Scandic Hotels Group Ab · OMXSTO:SHOT
Scandic Hotels Group Ab — Debt Investor Presentation (March 2021)
40 slides from Scandic Hotels Group Ab's debt investor presentation, March 2021
Slide 1: Scandic Hotels: Investor Presentation
SCANDIC HOTELS: | INVESTOR < | PRESENT )
Slide 2: Disclaimer
DISCLAIMER THE INFORMATION. CONTAINED IN THIS PRESENTATION IS CONFIDENTIAL INFORMATION. ACCORDINGLY, THE INFORMATION INCLUDED HEREIN MAY NOT BE REFERRED TO; QUOTED OR OTHERWISE DIRECTLY DISCLOSED BY YOU. BY REVIEWING THIS INFORMATION, YOU ARE ACKNOWLEDGING THE CONFIDENTIAL NATURE OF THIS INFORMATION
Slide 3: Risk factors: risks related to Scandic and its business
This section describes the risk factors and significant circumstances considered to be material for Scandic’s business and future development. The risk factors relate to Scandic’s operations, industry and markets, and further include operational risks, legal risks, regulatory risks, risks related to
Slide 4: COVID-19 material adverse effect (cont'd)
1.1.1 COVID-19 has had a material adverse effect on Scandic and Scandic remains subject to significant risks related to the virus and countermeasures (cont’d) If the Company’s assumptions and expectations of future recovery are not realized, in whole or in part, this could for example imply that the
Slide 5: Risks related to long-term lease agreements
1.1.6 Scandic is exposed to risks related to the Company’s lease agreements being concluded with a long term and that the main part includes a fixed or partially fixed rental component Scandic’s lease agreements are generally entered into for initial periods of 15 to 20 years. The longterm nature of
Slide 6: Risks in implementing strategy for profitable growth
1.1.9 Scandic may not have the possibility to successfully implement its strategy for profitable growth and develop new hotels (cont’d) Furthermore, the Company is active and well-established in the middle segment and there is a risk that, even in good market conditions, the Company will find it mor
Slide 7: Risks related to legal and regulatory issues
1.1.12 Scandic is dependent on attracting and retaining dedicated and competent staff (cont’d) During periods of reduced revenues, Scandic may reduce its workforce through layoffs and/or terminations or similar measures. When such a period is over, there is a risk that such staff will not return to
Slide 8: Financial risks
1.2.2 Failure to protect Scandic’s trademarks and other intellectual property could reduce the value of the Company’s brands The recognition and reputation of Scandic’s brands and concepts are vital to the success of Scandic. Scandic relies on trademark laws to protect the Company’s proprietary righ
Slide 9: Risks related to the securities
1.3.2 Scandic’s existing facilities agreements contain, and future facilities agreements may contain, restrictions that could limit the Company’s flexibility in operating its business Scandic’s existing facilities agreements contain, and documents governing future financing may contain, operating co
Slide 10: Conversion right subject to general meeting approval
1.4.4 The conversion right is subject to approval from a general meeting and right to exercise the conversion rights may be limited in certain events The right to convert the convertible bonds into shares in the Company is subject to approval from a general meeting and, if approved, the conversion r
Slide 11: Transaction
TRANSACTION ~
Slide 12: Convertible bond terms
Issuer: Scandic Hotels Group AB (publ) Principal amount: Up to approximately SEK 1,800,000,000 Issue price: [89.41 to 90.94]% of the principal amount Gross cash proceeds raised: Up to approximately SEK 1,600,000,000 Securities offered: Convertible Bonds Status: Subordinated and unsecured Duration: 3
Slide 13: Background and rationale
3 BACKGROUND AND RATIONALE During the first quarter, Scandic’s cash outflow is estimated at approximately SEK 1,100m and Scandic’s available liquidity is expected to be approximately SEK 800 million, as of 31 March 2021 The occupancy rate for Scandic is estimated to be around 18% in the first quarte
Slide 14: Simplified transaction structure
SIMPLIFIED TRANSACTION STRUCTURE • The leading hotel company in the Nordic region with an Convertible bond unrivalled geographic network with approximately a 15% up to SEK 1,600m Scandic Hotels Group AB gross proceeds market share • Pre-pandemic organic revenue CAGR of 7% combined with an almost two
Slide 15: Scandic at a glance
SCANDIC AT A GLA
Slide 16: Scandic - the market leading hotel company in the Nordics
16 SCANDIC- THE MARKET LEADING HOTEL COMPANY IN THE NORDICS SOLID DEMAND DYNAMICS UNTIL 2019 DEMAND HAS CONSISTENTLY OUTGROWN SUPPLY IN THE NORDICS, WITH A BROAD AND WELL-BALANCED CUSTOMER BASE STRONG MARKET #1 BRAND IN THE NORDICS WITH AN UNRIVALLED GEOGRAPHIC NETWORK AND POSITION APPEALING ROOM OF
Slide 17: An unrivalled market position
AN UNRIVALLED MARKET POSITION 130 DESTINATIONS 53,000 ROOMS 15% NORDIC MARKET SHARE 250 Fs) 7 3 SCANDIC SIGNATURE IHG HILTON HOTELS Scandic
Slide 18: An attractive business model
18 AN ATTRACTIVE BUSINESS MODEL SEVERAL ADVANTAGES OF THE VARIABLE LEASE MODEL FLEXIBLE COST STRUCTURE IN NORMAL MARKET FLUCTUATIONS CONTROL OF CUSTOMER OFFERING SHARED INTEREST WITH LANDLORDS LIMITED INTERNATIONAL COMPETITION Scandic
Slide 19: Nordic market RevPAR growth history
10% 0% -86 -87 -88 -89 -90 -91 -92 -93 -94 -95 -96 -97 -98 -99 -00 -01 -02 -03 -04 -05 -06 -07 -08 -09 -10 -11 -12 -13 -14 -15 -16 -17 -18 -19 -20e -10% -20% -30% -40% -50% Like-for-like growth as historical data is not available from 1986 in all countries (Norway: 1986-, Denmark: 1992-, Finland: 19
Slide 20: Measures taken to handle COVID-19
Postponed rent payments Non-rent cost base reduced New credit facility of Negotiations with by ~60% as of Q2 SEK 1,150m and bridge landlords have resulted in Cancelled dividend financing of SEK 250m rent reductions of up to Temporary closed >50% of SEK 900m Rescheduled capex the hotels during the sp
Slide 21: Entering market recovery with low costs
21 ENTERING MARKET RECOVERY WITH LOW COSTS 2019 Record year with revenue of SEK 19bn and adjusted EBITDA above SEK 2bn 2020 Substantial measures to handle ~60% revenue decline due to Covid-19 2021 Recovery with high cash conversion given slimmed cost base Ee)its[-) MM Potential to exceed 11% adjuste
Slide 22: Scandic Hotels 2020 and outlook
SCANDIC HOTELS QA 2020 AND OUELO ay ad 7
Slide 23: Total market occupancy
(TOTAL MARKET OCCUPANCY) (TOTAL MARKET OCCUPANCY) (TOTAL MARKET OCCUPANCY) (TOTAL MARKET OCCUPANCY) Source: Benchmarking Alliance 23
Slide 24: Y-o-y change in market RevPAR
(Y-O-Y CHANGE IN MARKET REVPAR) (Y-O-Y CHANGE IN MARKET REVPAR) (Y-O-Y CHANGE IN MARKET REVPAR) (Y-O-Y CHANGE IN MARKET REVPAR) Source: Benchmarking Alliance 24
Slide 25: Lease structure: fixed, variable, minimum guarantee
Fixed 12% Fully variable 21% Variable with minimum guarantee 67% 25
Slide 26: Hotel openings pipeline
Q1 2021 Scandic Arlandastad Stockholm, Sweden Take-over 150 Opened January 10 Q1 2021 Scandic by Copenhagen Airport Copenhagen, Denmark New 357 Q1 2021 Scandic Sortland Sortland, Norway Franchise 130 Q2 2021 Scandic Grand Central Helsinki Helsinki, Finland New 491 Postponed from Q1 to Q2 Q2 2021 Sca
Slide 27: Expected recovery in 2021
27 EXPECTED RECOVERY IN 2021 VACCINATION GAINS MOMENTUM IMPROVED COVID-19 DATA OCCUPANCY INCREASES AS RESTRICTIONS ARE GRADUALLY EASED DEMAND INITIALLY DRIVEN BY DOMESTIC DEMAND OCCUPANCY IN THE SUMMER EXPECTED TO EXCEED LAST YEAR’S LEVEL GRADUAL MARKET NORMALIZATION INTRA-NORDIC BUSINESS TRAVEL MEE
Slide 28: Occupancy 2019-2021
2019 2020 2021 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 28
Slide 29: Occupancy and RevPAR change, US vs Europe
Occupancy 7-13 March Revpar Change vs 2019 60% 0% -10% 50% -20% 40% -30% -40% 30% -50% 20% -60% -70% 10% -80% 0% -90% US Europe US Europe Source: STR 29
Slide 30: Slide 30
Slide 31: Net sales development
Oct-Dec Oct-Dec Jan-Dec Jan-Dec SEKm 2020 2019 % 2020 2019 % Net sales 1,377 4,831 -71.5% 7,470 18,945 -60.6% Q4 FX -71 -1.5% -246 -1.3% Sweden -71.3% Organic -3,384 -70.0% -11,229 -59.3% Norway -64.1% - New hotels -90 -1.9% -196 -1.0% Finland -74.2% - Exited hotels -28 -0.6% -178 -0.9% Other Europe
Slide 32: Net sales and adjusted EBITDA by country
October-December Net sales Adjusted EBITDA Adjusted EBITDA % 2020 2019 2020 2019 2020 2019 2020 ex. gov. SEKm support Sweden 465 1,622 -136 -216 239 -29.2% 14.7% Norway 410 1,277 6 -132 115 1.5% 9.0% Finland 300 1,222 -89 -94 216 -29.7% 17.7% Other Europe 201 710 -24 -27 60 -11.9% 8.5% Central costs
Slide 33: Cash flow, net debt and liquidity
SEKm Q4 FY2020 Adjusted EBITDA -282 -1,503 Change in working capital -843 -221 Paid tax, interest, pre-opening and other items -61 -464 Cash flow from operations -1 186 -2 188 Investments in existing operations -15 -449 Free cash flow before expansion capex -1,201 -2,637 Expansion capex -133 -302 Fr
Slide 34: Occupancy rate
2019 2020 2021 90% 80% 70% 60% Occupancy rate 50% 40% 30% 20% 10% 0% 34
Slide 35: Strengths and opportunities in a post COVID-19 environment
STRENGHTS & OPPORTUNITIES INA POST COVID-19 ENVIRONMENT Scandic
Slide 36: Scandic is well positioned for a market recovery
36 SCANDIC IS WELL POSITIONED FOR A MARKET RECOVERY Planned hotel openings in attractive locations Local and regional Customer price Well-known and demand consciousness trusted brand Local and regional Trusted and well- Market leading customer loyalty program connected business partner to the landlo
Slide 37: Appendix
APPE i
Slide 38: Income statement excluding IFRS 16
2020 2019 Excluding SEKm Effect IFRS 16 Reported Reported IFRS 16 Net sales 7,470 7,470 18,945 EBITDAR 1,619 1,619 7,107 Total rent costs -3,121 3,191 70 -1,770 Adjusted EBITDA -1,503 Pre-opening costs -32 -32 -81 Items affecting comparability -269 -269 169 EBITDA -1,804 3,191 1,387 5,425 Depreciati
Slide 39: Assets and equity and liabilities
Assets (SEKm) Equity and liabilities (SEKm) Intangible assets 6,687 Total equity 2,071 Buildings and land fittings 25,762 Liabilities to credit institutions 4,526 Equipment, fixtures and fittings 4,625 Lease liabilities 26,169 Financial fixed assets 479 Other long term liabilities 1,159 Total fixed
Slide 40: Thank you
THANK YO WV Need || W Tie ic Z--— 4 oe | :
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