Q2 2016 RESULTS BRUSSELS, 27 JULY 2016 WOLFGANG M. NEUMANN, PRESIDENT & CEO KNUT KLEIVEN, DEPUTY PRESIDENT & CFO 1 I Q2-2016 Results Radisson Blu Beach Resort, Milatos Crete, Greece
Significant further improvements made and gaining market share 80,000 rooms in operation: across 3 continents, 67 countries Gaining market share: 0.6% RGI growth in the first five months of the year 1 st Radisson Red: Introducing the very first Red branded hotel to the Brussels market in April Prizeotel acquisition: Closing of acquisition of 49% shareholding in prizeotel Group in April Asset Management: ca. 2m savings p.a. from asset management activities Leading African pipeline: Radisson Blu largest room pipeline in Africa according to W-Hospitality Safehotels: >110 hotels across Europe, Middle East and Africa certified by the Safehotels Alliance (independent verification of safety & security best practice in hotel & meeting venues) 2 I Q2-2016 Results
while facing some external headwinds France / Belgium: Markets still suffering from aftermaths of the attacks in Brussels (22 Mar 2016) and Paris (13 Nov 2015) Norway: Economy continues to be impacted by low oil price and weakness of oil industry. Closure of some hotels due to strike action (Apr - May). Oil / commodity prices: Impacting demand in oil & commodity producing countries (e.g. KSA, Russia, UAE, Nigeria ) Currency fluctuations: Strengthening of EUR vs. NOK, GBP, RUB and CHF had negative impact of ca. 4% on revenue Turkey: Continuous terrorism threat after 4 th attack this year impacts demand 3 I Q2-2016 Results
Q2 results at a glance Revenue EBITDA Signing 260m Reported Revenue, down - 4.0m (-1.5%) 10.6m L/L Revenue increase (+4.0%) 36m EBITDA (+ 2.8m) 14.0% EBITDA margin (+1.3pp) 11 hotels (-4) 2,600 rooms (+100) RevPAR Net profit Openings L/L RevPAR 80.9 (+4%) ADR 116.2 (+3.8%) Occupancy 69.6% (+0.1pp) 16.2m up 0.8m (+5.2%) 6.2% net profit margin 6 hotels (=) 1,400 rooms (+200) 1,000 rooms net opening 4 I Q2-2016 Results
Q2-07 Q2-08 Q2-09 Q2-10 Q2-11 Q2-12 Q2-13 Q2-14 Q2-15 Q2-16 EBITDA ( m) EBITDA margin Q2 2016 - one of the strongest quarters in Rezidor s history 40 30 EBITDA development since IPO 40% 30% 20 20% 10 10% 0 0% -10-10% -20 EBITDA Margin -20% 36m EBITDA 14% EBITDA margin 5 I Q2-2016 Results
Norway Sweden Denmark UK France Germany Russia Turkey Poland UAE Saudi Arabia South Africa % Change Q2 2016 vs. Q2 2015 (local currency) MARKET RevPAR development Mixed across regions & countries NORDICS ROWE EASTERN EUROPE MEAO 50% 30% 10% Occupancy ADR RevPAR 27.8% 14.4% 14.1% 1.0% 8.5% 14.6% 13.5% 13.0% -10% -30% -1.7% -12.5% -14.3% -50% -37.1% Europe sees solid performance (+3%) driven by Eastern and Southern Europe Nordics showing good performance in Sweden & Denmark with ongoing weakness in Norway impacted by strike action Western European countries show stable RevPAR performance (+1%) with the exception of Belgium & France due to terrorism impact Eastern Europe best performing region (+13%) driven by Russia, Slovakia, Romania, and Poland Middle East & Africa still weak overall with exception of South Africa and Saudi Arabia 6 I Q2-2016 Results SOURCE: Benchmark Alliance, STR Global
REZIDOR RevPAR development 4% L/L increase, strongly driven by rate improvement 10% L/L Occupancy L/L Average Room Rate L/L RevPAR 8.7% 8% 6% 4% 2% 5.9% 4.6% 4.2% 5.7% 6.0% 5.9% 5.4% 5.0% 2.7% 3.5% 0.9% 2.4% 4.9% 5.6% 1.0% 4.0% 0% -2% -4% Q2 Q3 Q4 2012 Q1 Q2 Q3 Q4 2013 Q1 Q2 Q3 2014 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2015 2016 NOTE: Like-for-like: same hotels in operation during same period last year compared at constant exchange rates 3 of 4 regions reported L/L RevPAR growth: Eastern Europe, ROWE and Nordics Rate improvement driven by Eastern Europe (at constant rate) Occupancy growth negatively impacted by MEAO and Nordics (Norway) 7 I Q2-2016 Results
Nordic overall performance negatively affected by strike, ROWE continues rate growth NORDICS ROWE L/L Occupancy L/L Average Room Rate L/L RevPAR L/L Occupancy L/L Average Room Rate L/L RevPAR 25% 25% 15% 5% -5% -0.8% 3.9% -4.0% -2.1% 3.8% 9.2% 6.9% -0.5% 0.5% 15% 5% -5% 4.9% 4.8% 4.3% 6.2% 7.0% 9.4% 5.6% 2.2% 4.8% -15% -15% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016 Norway: Positive Easter effect off-set by strike action and ongoing oil impact on the west coast Denmark: Strong rate growth Sweden: Strong growth in both rate and occupancy UK & Ireland: Continuous strong rate increase in Ireland, solid UK performance Germany: Good rate & occupancy growth Netherlands: Good rate growth with slight occupancy improvement Belgium & France: Occupancy suffering from terror attacks 8 I Q2-2016 Results
Solid improvements in Eastern Europe Middle East remains weak EASTERN EUROPE MIDDLE EAST & AFRICA L/L Occupancy L/L Average Room Rate L/L RevPAR L/L Occupancy L/L Average Room Rate L/L RevPAR 25% 25% 15% 17.4% 15.3% 10.1% 14.8% 15% 9.6% 9.5% 5.1% 5% -2.1% -3.3% 11.9% 5% 0.1% -5% -15% -5.5% 3.3% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016-5% -15% -6.3% -4.2% -4.5% -6.5% -5.8% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016 Russia: Exceptionally strong improvement in rate & occupancy Baltics: Weaker rate mainly linked to EU presidency (Latvia) last year Poland: Strong rate uplift while occupancy declined Turkey: Occupancy and rate negatively affected by recent events Middle East: Continued drop in demand in and rate pressure in both Saudi Arabia & UAE Northern Africa: Egypt & Tunisia demand continue to suffer following attacks Southern Africa: Strong occupancy growth & rate improvement in South Africa 9 I Q2-2016 Results
Strong development momentum continues SIGNINGS Q2 2016 Q2 2015 YTD 2016 YTD 2015 Hotels 11 15 24 25 Rooms 2,600 2,500 4,500 4,800 Radisson Blu Hotel, Durban Umhlanga, South Africa Q2 comments: Strong quarter for growth, particularly in Africa: - Radisson Blu Durban complementing South Africa portfolio (14 hotels, 8 in operation) - 1 st Park Inn in Mauritius (3 rd hotel in Mauritius) - 1 st Quorvus Collection in Lagos, Nigeria - Geographic expansion: Harare / Zimbabwe Other key markets: Saudi Arabia, UAE, Turkey, Poland Purely asset-light growth (>95% managed) Park Inn by Radisson Poznan, Poland 10 I Q2-2016 Results
Good quarter for openings Well ahead of last year OPENINGS Q2 2016 Q2 2015 YTD 2016 YTD 2015 Hotels 6 6 13 9 Rooms 1,400 1,200 2,400 1,400 Radisson Blu Hotel, Yerevan, Armenia Q2 comments: Openings fuelled by conversions / semi - conversions Good momentum in Africa: Flagships openings in Lomé and Marrakech (Total Africa portfolio: 35 hotels in operation, 18 countries) Geographic expansion: Togo, Morocco & Armenia Expansion of resort network: Crete, Marrakech Limited exits in Q2 2016 resulting in positive Net Growth of 1,000 rooms 100% asset-light Radisson Blu Hotel 2 Fevrier, Lomé, Togo 11 I Q2-2016 Results
Two strategic Asset Management transactions Strengthening our position in critical Norwegian market Radisson Blu Atlantic Hotel, Stavanger (Norway) 364-room renowned hotel in prime location 25-year extension of highly profitable lease contract 46m renovation, co-funded with landlord, to reposition property as the leading hotel in Stavanger Full closure for 14-months as of September taking advantage of soft market conditions Opening end of 2017 Park Inn by Radisson Stavanger (Norway) 208-room hotel in secondary location Strategic decision to terminate loss making lease contract (ca. 2m p.a.) Reduction of leased rooms in volatile market 2.7 million termination payment Continued focus on Asset Management Exit / renegotiate loss making leases with focus on UK 3 leases confirmed to exit 1 st Sept 2016: Stavanger, Bergen and Kristiansand (Norway) Stavanger & Kristiansand switch to franchise agreement 12 I Q2-2016 Results
Management priorities focus on margin optimisation while continuing accelerated capex deployment Leverage strong markets & optimise results (e.g. Sweden, Denmark) Monitor development in 3 fragile markets: Cancellations following attacks & failed military coup with slow pick up Istanbul market RevPAR down 42% in Q2 2016 Rezidor operating portfolio: - Turkey: 14 hotels / 2,860 rooms, 54% managed / 46% franchised - Istanbul: 8 hotels / 1,600 rooms, 65% managed / 35% franchised Fragile market environment in France following attacks in Paris & Nice Rezidor operating portfolio: - France: 14 hotels / 2,640 rooms, 29% leased / 46% managed / 25% franchised - Paris: 3 hotels / 500 rooms, all managed - Nice / Cannes: 3 hotels / 600 rooms, 53% leased / 47% managed Brussels market severely impacted by aftermaths of 22 March attacks Market RevPAR declined by ~30% in Q2 2016 3 hotels / 572 rooms, 75% leased / 25% managed Focus on cost containment and margin enhancement, with particular emphasis on overhead costs and procurement savings Continue Capex deployment in line with our 3 year capex plan Push new hotel openings through signing of conversions / semi-conversions & pipeline monitoring Closely monitor developments of Carlson s pending sale to HNA (as per announcement of 28 th April 2016) 13 I Q2-2016 Results
Radisson Blu Hotel Marrakech Carré Eden, Morocco FINANCIAL UPDATE KNUT KLEIVEN, DEPUTY PRESIDENT & CFO 14 I Q2-2016 Results
Q2 EBITDA margin improved by 1.3pp and net income increased 6% In m Q2 2016 vs LY LFL RevPAR (L&M) 80.9 4.0% Revenue 259.8-4.0 EBITDAR 98.1 3.3 EBITDAR Margin % 37.8% 1.9 pp EBITDA 36.4 2.8 EBITDA Margin % 14.0% 1.3 pp EBIT 22.0-1.0 Reported Revenue down 1.5% due to - Conversion of 1 lease to franchise as from 1 st Jan - Negative FX impact of 10.3m L/L Revenue up 10.6m (+4%) EBITDA increased due to higher LFL revenue, good flow through in leased portfolio and lower costs for bad debts in fee business. Positive Easter impact on EBITDA estimated at ca. 2.0m EBIT down by 1m, negatively impacted by termination costs of 2.7m, higher costs for depreciation and 1.2m writedown of fixed assets Net income positively impacted by reduced tax rates EBIT Margin % 8.5% -0.2 pp NET INCOME 16.2 0.8 15 I Q2-2016 Results
YTD Good Q2 results did not fully compensate for the weak Q1 which was impacted by one-offs In m YTD June 2016 vs LY LFL RevPAR (L&M) 73.5 2.7% Revenue 466.8-13.4 EBITDAR 148.6-7.0 EBITDAR Margin % 31.8% -0.6 pp EBITDA 27.2-5.6 EBITDA Margin % 5.8% -1.0 pp EBIT -3.0-13.6 EBIT Margin % -0.6% -2.8 pp NET INCOME -5.4-7.4 Revenue down 2.8% due to Conversion of 1 lease to franchise Temporary closure of 1 hotel for renovation and re-branding Negative FX impact of 16.9m from EUR strengthening vs. NOK, GBP, RUB and CHF L/L Revenue up by 13.1m (+2.7%) EBITDA decreased due to performance in Q1, which was impacted by weak revenue development and higher costs for reservations, provisions for bad debts and central costs FX had a negative impact of ca 1.3m on EBITDA EBIT negatively impacted by termination costs of 10.6m, partly offset by gain on sale of shares in subsidiaries of 1.9m Net income positively impacted by reduced tax rates 16 I Q2-2016 Results
Strong flow through in the quarter Q2-2016 vs Q2-2015 Reported Change FX Hotel Exits New Hotels One-offs Change in Writedowns L/L Revenue -4.0-10.3-5.6 1.3 10.6 EBITDAR 3.3-3.8-2.4 0.7-0.7 9.5 EBITDA 2.8-1.4-1.3 0.7-0.7 5.5 EBIT -1.0-0.8-1.2 0.5-3.4-0.8 4.7 Strengthening of EUR vs NOK, GBP, RUB and CHF had negative impact of ca. 4% on revenue. The negative impact on results relates mainly to the fee business Hotel exits had a negative impact on the results (mainly conversion of a leased property to franchise) New hotels include Radisson RED Brussels (renovated and re-branded hotel) One-offs negatively impacted EBIT by 3.4m (mainly termination of lease Park Inn Stavanger in Norway) Strong flow through, most notable in the leased portfolio 17 I Q2-2016 Results
Q2 - Leased Business Positive development in leased business with good flow through but EBIT impacted by one-off cost for termination Leased Revenue, MEUR Nordics Revenue decreased by 5.9m due to weakening of NOK vs. EUR and conversion of lease to franchise Excellent flow through in lease portfolio offset decrease in Revenue, most notable during strike in Norway EBIT decreased by 2.5m due to termination of Park Inn Stavanger ( 2.7m) 250 200 150 100 50 0 NO RoWE Total Q2 2016 Q2 2015 EBIT, MEUR 16 Rest of Western Europe Reported Revenue flat vs last year L/L RevPAR growth in all key countries (except Belgium) had positive impact, partly offset by weakening of GBP vs EUR EBIT and EBIT margin positively impacted by improved conversion, partly offset by higher costs for write-downs of fixed assets 14 12 10 8 6 4 2 0 NO RoWE Total Q2 2016 Q2 2015 18 I Q2-2016 Results
Q2 - Fee Business Improved results despite market challenges Fee Revenue, MEUR Rest of Western Europe 35 Fee revenue 0.4m higher than last year due to the RevPAR development 30 25 20 15 10 Q2 2016 Q2 2015 Eastern Europe Fee revenue 0.5m higher than last year. Very strong RevPAR development offset by strengthening of Euro EBIT is also impacted by lower costs for bad debts 5 0 25 NO RoWE EE MEAO Total EBIT, MEUR 20 Middle East, Africa & Others Fee revenue 0.4m lower than last year due to RevPAR EBIT flat since decrease in revenue was offset by lower costs for bad debts 15 10 5 0 NO RoWE EE MEAO Total Q2 2016 Q2 2015 19 I Q2-2016 Results
Investments of 49.1m carried out during the first six months of the year H1 2016 vs H1 2015 2016 2015 Cash flow before working capital changes 9.0 25.9 Change in working capital 7.8-3.3 Cash flow from operating activities 16.8 22.6 Investments -49.1-28.6 Free Cash Flow -32.3-6.0 MEUR Jun 30, 2016 Dec 31, 2015 Balance sheet total 487.2 464.3 Net working capital -52.6-53.0 Net cash (net debt) -3.4 41.1 Equity 233.6 246.7 Weaker cash flow before working capital mainly due to decrease in EBIT in Q1 Change in working capital positive due to changes in accruals Investments include the acquisition of 49% in prizeotel ( 14.7m) Resulting net cash position is negative ( -3.4m) by the end of the quarter 20 I Q2-2016 Results
Radisson Blu Hotel & Residence Maputo, Mozambique Q&A 21 I Q2-2016 Results