16.4, due to the EBIT decreased by MEUR 21.7 to MEUR 13.3. In addition decrease in EBITDA and higher costs for depreciation and to the negative EBITDA development, EBIT is impacted by impairment of fixed assets in leased hotels of in total termination costs of MEUR 10.6 (1.1) for two leases in MEUR 2.3. This was however partly offset by lower costs Norway, as well as higher costs for depreciation and for termination of contracts of MEUR 1.1. impairment of fixed assets of MEUR 1.7, partly offset by MEUR 1.9 gain on sale of shares in subsidiaries. The performance of the hotels under lease and management agreements in Brussels, Nice and Paris have The profit for the period amounted to MEUR 9.5 been significantly impacted by the recent terrorist compared to MEUR 19.9 last year. The positive income attacks. The eight hotels are in total MEUR 4.4 below last tax development is due to change in jurisdictional mix and year on EBIT. tax treatment of certain expenses. The profit for the period amounted to MEUR 14.9 compared to MEUR 17.9 last year. The positive income tax development is due to change in jurisdictional mix and tax treatment of certain expenses.
EBITDAR, MEUR Rullande EBITDAR-margin, % EBITDA, MEUR Rolling EBITDA margin, % EBIT, MEUR Rolling EBIT margin, %
120.0 35% 40 11% 30.0 6% 100.0 10% 20.0 30 5% 80.0 34% 9% 10.0 20 60.0 8% 0.0 4% 10 40.0 33% 7% -10.0 3% 20.0 0 6% -20.0 0.0 32% -10 5% -30.0 2% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 2015 2016 2015 2016
Rezidor Hotel Group – Interim Report January-September 2016 p. 3/20
Public offer to the shareholders in Rezidor Hotel Group AB (publ) 19 Rezidor’s interim report for 1 January – 30 September 2016
Q3 Comments by Region Eastern Europe MEUR Q3 2016 Q3 2015 Change Nordics L/L RevPAR, EUR 63.2 53.9 17.3% MEUR Q3 2016 Q3 2015 Change Total Fee Revenue 12.3 10.6 16.0% L/L RevPAR, EUR 108.3 98.4 10.0% EBITDA 8.6 7.5 14.7% Total Revenue 110.7 111.7 -0.9% EBITDA margin, % 69.9% 70.8% -0.9 pp EBITDA 16.7 15.7 6.4% EBIT 8.5 7.4 14.9% EBITDA margin, % 15.1% 14.1% 1.0 pp EBIT margin, % 69.1% 69.8% -0.7 pp EBIT 8.2 8.0 2.5% EBIT margin, % 7.4% 7.2% 0.2 pp L/L RevPAR improved by 17.3%, with growth in both average room rate and occupancy. Russia (39.3%) L/L RevPAR increased by 10.0% with the growth almost remains the key driver with Turkey (-21.5%) negatively evenly split between average room rate and occupancy. impacted mainly by the terrorist attacks, attempted coup All three key countries were above last year with Norway and unrest in the neighbouring countries. (14.6%) leading, followed by Denmark (10.3%) and Sweden (2.3%). Fee revenue increased by MEUR 1.7 (or 16.0%). The positive impact of the strong L/L RevPAR development Total revenue decreased by MEUR 1.0 (or 0.9%) has been partly offset by the weakening of the Rouble and compared to last year, mainly due to the exit of four other currencies in the region. hotels and the weakening of the Norwegian krona. In addition, one hotel is closed for renovation as from EBITDA and EBIT margins are in line with last year. September 1. The decrease due to the above mentioned factors has been partly offset by the strong L/L RevPAR Middle East, Africa and Others development. MEUR Q3 2016 Q3 2015 Change The increase in EBITDA of MEUR 1.0, and the improved L/L RevPAR, EUR 61.2 63.6 -3.7% EBITDA margin, is due to the strong L/L revenue Total Fee Revenue 6.9 6.1 13.1% development and improved conversion. EBITDA 5.0 3.6 38.9% EBIT is negatively impacted by impairment of fixed assets EBITDA margin, % 72.5% 59.0% 13.5 pp of MEUR 3.8, partly offset by lower termination costs of EBIT 5.0 3.5 42.9% MEUR 1.1 and lower depreciation costs. EBIT margin, % 72.5% 57.4% 15.1 pp L/L RevPAR decreased by 3.7% as the decline in average Rest of Western Europe room rates offset a slight increase in occupancy. South MEUR Q3 2016 Q3 2015 Change Africa (10.0%) continued to lead the growth with Saudi L/L RevPAR, EUR 103.2 102.5 0.7% Arabia (-13.4%) remaining the main challenge as the low Total Revenue 121.4 133.0 -8.7% oil price continues to have a negative impact. EBITDA 17.7 21.8 -18.8% The increase in fee revenue of MEUR 0.8 (or 13.1%) is EBITDA margin, % 14.6% 16.4% -1.8 pp mainly due to new hotels in the portfolio. EBIT 13.7 18.3 -25.1% EBITDA and EBIT are, in addition to the revenue increase, EBIT margin, % 11.3% 13.8% -2.5 pp impacted by lower costs for bad debts. L/L RevPAR grew by 0.7% as average room rate growth offset a decline in occupancy. The growth, most notable Central costs in Germany (11.1%) and Ireland (11.0%), offset the Central costs for the quarter amounted to MEUR 19.0, an challenges in Belgium (-18.6%) and France (-18.5%) linked increase compared to last year of MEUR 6.2. This is mainly to the ongoing impact of the terrorist attacks. due to redundancy costs of MEUR 4.0 and higher costs for Total revenue decreased by MEUR 11.6 (or 8.7%) long-term incentive programmes of MEUR 1.4. compared to last year, mainly due to the weakening of the British Pound and the challenges in Brussels, Nice and Paris after the terrorist attacks. In addition, last year’s numbers included a one-off fee income of MEUR 1.7 related to a renegotiated management agreement. The decrease in EBITDA of MEUR 4.1 is mainly attribu- table to the three cities mentioned above. EBIT is negatively impacted by higher depreciation costs, partly offset by lower net costs for impairment of fixed assets.
Rezidor Hotel Group – Interim Report January-September 2016 p. 4/20
20 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Rezidor’s interim report for 1 January – 30 September 2016
Comments to the Balance Sheet credit for use. The committed credit facilities have a tenor until November 2018 and carry customary covenants. Non-current assets increased by MEUR 31.4 from year- end 2015 and amounted to MEUR 310.0. The increase is Net interest bearing assets amounted to MEUR 19.3 (53.0 mainly related to investments in tangible assets of at year-end 2015). MEUR 49.8 and investments in associates of MEUR 14.7, Net cash (debt), defined as cash & cash equivalents plus partly offset by depreciation of MEUR 29.6 and write- short-term interest-bearing assets minus interest-bearing downs of MEUR 4.6. financial liabilities (short-term & long-term), equalled Net working capital, excluding cash and cash equivalents, MEUR 3.6 (41.1 at year-end 2015). but including current tax assets and liabilities, was MEUR -52.9 at the end of the period, compared to MEUR - MEUR Jan-Sep 16 Jan-Sep 15 53.0 at year-end 2015. Cash flow before working capital 37.6 57.1 changes Cash and cash equivalents decreased by MEUR 26.2 from Change in working capital 0.9 -4.3 year-end 2015 to MEUR 11.5 at the end of the period. The decrease is due to investments carried out during the Cash flow from investing activities -63.3 -45.9 period and dividend paid to the shareholders, partly Free cash flow -24.8 6.9 offset by the positive cash flow from operating activities and external financing. Subsequent Events Compared to year-end 2015, equity increased by There are no significant post balance sheet events to MEUR 0.4 to MEUR 247.1. The profit for the period of report. MEUR 9.5, the increase of provision for long term incentive programmes of MEUR 1.8 and the net actuarial gain on defined benefit pension plans of MEUR 1.2 has Material Risks and Uncertainties been partly offset by the distributed dividend of MEUR 11.9. No material changes have taken place during the period and reference is therefore made to the detailed The decrease in assets and liabilities classified as held for description provided in the annual report for 2015. The sale of MEUR 7.9 and MEUR 4.6, respectively, is mainly general market, economic and financial conditions as well due to the finalisation of the sale of the entity holding the as the development of RevPAR in various countries where lease on the Radisson Blu Scandinavia Hotel, Gothenburg, Rezidor operates, continue to be the most important Sweden. factors influencing the company’s earnings. In order to reduce the risks associated with operating in Emerging MEUR 30-Sep 16 31-Dec 15 Markets, Rezidor applies an asset light business model. Total assets 489.3 464.3 Management is continuously analysing ways to improve the performance of the hotel portfolio, with a particular Net working capital -52.9 -53.0 focus on how to increase the profitability of the leased Net cash (debt) 3.6 41.1 business in Rest of Western Europe. Future cash flow Equity 247.1 246.7 projections related to leases or management agreements with performance guarantees are sensitive to changes in Cash Flow and Liquidity discount rate, occupancy and room rate assumptions. Changes in such assumptions may lead to a renewed Cash flow from operations, before change in working assessment of the value of certain assets and the risk for capital, amounted to MEUR 37.6, a decrease of loss making contracts. MEUR 19.5 and mainly due to the decrease in EBIT. Cash The financial impact of existing contracts is uncertain and flow from change in working capital amounted to it cannot be ruled out that an exit could lead to a cash MEUR 0.9, compared to MEUR -4.3 last year. outflow which is currently not fully reflected in the Cash flow used in investing activities was MEUR 17.4 reported liabilities of the Group. The Parent Company higher compared to last year, and amounted to performs services of a common Group character. The MEUR -63.3, reflecting the investment in prize Holding risks for the Parent Company are the same as for the GmbH of MEUR 14.7 and increased capex spend in the Group. leased business. Cash flow from financing activities amounted to Seasonal Effects MEUR -4.6 (-5.2). The change is mainly due to the Rezidor is active in an industry with seasonal variations. recognition of an interest bearing liability in connection Sales and profits vary by quarter and the first quarter is with the acquisition of the shares in prize Holding GmbH generally the weakest. The timing of Easter can have a of MEUR 8.2, partly offset by dividend distributed of significant impact on Earnings when comparing to the MEUR 11.9. equivalent period for the previous year. For quarterly At the end of the period, Rezidor had MEUR 11.5 (37.7) in revenue and margins, see table on page 17. cash and cash equivalents. The total credit facilities available for use at the end of the period amounted to MEUR 200.0 (200.0). MEUR 0.5 (0.4) was used for bank guarantees, leaving MEUR 199.5 (199.6) in available
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Public offer to the shareholders in Rezidor Hotel Group AB (publ) 21 Rezidor’s interim report for 1 January – 30 September 2016
Sensitivity Analysis For Further Information, Contact With the current business model and portfolio mix Knut Kleiven Rezidor estimates that a EUR 1 RevPAR variation would Deputy President & CFO result in a MEUR 6-8 change in L/L EBITDA. Future cash Tel: +32 2 702 9244 flow projections related to leases or management Fax: +32 2 702 9330 agreements with performance guarantees are sensitive to [email protected] changes in discount rates, occupancy and room rate assumptions. Changes in such assumptions may lead to a Andrea Brandenberger renewed assessment of the value of certain assets and Senior Director the risk for loss making contracts. Business Development Strategy & Investor Relations Tel: +32 2 702 9237 Auditors’ review [email protected] The report has not been subject to review by the auditors. The Rezidor Hotel Group Corporate Office Avenue du Bourget 44 B-1130 Brussels Presentation of the Q3 Results Belgium On October 25, 2016 at 10:00 (Central European Time) a Tel: +32 2 702 9200 combined telephone conference and live webcast (in Fax: +32 2 702 9300 English) concerning the report will be presented by the President & CEO, Wolfgang M. Neumann and Deputy Website: www.rezidor.com President & CFO, Knut Kleiven. To follow the webcast, please visit www.investor.rezidor.com. About the Rezidor Hotel Group To access the telephone conference, please dial: The Rezidor Hotel Group is focused on hotel management and operates the core brands Radisson Blu and Park Inn Belgium, Local +32 2 404 0660 by Radisson. In 2014, Rezidor announced together with Belgium, Free 0800 58032 Carlson the launch of two additional brands; Radisson Sweden, Local: +46 8 5033 6538 RED, an upscale “lifestyle select” brand inspired by the Sweden, Free: 0200 883 440 millennial lifestyle, and Quorvus Collection, a new UK, Local: +44 20 3427 1918 generation of distinctive five star hotels. Rezidor also UK, Free: 0800 279 4841 holds 49% in prizeotel, a young hotel chain in the USA, Local: +1 646 254 3360 economy segment. USA, Free: 1877 280 1254 The portfolio consists of 474 hotels with over 103,000 France, Local: +33 1 76 77 22 27 rooms in operation and under development in 82 France, Free: 0805 631 579 countries across Europe, the Middle East and Africa. Confirmation code: 3927067. For a replay of the Rezidor’s strategy is to grow with management and conference call please visit www.investor.rezidor.com. franchise contracts and only selectively with leases. The strategy is also to further expand in the emerging Financial Calendar markets. Rezidor is a member of the Carlson Rezidor Hotel Group. Q4 2016 results: February 10, 2017 For more information, visit www.rezidor.com. Annual Report 2016: March 24, 2017 Q1 2017 results: April 28, 2017 AGM 2017: April 28, 2017 This quarterly report comprises information which Rezidor Hotel Group AB (publ) is required to disclose under the Securities Markets Act and/or the Financial Instruments Trading Act. It was released for publication at 07:30 Central European Time on October 25, 2016.
Stockholm, October 25, 2016
Wolfgang M. Neumann President & CEO Rezidor Hotel Group AB
Rezidor Hotel Group – Interim Report January-September 2016 p. 6/20
22 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Rezidor’s interim report for 1 January – 30 September 2016
Condensed Consolidated Statement of Operations MEUR Q3 2016 Q3 2015 Jan-Sep 2016 Jan-Sep 2015 Revenue 251.3 261.4 718.1 741.6 F&D and other related expenses -13.0 -14.5 -39.0 -41.9 Personnel cost and contract labour -87.1 -83.2 -251.7 -253.1 Other operating expenses -60.9 -61.7 -180.9 -181.1 Insurance of properties and property tax -3.0 -4.3 -10.6 -12.2 Operating profit before rental expense and share of income in associates and depreciation and amortisation and gain on sale of 87.3 97.7 235.9 253.3 fixed assets (EBITDAR) Rental expenses -58.5 -62.0 -179.9 -184.8 Share of income in associates and joint ventures 0.2 0.1 0.2 0.1 Operating profit before depreciation and amortisation and gain on 29.0 35.8 56.2 68.6 sale of fixed assets (EBITDA)
Depreciation and amortisation -10.2 -9.2 -29.6 -27.5 Write-downs and reversals of write-downs -2.4 -1.1 -4.6 -5.0 Costs due to termination of contracts — -1.1 -10.6 -1.1 Gain on sale of shares, intangible and tangible assets — — 1.9 — Operating profit (EBIT) 16.4 24.4 13.3 35.0
Financial income 0.5 -0.8 1.5 0.7 Financial expense -0.4 -0.3 -2.1 -2.0 Profit before tax 16.5 23.3 12.7 33.7
Income tax -1.6 -5.4 -3.2 -13.8 Profit for the period 14.9 17.9 9.5 19.9
Attributable to: Owners of the parent company 14.9 17.9 9.5 19.9 Non-controlling interests — — — — Profit for the period 14.9 17.9 9.5 19.9
Basic average no. of shares outstanding 170,735,442 170,707,719 170,716,960 170,707,719 Diluted average no. of shares outstanding 173,639,018 173,448,943 173,504,452 172,718,703
Earnings per share, in EUR Basic 0.09 0.10 0.06 0.12 Diluted 0.09 0.10 0.05 0.12
Consolidated Statement of Comprehensive Income
Profit for the period 14.9 17.9 9.5 19.9 Other comprehensive income: Items that will not be reclassified subsequently to profit or loss: Actuarial gains and losses 1.8 0.2 1.8 0.2 Tax on actuarial gains and losses -0.6 -0.1 -0.6 -0.1 Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign operations -2.0 -3.5 2.1 -3.3 Tax on exchange differences -1.8 0.4 -2.1 0.3 Fair value gains and losses on cash flow hedges -0.2 0.6 -0.2 -0.0 Tax on fair value gains and losses on cash flow hedges 0.0 -0.1 0.0 0.0 Other comprehensive income for the period, net of tax -2.8 -2.5 1.0 -2.9 Total comprehensive income for the period 12.1 15.4 10.5 17.0 Attributable to: Owners of the parent company 12.1 15.4 10.5 17.0 Non-controlling interests — — — — Rezidor Hotel Group – Interim Report January-September 2016 p. 7/20
Public offer to the shareholders in Rezidor Hotel Group AB (publ) 23 Rezidor’s interim report for 1 January – 30 September 2016
Condensed Consolidated Balance Sheet Statements MEUR 30-Sep 2016 31-Dec 2015
ASSETS Intangible assets 61.7 64.6 Tangible assets 181.8 170.5 Investments in associated companies and joint ventures 17.6 2.9 Other shares and participations 5.2 5.2 Other long-term receivables 15.4 13.7 Deferred tax assets 28.3 21.7 Total non-current assets 310.0 278.6
Inventories 4.8 5.0 Other current receivables 147.2 118.6 Derivative financial instruments 0.3 0.3 Other short term investments 1.3 2.0 Cash and cash equivalents 11.5 37.7
Assets classified as held for sale 14.2 22.1 Total current assets 179.3 185.7
TOTAL ASSETS 489.3 464.3
EQUITY AND LIABILITIES Equity attributable to equity holders of the parent 247.1 246.7 Non-controlling interests 0.0 0.0 Total equity 247.1 246.7
Deferred tax liabilities 10.0 15.4 Retirement benefit obligations 4.1 5.6 Other long-term liabilities 25.4 17.6 Total non-current liabilities 39.5 38.6
Derivative financial instruments 0.2 0.1 Other current liabilities 202.5 174.3
Liabilities classified as held for sale — 4.6 Total current liabilities 202.7 179.0
TOTAL EQUITY AND LIABILITIES 489.3 464.3
Number of ordinary shares outstanding at the end of the period 170,749,304 170,707,719 Number of ordinary shares held by the company 3,639,553 3,681,138 Number of registered ordinary shares at the end of the period 174,388,857 174,388,857
Rezidor Hotel Group – Interim Report January-September 2016 p. 8/20
24 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Rezidor’s interim report for 1 January – 30 September 2016
Consolidated Statement of Changes in Equity Retained Attributable earnings incl. to equity Non- Share Other paid Other net profit/loss holders of controlling Total MEUR capital in capital reserves for the period the parent interests equity Opening balance as of 11.6 177.1 6.2 24.5 219.4 0.0 219.4 January 1, 2015 Profit for the period — — — 19.9 19.9 — 19.9 Other comprehensive income: Actuarial gains and losses on — — — 0.2 0.2 — 0.2 defined benefit plans Tax on actuarial gains and losses on — — — -0.1 -0.1 — -0.1 defined benefit plans Currency differences on translation — — -3.3 — -3.3 — -3.3 of foreign operations Tax on exchange differences recognised in other comprehensive — — 0.3 — 0.3 — 0.3 income Cash flow hedges — — -0.0 — -0.0 — -0.0 Tax on cash flow hedges — — 0.0 — 0.0 — 0.0 Total comprehensive income for the — — -3.0 20.0 17.0 — 17.0 period Transactions with owners: Dividend — — — -5.1 -5.1 — -5.1 Long term incentive plan — — — 0.3 0.3 — 0.3 Ending balance as of 11.6 177.1 3.2 39.7 231.6 0.0 231.6 September 30, 2015
Opening balance as of 11.6 177.1 3.6 54.4 246.7 0.0 246.7 January 1, 2016 Profit for the period — — — 9.5 9.5 — 9.5 Other comprehensive income: Actuarial gains and losses on — — — 1.8 1.8 — 1.8 defined benefit plans Tax on actuarial gains and losses on — — — -0.6 -0.6 — -0.6 defined benefit plans Currency differences on translation — — 2.1 — 2.1 — 2.1 of foreign operations Tax on exchange differences recognised in other comprehensive — — -2.1 — -2.1 — -2.1 income Cash flow hedges — — -0.2 — -0.2 — -0.2 Tax on cash flow hedges — — 0.0 — 0.0 — 0.0 Total comprehensive income for the — — -0.2 10.7 10.5 — 10.5 period Transactions with owners: Dividend — — — -11.9 -11.9 — -11.9 Long term incentive plan — — — 1.8 1.8 — 1.8 Ending balance as of 11.6 177.1 3.4 55.0 247.1 0.0 247.1 September 30, 2016
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Public offer to the shareholders in Rezidor Hotel Group AB (publ) 25 Rezidor’s interim report for 1 January – 30 September 2016
Condensed Consolidated Statement of Cash Flow
MEUR Q3 2016 Q3 2015 Jan-Sep 2016 Jan-Sep 2015 Operating profit (EBIT) 16.4 24.4 13.3 35.0 Non-cash items 12.2 10.5 34.3 32.9 Interest, taxes paid and other cash items 0.1 -3.7 -10.0 -10.8 Change in working capital -7.0 -1.0 0.9 -4.3 Cash flow from operating activities 21.7 30.2 38.5 52.8
Purchase of intangible assets -0.2 -0.2 -0.5 -0.8 Purchase of tangible assets -14.2 -17.3 -49.8 -45.2 Investments in subsidiaries — — — 0.4 Net proceeds from sale of shares in subsidiaries — — 0.6 — Investments in associated companies and joint ventures — — -14.7 — Other investments/divestments 0.2 0.2 1.1 -0.3 Cash flow from investing activities -14.2 -17.3 -63.3 -45.9
Dividend — — -11.9 -5.1 External financing, net -8.7 -1.6 7.3 -0.1 Cash flow from financing activities -8.7 -1.6 -4.6 -5.2
Cash flow for the period -1.2 11.3 -29.4 1.7
Effects of exchange rate changes on cash and cash equivalents -0.1 -0.1 -0.2 0.1
Cash and cash equivalents at beginning of the period 12.8 26.1 41.1 35.5 Cash and cash equivalents at end of the period 11.5 37.3 11.5 37.3
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26 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Rezidor’s interim report for 1 January – 30 September 2016
Parent Company, Condensed Statement of Operations MEUR Q3 2016 Q3 2015 Jan-Sep 2016 Jan-Sep 2015 Revenue 3.9 1.7 8.5 5.0 Personnel cost and contract labour -1.6 -1.2 -4.8 -3.6 Other operating expenses -4.3 -2.8 -10.5 -8.0 Operating profit/loss before depreciation and amortization -2.0 -2.3 -6.8 -6.6 (EBITDA)
Depreciation and amortization -0.1 0.0 -0.1 -0.2 Operating profit/loss (EBIT) -2.1 -2.3 -6.9 -6.8
Financial income -4.5 10.6 0.3 14.6 Financial expense 0.0 -0.2 -0.0 -0.2
Profit/loss before tax -6.6 8.1 -6.6 7.6
Income tax 1.4 -1.8 1.4 -1.7 Profit/loss for the period -5.2 6.3 -5.2 5.9
Parent Company, Statement of Comprehensive Income
Profit/loss for the period -5.2 6.3 -5.2 5.9 Other comprehensive income — — — — Total comprehensive income for the period -5.2 6.3 -5.2 5.9
Parent Company, Condensed Balance Sheet Statements
MEUR 30-Sep 2016 31-Dec 2015
ASSETS Intangible assets 0.0 0.0 Tangible assets 0.5 0.2 Shares in subsidiaries 235.4 233.5 Deferred tax assets 1.4 — Total non-current assets 237.3 233.7
Current receivables 34.3 53.8 Total current assets 34.3 53.8
TOTAL ASSETS 271.6 287.5
EQUITY AND LIABILITIES Equity 267.4 282.7
Current liabilities 4.2 4.8 Total current liabilities 4.2 4.8
TOTAL EQUITY AND LIABILITIES 271.6 287.5
Rezidor Hotel Group – Interim Report January-September 2016 p. 11/20
Public offer to the shareholders in Rezidor Hotel Group AB (publ) 27 Rezidor’s interim report for 1 January – 30 September 2016
Parent Company, Statement of Changes in Equity
Share premium Retained earnings incl. net MEUR Share capital reserve profit/loss for the period Total equity Opening balance as of January 1, 2015 11.6 254.1 20.6 286.3 Total comprehensive income for the period — — 5.9 5.9 Transactions with owners: Dividend — — -5.1 -5.1 Long term incentive plan — — 0.3 0.3 Ending balance as of September 30, 2015 11.6 254.1 21.7 287.4
Opening balance as of January 1, 2016 11.6 254.2 16.9 282.7 Total comprehensive income for the period — — -5.2 -5.2 Transactions with owners: Dividend — — -11.9 -11.9 Long term incentive plan — — 1.8 1.8 Ending balance as of September 30, 2016 11.6 254.2 1.6 267.4
Comments on the Income Statement Notes to Condensed Consolidated The primary purpose of the Parent Company is to act as a Financial Statements holding company for the Group’s investments in hotel Basis of preparation operating subsidiaries in various countries. In addition to this main activity, the Parent Company also serves as a The interim report has been prepared in accordance with Shared Service Centre. the Swedish Annual Accounts Act and International Accounting Standard (IAS) 34 Interim Financial Reporting. The main revenue of the company is internal fees charged The interim report has been prepared using accounting to hotels for the services provided by the Shared Service principles consistent with International Financial Reporting Centre. In Q3 2016 and YTD 2016 the intercompany Standards (IFRS). Disclosures in accordance with IAS 34 revenue of the Parent Company amounted to MEUR 5.4 Interim Financial Reporting are presented either in notes or (1.6) and MEUR 7.9 (4.8) respectively. The intercompany elsewhere in the interim report. costs in Q3 2016 and YTD 2016 amounted to MEUR 3.0 (1.7) and MEUR 7.3 (5.2) respectively. The interim report for the Parent Company has been prepared in accordance with Swedish Annual Accounts Act The decrease in profit before tax by MEUR 11.1 YTD 2016 is and Recommendation RFR 2, Accounting for Legal Entities, mainly due to changes in group contributions. issued by Swedish Financial Accounting Standards Council. Comments on the Balance Sheet The same accounting policies, presentation and methods of computation have been followed in this interim report as At the end of the period the intercompany receivables were applied in the company’s annual report for the year amounted to MEUR 33.9 (58.8) and the intercompany ended December 31, 2015, except for the impact of the liabilities to MEUR 1.4 (0.7). The change in current assets adoption of the standards and interpretations described and current liabilities since year end 2015 is mainly related below. to changes in intercompany balances. There have been amendments to IFRS 2, IFRS 3, IFRS 5, IFRS 7, IFRS 8, IFRS 11, IFRS 13, IAS 1, IAS 16, IAS 19, IAS 24, IAS 27, IAS 34 and IAS 38. The new amendments have had no impact on the reported results or financial position of the Group. ESMA's guidelines on "alternative performance measures" has been applied from July 3, 2016. The guidelines involve disclosure requirements related to financial measures that are not defined under IFRS. The application of these new guidelines has resulted in extended disclosures, which can be found in the end of this report under the section “Definitions”.
Rezidor Hotel Group – Interim Report January-September 2016 p. 12/20
28 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Rezidor’s interim report for 1 January – 30 September 2016
Incentive programmes The net costs recognised in the income statement during Q3 2016 and YTD 2016 in accordance with IFRS 2 for the In 2013, 2014, 2015 and 2016 the AGM’s have approved incentive programmes amounted to MEUR 1.6 (0.2) and long-term equity settled performance-based incentive MEUR 2.0 (0.3) respectively. programmes to be offered to executives within Rezidor. The structure of the three programmes are similar. The Share buy-back programmes are comprised of both matching shares and The number of treasury shares held by the company at the performance shares. The President and CEO and other end of the quarter was 3,639,553, corresponding to 2.1% of members of the Executive Committee have been offered all registered shares. The average number of its own shares the opportunity to participate in the performance share held by the company during Q3 2016 was 3,653,415 part as well as the matching share part of the programmes. (3,681,138). The shares have been bought back in 2007 and Other key executives have been offered to participate in 2008 following authorisations at the AGMs in the same the performance share part of the programmes. years. A majority of the shares bought back are held to In order to qualify for matching shares, each participant secure delivery of shares in the incentive programmes and shall meet certain requirements, including a shareholding the related social security costs. requirement of at least three years and continuing employment with the company during the vesting period. Financial instruments measured at fair value Exemptions may be prescribed in specific cases. In order to On September 30, 2016, Rezidor has financial instruments qualify for performance shares, each participant must, in measured at fair value amounting to MEUR 5.5 (5.4). addition to the requirement regarding continuing employment during the vesting period, meet a Related party transactions performance target based on Rezidor Group’s cumulative Related parties with significant influence are the Carlson earnings per share for three consecutive financial years, Group (Carlson), owning 51.3% of the outstanding shares. starting as from the year the programme has been Rezidor also has some joint ventures and associated approved by the AGM. companies. On September 30, 2016 Rezidor had no receivables related to Carlson (none as at December 31, The programme approved by the AGM in 2013 has expired 2015) and current liabilities of MEUR 2.1 (0.8). The business in 2016. The performance target based on cumulative relationship with Carlson mainly consisted of operating earnings per share for three consecutive financial years was costs related to the use of the brands and the use of the not met. Six members of the Executive Committee met the Carlson reservation system. During Q3 and YTD 2016, requirements for the matching share part of the Rezidor had operating costs towards Carlson of MEUR 4.9 programme. In total 46,408 shares were awarded to the (5.2) and MEUR 14.4 (15.2), respectively. Executive Committee members participating, of which the President and CEO was awarded 17,497 shares. Carlson also charged MEUR 0.9 (1.6) and MEUR 4.0 (4.3), respectively, for points earned in the Club Carlson loyalty Six members of the Executive Committee participate in the programme and reimbursed MEUR 0.8 (0.9) and MEUR 2.3 2014 programme entitling them to a maximum total of (2.6), respectively, for points redeemed. Furthermore, 491,843 shares, of which the President and CEO is entitled Carlson recharged MEUR 0.8 (0.9) and MEUR 3.7 (2.6), to a maximum of 207,307 shares. 18 other members of respectively, of costs incurred from third parties, mainly management participate in the programme, entitling them internet based reservation channels. Moreover, Rezidor to a maximum of 198,489 shares in total. paid commissions towards the travel agencies’ network of The total value of the 2014 programme at grant date, based Carlson amounting to MEUR 0.1 (0.1) and MEUR 0.3 (0.4), on 35 participants and including social security costs, respectively. For these commissions Rezidor had current amounted to MEUR 4.7. liabilities of MEUR 0.1 (0.0). Seven members of the Executive Committee participate in Carlson and Rezidor are also cooperating in various other the 2015 programme entitling them to a maximum total of areas, such as global sales, brand websites, revenue 674,620 shares, of which the President and CEO is entitled optimisation tools and purchasing. During Q3 and YTD 2016 to a maximum of 272,935 shares. 25 other members of Rezidor had revenue towards Carlson of MEUR 0.2 (0.4) and management participate in the programme, entitling them MEUR 0.8 (1.1), respectively, and costs of MEUR 0.1 (0.2) to a maximum of 402,525 shares in total. and MEUR 0.3 (1.3), respectively, related to these cost sharing arrangements. The total value of the 2015 programme at grant date, based on 35 participants and including social security costs, Pledged assets and contingent liabilities amounted to MEUR 5.1. 30-Sep 31-Dec Pledged assets, MEUR 2016 2015 Six members of the Executive Committee participate in the Securities on deposits 1.3 2.0 2016 programme entitling them to a maximum total of (restricted accounts) 718,479 shares, of which the President and CEO is entitled to a maximum of 304,258 shares. 25 other members of 30-Sep 31-Dec management participate in the programme, entitling them Contingent liabilities, MEUR 2016 2015 to a maximum of 417,350 shares in total. Tax claim interest deduction Sweden 5.4 5.4 The total value of the 2016 programme at grant date, based Guarantees provided 0.5 0.4 on 40 participants and including social security costs, amounted to MEUR 5.4.
Rezidor Hotel Group – Interim Report January-September 2016 p. 13/20
Public offer to the shareholders in Rezidor Hotel Group AB (publ) 29 Rezidor’s interim report for 1 January – 30 September 2016
RevPAR Development by Brand (Leased & Managed Hotels) L/L Occupancy L/L Average Room Rates L/L RevPAR Reported RevPAR In EUR Q3 2016 vs. 2015 Q3 2016 vs. 2015 Q3 2016 vs. 2015 Q3 2016 vs. 2015 Radisson Blu 74.1% 0.6 pp 122.1 3.9% 90.5 4.7% 83.9 -2.2% Park Inn by Radisson 78.1% 1.5 pp 71.9 5.4% 56.1 7.5% 49.6 -1.7% Group 75.1% 0.9 pp 109.3 4.1% 82.1 5.3% 75.3 -2.2%
Jan-Sep Jan-Sep Jan-Sep Jan-Sep vs. 2015 vs. 2015 vs. 2015 vs. 2015 In EUR 2016 2016 2016 2016 Radisson Blu 68.6% -0.4 pp 123.1 3.6% 84.4 3.0% 77.6 -4.1% Park Inn by Radisson 68.5% 0.2 pp 76.9 4.8% 52.7 5.1% 45.8 -3.4% Group 68.5% -0.2 pp 112.3 3.7% 76.9 3.4% 69.6 -4.2%
RevPAR Development by Region (Leased & Managed Hotels)
L/L Occupancy L/L Average Room Rates L/L RevPAR Reported RevPAR In EUR Q3 2016 vs. 2015 Q3 2016 vs. 2015 Q3 2016 vs. 2015 Q3 2016 vs. 2015 Nordics 84.5% 4.0 pp 128.2 4.8% 108.3 10.0% 103.4 6.9% Rest of Western Europe 82.2% -0.6 pp 125.6 1.4% 103.2 0.7% 96.1 -5.6% Eastern Europe 73.1% 1.2 pp 86.5 15.4% 63.2 17.3% 58.1 11.1% Middle East, Africa & Others 61.3% 0.6 pp 99.9 -4.6% 61.2 -3.7% 55.4 -11.7% Group 75.1% 0.9 pp 109.3 4.1% 82.1 5.3% 75.3 -2.2%
Jan-Sep Jan-Sep Jan-Sep Jan-Sep vs. 2015 vs. 2015 vs. 2015 vs. 2015 2016 2016 2016 2016 Nordics 75.5% 2.3 pp 129.9 2.7% 98.1 5.8% 89.7 -0.5% Rest of Western Europe 76.5% -0.1 pp 122.9 2.4% 94.1 2.3% 89.9 -1.1% Eastern Europe 61.4% 0.6 pp 87.9 12.9% 54.0 13.9% 47.8 3.9% Middle East, Africa & Others 61.7% -3.6 pp 113.8 -2.3% 70.2 -7.7% 60.2 -16.4% Group 68.5% -0.2 pp 112.3 3.7% 76.9 3.4% 69.6 -4.2%
RevPAR Development by Region (Leased Hotels) L/L Occupancy L/L Average Room Rates L/L RevPAR Reported RevPAR In EUR Q3 2016 vs. 2015 Q3 2016 vs. 2015 Q3 2016 vs. 2015 Q3 2016 vs. 2015 Nordics 84.2% 4.1% 126.4 5.1% 106.5 10.5% 101.2 6.6% Rest of Western Europe 81.3% -0.0% 122.6 1.2% 99.7 1.2% 92.1 -6.2% Group 82.6% 1.8% 124.3 2.9% 102.6 5.1% 96.3 -0.3%
Jan-Sep Jan-Sep Jan-Sep Jan-Sep vs. 2015 vs. 2015 vs. 2015 vs. 2015 2016 2016 2016 2016 Nordics 75.7% 2.9 pp 128.2 3.3% 97.1 7.3% 88.4 0.3% Rest of Western Europe 76.3% 0.8 pp 121.7 2.1% 92.9 3.2% 88.1 -2.2% Group 76.0% 1.7 pp 124.5 2.7% 94.7 5.0% 88.2 -1.0%
RevPAR Development – Like-for-like to Reported Jan-Sep RevPAR Q3 2016 2016 L/L growth 5.3% 3.4% FX impact -4.8% -5.5% Units out or closed for renovation 0.6% 1.3% New openings -3.3% -3.4% Reported growth -2.2% -4.2%
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30 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Rezidor’s interim report for 1 January – 30 September 2016
Revenue per Area of Operation MEUR Q3 2016 Q3 2015 Change % Jan-Sep 2016 Jan-Sep 2015 Change % Rooms revenue 150.3 155.9 -3.6% 413.8 426.9 -3.1% F&D revenue 55.9 59.0 -5.3% 177.3 188.6 -6.0% Other hotel revenue 6.7 7.7 -13.0% 20.0 21.0 -4.8% Total hotel revenue (leased) 212.9 222.6 -4.4% 611.1 636.5 -4.0% Fee revenue (managed & 33.0 33.5 -1.5% 90.1 91.0 -1.0% franchised) Other revenue 5.4 5.3 1.9% 16.9 14.1 19.9% Total revenue 251.3 261.4 -3.9% 718.1 741.6 -3.2%
Total Fee Revenue MEUR Q3 2016 Q3 2015 Change % Jan-Sep 2016 Jan-Sep 2015 Change % Management Fees 8.9 9.7 -8.2% 24.8 26.9 -7.8% Incentive Fees 8.5 7.7 10.4% 21.5 21.7 -0.9% Franchise Fees 3.6 3.1 16.1% 9.4 8.0 17.5% Other Fees (incl. marketing, 12.0 13.0 -8.4% 34.4 34.4 0.0% reservation fee etc.) Total fee revenue 33.0 33.5 -1.8% 90.1 91.0 -1.0%
Revenue per Region Rest of Middle East, MEUR Nordics Western Europe Eastern Europe Africa & Others Total Q3 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 Leased 103.8 105.6 109.1 117.0 — — — — 212.9 222.6 Managed 0.7 0.7 7.3 11.1 10.7 9.3 6.8 6.1 25.5 27.2 Franchised 2.5 2.1 3.3 2.9 1.6 1.3 0.1 — 7.5 6.3 Other 3.7 3.3 1.7 2.0 — — — — 5.4 5.3 Total 110.7 111.7 121.4 133.0 12.3 10.6 6.9 6.1 251.3 261.4
Rest of Middle East, MEUR Nordics Western Europe Eastern Europe Africa & Others Total Jan-Sep 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 Leased 292.8 310.5 318.3 326.0 — — — — 611.1 636.5 Managed 1.6 1.8 21.0 25.7 25.4 23.3 21.8 22.8 69.8 73.6 Franchised 7.2 5.9 8.5 7.6 4.3 3.9 0.3 — 20.3 17.4 Other 10.3 9.1 6.6 5.0 — — — — 16.9 14.1 Total 311.9 327.3 354.4 364.3 29.7 27.2 22.1 22.8 718.1 741.6
Rental Expenses MEUR Q3 2016 Q3 2015 Change % Jan-Sep 2016 Jan-Sep 2015 Change % Fixed rent 45.9 50.0 -8.2% 141.9 149.6 -5.1% Variable rent 12.4 12.3 0.8% 35.5 33.2 6.9% Rent 58.3 62.3 -6.4% 177.4 182.8 -3.0% Rent as % of leased hotel revenue 27.4% 28.0% -0.6 pp 29.0% 28.7% 0.3 pp Shortfall guarantees 0.2 -0.3 -166.7% 2.5 2.0 25.0% Rental expense 58.5 62.0 -5.6% 179.9 184.8 -2.7%
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Public offer to the shareholders in Rezidor Hotel Group AB (publ) 31 Rezidor’s interim report for 1 January – 30 September 2016
Operating Profit before Depreciation and Amortisation and Gain on Sales of Fixed Assets (EBITDA) Rest of Middle East, MEUR Nordics Western Europe Eastern Europe Africa & Others Central costs Total Q3 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 Leased 12.0 10.8 11.1 11.2 — — — — — — 23.1 22.0 Managed 0.6 0.5 5.0 9.1 7.5 6.9 4.8 3.5 — — 17.9 20.0 Franchised 1.6 1.3 1.5 1.5 1.1 0.6 — — — — 4.2 3.4 Other1) 2.5 3.1 0.1 — — — 0.2 0.1 — — 2.8 3.2 Central costs — — — — — — — — -19.0 -12.8 -19.0 -12.8 Total 16.7 15.7 17.7 21.8 8.6 7.5 5.0 3.6 -19.0 -12.8 29.0 35.8
Rest of Middle East, MEUR Nordics Western Europe Eastern Europe Africa & Others Central costs Total Jan-Sep 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 Leased 22.2 25.2 20.9 19.8 — — — — — — 43.1 45.0 Managed 1.1 1.2 12.1 16.6 17.7 15.7 12.8 13.3 — — 43.7 46.8 Franchised 4.1 3.2 3.6 3.4 2.1 2.3 0.1 — — — 9.9 8.9 Other1) 4.7 5.5 0.1 — — — 0.2 0.1 — — 5.0 5.6 Central costs — — — — — — — — -45.5 -37.7 -45.5 -37.7 Total 32.1 35.1 36.7 39.8 19.8 18.0 13.1 13.4 -45.5 -37.7 56.2 68.6 1) Other also includes share of income from associates and joint ventures.
Operating Profit (EBIT) Rest of Middle East, MEUR Nordics Western Europe Eastern Europe Africa & Others Central costs Total Q3 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 Leased 4.4 3.8 7.1 7.7 — — — — — — 11.5 11.5 Managed 0.5 0.5 5.0 9.2 7.5 6.8 4.8 3.4 — — 17.8 19.9 Franchised 1.6 1.4 1.5 1.4 1.0 0.6 0.0 — — — 4.1 3.4 Other1) 1.7 2.3 0.1 — — — 0.2 0.1 — — 2.0 2.4 Central costs — — — — — — — — -19.0 -12.8 -19.0 -12.8 Total 8.2 8.0 13.7 18.3 8.5 7.4 5.0 3.5 -19.0 -12.8 16.4 24.4
Rest of Middle East, MEUR Nordics Western Europe Eastern Europe Africa & Others Central costs Total Jan-Sep 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 Leased -2.2 10.3 5.4 3.7 — — — — — — 3.2 14.0 Managed 1.0 1.2 12.0 16.6 17.6 15.5 12.7 13.1 — — 43.3 46.4 Franchised 4.1 3.2 3.5 3.3 2.0 2.3 0.1 — — — 9.7 8.8 Other1) 2.3 3.4 0.1 — — — 0.2 0.1 — — 2.6 3.5 Central costs — — — — — — — — -45.5 -37.7 -45.5 -37.7 Total 5.2 18.1 21.0 23.6 19.6 17.8 13.0 13.2 -45.5 -37.7 13.3 35.0 1) Other also includes share of income from associates and joint ventures.
Reconciliation of Profit/Loss for the Period
MEUR Q3 2016 Q3 2015 Jan-Sep 2016 Jan-Sep 2015 Total operating profit/loss (EBIT) for reportable segments 16.4 24.4 13.3 35.0 Financial income 0.5 -0.8 1.5 0.7 Financial expense -0.4 -0.3 -2.1 -2.0 Group’s total profit/loss before tax 16.5 23.3 12.7 33.7
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32 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Rezidor’s interim report for 1 January – 30 September 2016
Balance Sheet and Investments Rest of Middle East, MEUR Nordics Western Europe Eastern Europe Africa & Others Total 30-Sep 31-Dec 30- Sep 31-Dec 30- Sep 31-Dec 30- Sep 31-Dec 30- Sep 31-Dec 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 Assets 184.1 175.7 260.1 243.9 15.6 14.8 29.5 29.9 489.3 464.3 Investments (tangible & 14.5 23.5 35.3 49.8 0.1 0.1 0.4 0.6 50.3 74.0 intangible assets)
Quarterly Key Figures
MEUR Q3 2016 Q3 2015 Q3 2014 Q3 2013 Q3 2012 RevPAR 75.3 77.0 72.7 72.5 71.9 Revenue 251.3 261.4 240.8 227.4 237.3 EBITDAR 87.3 97.7 87.7 81.7 81.3 EBITDA 29.0 35.8 26.4 22.8 17.6 EBIT 16.4 24.4 17.3 15.1 8.6 Profit for the period 14.9 17.9 11.3 9.7 4.4 EBITDAR margin, % 34.7 37.4% 36.4% 35.9% 34.3% EBITDA margin, % 11.5 13.7% 11.0% 10.0% 7.4% EBIT margin, % 6.5 9.3% 7.2% 6.7% 3.6%
2016 2015 2014
MEUR Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 RevPAR 75.3 73.1 60.4 67.9 77.0 77.2 63.7 65.4 72.7 Revenue 251.3 259.8 207.0 255.4 261.4 263.8 216.4 238.0 240.8 EBITDAR 87.3 98.1 50.5 87.7 97.7 94.8 60.9 71.4 87.7 EBITDA 29.0 36.4 -9.2 32.5 35.8 33.6 -0.7 14.8 26.4 EBIT 16.4 22.0 -25.0 22.3 24.4 23.0 -12.4 0.5 17.3 Profit/loss for the period 14.9 16.2 -21.6 14.3 17.9 15.4 -13.4 -0.9 11.3 EBITDAR margin, % 34.7 37.8 24.4 34.3 37.4 35.9 28.1 30.0 36.4 EBITDA margin, % 11.5 14.0 -4.4 12.7 13.7 12.7 -0.3 6.2 11.0 EBIT margin, % 6.5 8.5 -12.1 8.7 9.3 8.7 -5.7 0.2 7.2
Rezidor Hotel Group – Interim Report January-September 2016 p. 17/20
Public offer to the shareholders in Rezidor Hotel Group AB (publ) 33 Rezidor’s interim report for 1 January – 30 September 2016
Hotel and Room Openings and Signings
Openings Signings Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Jan-Sep Jan-Sep Jan-Sep Jan-Sep Q3 2016 Q3 2016 Q3 2016 Q3 2016 2016 2016 2016 2016 By region: Nordics — — 2 238 — — — — Western Europe — — 2 423 — — 3 328 Eastern Europe — — 5 589 1 181 8 1,456 Middle East, Africa & Others 1 292 5 1,428 8 1,698 22 4,627 Total 1 292 14 2,678 9 1,879 33 6,411
By brand: Radisson Blu 1 292 11 2,399 3 817 12 2,730 Park Inn by Radisson — — 2 219 6 1,062 16 2,863 Others — — 1 60 — — 5 818 Total 1 292 14 2,678 9 1,879 33 6,411
By contract type: Leased — — — — — — — — Managed 1 292 8 1,774 9 1,879 29 5,908 Franchised — — 6 904 — — 4 503 Total 1 292 14 2,678 9 1,879 33 6,411
In Q3 2016, three hotels and 515 rooms left the system, resulting in a net closing of 223 rooms.
Hotels and Rooms in Operation and under Development (in Pipeline)
In operation Under development Hotels Rooms Hotels Rooms 30 September 2016 2015 2016 2015 2016 2015 2016 2015 By region: Nordics 61 60 14,531 14,810 — 3 — 315 Western Europe 134 137 26,678 26,878 14 12 2,739 2,671 Eastern Europe 98 93 23,872 23,031 25 29 4,955 5,558 Middle East, Africa & Others 68 61 15,031 13,515 74 62 16,178 13,754 Total 361 351 80,112 78,234 113 106 23,872 22,298
By brand: Radisson Blu 239 232 56,968 55,218 64 67 14,295 15,064 Park Inn by Radisson 114 114 22,066 22,258 43 37 8,408 6,813 Others 8 5 1,078 758 6 2 1,169 421 Total 361 351 80,112 78,234 113 106 23,872 22,298
By contract type: Leased 67 71 16,701 17,789 — — — — Managed 183 187 41,687 42,000 101 90 21,912 19,607 Franchised 111 93 21,724 18,445 12 16 1,960 2,691 Total 361 351 80,112 78,234 113 106 23,872 22,298
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34 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Rezidor’s interim report for 1 January – 30 September 2016
Definitions 30-Sep 31-Dec 2016 2015 The company presents certain financial measures in this Cash & cash equivalents [A] 11.5 37.7 interim report that are not defined under IFRS. The Cash & cash equivalents classified as held-for- — 3.4 company believes that these measures provide useful sale [B] supplemental information to investors and the company's Short-term interest bearing assets [C] — — management as they allow evaluation of the company’s Interest-bearing liabilities [D] 17.8 11.3 performance. Because not all companies calculate these Retirement benefit obligations [E] 4.1 5.6 financial measures similarly, these are not always Liabilities related to investments in hotels comparable to measures used by other companies. These 5.4 5.7 under management contracts [F] financial measures should not be considered a substitute Net cash (debt) [A+B+C-D+E+F] 3.6 41.1 for measures defined under IFRS. Net Interest-bearing Assets/Liabilities IFRS Measures Interest-bearing assets minus interest-bearing liabilities. Revenue 30-Sep 31-Dec All related business revenue (including rooms revenue, MEUR 2016 2015 food & drinks revenue, other hotel revenue, fee revenue Interest-bearing assets [A] 37.1 64.3 and other non-hotel revenue from administration units). Interest-bearing liabilities [B] 17.8 11.3 Net interest-bearing assets/liabilities [A-B] 19.3 53.0 Earnings per Share Profit for the period, before allocation to non-controlling Free Cash Flow interests, divided by the weighted average number of Total cash flow from operating activities and investing shares outstanding. activities. Basic Average Number of Shares Jan-Sep Jan-Sep Weighted average number of ordinary shares outstanding MEUR 2016 2015 during the period. Cash flow from operating activities [A] 38.5 52.8 Cash flow from investing activities [B] -63.3 -45.9 Non-IFRS Measures – Alternative Free cash flow [A+B] -24.8 6.9 Performance Measures Rent as Percentage of Leased Hotel Revenue EBIT Rental expense minus shortfall guarantees as percentage of Operating profit before net financial items and tax. total hotel revenue (leased portfolio). EBIT Margin Jan-Sep Jan-Sep EBIT as a percentage of Revenue. MEUR 2016 2015 Rental expense [A] 179.9 184.8 EBITDA Where of shortfall guarantees [B] 2.5 2.0 Operating profit before depreciation and amortisation, Total hotel revenue [C] 611.1 636.5 costs due to termination/restructuring of contracts, net Rent as percentage of leased hotel revenue 29.0% 28.7% financial items and tax. [(A-B)/C]
EBITDA Margin Net Working Capital EBITDA as a percentage of Revenue. Inventory plus current non-interest-bearing receivables minus current non-interest-bearing liabilities. EBITDAR Operating profit before rental expense and share of income 30-Sep 31-Dec in associates, depreciation and amortisation, costs due to MEUR 2016 2015 termination/restructuring of contracts, net financial items Inventory [A] 4.8 5.0 and tax. Current non-interest-bearing receivables [B] 145.0 116.4 Current non-interest-bearing liabilities [C] 202.7 174.4 EBITDAR Margin Net working capital [A+B-C] -52.9 -53.0 EBITDAR as a percentage of Revenue.
Net Cash (Debt) Cash & cash equivalents plus short-term interest-bearing assets (with maturity within three months) minus interest- bearing liabilities (short-term & long-term), excluding retirement benefit obligations as well as liabilities related to investments in hotels under management contracts, for which repayments are linked to fees collected.
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Public offer to the shareholders in Rezidor Hotel Group AB (publ) 35 Rezidor’s interim report for 1 January – 30 September 2016
RevPAR Geographic Regions/Segments Rooms revenue in relation to available rooms, whereas available rooms is defined as total rooms inventory less Nordics (NO) rooms not available for sale. Denmark, Finland, Iceland, Norway and Sweden. Jan-Sep Jan-Sep Leased portfolio 2016 2015 Rest of Western Europe (ROWE) Austria, Belgium, France, Germany, Greece, Ireland, Italy, Rooms revenue (MEUR) [A] 413.8 426.9 Luxembourg, Malta, the Netherlands, Portugal, Spain, Number of available rooms (thousands) [B] 4,690 4,790 Switzerland and the United Kingdom. RevPAR [A/B] 88.2 89.1 Eastern Europe (incl. CIS countries) (EE) Operating Measures Armenia, Azerbaijan, Belarus, Bulgaria, Croatia, Cyprus, the Czech Republic, Estonia, Georgia, Hungary, Kazakhstan, Average Room Rate Kyrgyzstan, Latvia, Lithuania, Macedonia, Moldova, Poland, Average Room Rate – Rooms revenue in relation to number Romania, Russia, Serbia, Slovakia, Slovenia, Turkey, Ukraine of rooms sold. This is also referred to as ARR (Average Room and Uzbekistan. Rate), ADR (Average Daily Rate) or AHR (Average House Rate) in the hotel industry. Middle East, Africa and Others, (MEAO) Algeria, Angola, Bahrain, Benin, Chad, China, Congo, Egypt, Central Costs Ethiopia, Gabon, Ghana, Guinea, Iraq, Ivory Coast, Jordan, Central Costs represent costs for corporate and regional Kenya, Kuwait, Lebanon, Libya, Mali, Mauritius, Morocco, functions, such as Executive Management, Finance, Mozambique, Nigeria, Oman, Qatar, Rwanda, Saudi Arabia, Business Development, Legal, Communication & Investor Senegal, Sierra Leone, South Africa, South Sudan, Togo, Relations, Technical Development, Human Resources, Tunisia, Uganda, the United Arab Emirates, Zambia and Operations, IT, Brand Management & Development and Zimbabwe. Purchasing. These costs are incurred to the benefit of all hotels within the Rezidor Group, i.e. leased, managed and franchised.
F&D Food and Drink.
FF&E Furniture, Fittings and Equipment.
L/L Hotels Same hotels in operation during the previous period compared (“like-for-like”).
Occupancy (%) Number of rooms sold in relation to the number of rooms available for sale.
RevPAR L/L RevPAR for L/L hotels at constant exchange rates.
The Rezidor Hotel Group Avenue du Bourget 44 B-1130 Brussels, Belgium Tel: + 32 2 702 9200 www.rezidor.com
Rezidor Hotel Group – Interim Report January-September 2016 p. 20/20
36 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Brief description of HNA Sweden and HNA Tourism Group and the financing of the Offer
Description of HNA Sweden HNA Sweden Hospitality Management AB, with corporate registration number 559073-9503, is a Swedish limited liability company and an indirect wholly-owned subsidiary of HNA Tourism Group Co., Ltd. HNA Sweden has its registered office in Stockholm, Sweden and its address is c/o Advokatfirman Lindahl KB, P.O. Box 1065, SE-101 39 Stockholm, Sweden. HNA Sweden was founded on 22 August 2016 and registered with the Swedish Companies Registration Office (Sw. Bolagsverket) on 26 August 2016. HNA Sweden has been established to make and carry out the Offer. HNA Sweden has not conducted any business and is currently not conducting any business.
Description of HNA Tourism Group HNA Tourism Group, the core subsidiary of the Fortune Global 500 company HNA Group, is a comprehensive enterprise group providing multiplex services. Since its founding in 1993, HNA Group has evolved from a regional airline based on Hainan Island into a global company with over $90 billion of assets, $30 billion in annual revenue and an international workforce of nearly 200,000 employees, primarily across North America, Europe and Asia. HNA Tourism has over 700 aircraft carrying over 90 mil- lion passengers to 260 cities worldwide. Together with Carlson Hotels, HNA Tourism operates and invests in nearly 2,000 hotels with over 300,000 rooms across major markets.
Financing of the Offer The Offer is fully financed by available funds within HNA Tourism Group.
Public offer to the shareholders in Rezidor Hotel Group AB (publ) 37 Tax issues in Sweden
General information Capital gains and capital losses are calculated as the dif- The following is a summary of the Swedish tax consequences ference between the sales price, less sales costs, and the that may arise from the Offer. The summary is based on acquisition cost. The acquisition cost consists of the acquisi- existing legislation and is only designated as general infor- tion price together with brokerage. The acquisition cost for mation. The summary does not purport to be a comprehen- all shares of the same kind and sort is multiplied and calcu- sive description of all tax consequences that may be relevant lated together using the Average Method, meaning that the in relation to the Offer. For instance, the summary does not acquisition price for one share is the average acquisition price address the specific rules for (i) securities held by partner- for all shares of the same class and type, based on actual ships or held as current assets in business operations, (ii) tax- acquisition prices and taking into account any changes of the exempt capital gains and dividends (including non-deducti- holding. For listed shares the Standard Method can also be bility for capital losses) in the corporate sector that may be used. According to this method the acquisition cost is calcu- applicable when shares are considered to be held for business lated as 20 per cent of the sales price, less sales costs. purposes (Sw. näringsbetingade andelar) by the shareholder, If the acquisition cost is higher than the sales price, a cap- (iii) the specific rules that could be applicable to holdings in ital loss arises. Capital losses on sale of shares in the company companies that are, or have previously been, closely held are deductible. Losses are fully deductible against taxable companies or shares acquired on the basis of such holdings, capital gains during the same year on shares and against tax- (iv) shares held in an endowment insurance, or (v) shares or able capital gains during the same year on listed securities other equity-related securities that are held in a so-called taxable as shares with the exception of shares in investment investment savings account (Sw. investeringssparkonto) and funds holding only Swedish claims, i.e. interest funds (Sw. that are subject to special rules on standardized taxation. svenska räntefonder). A deduction for capital losses, not set Specific tax rules apply for certain categories of companies off through the described method, is given in the capital and have been excluded from the summary. The tax treat- income category with 70 per cent of the loss. Should there ment of each holder of securities is partially dependent on be a deficit in income of capital, a reduction of the tax on the specific situation of each holder. Each holder should con- income from employment, income from business and real sult a local tax adviser regarding the tax effects arising for the estate tax will be granted. Such reduction is made with 30 holder due to the Offer, including the applicability and effect per cent of the deficit up to SEK 100,000 and with 21 per of foreign rules and tax treaties. cent of the residuary deficits. Any remaining loss cannot be carried forward to future income years. Individuals Sales of shares in the company are for individuals with unlim- Legal entities ited tax liability in Sweden taxed as capital income with a flat Limited liability companies and other legal entities, except tax rate of 30 per cent. estates, are normally taxed for all income, including capital Capital gains will be taxable when the contract is consid- income, as business income with a tax rate of 22 per cent. ered to be binding. In this case, the agreement should, at The capital gain and/or loss is calculated as described above earliest, be deemed to be binding when the shareholder no under Individuals. Capital losses on shares and other securi- longer has the right to withdraw the acceptance. The capital ties can only be set off against capital gains on shares and gain for shareholders accepting the Offer will thus be consid- other securities taxed as shares. If the loss cannot be fully set ered to be recognized during the fiscal year of 2017. off, the company can, during the same income year, deduct the loss against capital gains from shares and other securi- ties taxed as shares sold by another group company, provided group relief is possible between the two companies and both companies request the relief for the same tax year. Capital losses can be carried forward to future income years and be set off against capital gains on sale of shares and other secu- rities during future income years, without limitation in time.
38 Public offer to the shareholders in Rezidor Hotel Group AB (publ) Tax issues in Sweden
Shareholders with limited tax liability in Sweden Individuals Shareholders with limited tax liability in Sweden whom are not conducting business from a permanent establishment in Sweden are normally not taxed in Sweden upon sale of shares. Shareholders may however be taxed in their country of residence. These shareholders should consult a tax con- sultant in the country of residence. An individual resident outside of Sweden may be taxed in Sweden for sales of securities (e.g. shares, subscription rights, convertibles or shares in investment funds) if the person during the calendar year during which the sale takes place or at any point during the previous ten years have lived in or permanently resided in Sweden. This is also applicable for estates after deceased Swedish individuals resident abroad. However, the right to tax might be restricted due to the tax treaties Sweden has entered into with other countries.
Legal entities Shareholders with limited tax liability in Sweden whom are not conducting business from a permanent establishment in Sweden are normally not taxed in Sweden at the sale of shares. Shareholders might however be taxed in the country of residence.
Public offer to the shareholders in Rezidor Hotel Group AB (publ) 39 Adresses
HNA Sweden HNA Sweden Hospitality Management AB c/o Advokatfirman Lindahl KB P.O. Box 1065 SE-101 39 Stockholm Sweden
Advisers Financial advisers Legal advisers J.P. Morgan1) Advokatfirman Lindahl 27/F Chater House Mäster Samuelsgatan 20 8 Connaught Road Central SE-101 39 Stockholm Hong Kong Sweden
Benedetto, Gartland & Company Hogan Lovells 444 Madison Avenue 875 Third Avenue 4th Floor New York, NY 10022 New York, NY 10022 USA USA
Tender agent Handelsbanken Capital Markets HCXS-O/Issue Department SE-106 70 Stockholm Sweden
1) J.P. Morgan is financial adviser to HNA Tourism Group and HNA Sweden (through its parent company HNA Tourism Group).
40 Public offer to the shareholders in Rezidor Hotel Group AB (publ)
Ineko Finanstryck 2017 – 280875