AccorInvest Société par actions simplifiée (SAS) Share capital: 65,415 2, rue de la Mare Neuve EVRY

Transcription

1 Patrice Cousin 110, boulevard de Fontainebleau Corbeil Essonnes Didier Kling 28, avenue Hoche Paris AccorInvest Société par actions simplifiée (SAS) Share capital: 65,415 2, rue de la Mare Neuve EVRY Independent Auditors' Report on the Value of Assets to be Contributed by Accor SA to AccorInvest Order of the Presiding Magistrate of the Evry Commercial Court on February 2, 2017 This is a free translation into English of the Contributor Auditors report issued in French produced by AccorHotels and is provided solely for the convenience of English speaking readers. The Contributor Auditors report includes information specifically required by French law and professional doctrine of Compagnie nationale des commissaires aux comptes in such reports, whether modified or not. This report should be read in conjunction and construed in accordance with French law and professional doctrine of Compagnie nationale des commissaires aux comptes.

2 Independent Auditors' Report on the Value of Assets to be Contributed by Accor SA to AccorInvest In accordance with the terms of our appointment by the Presiding Magistrate of the Evry Commercial Court on February 2, 2017 governing the asset contribution by way of spin-off governed by the laws on demergers from Accor SA to AccorInvest, we have prepared this report on the value of the Contributed Net Assets pursuant to the provisions of Articles L and L of the French Commercial Code (Code de commerce). Our opinion on the proposed consideration for the Contributed Net Assets is presented in a separate report. The Contributed Net Assets are described in the asset contribution and demerger agreement (the "Contribution-Demerger Agreement") signed by the representatives of the companies concerned on May 18, Our responsibility is to inform shareholders of our conclusions about whether this value is overstated or not. We performed the procedures that we considered necessary in accordance with the professional guidelines applicable in France to this type of engagement. Those guidelines require that we perform procedures to assess the value of the Contributed Net Assets, and to obtain assurance that (i) said value is not overstated and (ii) it is at least equal to the par value of the shares to be issued by the Contributee plus the related premium. We were not informed of any special benefits to be granted in connection with the asset contribution and our procedures did not reveal any such benefits. The engagement was not incompatible with our other professional obligations and we were not prohibited or disqualified from accepting it. The issuance of this report is the final stage in our engagement and we have no obligation to update our report to take into account any facts or circumstances arising after the date of its signature. Shareholders are invited to read our observations and conclusions presented in the report below, which is organized as follows: 1. Presentation of the transaction and description of the Contributed Net Assets 2. Procedures and appraisal of the Contributed Net Assets 3. Executive summary 4. Conclusion Independent Auditors' Report on the Value of Assets to be Contributed Page 2

3 1. Presentation of the transaction and description of the Contributed Net Assets 1.1. Presentation of the Contributor and Contributee Contributee AccorInvest is a French société par actions simplifiée (simplified joint stock company) with share capital of 65,415, represented by 4,361 shares, each with a par value of 15. Following the various preparatory asset contributions described in section of this report, as of the Contribution-Demerger Completion Date, it will have share capital of 91,575, represented by 6,105 shares, each with a par value of 15. Its registered office is at 2, rue de la Mare Neuve, Evry, France. It is registered with the Evry Trade and Companies Register under number Its corporate purpose, which may be implemented directly or indirectly both in France and abroad, is to: - Conduct any and all hotel and restaurant businesses. - Acquire and rent or lease from any third parties, any and all real estate and/or business assets needed to conduct its businesses. - Lease, under a business lease or otherwise, any and all hotel, restaurant, tourism or leisure facilities and operate them directly or through an intermediary. - Research, develop, create, fit out, equip and operate seawater spa facilities. - Create, build, purchase, lease and operate any and all spa therapy, physical rehabilitation and body care facilities. - Purchase, equip and sell any and all hotel and restaurant facilities. - Research, create, enhance, operate and manage, as legal manager or otherwise, any and all business ventures or commercial, industrial, real estate or financial services undertakings. - Participate, directly or indirectly, in any and all transactions and ventures by (i) creating real estate, commercial, industrial or financial services companies, units or groups, or (ii) providing all or part of their initial capital or (iii) underwriting all or part of a rights issue by an existing company or (iv) becoming a managing partner, or (v) purchasing shares or other rights or (vi) otherwise. - Generally, undertake any and all commercial or financial transactions related directly or indirectly to the above corporate purpose or any similar or associated purpose, such as the sale and design of tourist products, entertainment production and operation of shuttle services Contributor Accor is a French société anonyme (joint stock company) with share capital of 854,428,095. Its registered office is at 82, rue Henri Farman, Issy-les-Moulineaux, France, and it is registered with the Nanterre Trade and Companies Register under number Accor SA shares are listed on the Euronext Paris stock exchange (ISIN: FR ) and traded in the USA on the OTC market (symbol: ACRFY). Independent Auditors' Report on the Value of Assets to be Contributed Page 3

4 Accor SA's corporate purpose is to engage in the following activities, in France and other countries, on its own behalf, or on behalf of third parties, or jointly with third parties: - The ownership, financing and management, directly, indirectly, or under specified mandates, of hotels, restaurants and bars of any nature or category and, more generally, any accommodation, foodservice, tourism, leisure, and services establishments. - The economic, financial and technical review of projects and, generally, all services related to the development, organization and management of the above-mentioned establishments, including all actions related to their construction or the provision of any related consulting services. - The review and provision of services intended to facilitate the supply of meals to employees in companies, institutions and other organizations. - The creation of any new company and the acquisition of interests by any method in any company operating in any business. - All civil, commercial, industrial, financial, securities and real estate transactions related to the purposes of the Company and all similar or associated purposes. 1.2 Capital ties between the companies As of the date of this report, Accor SA holds 100% of the capital of AccorInvest. 1.3 Background to the transaction Purpose and objectives of the Contribution-Demerger The AccorHotels Group, of which Accor SA is the parent, is one of the world's leading hotel operators and is ranked no.1 in Europe. It operates some 4,100 hotels and 3,000 private luxury homes in 95 countries worldwide, under direct ownership or lease or franchise contracts. AccorHotels' consolidated revenue for the year ended December 31, 2016 totaled 1,603 million. The Group is present in several market segments through its 20 brands, including: the Luxury segment with the Raffles, Fairmont, Sofitel, Onefinestay, MGallery by Sofitel, Grand Mercure, The Sebel, Pullman and Swissôtel brands, the Midscale segment, with the Adagio, Novotel and Mercure brands, the Economy segment, with the Jo&Joe, Ibis, Ibis Styles, Ibis budget and hotelf1 brands. In 2013, AccorHotels reorganized its business operations into two separate complementary business lines: the HotelServices business, which encompasses hotel franchising and management (hotels owned by HotelInvest, partners, or franchisees), development of AccorHotels Group brands and management of the AccorHotels online booking system, and, the HotelInvest business, which encompasses operation of hotel businesses and management of the hotel properties, whether owned or leased. Independent Auditors' Report on the Value of Assets to be Contributed Page 4

5 AccorHotels now proposes to legally separate the HotelServices business from the HotelInvest business. The Group is preparing the separation by combining the entities that comprise the HotelInvest business and operate some 960 hotels in 26 countries under the control of Accor Hotels Luxembourg (AHL), a Luxembourg company that will be renamed AccorInvest Group. The demerger and creation of the AccorInvest Group is referred to as the "Booster" project. AccorInvest Group will maintain and actively manage its portfolio of buildings, land and hotel businesses, including by acquiring and divesting assets, and investing in hotel renovation, construction and maintenance work. To operate these hotels, AccorInvest will use management and marketing services to be provided by HotelServices under hotel management or franchise agreements. This is the backdrop to the following transactions planned by the AccorHotels Group: First, the sale for cash and shares to Société de Participations Hôtelières (SPH) of the Group's interests in the companies that operate the French hotels and certain companies that operate hotels in other European countries. Second, the transfer to AccorInvest of the Group's AccorInvest operations in continental Europe, including the SPH shares held by Accor and Ibis Budget following the transactions described above. Lastly, the contribution of AccorInvest shares to AccorInvest Group (formerly AHL) Legal reorganization process The legal reorganization of the AccorInvest business concerns over 413 hotels in France, 1 in Monaco, 43 in Spain, 24 in Belgium and 18 in the Netherlands owned either directly by Accor or indirectly through subsidiaries. The process will be as follows: a) Contribution by Accor SA of its interests in 16 HotelInvest hotels in France and one in Monaco to SPH. The transaction was completed on May 17, 2017 and is covered by our contribution appraisal report dated May 9, b) Sale by Accor SA and its subsidiaries of their shares in the other HotelInvest companies not included in the above asset contribution, including one Belgian company, two indirect shareholdings in a Netherlands company and a Spanish company. These sales were virtually all completed on May 17, The remaining operations will be completed before June 30, c) Contribution by Ibis Budget of its HotelInvest business, mainly comprising 19 hotel businesses and hotel operator rights under three business leases, to SH New IBB. This transaction qualifies as an "apport partiel d'actifs" under French law and, as such, is subject to the rules applicable to demergers. It is scheduled for completion on June 30, d) Contribution by Ibis Budget of its SH New IBB shares to SPH following the asset contribution to SH New IBB described above. This transaction is also scheduled for completion on June 30, Independent Auditors' Report on the Value of Assets to be Contributed Page 5

6 e) Contribution by Ibis Budget of its shares in SPH to AccorInvest following the contribution of SH New IBB to SPH described above. This transaction is likewise scheduled for completion on June 30, f) Contribution by Accor SA of its HotelInvest business comprising 44 hotel businesses, 7 buildings, 6 plots of land, SPH shares and Société de Gestion HotelInvest shares to AccorInvest. The scheduled completion date is also June 30, This transaction (f) is planned to be completed after transactions (a) and (b) and immediately after transactions (c) to (e). 1.4 Legal and tax regimes From a legal standpoint, the contribution of a stand-alone business will qualify as an "apport partiel d'actifs" under French law and, as such, will be subject to the rules applicable to demergers, as set out in Articles L to L of the French Commercial Code. The Contributor and Contributee have expressly agreed that there will be no joint or several liability between them as regards either the Contributor's liabilities or the liabilities transferred, in accordance with Article L of the Commercial Code. Accordingly, the Contributee will have sole liability for settling the liabilities transferred pursuant to the Contribution-Demerger as of the Completion Date and the Contributor will have sole liability for settling the liabilities that it retains. From a tax standpoint, as an "apport partiel d'actifs" the transaction will qualify for the preferential corporate income tax regime provided for in Articles 210 A and 210 B of the French Tax Code (Code Général des Impôts); it being specified that the SPH shares held by Ibis Budget will also be contributed. The parties have applied to benefit from this regime and their request is currently being examined by the tax authorities. The Contribution-Demerger will be subject to the fixed registration duty provided for in Articles 816 and 817 of the French Tax Code and Article 301-E of Appendix II to the Code. 1.5 Effective date The Contribution-Demerger will be effective for legal, accounting and tax purposes on the date on which the Contribution-Demerger is approved and the shares are issued by the sole shareholder of AccorInvest, in principle on June 30, 2017; it being specified that all other conditions precedent (as listed in section 1.6 below) must be fulfilled no later than said date. Independent Auditors' Report on the Value of Assets to be Contributed Page 6

7 1.6 Conditions precedent This Contribution-Demerger is subject to the conditions precedent described in Article 4.1 of the Contribution-Demerger Agreement, i.e.: Completion of the preparatory transactions listed in Appendix of the Contribution-Demerger Agreement. Receipt of the Independent Auditors' reports on the value attributed to the Contributed Net Assets and the fairness of the exchange ratio, to be prepared pursuant to Article L of the French Commercial Code. Approval of the Contribution-Demerger Agreement, the value attributed to the Contributed Net Assets and the consideration therefor, at an extraordinary general meeting of the Contributor's shareholders; and Approval of the Contribution-Demerger Agreement, the value attributed to the Contributed Net Assets and the consideration therefor by the Contributee's sole shareholder. If the conditions precedent are not fulfilled by June 30, 2017 at the latest, the provisions of the Contribution-Demerger Agreement will be considered as null and void, unless the period for their fulfillment is extended by mutual agreement of the Contributor and Contributee. 1.7 Description and valuation of the Contributed Net Assets Description of the Contributed Net Assets Article 2 of the Contribution-Demerger Agreement states that Accor SA will contribute to AccorInvest all of the assets and liabilities, rights and obligations associated with the contributed business ("the HI business" or "HI"). Articles and 2.2 of the Contribution-Demerger Agreement state that the contributed assets and liabilities will be valued at their market value, based on Accor SA's assets as recorded in the estimated pro forma balance sheet at June 30, 2017 after being carved out of Accor SA's separate financial statements at December 31, 2016 on which the Statutory Auditors issued a clean opinion without any emphasis of matter, subject to the adjustment provided for in Article 3.3 of the Contribution-Demerger Agreement described below. The provisional contribution balance sheet at June 30, 2017 takes into account the cancellations of business leases (other than those with AccorInvest) that will take place prior to the Contribution-Demerger. The list of assets assigned to the contributed business is provided in the appendices of the Contribution-Demerger Agreement and may be summarized as follows: Independent Auditors' Report on the Value of Assets to be Contributed Page 7

8 Assets assigned to the 44 contributed hotel businesses, including the employees' employment contracts. The 27,235,667 SPH shares. SPH holds all of the shares listed in Appendix d) of the Contribution-Demerger Agreement, that were acquired through the legal reorganization described in paragraphs a), b) and d) of section above. Prior to the Contribution-Demerger, on June 30, 2017 all of the SH New IBB shares held by Ibis Budget following the contribution-demerger transaction due to be carried out the same day will be contributed to SPH. For the look-through entities sold by Accor SA to SPH on May 17, 2017, which are listed in Appendix 2.1.1d) of the Contribution-Demerger Agreement, SPH's liability as shareholder or partner for the debts of these companies has also been transferred. 10,000 Société de Gestion HotelInvest shares, corresponding to the entire capital of this company set up on December 15, Other intangible assets that can be allocated in full to the contributed AccorInvest business notably include the partnership agreements and guarantees and bonds issued in respect of leases held by some of the Contributor's current subsidiaries that will become subsidiaries of the Contributee on the Completion Date (including the guarantees and bonds issued by Accor SA in respect of leases that have been renewed on the date of the Contribution Agreement). Other off-balance sheet commitments. Real estate assets. The final value attributed to the Contributed Net Assets will be determined as provided for in Article 3.3 of the Contribution-Demerger Agreement concerning the adjustment of the contributed assets and liabilities on the Completion Date. The parties have agreed to draw up a final Contribution Balance Sheet showing the amount of the Contributed Net Assets on the effective date of June 30, This balance sheet will be prepared using the same rules as for the preparation of the provisional contribution balance sheet. The adjustment mechanism agreed between the parties will be implemented as follows: o If the Completion Date Adjusted Contributed Net Assets represent less than the net assets in the provisional contribution balance sheet, the Contributor will make a cash payment covering the amount needed to pay up the shares to be issued as consideration for the Contributed Net Assets; o If the Completion Date Adjusted Contributed Net Assets represent more than the net assets in the provisional contribution balance sheet, the excess will be added to the share premium recorded in the Contributee's balance sheet. Independent Auditors' Report on the Value of Assets to be Contributed Page 8

9 This mechanism is not intended to be used to alter the number of new shares to be issued as consideration for the Contributed Net Assets or the amount of the related capital increase Value attributed to the Contributed Net Assets As explained above, the ultimate purpose of the internal reorganization is to permit Accor SA to contribute its AccorInvest shares and the shares to be received in this Contribution-Demerger to AccorInvest Group. The aim is for the majority of AccorInvest Group's shares to be held by outside investors by December 31, 2018 at the latest. The Contribution-Demerger will therefore be treated as the spin-off of a stand-alone business to a subsidiary that will subsequently be transferred to a company under separate control, and the net assets will be transferred at market value in accordance with French accounting rules (Règlement ANC no dated June 5, 2014). Consequently, the net assets contributed in the Contribution-Demerger presented above will be valued at the market values agreed between the parties. The parties have nevertheless agreed that if control of AccorInvest Group does not pass to outside investors before December 31, 2018, the internal reorganization represented by this Contribution-Demerger will be qualified as a transaction between companies under common control. In this case, French accounting rules (Règlement ANC no dated June 5, 2014) will require the net assets contributed in the Contribution-Demerger to be remeasured at their original book value on the Completion Date Value of the contribution On these bases, the assets included in the Contributions by Accor SA can be summarized as follows: Heading Gross value Amortization/ Impairment Net book value Market value Intangible assets 8,426,986 (4,977,639) 3,449, ,367,638 Property and equipment 139,210,712 (95,655,940) 43,554,777 52,708,736 Non-current financial assets 656,816,166 (1,329,566) 655,486, ,486,600 Current assets 24,392,766 (53,903) 24,338,863 24,338,863 Total contributed assets 828,846,630 (102,017,048) 726,829, ,901,837 The liabilities assumed by AccorInvest will include: Heading Net book value Market value Provisions 2,988,650 11,713,686 Debt 4,815,028 4,815,028 Current liabilities 13,453,994 13,453,994 Total liabilities 21,257,672 29,982,708 Independent Auditors' Report on the Value of Assets to be Contributed Page 9

10 According to these estimates, the values of the Contributed Net Assets on the Completion Date of June 30, 2017 will be: o 816,919,129 based on market values; o 705,571,918 based on book values. Article 10 of the Contribution-Demerger agreement states that the parties have agreed that if control of AccorInvest Group does not pass to outside investors before December 31, 2018, Accor SA will contribute to AccorInvest net assets estimated on the basis of their book value at June 30, They have also agreed that the value attributed to the contributed net assets will be adjusted in the same way as that described in Article 3.3 of the Contribution-Demerger Agreement. The Contribution-Demerger has been agreed subject to the terms and conditions specified in Article 6 of the Contribution-Demerger Agreement. 1.8 Valuation method The contributed stand-alone business has been valued using the adjusted net asset value (NAV) method, which consists of revaluing the contributed assets and transferred liabilities at their gross asset value (GAV) determined primarily on the basis of: i) The gross asset value of the 44 contributed hotel businesses determined by three independent valuers retained by AccorHotels (BNP Paribas Real Estate, Jones Lang LaSalle and Cushman & Wakefield). ii) Current assets and liabilities of the businesses that are the subject of the Contribution- Demerger. These assets and liabilities have been estimated using historical data at June 30, 2016 determined for the preparation of Accor SA's interim consolidated financial statements. In light of the business's seasonal nature, working capital fluctuates in the same way from year to year. iii) Projected employee benefit obligations at June 30, iv) Provisions for taxes on capital gains that may be payable on hotel businesses qualified as available for sale in the near future and on capital gains on depreciable property. v) The market value of real estate determined by the financial advisor in the absence of an independent valuation, by reference to the price of comparable transactions. vi) The net book value of 2 plots of land included in the land bank. vii) The market value of contributed SPH shares, calculated by the NAV method, and all the shares held by SPH. These market values have been determined in accordance with hospitality industry practice, in particular by valuing assets on a going concern basis before the tax effect. Independent Auditors' Report on the Value of Assets to be Contributed Page 10

11 During the first half of 2017 and up to the Contribution-Demerger Completion Date, SPH will receive under the Booster project: Shares in 16 companies held by Accor SA 1 (see section a) above). Shares in several HI subsidiaries from Accor SA and other AccorHotels Group companies. The list of contributed shares is provided in the appendix to the Contribution-Demerger Agreement (see section b) above), primarily in exchange for vendor credit. SH New IBB shares held by Ibis Budget SA that it received as consideration for the contribution of a stand-alone business (see section c) and d) above). The value of these shares has been determined using the work of Accor's financial advisors (PricewaterhouseCoopers), based on: a. Historical data taken from each company's audited financial statements for the year ended December 31, b. The market value of these companies' intangible assets and property and equipment, as determined by three independent valuers (BNP Paribas Real Estate, Jones Lang LaSalle and Cushman & Wakefield). c. The net book value of property and equipment used to operate hotel businesses under business leases. Account was also taken of transactions that took place during the interim period of 2017: Dividend payments. Additional depreciation of property and equipment used to operate one or several hotel businesses under business leases. Payment to compensate for the lost benefit of tax losses used by Accor SA under the group relief system. This concerns companies that are expected to return to profit between 2017 and 2019 based on their business plan projections Payment of taxes on the share acquisitions carried out during the period. Asset sales completed during the interim period. For the determination of the net book value that will be used to value the contributed net assets if control of AccorInvest Group does not pass to outside investors by December 31, 2018, account has been taken of: i) The estimated net book value at June 30, 2017 of the property and equipment used to operate the contributed hotel businesses. ii) The net book value at June 30, 2017 of the contributed shares, as determined after taking into account the shares in 16 companies contributed by Accor SA to SPH on May 17, iii) Current assets and liabilities of the businesses that are the subject of the contributiondemerger. These assets and liabilities have been estimated using historical data at June 30, 2016 determined for the preparation of Accor SA's interim consolidated financial statements. 1 See our report dated May 9, 2017 on the value of the contributed assets. Independent Auditors' Report on the Value of Assets to be Contributed Page 11

12 iv) Projected employee benefit obligations at June 30, The estimated net book value of intangible assets and property and equipment at June 30, 2017 is (i) based on the carve-out of assets carried in Accor SA's financial statements for the year ended December 31, 2016 on which the Statutory Auditors issued a clean opinion, (ii) after amortization and depreciation for the first half of 2017 and (iii) impairment losses and reversals recorded after the period end based on the fair values of the hotel businesses as described above. 1.9 Consideration for the Contributed Assets Under the terms of the Contribution Agreement signed on May 18, 2017, AccorInvest will issue to Accor SA 50,542 new fully paid-up shares with a par value of 15 each. The share premium, corresponding to the difference between the value of the Contributed Net Assets ( 816,919,129) and the par value of the new AccorInvest shares ( 758,130), will be 816,160,999. The Contributor has specifically waived its rights to fractions of shares and the share premium may be allocated to any reserve account or used for any purpose decided by the General Meeting of AccorInvest shareholders. If control of AccorInvest Group does not pass to outside investors by December 31, 2018, this will not affect the amount of the share issue to be carried out by AccorInvest. 2. Procedures and appraisal of the Contributed Net Assets 2.1. Procedures Our engagement corresponded to one of the "other audit engagements" defined by law and provided for in the conceptual framework underpinning the professional guidelines applicable in France. Its purpose was to provide assurance to AccorInvest shareholders that the value attributed to the Contributed Net Assets is not overstated. Consequently, we did not perform a full audit or a limited review of financial and accounting information, nor did we perform any procedures to validate the transaction's tax treatment. Our engagement did not consist of a due diligence investigation such as would be performed on behalf of a lender or buyer and did not include all of the procedures that would be required for that type of engagement. Our report cannot therefore be used in connection with any due diligence process. Similarly, our procedures were not equivalent to those that would be performed by an independent expert retained by the administrative, management or supervisory body of either of the parties. Independent Auditors' Report on the Value of Assets to be Contributed Page 12

13 In accordance with the terms of our appointment, we performed the procedures that we considered necessary under the professional guidelines applicable in France to this type of engagement: These procedures included: Gaining an understanding of the proposed contributions under the Booster project, by making inquiries of the chief executives of the companies concerned by the project in order to ascertain the backdrop to the transactions and analyze the planned accounting, legal and tax aspects. Reviewing the draft Contribution-Demerger Agreement and its appendices. Obtaining assurance concerning the existence and ownership of the assets contributed by Accor SA. Analyzing the independent appraisals of the real estate in France, Belgium, Spain and the Netherlands to be included in the contributions, performed at the Contributor's request by BNP Paribas Real Estate, Jones Lang LaSalle and Cushman & Wakefield, and conducting meetings and one-to-one discussions with the valuers and HI's asset managers. Based on testing and/or analytical review procedures, we assessed the relevance of the appraisal criteria, reviewed the parameters and their application, and checked the consistency of the appraisal data with the legal documentation in order to obtain assurance concerning ownership of the assets and the correct application of contract terms (rent, management fees, etc.). Reviewing the impairment tests performed on the contributed hotel businesses and on the hotel properties and underlying assets held by the companies owned by SPH, as well as the valuation methods applied. Examining the vendor due diligence procedures performed by Accor's advisors, covering the various legal, financial, accounting and tax aspects of the transactions and assets. Reviewing the valuations of the contributed companies in France, Belgium, Spain and the Netherlands, prepared by Accor's financial advisor (PwC). Based on testing and/or analytical review procedures, we reviewed the restatements (assets with no economic value, finance leases, etc.) and the impact of transactions carried out during the first half of 2017 (asset sales and acquisitions, dividend payments, recapitalizations, etc.), obtained assurance concerning the existence of assets and shares in subsidiaries, the correct transcription and measurement of the property, equipment and intangible assets used to operate the hotel businesses and the proper distinction between owners and lessees, and reviewed the possible impact of off-balance sheet commitments and any identified contingent liabilities. We also verified that the Statutory Auditors had issued a clean opinion on the financial statements for the year ended December 31, Making inquiries of the AccorHotels Group's investment bankers (Rothschild & Co) responsible for the Booster project, in order to obtain insight into the business plan presented to investors and the valuation methods used. Independent Auditors' Report on the Value of Assets to be Contributed Page 13

14 Reviewing the documentation and the Booster information package prepared by AccorHotels Group management and their investment bankers, Rothschild & Co. Making inquiries of the AccorHotels Group's Statutory Auditors in order to confirm the absence of any weaknesses in the process for the production of accounting data and financial information, and the process for allocating in the accounts the individual assets and liabilities of each hotel. We also obtained assurance that the Statutory Auditors had issued a clean opinion on Accor SA's financial statements for the year ended December 31, Performing tests on the contributed assets and transferred liabilities in order to obtain assurance that they related to the contributed hotel businesses. Performing procedures to check that fixed assets were properly transcribed in the Contribution Balance Sheet (cost, accumulated amortization/depreciation), including reconciliations to the fixed asset file and tests on amortization/depreciation/impairment charges recorded during the first half of Analyzing the estimated working capital of the contributed stand-alone business, provisions and any tax accruals. Obtaining a representation letter from the AccorHotels Group confirming the material information used for our engagement including the absence of (i) anything that could prevent the free transmission of the contributed shares and (ii) any event that could adversely affect the appraisal values determined by the independent valuers for the assets valued at December 31, 2016 and by the AccorHotels Group's financial advisors for the subsidiaries valued in connection with the contributions and the value attributed to the contributed shares. We also used the work we had performed as Independent Auditors responsible for assessing the consideration for the contributed assets Existence of the Contributed Net Assets We obtained assurance that the contributed assets and transferred liabilities, particularly the hotel businesses and shares, represented assets of Accor SA and that it had free title thereto. We also obtained a representation letter confirming that there were no restrictions on the ownership and transfer of the assets. Independent Auditors' Report on the Value of Assets to be Contributed Page 14

15 2.3. Appraisal of the individual and aggregate values of the Contributed Net Assets The contribution values correspond to the assets' market values, in accordance with French accounting rules (Règlement ANC no dated June 5, 2014) applicable in the case where control of AccorInvest Group passes to outside investors before December 31, If control does not pass to outside investors before December 31, 2018, the contributed assets and transferred liabilities will be remeasured at their net book value. The value of the contributed stand-alone business was determined by the NAV method. This method consists of using the market value of the hotel businesses and the shares in SPH, which in turn owns shares in several HI companies that were for the most part acquired in exchange for vendor credit or contributed by Accor SA during the first half of The contributed hotel businesses were valued at their gross asset value (GAV) at December 31, 2016 as determined by the independent valuers retained by the AccorHotels Group. As explained in Appendix 2.3 of the Contribution-Demerger Agreement, the contribution value of the shares in SPH and all of its subsidiaries was taken to represent the economic value of each company concerned, as determined by the NAV method. This method consists of adjusting the book value of the company's net assets by remeasuring assets and liabilities at gross asset value. The NAV method was applied to the separate financial statements for the year ended December 31, 2016, on which the Statutory Auditors issued a clean opinion. The main adjustments made to these financial statements were as follows: The net book value of the hotel properties and/or the intangible assets and property and equipment used to operate the hotel businesses was replaced by their gross asset value, as determined at December 31, 2016 by the independent valuers retained by the AccorHotels Group. Assets with no economic value were identified and deducted from the book value of net assets. The outstanding principal on real estate lease financing was deducted from the book value of net assets in cases where the leased asset was valued by the independent valuer as if it was owned outright. The independent valuers retained by the AccorHotels Group valued the hotel businesses and/or hotel properties by the discounted cash flows (DCF) method, which consists of discounting the projected future cash flows from an asset at a rate that is representative of the non-diversifiable risks incurred by investors. Independent Auditors' Report on the Value of Assets to be Contributed Page 15

16 The valuers applied the DCF method in three stages: The first step was to prepare cash flow projections (EBITDA less investments) generally over ten years (or a shorter period when justified by contractual or financial conditions). The valuers estimated these cash flows based on the contractual terms applicable at December 31, 2016 with respect to the conditions of ownership of the assets, rent and fees payable under management contracts. The only exception to these principles concerned the projected operational impact of the relaunch plan for the hotelf1 brand announced by Accor in a press release dated March 8, 2017, involving the renovation of a large proportion of the brand's hotel base and extensive changes to the ownership of the hotel properties. In addition to recurring capex, the independent valuers took into account additional expenditure where this was considered necessary to maintain the quality of the hotel assets and ensure that cash flows projections would be achieved. Generally-speaking, they did not allow for any development capex that an investor could wish to incur to create new momentum and enhance the asset's value. They calculated an exit value at the end of the projection period (except in specific cases), based on the remaining life of current leases and an exit cap rate. The projected cash flows and exit value were discounted at a rate that was representative of the non-diversifiable risks incurred by investors. They determined the value of the hotel businesses by deducting from the hotel's total GAV the value of the hotel property estimated using the "hotel method" which consists in determining a theoretical rent which is then used in the capitalization. The methods used to value contributed shares directly (NAV method) or indirectly by valuing the assets of the companies concerned (DCF method) and to value assets contributed directly by Accor SA (mainly the DCF method) appear satisfactory considering the following: The NAV method is the most commonly used method of valuing companies that own real estate in this case hotel properties and/or businesses. The DCF method is considered as the benchmark method for valuing hotel properties because it takes into account the stage in the hotel cycle, renovation needs and the asset's long-term outlook, while also softening the impact of exceptional external risks (such as the terrorist attacks in France and Belgium). Use of the DCF method to value the stand-alone business was not possible in practice due to the difficulty of (i) reliably determining future adjustments to the discount rate needed to recognize the increased weighting of real estate assets and (ii) determining in advance the price at which these real estate assets could be acquired in the future. Independent Auditors' Report on the Value of Assets to be Contributed Page 16

17 Alternative methods could be considered to value a hotel business or a company that owns hotel assets or to directly value hotel businesses and/or properties (revenue, EBITDAR or EBITDA multiples, price per room, capitalization of an indicator). However, these alternative methods are less accurate and are generally used only to confirm values obtained using other approaches because: (i) There are few comparable assets that could serve as a satisfactory basis for determining multiples or capitalization rates. This is due to such factors as the limited size of the hotel property market and its segmentation based on type of ownership and hotel category. (ii) The reference financial indicator, generally calculated for one year or as an average over several years, does not provide real insight into the long-term profitability of an asset and the capital expenditure needed to maintain the level of profit over a long period. Consequently, we have no comments to make concerning the application of these methods of valuing hotel businesses and the shares of companies that own hotel assets. We also reviewed the consistency and correct allocation of the assets and liabilities of the contributed stand-alone business and have no comments concerning the carve-out. We were informed that in light of the seasonal nature of the business, which generates cash surpluses as from the end of the first half, no cash will be injected in the business, as the contributed assets will be sufficient to self-finance any working capital requirement. To assess the aggregate value attributed to the Contributed Assets, we used the results of the work performed during our engagement to assess of the fairness of the exchange ratio used to determine the consideration for the Contributed Assets. Our procedures included the application of alternative or complementary methods. These procedures showed in substance that the NAV method used to value the stand-alone business was satisfactory and the most appropriate in light of the following: The NAV method is the most commonly used method of valuing companies that own real estate in this case hotel properties and/or businesses. Use of the DCF method to value the stand-alone business was not possible in practice due to the difficulty of (i) reliably determining future adjustments to the discount rate needed to recognize the increased weighting of real estate assets and (ii) determining in advance the price at which these real estate assets could be acquired in the future. We confirmed the valuation using alternative methods based on the multiples observed for comparable listed companies and comparable transactions. Independent Auditors' Report on the Value of Assets to be Contributed Page 17

18 For the comparable listed company multiples method, we used a sample of real estate investment trusts (REIT) specialized in hotel property. We obtained an enterprise value of 13.2x EBITDA over one year and 14.2x over five years (the advantage of applying the longer period is that the effect of hotel cycles on EBITDA is smoothed). Application of the five-year multiple to the stand-alone business's indicators, after applying a discount reflecting differences in taxation, positioning across the various hotel categories and type of ownership, resulted in a value that was greater than that attributed to the Contributed Net Assets, on both a market value and a book value basis. The comparable transaction multiples method was based on a sample of transactions concerning companies and portfolios in Europe. Use of this method led to an enterprise value equal to 13.3x EBITDA. Application of this multiple to the standalone business's indicators resulted in a value that was greater than that attributed to the Contributed Net Assets, on both a market value and a book value basis. Based on our procedures on the value of the stand-alone business contributed by Accor SA, we did not identify anything that would be likely to affect the overall value of the Contributed Net Assets. 3. Executive summary In summary of our assessments, it should be noted that: - The valuations of the Contributed Net Assets were based on projections concerning a market that is exposed to economic and political changes and the risk of adverse events in the host regions of the hotel businesses contributed or managed by companies whose shares are held by SPH and in the tourist sector in general. - In our opinion, the valuation methods used by the independent valuers to value the hotel properties and/or businesses and by the AccorHotels Group's financial advisor to determine the market value of the shares of SPH and its subsidiaries are appropriate and consistent with hotel industry practices. These observations do not affect our appraisal but are an integral part thereof. We do not have any other comments concerning the total value of the Contributed Net Assets. Independent Auditors' Report on the Value of Assets to be Contributed Page 18

19 4. Conclusion On the basis of our work and as of the date of this report, we consider that the value of 816,919,129 attributed to the Contributed Net Assets is not overstated and is at least equal to the sum of the aggregate par value of the shares to be issued as consideration by the Contributee and the related premiums. Signed in Paris and Corbeil Essonnes on May 19, 2017 Patrice Cousin Didier Kling Independent Auditors of Capital Contributions Members of Compagnie Régionale de Paris Independent Auditors' Report on the Value of Assets to be Contributed Page 19