a great way to mix , Hotel PROPERTIES ROOMS LOCATIONS COUNTRIES BRANDS PANDOX BUSINESS OPERATIONS REPORT 2011

118

24,500

58

10

20

PANDOX BUSINESS OPERATIONS REPORT 2011

ONE Of ThE lEADINg hOTEl PROPERTy cOmPANIES IN EUROPE

Hotel

PROPERTIES

ROOMS

LOCATIONS

COUNTRIES

BRANDS

a great

way to mix

Pandox

WE OWN

WE OWN

The Holiday Inn Brussels Airport was acquired in 2007. The hotel was totally refurbished in 2009–2010 and is now one of the leading business hotels close to Brussels’ international airport. Pandox operates the hotel under a franchise agree-ment with the InterContinental Hotels Group.

WE OWN

118 hotel properties and one congress and fair

centre totalling 24,500 rooms, with operations

in 10 countries and 58 strategic cities.

OWN OPERat

OWN OPERATIONS

Hotel Berlin, Berlin was acquired in 2006 and has since been successfully repositioned towards the profitable meeting and events segment.

The hotel is centrally located next to the tourist-popular Kurfürstendamm, and with 701 rooms is the third largest hotel in Berlin.

OWN OPERat

Pandox’ own operations embrace 11 hotels operated on

local strategies, and are located in Berlin, Brussels,

Ant-werp, montreal, helsinki and the Bahamas. Together they

generate total revenues of SEK 1.3 billion.

scandic

hilton

hyatt

radisson blu

park inn

intercontinental

crown plaza

holiday inn

clarion hotel

quality hotel

comfort hotel

elite hotels

rica hotels

first hotels

best western

ibis hotel

omena hotels

rantasipi

WE CO-OPE

WE CO-OPE

WE CO-OPERATE

with 12 hotel chains under 20 different brand names.

WE DEVEL

WE DEVELOP

Pandox often

acquires hotels that

under-perform, which

implies that the hotels

need to be developed

in order to reach full

potential through, for

example,

reposition-ing and investments.

WE DEVEL

WE DEVELOP

Hyatt Montreal was acquired in 2008 and has since been successfully developed to one of the city’s leading meeting and leisure hotels. With 605 rooms, it is one of Montreal’s largest hotels. The location is strategic and central – right in the centre of the entertainment and shopping district.

WE GE NER

WE GENERATE

A

T

The Hotel Brussels – hotel property and operations – was acquired in 2010. The hotel is currently undergoing comprehensive product development that is estimated to be completed in two years. The picture shows the magnificent view from the top floor of the hotel.

WE GE NER

A

T

Pandox’ strategy and business model has generated an

average annual return of approximately 19 percent since

the Company was formed.

SECOND PART

CEO commentary

,

54–57

Workforce – Pandox’ heart and mind,

58–59

Hotel properties and summary list,

60–75

Economic and financial information,

76–100

WELCOME

TO PANDOX WORLD!

first part

To describe Pandox, we have assembled the Company’s different parts in a visual

hotel building where each floor represents a separate part of the Company’s business

chain. Welcome to Pandox World and an exciting tour through our hotel building.

Let’s start on the ground floor.

2020

Operational strategies

2021

main processes

2022

Types of lease

1

st

FLOOR

WE OWN

3024

Active ownwership

3026

Pandox’ Tool Box

3026

Environmental work

3028

hotel managers

5034

Investments

5036

The Shark Project

5038

Success Stories

0012

Vision and business concept

0013

Pandox’ characteristics

0014

Strategy

0016

Value-growth chain

4030

Network and cooperation

4032

Pandox’ partners

GROUND FLOOR

1018

The portfolio

1019

geographical spread and breadth

2

nd

FLOOR

BUSINESS MODEL

3

Rd

FLOOR

OWN OPERATIONS

4

th

FLOOR

wE CO-OPERATE

5

th

FLOOR

WE DEVELOP

TOP Floor

WE MANAGE

7046

We manage

7048

Board of Directors and auditors

7050

Senior executives

6

th

FLOOR

WE GENERATE

6040

growth and cash flow

6042

Pandox’ development

6044

market communication

6045

Social responsibility

WELCOME

Who

do we think

WE ARE?

The driving forces for Pandox’ successful and rapid

develop-ment are to be found in the Company’s specialist expertise,

well-defined strategy, professional employees, and industrial

owners. A special characteristic is the Pandox Spirit – our

corporate culture where nothing is impossible!

T 6 5 4 3 2 1 0

GROUND

FLOOR

Vision

Pandox’ vision is to be one of the world’s leading hotel property com-panies with regard to specialist expertise in both hotel and property operations, and active ownership.

for the vision to become reality, the company must retain its spe-cialist expertise regarding the value-growth chain, and that the balance between international and national revenues, brand names and types of hotel be maintained. Another important aspect is to constantly develop the business model so as to adapt to each situation and choose the strategy that is best suited to local conditions.

Business concept

Pandox’ business concept – based on expertise within hotel proper-ties, hotel operations and business development – is to actively own, develop and lease hotel properties.

Overall goal

Pandox’ overall goal, through specialist expertise within hotels, hotel properties and business development, is to achieve optimal yield and value-growth in the hotel property portfolio. Specific goals are set each year for the operating net, return on investment, value-growth objec-tives in the existing hotel property portfolio, and the equity/assets ratio. The goals are then broken down to each individual property and act as guidance during investment decisions.

WELL-DEFINED AND

FOCUSED STRATEGY

Pandox has a well-defined strategy where country, city, hotel type, form of partnership and yield requirements have been consistently followed since the company was formed.

>>

Further information about Pandox’ strategy is available on pages 0014–0015

AcTIVE OWNERS AND RAPID DEcISIONS

4

Pandox’ shareholders and Board of Directors possess industrial expertise in the company’s three most important disciplines: hotel operations, hotel properties and business development. Their knowledge and experience create con fid ence, which enables us to take rapid decisions within, for example, different acquisition questions. This is a competitive advantage in a significantly slower world at large. Pandox’ shareholders and Board of Directors set distinct goals for operations, which provide excellent guidance for the company.

KNOWlEDgE AND BUSINESS INTEllIgENcE

One of Pandox’ most important cornerstones is to constantly develop its areas of competence and expertise. The business model is based on

well-developed methodology that enables Pandox’ skilled employees to focus on development and the

creative process.

cORPORATE cUlTURE – ThE PANDOX SPIRIT

Pandox has established an informal management style where a high level of competence is combined with minimum bureaucracy and effective monitoring methods. Our keywords are inspiration,

simplicity, rapidity, expertise and prominent leadership.

3

5

PANDOX' chARAcTERISTIcS //

GROUND FLOOR

// 0013

EXPERTISE AND NETWORK

2

International network enables access to unique expertise.

Pandox has a small management organisation. The model provides major benefits with rapid decision-making paths, a high level of interactivity and considerable individual freedom. In order to be able to maintain momen-tum in all business processes, the organisation is supplemented by a national and international network. The model places demands on both visionary and operative leadership, as well as an ability to create forms of collaboration with individuals with different backgrounds.

STRUCTURED WAY OF WORKING

6

Neat and orderly.

Pandox’ operations are structured in five main pro -

cesses that in a clear and simply way describe the company’s ongoing position. This in turn creates prerequisites for a situation-adapted and commercially inspired way of working.

CONSISTENT STRATEGY

T 6 5 4 3 2 1 0

ENABLES STABILITY

AND RISK-SPREADING

Business position: Pandox portfolio contains 118 hotel properties and one congress and fair centre.

Business position: Pandox has operations in ten countries, where Sweden is largest. Other major submarkets are Brussels, copenhagen, helsinki, gothenburg and montreal. Overall, Pandox is established in 58 locations that represent a mix of international and domestic demand.

Business position: The largest form of business model in the Pandox portfolio consists of leases, which represent 83 percent of revenues, while the company’s own-operated hotels and management agreements amount to 12 percent.

ONE TyPE Of ASSET – hOTEl PROPERTIES

A hotel property has distinctive features and differs from other types

of property, which demands specialist expertise in order to maintain

active ownership. Pandox therefore invests only in one type of

asset – hotel properties.

BUSINESS mODEl

In order to maximise the value-growth of each hotel, Pandox has a

flexible business model that enables a situation-adapted strategy

based on the hotel’s local prerequisites.

Lease structure – rent revenues 2011

gEOgRAPhIc mARKET

focusing on one type of asset requires a broad geographic market

so as to create growth prerequisites and benefit from changes in

the hotel economic cycle.

Geographical spread, proportion of hotel rooms

Revenue-based leases with guarantee, 61%

Other, 5% Revenue-based leases, 22%

Own operation and manage-ment agreemanage-ments, 12% Sweden, 51% Finland, 13% Norway, 10% Belgium, 9% Other Europe, 7% Denmark, 5% Canada/Bahamas, 5%

0014 //

GROUND FLOOR

// STRATEgy

CONSISTENT STRATEGY

lOcATION AND SIZE

large hotels with strong locations provide the best business

prerequisites, while simultaneously reducing risks. Such hotels

have higher liquidity and are easier to finance.

TyPE Of hOTEl

The hotels shall belong to the upper-medium and high-price

segment.

chOIcE Of BRAND NAmES AND PARTNERS

Each hotel shall have the best possible brand name that

strengthens the profile. This requires that Pandox maintains a

broad network within national and international hotel companies.

Business position: All Pandox hotels have strong and natural locations with an average of 206 rooms, which is significantly higher than the average hotel in each respective market.

Business position: The portfolio contains a mix of upper-medium and high-priced hotels. The medium-priced hotels include many Scandic hotels, as well as the hotel Berlin, Berlin. Examples of high-priced hotels include Intercontinental montreal and hilton Stockholm Slussen.

Business position: Pandox currently works together with 12 hotel chains under 20 well-known and established brand names, as well as a number of independent distribution channels – thus providing a unique position and a broad network.

STRATEgy //

GROUND FLOOR

// 0015

Bastionen, Oslo Billingen, Skövde

VALUE GROWTH

The value-growth chain in a hotel property

forms the basis for Pandox’ vision, strategy and choice of lease structure.

Knowledge of the entire chain is a precondition for success.

1. Macro economy

The activity level (global, regional or local) represents an important component for how demand develops in the hotel market. macro also affects the economic course, which in turn can imply choosing different points in time to enter a specific market.

2. Hotel economic cycle

The hotel economic cycle is part of the macro economy, and can be divided into five different phases: downturn, declining rate of downturn, levelling-out, growth, and peaking. Knowledge of the pattern of a hotel economic cycle can be utilised when investing in different geographic markets, and endeavouring

to limit risk in markets that have poorer outlooks.

3. Location and size

Two important factors are that hotels must have strong and natural locations, as well as the right size so as to obtain critical volume and thereby good preconditions for profitability.

4. Competition – new capacity – different market positions

Each market is unique, and considerable knowledge of local conditions is required to create a product that provides sustainable profitability.

5. Brand names

A strong brand name strengthens the hotel’s market position and competitiveness in the chosen product segment.

10. Financing and taxes

The choice of financing and legal structure represents a key issue that creates prerequisites for stable value growth.

9. Lease structure

The hotel industry has many forms of lease that affect a hotel’s profitability, financing and value-growth. In general, a lease shall contain mutual incentives so that the parties work in the same direction.

6. Operations and management

hotel operations are complicated and demand a high level of expertise, considerable presence and good leadership. A good local hotel team creates both satisfied customers and employees, as well as a high level of profitability.

8. Asset management

The hotel industry is capital-intensive and requires specialist expertise within both hotel operations and property so as to effectively manage and develop the hotel properties.

7. Investments

To continuously develop a hotel is a necessity in order to maintain a strong market position. T 6 5 4 3 2 1 0

VALuE GrOWTH CHAIn //

GROUND FLOOR

// 0017

we

own

PROBABLY

the best

mix!

Pandox’ principal strategy is to own one type of asset – hotel properties.

The portfolio currently embraces 118 hotel properties and one congress and

fair centre with 24,500 rooms where the majority belong to the profitable

full-service segment or stable medium-priced products.

Operations are located in 10 countries and 58 locations. About 60 per cent

of revenues come from international markets such as Brussels, London,

Mon-treal, Stockholm, Gothenburg, Malmö, Copenhagen, Berlin, Helsinki and Oslo.

The remaining 40 percent are characterised by domestic demand in regional

towns and cities in Scandinavia and Germany.

The mix of locations and brand names creates stable demand that gives a

portfolio with good potential and limited risk.

118 Hotels >> 24 ,500 rooms >>

T 6 5 4 3 2 1 0

1018 //

we Own

// THe POrTfOLiO

58 LOCATIOnS >> 10 COUnTRIeS >>

Ge

OG

rA

PHi

CAL SPreAD AND B

_reA

DT

_H

CANADA

2 hotels 1 city

BAHAMAS

1 hotel 1 city

eNGLAND

1 hotel 1 city

BeLGiUM

8 hotels 2 cities

SWiTZerLAND

1 hotel 1 city

GerMANY

4 hotels 4 cities

NOrWAY

14 hotels 10 cities

fiNLAND

14 hotels 1 congress and fair centre 8 cities

DeNMArK

5 hotels 1 city

SWeDeN

68 hotels 29 cities

Hyatt Regency, Montreal

BUSIneSS mODeL

1. Lease with a professional operator where Pandox remains strategic partner

2. Management agreement where another party manages daily operations on behalf of Pandox

3. Manage operations under a franchise agreement with a well-known brand name

4. retain own operations via independent distribution systems. T 6 5 4 3 2 1 0

PANDOX’ BUSiNeSS MODeL

Depending on local preconditions, Pandox can choose between four operational strategies:

The business model provides excellent potential to create a situation-adapted strategy – asset by asset.

Hyatt Regency, Montreal

2020 //

BUSIneSS MODeL

// OPerATiONAL STrATeGieS

Market analysis

A market analysis is performed in order to assess a hotel’s profitability potential and subsequent ability to pay the agreed rent. The local market is identified and analysed with regard to demand, competition and the current and future offer.

Market strategy

A strategic plan for each hotel property is established based on each respective hotel’s specific prerequisites, the local market, and its position in the hotel economic cycle. The property’s continued area of use is unconditionally evaluated during the preparation of the strategic plan.

Profitability optimisation

in view of that the value of a property is influenced by the profitability of the related hotel operations, the opera-tor is Pandox’ most important part-ner. The hotel operator is constantly assessed in order to ensure positive developments of the hotel’s opera-tions and the value of the property.

Lease optimisation The optimal cash flow of each respective hotel property is then divided among the operator, Pandox and other related parties. The lease is formulated in such a way that all parties involved are given an incen-tive to continuously improve the hotel property’s overall profitability.

THe PANDOX MODeL – AND iTS fOUr PHASeS

Possibility to acquire the hotel property Action plan with concrete measures Evaluation of each respective hotel property and the portfolio

Market analysis Market strategy Profitability

optimisation Lease optimisation

Sale in accordance with the strategy

1

MARKET MAPPING

Create knowledge of the market situation

and change patterns.

2

THe PANDOX MODeL

The Company’s methodology increases cash flow and limits risk

for each respective hotel.

3

Asset mAnAgement

Daily maintenance and major investments

so as to increase the value of properties in the long-term.

4

ECONOMIC AND

FINANCIAL REPORTING

Operations are monitored through established

goals, evaluations and appraisals.

5

MARKET COMMUNICATION

Pandox regularly carries out market activities

towards its target groups.

Pandox’ five main processes are used to describe the Company’s business situation, understand external and internal driving forces, and how they interact.

TYPES OF LEASE

The value of a hotel property is

determined to a considerable

degree by how the underlying

lease or agreement is formulated.

Pandox endeavours to find

agreements that create optimal

preconditions for maximum

development for both parties.

Optimal lease framework

Pandox’ flexible business model is reflected in the different types of lease. The design and formula-tion of leases and agreements are guided by fac-tors such as anticipated market trends, local com-petition, planned investments, as well as choice of operator and distributor. A mixture of different types of lease/agreement provides Pandox with a structure that increases cash flow in good times and, with rental guarantees, protects against receding markets.

Depending on local preconditions, Pandox is able to choose to mix several possible types of lease/agreement:

1. Rental agreements/leases

Revenue-based hotel lease

revenue-based hotel leases are linked to the sales generated by the hotel business. This form of lease provides Pandox with a share of growth in both the market as a whole and in the market share. To limit the risk, these leases generally specify a minimum guaranteed rent.

Result-based hotel lease

A result-based lease implies that Pandox receives a share of the hotel operator’s operating net. This type of lease requires that Pandox be informed of and have insight to the operating company’s finances and accounts. This form of lease can also have a guaranteed rent.

The hotel industry has many forms of lease, which influence a hotel’s profitability, financing and value growth.

T 6 5 4 3 2 1 0 InterContinental, Montreal

Fixed-fee lease

fixed-fee hotel leases are used in mature markets and in well-established hotel products. A fixed-fee lease limits the risk but also the potential. 2. Management agreements

A management agreement can be perceived as a sort of agent contract, where Pandox owns the hotel business. Through a management agree-ment, a hotel company is assigned to operate and manage the hotel on behalf of Pandox. This implies that Pandox owns the hotel operations as well as the hotel property.

3. Franchise agreements

franchise agreements can be entered into with a hotel company for Pandox’ own operations. Pan-dox thereby benefits from a large system that takes care of the hotel’s overall marketing and sales. This implies that Pandox owns the hotel operations as well as the hotel property.

Lease structure – rental revenues 2011

Pandox’ leases are formulated so that all parties involved are encouraged to continuously improve each hotel property’s overall profitability.

Revenue-based leases with guarantee, 61%

Other, 5% Revenue-based leases, 22%

Own operation and manage-ment agreemanage-ments, 12%

Radisson Blu, Lillehammer

KnOwLeDGe

generates

BUSIneSS!

A natural part of Pandox’ active ownership is to

manage its own operations. Pandox’ operations

currently embrace 11 hotels with close to 4,000

rooms and total sales of SeK 1.3 billion. The

hotels are located in Berlin, Helsinki, Brussels,

Antwerp, Montreal and the Bahamas. The

philos-ophy behind Pandox’ operations is to build each

hotel’s strategy and competence locally.

Pandox’ vision is to be one of the world’s leading hotel prop-erty companies with regard to specialist competence in both hotel and property operations, as well as active ownership. To manage its own hotel operations is an important part of Pandox’ active ownership.

T 6 5 4 3 2 1 0

own op eration

Hotel BLOOM!, Bryssel

3024 //

Own OPeRATIOnS

// ACTive OWNerSHiP

The business cultures differ among Pandox’ vari-ous geographic areas. in the Nordic region, leases dominate, while in North America manage-ment and franchise agreemanage-ments are most com-mon. europe has a mix of both. it is therefore important to master different strategies in order to successfully work in an international hotel environ-ment. To have one’s own operational expertise also implies possessing specialist knowledge so as to be able to evaluate the operators with whom one has leases, and be able to complete acquisi-tions where both the property and operaacquisi-tions are included.

in view of that the sector-trend is for hotel com-panies to increasingly be management compa-nies, it is also natural for Pandox to integrate verti-cally and to take over responsibility for operations. in view of that the sector-trend is for hotel

com-panies to increasingly be management compa-nies, it is also natural for Pandox to integrate verti-cally and to take over responsibility for operations. in recent years, five under-performing opera-tions that were acquired and thereafter developed, Hotels operated by Pandox

CIty Hotel Brand name No. of rooms Situation

Antwerp Crowne Plaza Antwerpen Crowne Plaza 262 City centre

Berlin Hotel Berlin, Berlin independent 701 City centre

Brussels Crowne Plaza Brussels – Le Palace Crowne Plaza 354 City centre

Hotel BLOOM! independent 305 City centre

Hilton Brussels City Hilton 283 City centre

The Hotel Brussels independent 433 City centre

Holiday inn Brussels Airport Holiday inn 310 Airport

Montreal Hyatt regency Hyatt regency 605 City centre

interContinental Montreal interContinental 357 City centre

Helsinki, espoo Korpilampi independent 151 ring road

Bahamas Pelican Bay independent 186 Central

Total 3,947

have been rented with long leases to well-known operators – thus creating prerequisites for new acquisitions.

The philosophy behind Pandox’ operations is to establish each hotel’s strategy and competence locally. This implies that most decision-making is delegated, and reporting is made to a board of directors with external members elected for their specialist knowledge. To be successful in these business processes requires the ability to attract the best management, and that these persons be given substantial influence over operations.

Hotel Berlin, Berlin – a real Berliner located centrally in the tour-ist-frequented district of Kurfürstendamm. The hotel is the city’s third largest with 701 rooms and excellent meeting facilities.

own op eration

T 6 5 4 3 2 1 0

pandox tool box

Pandox is an active owner. Over the years, the Company has

developed various specialist competences, of which a number

have been assembled and structured into management tools as

support for decisions taken in daily operations. We call this the

Pandox Tool Box – tools that are actively used for successful

analysis, forecasts, cost-control and high productivity.

PrOfiTABiLiTY OPTiMiSATiON

Tool 1. Reservations status

information about the exact reservations status for each given time period and each segment enables detailed analyses and correct forecasts.

Tool 2. Revenue management

The consistent use of a Property Management Software system that includes information about late cancellations, early check-outs and check-ins and other guest information, creates pre-conditions for effective forecasts and right pricing.

Tool 3. Implementation

The implementation of the two first tools takes place in all parts of the hotel – conferences, breakfast, restaurant, etc.

Tool 4. High-quality forecast tools

High-quality forecast tools that enable to provide accurate daily, weekly and monthly forecasts is a precondition for good planning both in the short and long-term.

enVIROnMenTAL wORK

We STrive TO reDUCe OUr OWN AND OUr OPerATOrS’ eNvirONMeNTAL iMPACT.

The hotel industry has placed considerable focus for many years on environmental and sustainability procedures. Scandic, which was one of the pio-neers, has purposefully endeavoured for a very long time to minimise their impact on the ment. We at Pandox perceive an active environ-ment process not only as being quite natural, but also as a necessity where we shall do all we can to contribute to long-term sustainable development. This implies that Pandox endeavours to fulfil with a good margin the environmental demands of the countries where the Company has operations, that we monitor the energy and water consump-tion of all of our hotels, and that we primarily use suppliers, contractors and consultants that have an established environment policy. Development

measures are often implemented in cooperation with the operators. for example, we have suc-cessfully endeavoured to actively and systemati-cally reduce the CO2 emissions and thereby

reduce the environmental impact.

internally within Pandox, we weigh in the envi-ronmental aspects as systematically and

struc-tured as possible in our daily work, examples of which can be simple things such as minimising the use of paper and energy in our premises. We sort waste and recycle as much as possible. And of course, the coffee and fruit in our premises are ecological and KrAv-labelled.

pandox tool box

COST CONTrOL AND fLeXiBiLiTY

Tool 5. Time reporting

Detailed reporting of hours worked spread by day, week, month and department enable rationalisation measure and correct profit assessments.

Tool 6. Work rotation / multi-tasking

Cooperation among the hotel’s departments increases effi-ciency, strengthens personnel development and reduces the number of recruitment processes.

Tool 7. Organisation

Personnel costs can be kept down, at the same time as obtain-ing a stable organisation, by allowobtain-ing the hotel’s fundamental organisation and number of permanent employees to be based on the year’s weakest month of occupancy, and to adapt the remaining workforce to seasonal requirements.

Tool 8. Conversion

flexible cost volumes enable adaptation when revenues fluctuate.

STrATeGiC TOOLS

Tool 9. Business plan

A tangible and well-embodied business plan with budget, forecasts and investments guides the organisation to the right priorities.

Tool 10. Early-warning system

An early and clear warning system based on daily analyses of revenues and costs increases the possibility to take active measures and the right action at an early stage.

Tool 11. Action plan and log

Distinct and measurable activity goals with clear allocation of responsibility and timetable are necessary to maintain focus and to continuously monitor and improve operations.

in practice

SUCCeSSfUL eNvirONMeNT PrOCeDUreS AT THe CrOWNe PLAZA BrUSSeLS – Le PALACe.

The Crowne Plaza Brussels is one hotel where Pandox has successfully and systematically worked together with the hotel management to reduce total energy consumption and the negative environmental impact.

An energy analysis performed in 2008 marked the beginning of intensive and comprehensive

envi-ronment procedures at the hotel. Most of the improvement measures were carried out in order to optimise operations, enhance controls and to find alternative energy solutions. The investments have proven to be both effective and profitable. for the full-year 2011, measurements show that the hotel’s energy consumption, compared with 2008, has

-46

%

-15

%

-17

%

eLectricity

gas

water

been reduced as follows: electricity –46 percent, gas –15 percent, and water –17 percent.

The reduced consumption has led to 40 per-cent lower energy costs and 35 perper-cent lower car-bon dioxide footprint (to 1,300 kCO2 per annum).

The largest part of the energy savings comes from operational optimisation in the form of energy-saving lighting systems, environment-economising shower taps, as well as the installation of an own district-heating plant driven with natural gas. The district-heating plant is very effective compared with other electricity-driven systems, which implies that the hotel receives financial compensation from the Belgian state in accordance with green certifi-cate practice.

T 6 5 4 3 2 1 0

Bernard Chênevert, hotel manager

employed since 2008.

Bernard is a graduate of the Lausanne Hotel Manage-ment School and has more than 15 years’ experience of the hotel industry and the repositioning of hotels, includ-ing the prize-winninclud-ing W in Montreal. in 2011, Bernard obtained the prestigious award of Hotel Manager of the Year within the whole of iHG America.

montreal

erik van Dalsum, hotel manager

employed since 2004.

erik is a graduate of the Lausanne Hotel Management School and has held several leading positions at large hotels across the world within Hilton, Shangri-La Hotels & resorts, and radisson SAS. Under erik’s manage-ment, the Crowne Plaza Brussels – Le Palace received the distinction of Hotel of the Year iHG Hotels Group eMeA in 2007.

Brussels

energy&

creativity

professional leaders

wITH SeRVICe In THeIR BLOOD

Hans Wils, hotel manager

employed since 2009.

Hans has extensive experience of the hotel industry from Marriott, Golden Tulip, Accor and Sofitel, and worked most recently at the Lafayette Square in Washington DC, USA.

antWerp

Christel Cabanier, hotel manager

employed since 2008.

Christel has extensive and solid experience from several hotels in Antwerp. Her hotel career started as receptionist, and via a number of different positions Christel became at 25 years of age the youngest hotel manager in Belgium. Christel is also a well-known Tv-profile in Belgium.

Brussels

raymond soumako, hotel manager

employed since 2009.

raymond is a graduate of Montreal University in industrial economy, and has more than 30 years’ experience of the hotel sector from both iHG and the Starwood Group, as well as previous hotel repositioning. raymond is a mem-ber of the Hotel Association of Greater Montreal and is board member of iAHi.

montreal

Pandox’ basic management philosophy is more about inspiration than control, and more about the

individual than the system. it is the individual people at Pandox that make the Company so unique.

The principal ingredients are experience, entrepreneurship, the will to constantly improve, to find

new opportunities and to win – as well as a good dose of responsibility and power of initiative.

Charles Boelen, hotel manager

employed since 2007.

Charles came to iHG and the Crowne Plaza Brussels in 2001, after ten years within Hilton in Belgium, the Nether-lands and france. Charles has been the driving force behind the successful refurbishment of the Holiday inn Brussels Airport and introduced “the fUN experience” as a creative and appreciated feature of the new hotel.

Brussels airport

aldert schaaphok, Vice president operations

employed within Pandox since 2004.

Aldert is a member of Pandox’ management team and is responsible for the Company’s own hotel operations. Aldert has also been acting hotel manager of The Hotel Brussels during the takeover phase. The recruitment of a new hotel manager is currently in progress.

Brussels

Kari Hiltonen, hotel manager

employed since 2011.

Kari has many years’ international experience from lead-ing positions at hotels in the upper segment. Kari’s most recent position was as GM of the radisson Blu Hotel Lat-vija, and before that as Country Manager at reval Hotels Latvia, and from 2004 to 2007 as CeO/GM of Sokos Hotel viru estonia.

espoo

magnus alnebäck, hotel manager

employed since 2005.

Magnus is a graduate of SHM-Les roches in Switzer-land, and has previously worked for interContinental, Cunard, radisson/SAS and forte Hotels in Switzerland and London. He was also hotel manager of Ladera resort, St Lucia from 1996 to 2004.

BaHamas

Cornelia Kausch, hotel manager

employed since 2006.

Cornelia is a graduate of the Lausanne Hotel Management School and has many years’ international experience from leading positions at hotels in the upper segment. With strong visions and broad competence, Cornelia has successfully led the transformation of the hotel to one of Berlin’s leading and most creative meeting places.

Berlin

Jan Joris Kriele, hotel manager

employed since 2011.

Jan Joris is a graduate of the Leeuwarden Hotel Manage-ment School, and has more than 10 years’ experience of the hotel industry including at Hilton hotels in Scotland, france and the Netherlands. Jan Joris’ most recent posi-tion was as Director of Business Development at the Pan-dox-owned Stockholm Hilton Slussen.

Brussels

T 6 5 4 3 2 1 0

we

co-Pandox currently works together with 12 hotel chains that via 20

well-known brand names market the hotels. This way of working provides

a unique position and a broad network, and thus an excellent platform

to continuously develop our competence base.

The hotels are situated in 10 countries and 58 locations. Pandox’ most

comprehensive partner is Scandic, which operates 55 of the hotels and

one congress and fair centre in the Pandox portfolio – followed by Nordic

Choice Hotels with 20 hotels. Other partners include Hilton, Hyatt,

Radisson Blu, InterContinental, Holiday Inn, Park Inn by Radisson and

Elite Hotels. 11 of the hotels are managed under independent flags,

including Hotel BLOOM! and The Hotel in Brussels, Pelican Bay in the

Bahamas, Mr Chip in Stockholm, and Korpilampi in Helsinki.

OPERATE

4030 //

wE cO-OPERATE

// NETwORK aNd COOPERaTION

we

co-

IT’S MORE to it

than

TAlent!

>>

OPERATE

Each hotel is handled and analysed based on its prerequisites and surroundings. The business model, partnership and lease are chosen adapted to each situation in order to create optimal preconditions for maximum development for both parties.

Hyatt Regency, Montreal

Pandox

Partners

Well-known and established brand names

Pandox has a unique network in the hotel market, and currently works together with several of the large hotel chains under 20 different well-known and established brands. This enables a strong position and a broad network, and thus an excellent platform to continuously develop our competence base.

T 6 5 4 3 2 1 0

A PROUD PARADE

Each market is unique, and thorough knowledge of local conditions is required to create a product that provides sustainable profitability. a strong brand strengthens the hotel’s market position and competitiveness in the chosen product segment.

we see

OPPORTUNITIES

Over the years, Pandox has successfully developed a large number

of hotel properties and hotel operations. a further SEK 2 billion will be

invested in the next three years for the upgrading of existing hotels,

including the creation together with Scandic of the new generation of

highway hotels – one of the largest hotel ventures in the Nordic Region.

SEK 2 BIllION >>

T 6 5 4 3 2 1 0

wHERE OTHERS SEE PROBlEMS

5034 //

wE DEVElOP

// INvESTMENTS

we de

velop

//

wE DEVElOP

// 5035

we de

velop

The Radisson Blu Hotel Malmö is one of southern Sweden’s leading business hotels with an excellent location in central Malmö close to the business and shopping districts. The hotel has 229 rooms, 12 conference rooms, a relaxation centre, and restaurant. In 2011, the hotel was nominated best meeting hotel by the leading conference organiser, Congrex.

Pandox acquired Norgani for SEK 9.7 billion in the autumn of 2010. The hotel portfolio was composed of 73 hotels in Sweden, Norway, denmark and Finland. In general, the hotels were in need of refurbishment and upgrading. a major contract was signed with Scandic in 2011, where the parties agree to invest SEK 1.6 billion in the development of 38 existing Scandic hotels, as well as a congress and exhibition centre.

The Shark investment is one example of the ongoing restructuring and development of the Norgani portfolio. Since the acquisition of Nor-gani, four non-strategic hotels have been sold and new agreements with related investment programs have been entered into for 40 hotels.

Scope of the project

Scandic’s origins are in the classic highway hotels that were created to offer the motorist overnight accommodation and facilities in the 1960s. The hotel segment with highway hotels is now established over the entire Nordic Region. The Shark investment includes the Moby sub-project with the vision of developing the new generation of highway hotels. Several of Scandic’s highway hotels are covered by the Moby project, including well-known and popular highway hotels such as Kungens Kurva by the E4/E20 on Stockholm’s southern approach, Backadal by the E6 on Gothenburg’s western approach, Klarälven on Karlstad’s E18 ring road,

One of the Nordic Region’s

largest hotel investments

ever seen!

T 6 5 4 3 2 1 0

SEK 1.6 billion is being invested in the upgrading and development

of 38 existing Scandic hotels. The investment is a joint venture

between by Pandox and Scandic, and is one of the largest joint

hotel ventures ever realised in the Nordic Region between a hotel

operator and a property owner. The project, which has been

named “Shark”, will be implemented over the next three years.

The challenge is now in planning the numerous sub-projects

covered by the overall investment.

5036 //

wE DEVElOP

// THE PROjECT SHaRK

and Elmia in jönköping. The first hotel to imple-ment the new design concept will be the Scandic Upplands väsby.

The hotels in central city locations covered by the Shark investment include the Malmen in Stockholm, Continental and Hilton Strand in Hel-sinki, as well as the KNa hotel in Oslo.

New Concept

The new hotel concepts are characterised by flexibility and untraditional solutions, taking into consideration new family constellations, travel habits and trends. The whole way from the car park to the reception, lobby, conference facilities and restaurant to the hotel room – and with

complete focus on the guests’ needs and well-being. The concept also implies that the history of Scandic and each respective hotel be integrated into the design element and layout, that the informal home-feeling at the hotels be strengthened, that more social meeting places be created, and that the rooms obtain new and com-plete furnishings and design. Technology will also be upgraded throughout – so that the hotels will be well-equipped to meet future needs and requirements in the best possible way.

APPROxIMATEly SEK

1.6

BIllION

THE PROjECT SHaRK //

wE DEVElOP

// 5037

Shark is a joint investment program between Scandic and Pandox, and embraces a total of 26 hotels in Sweden, 10 hotels and one congress and fair centre in Finland, and 2 hotels in Norway. Most of the highway hotels covered by the project are located in Sweden.

The Moby project, with new concept for the new generation of highway hotels, is now part of the major Shark project. The first highway hotel to implement the new design concept is the Scandic Upplands väsby.

success stories

INVESTMENTS IN DEVElOPMENT

AND REPOSITIONING

Over the years, Pandox has purchased and sold 174 hotels. Many

of them have undergone considerable investment development

programs. Some of the successful repositioning projects of recent

years as well as ongoing projects are presented below.

The Crowne Plaza antwerp was acquired in 2007. The hotel is operated under a franchise agreement with the InterContinental Hotels Group. a total upgrading and modernisation was completed in the autumn of 2011 covering the lobby, restaurant & bar, sky bar, conference facilities and rooms, as well as a completely new event spa and fitness centre with the capacity to hold various activities, seminars and parties. Further to the upgrad-ing, the hotel is now one of the city’s leading business and meeting hotels.

Crowne Plaza Antwerp

Total make-over

in Antwerp

Investment program: EUR 3.7 million

Realised: Total upgrading with a new design con-cept called “welcome in ’t Stad”. The concon-cept uses the city’s architecture and history as theme and inspiration. different characteristic design ele-ments from the city can be seen throughout the various parts of the hotel.

T 6 5 4 3 2 1 0

The Radisson Blu Basel was acquired in 2005. The hotel is centrally located close to the old town and shopping district, and contains 206 rooms, conference facilities, restaurant and large relaxation centre. Since the acquisition, the hotel has undergone a comprehensive investment program where all parts have been upgraded and modernised, including a total facelift of the fitness and spa centre. The Pool Inn Club, which was inaugurated in 2010, has an unparalleled indoor pool, large relaxation centre, sauna and a large complete and modern fitness centre. After total refurbishment, the hotel has continued to expand its market share and show stable and good profitability.

Investment program: EUR 10 million

Realised: In 2008–2010, total refurbishment including rooms, conference facilities, bar and relaxation centre.

Radisson Blu Basel

cOMPlETE UPGRADING IN Basel

Hotel Berlin, Berlin

start of the

lAST PHASE IN BERlIN

Hotel Berlin, Berlin was acquired in 2006. The hotel is the third largest in Berlin with 701 rooms. Since the acquisition, the hotel has been successfully repositioned towards the meeting and business segment through a comprehensive investment pro-gram of approximately EUR 7.5 million that has now been com-pleted. Via active ownership, Pandox has also supported the local management for the implementation of effective and mod-ern operations. The upgrading of 200 rooms in the hotel’s old Classic Wing remains to be carried out in 2012 in order to create a uniform product standard.

InterContinental Montreal

center of attraction

AND AwARD-wINNING!

InterContinental Montreal was acquired by Pandox in 2007 as a traditional business and meeting hotel with international style. The product lacked a local profile and primarily competed through its location. This was the strate-gic starting point for a comprehensive investment and upgrading program. Through changes in layout, design, management and style, the hotel has created a new concept with a more boutique feeling. Since completing the investment in 2010, the hotel has strengthened its position and is now one of the city’s leading hotels with regard to RevPaR development.

during a large IHG conference held in Las vegas in October, hotel man-ager Bernard Chênevert was designated Hotel Manman-ager of the Year 2011 within InterContinental in america – a very prestigious award. The InterConti-nental Montreal is the first Canadian hotel to receive this distinction.

Investment program: Cad 13 million

Realised: In 2008–2010, refurbishment and modernisation of all 357 hotel rooms, development of the restaurant and bar concept, as well as upgrading of the lobby and meeting facilities.

Investment program:EUR 5.5 million (total investment since acquisition: approximately EUR 13 million)

Program for 2012: Refurbishment and development of 200 rooms including fittings, bathrooms, corridors, technology, etc.

we ge nerate

T 6 5 4 3 2 1 0

with

a sense

of humor

& passion

for

BUSINESS

Pandox' most important success factors are above all the thoroughly

planned and consistent strategy, the flexible business model and the unique

special expertise contained in the Company and its network. Enthusiastic

and committed people with the courage to do the unexpected.

6040 //

WE GENERATE

// GrowTh and Cash flow

we ge nerate

11 10 09 08 07 06 05 04 03 02 01 00 99 98 97 96 95 879* 831* 446 445 389 318 301 299 272 267 266 228 119 97 53 21 12

*refers to 100 percent of norgani's and Pandox' ongoing cash flow for each respective full-year.

cash flow

from 1995, sEK M

Key indicators 2011 2010

number of hotels* 118 120

number of hotel rooms 24,500 24,800

Property revenues, sEK M 1,782 1,730

Cash flow, sEK M 879 831

* as well as one congress and fair centre.

Pandox’ strategy and business model generates value. Pandox has generated an average annual return of 19 percent since the Company was formed in 1995. during the same period, the world has undergone three finance crisis.

+19

%

fRoM fINANCE CRISIS

To SUCCESSfUl

HoTEl PRoPERTY CoMPANY

when Pandox started in 1995, the Company's operations were

com-posed of 18 hotels with 3,000 rooms located in nine swedish towns

and cities. The business model was new and untried. The Company

had weak profitability and limited capital.

The road to success has been to acquire under-performing hotels

that have been developed, and to increase the Company's cash flow

and value – which in turn has been used to further expand. all in all,

transactions for more than sEK 20 billion have been completed. with a

consistent strategy, Pandox has shown durable and profitable growth,

along with a greater geographical spread.

at the end of 2011, Pandox had 118 hotels and one congress and fair

centre with a total of 24,500 rooms situated in 58 strategic locations in

10 different countries in the nordic region, northern Europe, and north

america. Pandox is thereby one of the leading hotel property companies

in the European market.

at the end of 2011, Pandox had a total of 118 hotel properties and one congress and fair centre. four transactions were completed in 2011: The hotel property Park Inn by radisson, solna was acquired. The hotels scandic Bromma, first linköping and scandic luosto in northern finland were sold.

11 10 09 08 07 06 05 04 03 02 01 00 99 98 97 96 95 118 120 46 45 44 39 36 44 45 44 46 46 31 28 20 14 18

Pandox' development from 1995 number of hotels T 6 5 4 3 2 1 0

Founded in 1995. Pandox has its origins in the finance and property crisis in the beginning of the 1990s. The Company was formed in 1995 by securum and skanska. The mission was to take over and restructure the hotel portfolio, and pre-pare it for sale.

The original hotel property portfolio. In the beginning, Pandox consisted of 18 hotel proper-ties and three small operating units. all of the hotels were in sweden, and most of them were small with weak locations and in bad condition. stock-exchange listing. Pandox was floated on the stockholm stock Exchange in 1997 with a new and untried business concept. The Compa-ny's portfolio was valued at sEK 1.3 billion and the market capitalisation at sEK 520 million. The list-ing gave 4,000 new shareholders.

further to the listing, Pandox expanded sub-stantially with acquisitions of large hotels in strong locations, while its smaller hotels were sold.

Internationalisation. In 2000, Pandox enlarged its geographical strategy to northern Europe through the acquisition of hotellus with 16 hotel properties.

Privatised again in 2004. Pandox is bought out from the stock market in 2004, with new industrial owners through Eiendomsspar as and sundt as. Stronger in Europe. The transaction tempo increased further to the privatisation and several large hotels were acquired in Berlin, Brussels, Basle, Copenhagen, stockholm and Malmö – thus strengthening Pandox as one of the leading hotel property players in Europe.

Expansion to North America. In 2007–2008, Pandox continued its international expansion with two acquisitions in Montreal.

leading in Europe. In august 2010, Pandox announced the close to sEK 10 billion acquisition of norgani hotels with a portfolio of 73 hotels in sweden, finland, norway and denmark.

further to the acquisition, Pandox is one of Europe's leading pure hotel property companies with regard to geographic spread and number of hotels and brands. since starting in 1995, Pandox has carried out acquisitions for a total of more than sEK 20 billion composed of 174 hotels at the end of 2011.

The value of the Company's hotel property portfolio amounted to approximately sEK 24 bil-lion at the end of 2011 – which implies that the value has increased about 20 times since the Company was formed. This has been achieved through a good hotel market, active ownership, sound expertise and profitable acquisitions.

Acquisitions for more than SEK 20 billion

TRANSACTIoNS CoVERING 174 HoTElS

MARKET CoMMUNICATIoN

hotel

market

day

pandox upgrade

rEGUlar MarKET InforMaTIon

The concept of a hotel market day was introduced by Pandox in 1996. The principal reason

was that the Company, and the hotel industry, needed to be presented to the capital

mar-ket prior to being listed on the stock marmar-ket, which took place the following year. from the

start, the hotel Market day has been an annual recurring event and has been developed

into a dynamic meeting place for the hotel industry.

Our newsletter, Pandox Upgrade, contains information about market developments, hotel trends and transactions, as well as news from the Pandox sphere. when Pandox was formed in 1995, the publication of a newsletter was started in order to market the Company vis-à-vis the capital market prior to being listed on the stock exchange. The newsletter later went over to presenting public reports distributed by the Company. In spite of Pandox no longer being listed on the stockholm stock Exchange, we continue to maintain the flow of information to people interest in the hotel sector and the hotel property market, which is why Pandox Upgrade is still regularly issued with normally three issues per year.

subscribe now! Pandox Upgrade is free of charge and may be ordered from Pandox either by telephone at +46 (0)8-506 205 50 or by sending an email to info@pandox.se

>>

Pandox Upgrade can also be downloaded in Pdf format in swedish and English at www.pandox.se The Hotel Market Day is held each year in the

middle of November at the Pandox-owned Hilton Stockholm Slussen hotel. recent years have seen a full house with more than 300 people taking part, with an increasingly larger proportion of international guests. during the day, the participants are offered interesting talks, an occasion to form networks and meet new contacts, as well as to obtain Pandox' hotel forecast for forthcoming years. The event is closed in the evening with a mingle and dinner in a pleasant and relaxed environment.

In recent years, the theme for the day has included the effect of low-price airlines on the

hotel industry, the significance of shopping tour-ism for a destination, as well as the signification of the term "brand profitability". The theme for 2010 was the economic situation and its conse-quences for the hotel industry, as well as social media and their effect on the sector.

In 2011, the hotel Market day was about the contemporary subject of Corporate social responsibility (Csr). Today it is not a question of whether a company shall take social respon-sibility, but how it should do so. Companies are placed with new challenges and new areas to handle, and developments are being driven by increased globalisation. The hotel Market day in

2011 highlighted the question from the hotel industry's perspective. The list of speakers was as usual of top quality, with several speakers with considerable commitment to the subject and with long experience of international Csr work. The main speaker was lars h. Thunell, previously CEo of sEB and now in a top interna-tional position within the world Bank Group as Executive vice-President and CEo of the Inter-national finance Corporation (IfC). other speak-ers during the day included Bicky Chakraborty, owner and CEo of Elite hotels of sweden, and lyndall de Marco, Managing director of only sustainability.

Up

Grade

M A R KE T I NF O R MAT I O N F R O M PA N DO X – O N E OF E U RO P E ’ S L E A DI N G HO T E L P R O PE R T Y C O MPA N I ES A fantastic year for Swedish handball 9 P. Theme: Social projects 8 P. Where are we heading? Report from Hot.E! 6 P. Recovery on most markets S PO T L I GH T 2011 Autumn t r e nd s | s O C IA L M ed I A I nC r e As I n G I n I M P O r tA n C e T 6 5 4 3 2 1 0

6044 //

WE GENERATE

// MarKET CoMMUnICaTIon

Social responsibility

freeset

Pandox has operations at 58 locations in 10 countries. To achieve our vision as one

of the world's leading hotel property companies requires responsible

entrepreneur-ship with focus on sound business ethics and profitability, prioritised environment

procedures, and a number of social projects that galvanise the Company and

where we can contribute to improving the existence of less-favoured people.

Within this spirit, we established during the year the project known as Pandox Youth Handball Movement in the town of Nyeri in Kenya. The overall objective is to provide children and young people with purposeful leisure time through sport and handball training. The project can then also contribute with advice about dis-ease, issues related to society and attitudes, as well as other social projects. Pandox believes that sport and purposeful leisure time is one of the most natural methods to come into contact with children and young people who need various forms of support. Greater interest is created for sport by investing in club life, which we believe is a

key to strengthened self-esteem, improved study motivation, an active and healthy lifestyle, and the opportunity to be part of a greater social context.

The project is managed in close cooperation with the Mount Kenya sports Group handball club, with more than 500 members, and the Partille Cup – the world's largest and most inter-national handball tournament for young people.

Pandox' support consists of preparing a detailed operational plan that enables good proj-ect management and prioritisation of measures and action to be taken. other tasks are to train handball trainers, which takes place through Pan-dox' network, as well as to arrange lectures and

courses regarding issues related to society to attitudes. Pandox has also given support through obtaining club premises and providing the club with items such as balls and training kit.

>>

further information about the Mount Kenya sports Group and the project is available at www.msgkenya.com

Pandox has also chosen to support the fair-trade company Freeset in Calcutta by pur-chasing their products for several hotels. The company offers employment to women who have been drawn into prostitution in Calcutta's largest and most notorious area for sex-traffick-ing – sonagacchi. More than 10,000 women are forced every day into prostitution in this area. They come primarily from Bangladesh, nepal and rural India. Many of them have fallen victims to trafficking while others only have severe poverty as an alternative. Through freeset, the women are given the opportunity to learn how to sew, and they produce handbags, cloth bags and T-shirts that are then sold to companies. They also have the chance to learn to read and write.

>>

read more about freeset at their website: www.freesetglobal.com.

health and

han

d

ball

we manage

ToP

flooR

T 6 5 4 3 2 1 0

The Crowne Plaza Antwerp was acquired in 2007. Pandox oper-ates the hotel under a franchise agreement with InterContinental Hotels Group. Further to a comprehensive refurbishment that was completed in the autumn of 2011, the hotel is one of the leading business hotels in Antwerp. The picture shows the exquisite new event pool.

Industrial competence and experience create confidence and ability to take action.

we manage

bo

a

rd

of

DIRECT

o

RS

AND

AUDIT

o

RS

T 6 5 4 3 2 1 0 CHRISTIAN RINGNES Chairman.

CEo of Eiendomsspar as.

Member of the Board of Pandox since 2004. Other appointments:

Chairman of nsv-Invest as, sundt as, dermanor as, oslo flaggfabrikk as and Mini Bottle Gallery as. Board member of schibsted asa and Thor Corporation as.

CHRISTIAN SUNDT

Board member of sundt as.

Member of the Board of Pandox since 2008. Other appointments:

owner and chairman of CGs holding as.

Board member of sundt air holding as, sundt sepa as, sundt helene as, sundt air as, sundt Eiendom II as and sundt Eiendom I as.

BENGT KJELL

CEo of aB handel och Industri.

Member of the Board of Pandox since 1996. Other appointments:

Chairman of Indutrade aB and hemfosa fastigheter aB. Board member of höganäs aB, helsingborgs dagblad aB, swegon aB and skånska Byggvaror aB.

BOARD OF DIRECTORS

In an international hotel property company such as Pandox, competence and experience within the following areas are important: hotel operations and hotel market, financing, properties and the property sector, business development, brand strategies, and development of international com-panies. The Board of directors of Pandox pos-sesses broad experience and knowledge from these areas.

Rules of procedure

The Board of directors has adopted rules of Pro-cedure for its work, directives to the Chief Execu-tive officer, as well as management instructions with regard to reporting. Pandox' Board of direc-tors establishes and documents the objectives and strategy of the Company each year. The Board has also adopted a finance policy, an approval policy and guidelines for decision-mak-ing, as well as a particular strategy regarding acquisitions.

The Board of directors of Pandox holds four ordinary meetings each year. The meetings follow an established annual agenda with themes and items requiring decisions. The meetings review and discuss the external and internal reporting of oper-ating results as well as various business matters. other items that are reviewed annually include mar-keting, strategy and budget issues. related mate-rial and documentation is sent to the Board mem-bers approximately one week in advance. The Company's auditors attend at least one meeting each year to present a report of their audit and their review of the Company's internal control systems.

In addition to their ongoing audit, the Compa-ny's auditors were also commissioned by the Board during the year to carry out special reviews of major lease agreements.

AUDITORS

The task of the auditors is to examine the Compa-ny's accounts, administration and financial infor-mation. The audit results in an audit report where the auditors give an opinion as to whether the annual accounts and financial statements have been prepared in accordance with the swedish annual accounts act and generally accepted accounting principles.

Per Gustafsson

authorised Public accountant KPMG

willard Möller

authorised Public accountant sET revisionsbyrå aB

LEIV ASKVIG

CEo of sundt as.

Member of the Board of Pandox since 2004. Other appointments:

Chairman of oslo Børs vPs holding asa, oslo Børs asa and alfarveg as.

Board member of Eiendomsspar as, verdipairsentralen vPs asa, skips as Tudor, astrup fearnley as and agder oPs vegselskap as.

oLAf GAUSLå

finansdirektör i Eiendomsspar as. ledamot i Pandox styrelse sedan 2004.

HELENE SUNDT

Board member of sundt as.

Member of the Board of Pandox since 2008. Other appointments:

owner and chairperson of sundt helene as. Chairman of dronningen Eiendom as and lanternen Eiendom as.

Board member of sundt sepa as, sundt Christian Gruner as, Bergesens almennyttige stiftelse and sundt air holding as.

MATS WÄPPLING

President and CEo of swECo aB (publ). Member of the Board of Pandox since 2003. Other appointments:

Board member of swECo aB (publ), vasakronan aB (publ) and Besqab aB (publ).

ANDERS NISSEN

CEo Employed since 1995.

LIIA NÕU

senior vice President Cfo

Employed since 2007.

LARS HÄGGSTRÖM

senior vice President asset Management. Employed since 2000. MIKAEL PLANELL vice President Business area other Europe, denmark, finland and southern sweden. Employed since 2005. ALDERT SCHAAPHoK vice President operations Belgium and Canada. Employed since 2004. ERIK HVESSER vice President Business area stockholm, northern and eastern sweden. Employed since 2006. NILS LINDBERG senior advisor finance & Insurance. Employed since 1995.

seni

o

r

executives

T 6 5 4 3 2 1 0 7050 //

WE MANAGE

// ManaGEMEnT

LEIf KRISTEN oLSEN

vice President Business area norway, Gothenburg and western sweden. Employed since 2010.

JoNAS TÖRNER

head of Business Control & Intelligence. Employed since 2005.

MAGNE RAMLo

vice President Property Manager norway, denmark and part of sweden.

Employed since 2010.

JoSEfIN BERGQVIST

senior analyst, Business Control & Intelligence. Employed since 2006.

co

rp

o

ra

te

dogs

Johnny 2000–2006 Enzo 2007–2010 Mr. Harry 2011 – ManaGEMEnT //

WE GENERATE

// 7051

PANDox

PART II

Vildmarkshotellet is located outside Norrköping next to Scandinavia's largest wildlife park, Kolmården, about 150 kilometres from Stockholm. The complex has 213 rooms, large conference facilities, restaurant with a wildlife-park theme, a lobby bar, as well as a family spa centre with waterway, relaxation areas and treatment room.

PANDox

PART II

contents

54–57

CEo commentary

58–59

workforce

60–75

hotel properties and summary list

76–100

Economic and financial information