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Choice Hotels Scandinavia ASA
Key Figures and Financial Ratios
Directors’ Report for 1999
Profit and Loss Account
Balance Sheet
Cash Flow Analysis
Notes
Auditors’ Report
Financial Position
Shareholders
Organisation and Management
Own Properties
Leased Properties
The Franchise Business
Building Projects
Brands
Hotel Operations
Loyalty Products
3
Welcome to Choice Hotels Scandinavia ASA
A hotel room is not just a room – it is also a
small sanctuary. A place of refuge where you
can relax from a stressful life and just be
your-self. Choice Hotels Scandinavia’s more than 100
hotels in Scandinavia are distributed on three
different categories: Comfort, Quality and
Clarion. This gives you something to choose
from – as the name of the company implies.
5
• Choice Hotels Scandinavia is one of the leading hotel chains
in Scandinavia with more than 100 hotels in Norway,
Sweden and Denmark. The estimated turnover in 2000 is of
more than NOK 2.5 billion.
• In the past three years, the company has grown by one
hotel every 10th day. The number of employees has
increased from approx. 250 to more than 4000 in the same
period.
• Choice Hotels Scandinavia markets its hotels under three
brand names:
Comfort
is a home away from home for frequent travellers. A
high standard, well-equipped rooms and a first-class breakfast
buffet. And thoughtful, service-minded staff and an informal
atmosphere.
Quality
is conference and function hotels: Good restaurants,
nice bars, smooth and flexible service and exciting activity
offers – for both families and business people.
Clarion
is business hotels with an international atmosphere:
First-class rooms, restaurants and conference department.
Professional service and central location – in a city/town or
6
1999
1998
1997
Profitability
Operating income
mNOK
1,918.2
1,516.9
1,305.6
Operating income excl. sale of properties
mNOK
1,918.2
1,485.9
1,133.9
Profit before tax
mNOK
90.1
82.3
174.9
Profit before tax excl. sale of properties
mNOK
90.1
54.5
13.2
Profit for the year
mNOK
83.6
78.1
280.6
Cash flow
1)
mNOK
166.6
132.9
226.9
Capital adequcy
Capitalised value
2)
mNOK
951.0
436.0
991.0
Book equity capital
mNOK
435.2
503.8
618.7
Equity ratio
3)
%
20.5%
44.0%
56.6%
Interest-bearing debt
mNOK
1,233.7
381.5
225.7
Liquid assets
mNOK
228.7
223.6
278.0
Profitability per share
Numer of shares as at 31.12.
39,640,285
39,640,285
39,640,285
Of which own owned shares
3,239,810
0
0
Earnings per share (EPS)
4)
NOK
2.27
1.97
8.37
Cash flow per share
5)
NOK
4.53
3.35
6.77
Market price as at 31.12.
NOK
24.00
11.00
25.00
Hotel operations
Development in number of rooms, total Choice
11,584
10,089
9,512
Of which – owned (1999 incl. acquisition of Quality Hotel Globe)
2,881
1,174
1,039
– leased
6,406
5,395
4,611
– franchised
2,297
3,520
3,862
Average income per room sold, total Choice
NOK
688
635
614
Income per available room, REV PAR
NOK
417
393
378
Occupancy rate
%
60.6
61.9
61.6
The accounting figures for the past three years have been revised in accordance with the new Norwegian Accounting Act.
1
) Ordinary profit before tax – tax payable + ordinary depreciation
2) Number of shares * market price as at 31.12.
3
) Book equity capital/total assets
4
) Profit for the year/average number of shares (adjusted for own owned shares)
5
) Ordinary profit – tax payable + ordinary depreciation/average number of shares (adjusted for own owned shares)
Key Figures and Financial Ratios
7
Norway Sweden Denmark Total0 500 1000 1500 2000
Operating income MNOK (excl. sale of properties)
1997 1998 1999 -20 0 20 40 60 80 100
Norway Sweden Denmark Total Profit before tax MNOK (excl. sale of properties)
1997 1998 1999 0 2000 4000 6000 8000 10000 12000
Norway Sweden Denmark Total Number of rooms 1997 1998 1999 0 2000 4000 6000 8000 10000 12000
Owned Leased Franchised Total Number of rooms
1997 1998 1999
Norway Sweden Denmark Average Choice 0 100 200 300 400 500 600 700 800
Average income per room in NOK
1997 1998 1999
Norway Sweden Denmark Average Choice 0 100 200 300 400 500
Average rev. par in NOK
1997 1998 1999 Total Denmark Sweden Norway 0 10 20 30 40 50 60 70 80
Average occupancy rate 1999
Choice The hotel market
0 10 20 30 40 50 60 70 80 Total Denmark Sweden Norway
Average occupancy rate 1998
H E N RIK A . C H RI S T E N S E N R A GN A R S J ON E R P E T T E R A . S TOR D A L E N A R V ID R A M S D A L
9
Directors’ Report 1999
T H E C OM PA N Y ’ S A C T I V I T IE S
At the year-end 1999/2000, Choice Hotels Scandinavia ASA
("Choice") had a total of 94 hotels in Scandinavia operating
under one of the three Clarion, Quality and Comfort brands.
The company was itself responsible for the management of 67
hotels, whereas the remaining 27 hotels were pure franchised
hotels. In Norway, a total of 62 hotels formed part of the
chain, 39 of which were managed by companies in the same
Group as Choice Hotels Scandinavia ASA. In Sweden, 29 hotels
formed part of the chain at the year-end, 27 of which are
managed by the subsidiary Choice Hotels Sweden AB, which is
a wholly-owned subsidiary of Choice. As at the year-end,
Choice had one own managed hotel and two franchised hotels
in Denmark.
Choice has taken over the management of and
ente-red into an agreement to take over the management of a
total of seven hotels since the year-end. In addition, the
company has entered into four new franchise agreements
with other hotel management companies. As at the
year-end, the company had five hotel projects. Two of the hotels
are under construction and will open in the course of
2000, whereas three hotels are in different stages of the
political planning approval process. The company also
owns three hotels which are not run under the company’s
brands.
The Choice Group expanded heavily in 1999, first and
foremost in Sweden, through the acquisition of Fastighets AB
Balder’s hotel portfolio consisting of six hotel properties, as
well as an option to buy a large hotel property in Stockholm.
The Board of Directors is pleased with the increase in
turnover, operating margins and the profit for the 1999
accounting year.
R E S U LT
Choice had total operating income in 1999 of NOK 1,918.2
mil-lion, which is an increase of NOK 401.3 million compared with
the 1998 accounting year. The operating profit in 1999 was
NOK 124.7 million, which is an increase of NOK 32.7 million
compared with the 1998 accounting year. Adjusted for gains
on sale of properties in the 1998 accounting year, the
increase in operating profit was NOK 60.5 million and the
ope-rating margin increased from 4.3% to 6.5%.
The consolidated profit before tax for the 1999 accounting
year was NOK 90.1 million against NOK 82.3 million for the
1998 accounting year, which comprises net gains on sale of
properties totalling NOK 27.8 million. Adjusted for property
gains, the profit constitutes an improvement of 65.3% for the
1999 accounting year compared with the 1998 accounting year.
The parent company’s total operating income for the
1999 accounting year was NOK 56.9 million. The profit and
loss account for the 1999 accounting year shows a profit
before tax of NOK 42.9 million.
BALANCE SHEET AND FINANCES
The consolidated book equity capital is NOK 435.2 million as at
31 December 1999 against NOK 503.8 million as at 31
Decem-ber 1998. This is equivalent to an equity ratio of 20.5% as at
31 December 1999 and 44.0% as at 31 December 1998
respectively. The reduction in equity capital can be attributed
to the company’s capital reduction, which resulted in a
pay-ment of NOK 53.7 million to the shareholders, acquisition of
own shares at a total net cost price of NOK 50.5 million and
allocation of NOK 53.5 million for dividend. Book equity capital
per share (with a deduction for own shares) amounted to NOK
12.71 as at the year-end 1998/1999 and NOK 11.96 as at the
year-end 1999/2000.
The Group’s funds of bank deposits and cash in hand as
at the year-end 1999/2000 amounted to NOK 228.7 million. In
addition, the Group has unused drawing rights of NOK 50.0
million and SEK 15.0 million. The Board of Directors regards
this as adequate liquid funds seen in relation to the extent of
the company’s activities.
The consolidated long-term debt amounted to
NOK 1,249.4 million as at the year-end 1999/2000 against
NOK 381.5 million as at the year-end 1998/1999. The increase
in the consolidated long-term debt is due to the acquisition of
12 hotel properties in 1999. The long-term debt has been
financed in its entirety through Norwegian and Swedish
finan-cing institutions with mortgages on real property together
with operating equipment, fixtures, etc. and by vendor credits.
10
OP E R AT ION S
The company’s expansion in 1999 is attached to increased
turnover in existing hotel business enterprises and the
acqui-sition of new hotel businesses.
In Norway, Choice took over the hotel properties and
management of Quality Hotel Ringerike at Hønefoss,
Com-fort Hotel Skagerak in Kristiansand, Quality Hotel Savoy in
Oslo and Quality Hotel Fagernes in Nord-Aurdal.
Further-more, Choice took over the hotel properties Quality Hotel
Arcticus in Harstad and Comfort Home Hotel Hammer in
Lil-lehammer. Quality Hotel Arcticus was previously a
fran-chised hotel, whereas Comfort Home Hotel Hammer has
been managed by Choice since 31 December 1996. In
Swe-den, Choice Hotels Sweden AB, which is a wholly-owned
subsidiary of Choice Hotels Scandinavia ASA, acquired
Qua-lity Hotel Ekoxen in Linköping in addition to the hotel
pro-perties which were acquired from Fastighets AB Balder:
Quality Hotel & Spa Selma Lagerlöf in Sunne, Quality Hotel
Prince Philip in Stockholm and Quality Hotel Stenungsbaden
north of Gothenburg. Included in the hotels which were
acquired from Fastighets AB Balder were two hotels for
which Choice did not have the management responsibility:
Mornington Hotel in Gothenburg and Stadshotellet in
Häss-leholm in Skåne. In January 2000, Mornington Hotel in
Got-henburg was sold with a gain of approx. NOK 12.5 million.
Stadshotellet in Hässleholm, which was acquired for
approx. NOK 20 million, has been put up for sale and is
expected to be sold in the course of the first half of 2000.
In Norway, Choice acquired the operating
company/lease for the following hotels last year: Quality Hotel
Grand Farris in Larvik, Quality Hotel Leangkollen in Asker,
Qua-lity Hotel Halvorsbøle in Jevnaker and Comfort Hotel Nobel in
Molde.
In Sweden, Choice acquired the operating
company/lease for the following hotels last year: Quality Hotel
Nacka in Stockholm, Quality Hotel Konserthuset in Malmö and
Quality Hotel Globe in Stockholm from and including the
year-end 1999/2000. Furthermore, Choice has acquired the
remai-ning 40% of the shares in Prize Hotels AB so that the Group
now owns 100% of the shares in this company.
During the past year, the company’s operating
organi-sation has focused on improvement of purchasing
conditi-ons, staffing adjustments in relation to occupancy at the
hotels and intensified sales work vis-à-vis large customers.
The Board of Directors is of the opinion that Choice is reaping
the benefits of the many economies of scale of having
around 100 hotel business enterprises in Scandinavia in the
same network.
After the year-end 1999/2000, Choice has entered into
leases with takeover of the management at Quality Hotel
Røros in Norway and Comfort Hotel Västerås in Sweden and
has taken over the management at the Neptun and
Esplana-den hotels in Copenhagen. The company’s activities in
mark have now been organised in a holding company in
Den-mark with a management along the same lines as in Sweden.
Choice has plans to take over further hotel business
enter-prises in Sweden and Denmark in the course of the year.
In the present year, Choice will open its new Clarion Hotel
in Stavanger with 250 rooms and large conference facilities. A
new Quality Hotel with an accompanying swimming centre
and conference facilities will open outside Sarpsborg.
Further-more, Choice is planning a large hotel at Skanstull in
Stock-holm with approx. 500 rooms. The final go-ahead is expected
to be given before the summer of 2000.
No problems arose with the Group’s IT systems in
con-nection with the new Millennium. The Group has an active
tegy in relation to developing and participating in the IT
stra-tegy which Choice Hotels International as the master
franchi-sor offers regarding booking and information about the hotel
products on the Internet.
T H E E X T E R N A L A N D IN T E R N A L E N V IR ON M E N T
Choice is concerned with dealing actively with environmental
problems which arise in connection with its activities.
Impor-tant matters regarding the external environment are
continu-ous waste handling and disposal at the hotel business
enter-prises, where the company tries to reduce the quantities of
waste and sort waste at source to the extent to which waste
sorting facilities are offered in the local environment in
ques-tion. Regarding conversion works, the company
11
ously follows all rules for demolition and handling of materials,
etc. from buildings which are demolished.
Regarding the internal environment, the company has
made continuous reviews of the indoor climate, and, at several
business enterprises, the air conditioning systems were
upgraded last year.
During 1999, Choice has not had any significant injuries
or accidents at work.
As a result of the Master Franchise Agreement with
Choice Hotels International, the Group has introduced
exten-sive routines in connection with follow-up of requirements for
the employees’ working environment at the hotel business
enterprises. There is continuous upgrading of cloakrooms,
break rooms, separation of smoking zones and other
meas-ures which contribute to improving the employees’ working
environment.
During the past year, Choice did not receive any public
orders or directions of importance stating that Acts and rules
which aim to protect the external and internal environment or the
employee’s working environment had not been complied with.
S H A R E HOL DE R S
Choice has as a long-term objective to give its shareholders a
competitive return through both cash dividend and an
increase in the value of the shares. The size of the dividend
will vary depending, among other things, on the results of the
activities, investment plans and general market trends and
economic trends.
As at the year-end, Choice had 580 shareholders. The
lar-gest shareholder in Choice as at 30 March 2000 is Petter A.
Stordalen and Anker Holding AS (which is owned by Petter A.
Stordalen by 90%). These two together own 37.5% of the
sha-res and have an option to buy a further 3.0% of the shasha-res in
the company. As at 30 March 2000, Choice owns 3,963,810
own shares, which constitutes 10% of the total number of
sha-res in Choice.
Of the other members of the Board of Directors, Henrik A.
Christensen and a company which he controls own 220,000
shares, Arvid Ramsdal owns 58,000 shares and Ragnar Sjoner
owns 41,000 shares. The Chairman of the Board of Directors,
Henrik A. Christensen, has an option to buy a further 416,000
shares in Choice. Arvid Ramsdal and Ragnar Sjoner each have
an option to buy a further 66,000 shares.
BO A R D OF DIR EC TOR S , M A N A GE M E N T A N D
E M P LOY E E S
Since the ordinary General Meeting, the Board of Directors of
Choice has had the following composition:
Henrik A. Christensen (Chairman), Petter A. Stordalen,
Arvid Ramsdal and Ragnar Sjoner.
Petter A. Stordalen is the Managing Director.
No special events or conditions have occurred regarding
the company’s management or Board of Directors after the
year-end 1999/2000. Niels Vester has been employed as
Managing Director in Choice Hotels Danmark AS, which is the
holding company for the Group’s activities in Denmark.
As at 31 December 1999, the Group had a total of approx.
3,800 employees, and the parent company, Choice Hotels
Scandinavia ASA, had 22 employees.
P R O S P EC T S
The Board of Directors expects a stagnation in the hotel
mar-ket in Norway in 2000. The increase in capacity is expected to
exceed market demand. A more positive development is
expected in the market in Sweden. Both in Norway and
Sweden, however, the Board of Directors expects a continued
positive development for the large chains in general and for
Choice in particular after the implementation of hotel
takeo-vers in 1999. Choice has gradually built up a network of hotels
in central locations in Scandinavia which are in demand by the
large customers. Good marketing, good offers for the market
and the formation of several important company agreements
strengthen the Board of Directors’ belief in continued growth
for Choice also in 2000. The takeovers implemented in
Denmark in January 2000 are also expected to contribute to
the achievement of positive results for Choice.
A L LO C AT ION OF P R OF I T
The annual report and accounts have been presented based
on an assumption of continued operations.
12
Directors’ Report 1999
The Board of Directors recommends that the profit for
the year in the parent company, tNOK 32,521, be allocated as
follows:
Allocated dividend
tNOK 53,515
Transferred from other equity capital
tNOK 20,994
Total amount allocated
tNOK 32,521
The Board of Directors will recommend to the General Meeting
that a dividend of NOK 1.50 per share be paid to the
share-holders. The company’s distributable reserve amounts to NOK
109 million as at 31 December 1999.
The Board of Directors would like to thank all employees for their good work and co-operation in 1999
31 March 2000
Henrik A. Christensen
Petter A. Stordalen
Chairman of the Board
Member of the Board and Managing Director
Ragnar Sjoner
Arvid Ramsdal
13
Profit and Loss Account
(amounts in NOK 1,000)
The parent company
The Group
1998
1999
Not
1999
1998
1997
53,978
56,853
3
Operating income
1,918,177
1,516,871
1,305,647
0
0
Cost of sales
224,292
171,272
142,004
14,820
23,190
4, 15 Payroll costs
682,588
522,015
411,092
5,117
5,388
6, 7
Ordinary depreciation
82,047
54,294
54,938
21,784
23,470
5
Other operating costs
804,592
677,368
486,372
41,721
52,048
Total operating costs
1,793,519
1,424,949
1,094,406
12,257
4,805
Operating profit
124,658
91,922
211,241
11,252
42,907
Income from invest. in subsidiaries
0
0
0
8,765
13,449
Interest received from group companies
0
0
0
6,145
1,631
Other interest received
9,914
18,393
11,920
1,866
1,008
Other financial income
2,703
1,843
1,273
– 7,453
– 10,381
Interest paid to group companies
0
0
0
– 945
– 9,818
Other interest paid
– 44,144
– 27,380
– 41,180
– 744
– 656
Other financial costs
– 3,017
– 2,458
– 8,390
18,886
38,140
Net financial result
– 34,544
– 9,602
– 36,377
31,143
42,945
Ordinary profit before tax
90,114
82,320
174,864
– 9,741
– 10,424
17
Tax
– 6,480
– 4,213
105,702
21,402
32,521
Profit of the year
83,634
78,107
280,566
Minority’s share of the profit for the year
– 33
– 895
– 791
Majority’s share of the profit for the year
83,667
79,002
281,357
Profit per share in NOK
2.11
1.97
7.08
Allocations
21,402
– 20,994
Transferred to/from other equity capital
0
53,515
Allocated dividend
The parent company
The Group
1998
1999
Note
Assets
1999
1998
Capital assets
Intangible assets
3,872
0
17
Deferred tax advantage
83,955
77,539
12,000
8,000
6
Goodwill
60,415
66,862
15,872
8,000
Total intangible assets
144,370
144,401
Fixed assets
0
0
7
Sites, builldings and other real property
1,324,095
464,683
3,376
2,582
7
Machinery, fixtures, fittings, office machines, etc.
201,924
120,861
3,376
2,582
Total fixed assets
1,526,019
585,544
Financial capital assets
310,792
317,148
8
Investments in subsidiaries
0
0
96,900
191,685
10
Loan to group companies
0
0
1,283
4,660
9
Investments in shares and ownership
13,338
1,691
7,500
0
10, 15 Other long-term accounts receivable
12,958
25,943
416,475
513,493
Total financial capital assets
26,296
27,634
435,723
524,075
Total capital assets
1,696,685
757,579
0
0
Stocks
20,091
17,107
Accounts receivable
0
0
Trade debtors
116,762
91,301
67,573
126,925
Accounts receivable from group companies
0
0
17,411
13,197
Other receivables
56,440
55,189
84,984
140,122
Total accounts receivable
173,202
146,490
82,603
37,581
11
Bank deposits, cash in hand, etc.
228,721
223,607
167,587
177,703
Total current assets
422,014
387,204
603,310
701,778
Total assets
2,118,699
1,144,783
Balance Sheet as at 31 December
(amounts in NOK 1,000)
15
Balance Sheet as at 31 December
(amounts in NOK 1,000)
The parent company
The Group
1998
1999
Note
Liabilities and equity capital
1999
1998
Contributed equity capital
3,964
3,964
12, 13 Share capital
3,964
3,964
0
– 324
12, 13 Own shares
– 324
0
64,275
55,350
13
Premium reserve
55,350
64,275
0
3,875
13
Contributed other equity capital
3,875
0
68,239
62,865
Total contributed equity capital
62,865
68,239
Earned equity capital
238,470
117,223
13
Other equity capital
365,971
431,302
238,470
117,223
Total earned equity capital
365,971
431,302
0
0
Minority interests
6,405
4,245
306,709
180,088
13
Total equity capital
435,241
503,786
Provisions for liabilities
0
0
15
Pension liabilities
1,708
1,311
0
8,059
17
Deferred tax
45,616
14,679
0
8,059
Total provisions for liabilities
47,324
15,990
Other long-term debt
96,900
201,500
16
Debt to credit institutions
1,118,428
381,504
0
26,500
16
Other long-term debt
131,007
0
96,900
228,000
Total other long-term debt
1,249,435
381,504
Short-term debt
971
1,079
Trade creditors
75,295
56,291
0
0
17
Tax payable
9,092
3,605
14,798
19,702
Public duties payable
101,499
77,155
0
53,515
Allocated dividend
53,515
0
165,890
198,253
Debt to group companies
0
0
18,042
13,082
Other short-term debt
147,298
106,452
199,701
285,631
Total short-term debt
386,699
243,503
296,601
521,690
Total debt
1,683,458
640,997
603,310
701,778
Total liabilities and equity capital
2,118,699
1,144,783
Oslo, 31.12.1999/31.03.2000
On the Board of Directors of Choice Hotels Scandinavia ASA
Arvid Ramsdal
Henrik A. Christensen
Ragnar Sjoner
Petter A. Stordalen
Member of the Board
Chairman of the Board
Member of the Board
MD/Member of the Board
16
Cash Flow Analysis
(amounts in NOK 1,000)
The parenc company The Group
1998
1999
1999
1998
Cash flow from operational activities:
31,143
42,945
Ordinary profit before tax
90,114
82,320
– 492
0
Tax paid for the period
– 5,452
– 3,344
5,117
5,388
Ordinary depreciation
82,047
54,294
0
0
Change in pension funds and pension liabilities
397
0
54
– 945
Loss/gain on sale of capital assets
– 1,357
– 30,917
0
0
Change in stocks
2,622
– 7,616
0
0
Change in trade debtors
4,676
– 27,529
– 9,758
108
Change in trade creditors
– 2,424
– 1,035
421,874
24,997
Change in intragroup accounts receivable/payable
0
0
1,700
– 12,842
Change in other current assets and other liabilities
7,158
43,384
449,638
59,651
Net cash flow from operational activities
177,781
109,557
Cash flow from investment activities:
10,000
19,827
Payments received for sale of fixed assets
4,098
244,117
– 20,138
– 594
Payments made for acquisition of fixed assets
– 203,799
– 115,359
382
1,620
Payments received for sale of financial capital assets
1,620
427
– 93,401
– 37,439
Payments made for acquisition of financial capital assets
– 67,353
– 87,457
0
7,251
Payments received from investments in financial capital assets
10,624
0
0
– 10,000
Payments made for investments in financial capital assets
0
0
– 103,157
– 19,335
Net cash flow from investment activities
– 254,810
41,728
Cash flow from financing activities:
0
21,205
Payments received for new long-term debt raised
194,417
288,594
0
– 2,423
Payments made for repayment of long-term debt
– 9,678
– 43,000
– 224,779
0
Payments made for repayment of short-term debt
0
– 250,882
0
0
Net change in overdraft facilities
818
0
– 198,201
– 53,663
Repayment of equity capital
– 53,663
– 198,201
0
– 64,079
Payments made for acquisition of own shares
– 64,079
0
0
13,622
Payments received for sale of own shares
13,622
0
– 422,980
– 85,338
Net cash flow from financing activities
81,437
– 203,489
0
0
Foreign currency translation effects
706
– 2,187
– 76,499
– 45,022
Net change in bank deposits, cash in hand, etc.
5,114
– 54,391
159,102
82,603
Funds of bank deposits, cash in hand, etc. as at 01.01.
223,607
277,998
17
Notes
N OT E 1 A C C O U N T I N G P R I N C I P L E S
The annual accounts have been prepared in accordance with the Norwegian Accounting Act of 1998 and generally accepted accounting principles as applied in Norway. The principles are described below. The Group has changed its accounting principles in 1999 in accordance with the new Norwegian Accounting Act. The effect of the change in accounting principles on the Group’s equity capital is shown in note 13. Comparative figures for the balance sheet and the profit and loss account have been revised in accordance with the new principles. All amounts have been stated in NOK 1,000 unless other-wise stated. Amounts denominated in foreign currency have been stated separately.
Consolidation principles
The consolidated accounts comprise Choice Hotels Scandinavia ASA and all subsidiaries in which Choice Hotels Scandinavia ASA directly or indirectly owns more than 50% and has a controlling interest. The consolidated accounts have been prepared as if the Group was an entity. See note 8, which shows which companies are included in the consolidated accounts for 1999. All major transactions and intragroup accounts have been eliminated.
The acquisition method has been used in connection with the consolidation of subsidiaries. Differences between the cost price for the shares of the subsidiaries and the book value of net assets in the same subsidiaries at the date of acquisition have been analysed and ascribed to the assets to which the differences relate. That part of the excess cost price which cannot be ascribed to acquired assets is classified as goodwill and written off over the estimated useful life. Consolidation has been made from the takeover date and up to the date of sale.
Minority interests’ shares of the profit after tax and equity capital are shown as separate items in the profit and loss account and the balance sheet. In connection with consolidation of foreign subsidiaries, the profit and loss accounts are translated into Norwegian kroner in accordance with an average exchange rate for the accounting period. Exchange rates as at the year-end are used in the balance sheet. Translation differences are entered directly against the Group’s equity capital.
Income recognition principles
Sales of goods and services are entered as income on the date of delivery.
Valuation and classification of assets and liabilities
Assets meant for permanent ownership or use have been classified as capital assets. Other assets have been classified as current assets. Accounts receivable which are to be repaid within one year have been classified as current assets. Classification of short-term debt and long-term debt has been based on equivalent criteria.
Capital assets are valued at cost of acquisition, but are written down to their actual value if the decrease in value is not expected to be temporary. Capital assets with a limited useful life are depreciated according to the depreciation plan. Long-term loans are entered in the balance sheet at the nomi-nal amounts received at the time at which they were raised.
Current assets are valued at the lower of the cost of acquisition and actual value.
Foreign exchange
Monetary items denominated in a foreign currency are translated at the exchange rate on the balance sheet date.
Intangible assets
Goodwill is written off based on the estimates of the earnings which have been made in connection with the acquisition of the individual company. At each closing of the accounts, the value of any remaining goodwill is valued and any write-down or change of the period of depreciation is made.
Fixed assets/Maintenance costs
Fixed assets are depreciated on a straight line basis over their estimated useful life. Investments in operating equipment attached to leased hotel proper-ties are written off over the term of the lease where the remaining term is shorter than the estimated useful life and where the lessor becomes the owner of the operating equipment at the end of the term of the lease. Maintenance is entered as expenses on a continuous basis.
Shares and ownership in subsidiaries, affiliated companies and jointly controlled business enterprises
Affiliated companies are defined as companies in which the Group has a significant influence (20-50% interest) and where the investment is of a long-term nature. The interests in affiliated companies and jointly controlled business enterprises are valued in accordance with the equity method in the consolidated accounts.
Shares have been valued in accordance with the cost method in the company accounts.
Other long-term shareholdings and ownership
Long-term shareholdings and minor investments in companies in which the Group does not have a significant influence are entered in the balance sheet at cost of acquisition. The investments are written down to their actual value if the decrease in value is not temporary. Dividend received and other profit allocations from the companies are entered as income under other financial income.
19
Notes
Stocks
Stocks have been valued at the lower of cost of acquisition and net sales value in accordance with the Fifo principle. The stocks consist primarily of food, wine, spirits, beer and mineral water.
Accounts receivable
Trade debtors and other accounts receivable are entered at nominal value less provisions for bad debts. Provisions for bad debts are made on the basis of an individual assessment of the individual accounts receivable. In addition, a general provision is made for bad debts for other trade debtors.
Bank deposits, cash in hand, etc.
Bank deposits, cash in hand, etc. include cash in hand, bank deposits and other monies with a due date which is less than three months from the date of acquisition.
Pensions
In those cases in which the Group has pension schemes for Norwegian companies, these are primarily covered via collective pension schemes with life assurance companies. The accounting of pensions has been based on a linear pension earning profile and estimated end salary as the pension earning basis. Estimated deviations and the effect of changed assumptions are amortised over the estimated remaining period for pension earning if they exceed 10% of the largest of the pension liabilities and pension funds (corridor). Pension plan changes are distributed over the remaining earnings period. Employer’s contributions have been included in the figures. The pension costs for the period have been included under payroll costs and consist of the period’s pension earned, interest paid on estimated pension liability, estimated return on pension funds, any effect of changes in estimates and pension plans entered in the profit and loss account as well as deviations between actual and estimated return entered in the profit and loss account.
Employees in Sweden are covered by a defined contribution plan.
Tax
The tax cost in the profit and loss account comprises both the tax payable for the period and change in deferred tax. Deferred tax/tax advantage has been calculated on the basis of net temporary differences between accounting values and tax values in the balance sheet as well as loss to be carried forward at the end of the accounting year. Tax-increasing and tax-reducing temporary differences which are reversed or can be reversed in the same period have been equalised. Full provision has been made in accordance with the liability method.
Business areas
The Group’s business area is limited to the hotel and restaurant trade. For this reason, comparative figures for business areas are not shown. Geographi-cally, the Group carries on business activities in Norway, Sweden and Denmark. See note 3, which shows how the turnover is distributed on the countries.
Cash flow analysis
The cash flow analysis has been prepared in accordance with the indirect method.
N OT E 2 M A J O R S I N G L E T R A N S A C T I O N S A N D C H A N G E I N G R O U P C O M P O S I T I O N
In September 1999, Choice Hotels Scandinavia ASA entered into an agreement with Fastighets AB Balder in Sweden on the takeover of the hotel proper-ties and operating companies Prince Philip in Stockholm, Selma Lagerlöf Hotel og Spa and Rotneros Restaurant in Sunne and Stenungsbaden Yacht Club as well as the hotel properties Lorensberg in Gothenburg and Stadshotellet Hässleholm. The takeover represented an investment of approx. SEK 520 mil-lion. Considerable investments were also made in Norway in 1999 with the takeover of Quality Fagernes Hotel and Quality Savoy Hotel in Oslo. In the con-solidated balance sheet as at 31.12.99, the property Quality Fagernes Hotel has a book value of NOK 96.9 million, and Quality Savoy Hotel has a book value of NOK 84.7 million. Clarion Ernst Hotel was acquired in July 1998. The property has a book value of NOK 139.4 million in the consolidated balance sheet as at 31.12.99. In 1997 and 1998, extensive sales were made of hotel properties and shares in property companies, generating a net gain for the Group of NOK 171.5 million in 1997 and NOK 27.8 million in 1998. For the composition of the Group and the time for new acquisitions, see note 8
20
Notes
Pro forma accounts (not audited)
The below pro forma accounts for 1997, 1998 and 1999 have been prepared on the basis of the assumptions that the above investments were made as at 01.01.97 and that the Group did not realise gains on sale of properties and property companies in 1997 and 1998. The note has only be prepared to make it possible to show comparative figures.
Profit and loss account Group 1999 Group 1998 Group 1997
Total operating income 2,131,002 1,803,048 1,452,386
Operating costs – 1,870,663 – 1,610,085 – 1,278,625
Ordinary depreciation – 91,827 – 77,297 – 77,735
Operating profit 168,512 115,666 96,026
Net financial costs – 60,327 – 49,350 – 78,553
Profit before tax 108,185 66,316 17,473
Earnings per share before tax (NOK) 2.73 1.67 0.44
Balance sheet Group 1999 Group 1998 Group 1997
Capital assets 1,709,080 1,398,819 1,478,006 Current assets 442,795 456,957 482,149 Total assets 2,151,875 1,855,776 1,960,155 Equity capital 510,846 468,730 575,671 Long-term debt 1,307,487 1,081,840 1,064,783 Short-term debt 333,542 305,206 319,701 Total debt 1,641,029 1,387,046 1,384,484
Total liabilities and equity capital 2,151,875 1,855,776 1,960,155
N OT E 3 O P E R AT I N G I N C O M E
The parent company The Group
1998 1999 Operating income 1999 1998 1997
49 744 51 564 Management fees from group companies 0 0 0
0 0 Gain on sale of properties 0 31,005 171,682
0 0 Room revenues 1,122,837 884,592 660,137
0 0 Goods sold 650,980 495,184 396,872
0 0 Other revenues from hotel business 143,958 101,731 75,113
0 0 Income from franchise business 24,840 31,093 28,224
4 234 5 289 Other rent receipts and operating income 18,031 9,497 2,919
0 0 - Commissions paid – 42,469 – 36,231 – 29,300
53 978 56 853 Total 1,918,177 1,516,871 1,305,647
Operating income distributed on country The Group
1999 1998 1997
Norway 1,307,411 1,104,207 1,097,627
Sweden 596,268 402,687 208,020
Denmark 14,498 9,977 0
21
N OT E 4 PAY R O L L C O S T S , N U M B E R O F E M P L O Y E E S , R E M U N E R AT I O N , L O A N S TO E M P L O Y E E S , E T C .The annual payrolls costs include:
The parent company The Group
1998 1999 Payroll costs 1999 1998
12,287 18,586 Salaries and wages 544,471 420,632
2,075 4,185 Nation insurance contributions 104,724 77,888
0 0 Pension costs (see note 15) 7,345 4,181
458 419 Other payment 26,048 19,314
14,820 23,190 Total 682,588 522,015
22 21 Number of man-years 2,496 2,094
The parent company/Group Former Present The Board
GCE GCE of Directors
Salary 2,959 2,922 0
Directors’ fee 0 221 299
Other remuneration 142 16 365
Siri-Lill Stensby was Group Chief Executive (GCE) until she left her position in April 1999. Salary and other remuneration to Stensby also comprise con-tractual final remuneration. Petter A. Stordalen, former Chairman of the Board of Directors in the company, took over as Group Chief Executive/Managing Director in April 1999 and continued his work on the Board of Directors as a member of the Board of Directors from April. Other remuneration to the Board of Directors represents a tax advantage in connection with the redemption of options.
The Managing Director has a clause in his contract of employment which entitles him to receive compensation equivalent to six months’ salary in addition to salary during the ordinary period of notice, which is three months, if he himself hands in notice to the company. In the event of notice of termination by the company, the compensation must be equivalent to 12 months’ salary in addition to salary during the ordinary period of notice. Howe-ver, this does not apply to a valid notice of dismissal. In his contract of employment, the Managing Director also has a clause which entitles him to receive an annual bonus if the budgeted operating profit for the Group is met. The agreed maximum annual bonus amount is currently NOK 1.0 million.
The company has a management agreement with Anker Holding AS, in which Managing Director and member of the Board of Directors Petter A. Stordalen owns 90% of the shares. In 1999, TNOK 1,590 has been paid to this company.
The Chairman of the Board of Directors, Henrik A. Christensen, is a partner in the legal firm Wiersholm, Mellbye & Bech. Legal fees invoiced from Wiersholm, Mellbye & Bech and entered as costs in 1999 amount to TNOK 2,553.
At an ordinary General Meeting on 30.04.98, the company adopted a resolution to grant the Board of Directors a power of attorney to increase the company’s share capital by up to TNOK 100 by the issue of up to 1,000,000 shares at a nominal value of NOK 0.10 at a price to be fixed by the Board of Directors. The power of attorney was to be used as a basis for one or more increases in capital as part of incentive schemes for the company’s Board of Directors and employees. This power of attorney has been granted with effect until the date for the ordinary General Meeting in 2001. An equivalent power of attorney was granted to the Board of Directors at the company’s General Meeting on 28.04.99. The company intends to use its holding of own shares in connection with the redemption of the option agreements with shop stewards and executives.
At the end of 1999, on the basis of the Board of Directors’ powers of attorney, a total of 1,647,000 options have been issued to the Board of Directors and executives, 99,000 of which have been redeemed. Of options issued, 200,000 have been allotted to the Managing Director, 449,000 have been allotted to the Chairman of the Board of Directors and 198,000 have been allotted to the other members of the Board of Directors.
In December 1998, a total of 297,000 options were allotted to the members of the Board of Directors. The subscription price has been fixed at NOK 11.00 per share plus 0.75% interest per commenced month from 31.12.98. The subscription price was equivalent to the share price at the time of allotment. 99,000 of the options were redeemed in 1999. 99,000 of the options may be exercised after the General Meeting in 2000 and until 31.08.00 and the remaining 99,000 options may be exercised after the General Meeting in 2001 and until 31.08.01. In May 1999, a total of 1,250,000 options were allotted to the Chairman of the Board of Directors, the Managing Director and executives. The subscription price has been fixed at NOK 17.00 per share, which was equivalent to the share price at the time of the allotment. 350,000 options which were allotted to the Chairman of the Board of Direc-tors may be exercised from the time of the allotment and until 26.04.01. The redemption price is NOK 17.00 per share plus 1.0% per commenced month until redemption takes place. 450,000 options may be exercised in the period 01.03-26.04.00. The remaining 450,000 options may be exercised in the period 01.03-26.04.01. A new General Manager in Sweden was allotted 100,000 options in connection with the employment in November 1999. The sub-scription price has been fixed at NOK 20.00 per share, which was equivalent to the share price at the time of allotment. Half the options may be redee-med in the period 01.03-30.06.01. The other half of the options may be redeeredee-med in the period 01.03.-30.06.02. The price of the company’s shares was NOK 24.00 as at 31.12.99. Regarding options, see also note 12.
22
Notes
The parent company/Group
Loans granted to and security pledged for executives, shareholders, etc.
The company has granted a loan of TNOK 350 to the Regional Manager for the Akershus/Østfold region. Interest is charged on the loan at a rate of 5.0%, and the loan is repaid by TNOK 5 a month from January 2000.
Auditors’ fee:
Remuneration to auditors for auditing and services of an auditing nature amounts to TNOK 405 for the parent company and TNOK 1,889 for subsidiaries in 1999. Remuneration for other services amounts to TNOK 1,151 for the parent company and TNOK 311 for subsidiaries.
Deloitte & Touche Advokater DA, a partner company with Deloitte & Touche Statsautoriserte Revisorer AS, has provided services to the parent com-pany for TNOK 35.
N OT E 5 OT H E R O P E R AT I N G C O S T S Other operating costs comprise:
The parent company Group
1998 1999 1999 1998
19 15 Energy costs 46,972 39,815
0 0 Operating equipment 84,279 76,044
580 857 Maintenance, acquisitions 47,248 43,657
0 0 Franchise costs 12,263 18,293
19,313 21,541 Misc. administrative expenses 212,615 171,993
1,872 1,057 External rent costs 393,870 322,923
0 0 Bad debt 7,345 4,643
21,784 23,470 Total 804,592 677,368
N OT E 6 G O O D W I L L
The parent company The Group
Othello InterNor Othello Other Total
20,000 Cost of acquisition, 31.12.98 57,052 20,000 12,686 89,738 0 Translation differences 0 0 33 33 0 Additions 0 0 6,756 6,756 0 Disposals 0 0 0 0 20,000 Cost of acquisitions, 31.12.99 57,052 20,000 19,475 96,527 12,000 Accumulated deprec., 31.12.99 15,979 12,000 8,133 36,112 8,000 Book value as at 31.12.99 41,073 8,000 11,342 60,415
4,000 Depreciation for the year 5,731 4,000 3,505 13,236
5 years Useful life 10 years 5 years 5 years
Straight-line Depreciation plan Straight-line Straight-line Straight-line
Goodwill acquired in connection with the acquisition of Inter Nor Hotels is written off over 10 years. In connection with the takeover of Inter Nor Hotels at the year-end 1996/1997, Choice Hotels Scandinavia acquired a strong loyalty programme which was attached to an extensive loyal customer base and sound hotel portfolio. The loyalty programme was among the first in Norway, built up over a long period of time, and continued by Choice Hotels AS on the same basis. The majority of the hotels which participated in the Inter Nor Hotels co-operation have entered into a new franchise agreement with Choice Hotels AS with a term of 20 years from when the agreement was entered into. The estimated future earnings and the time it takes to build up a strong loyalty programme with an established customer base as well as the long-term nature of the franchise agreements with the hotel portfolio taken over justify the choice of a 10-year period of depreciation for goodwill in connection with the investment.
23
N OT E 7 F I X E D A S S E T SThe parent company: The Group:
Buildings and Machinery,
Machinery, fixtures, etc. Sites other real property fixtures, etc.
5,595 Cost of acquisition 1.1.99 15,315 464,523 191,074
0 Translation differences 93 2,461 345
594 Additions, operating equipment purchased 81,859 794,722 133,336
0 Disposals, operating equipment sold 0 0 – 2,626
6,189 Cost of acquisition, 31.12.99 97,267 1,261,706 322,129
3,607 Accumulated depreciation, 31.12.99 0 34,878 120,205
2,582 Book value as at 31.12.99 97,267 1,226,828 201,924
1,388 Depreciation for the year 0 19,724 49,087
3-5 years Useful life Permanent 50 years 3-15 years
Straight-line Depreciation plan Straight-line Straight-line
790 Annual rent, op. equipment not entered in balance sheet – 393,870 22,044
The Group has entered into leases for all the hotels which are run, but not owned, by the Group with the exception of three hotels with which manage-ment agreemanage-ments have been entered into. As a general rule, the rent is percentage based, limited to a lower limit of a further agreed minimum rent. As at 31.12.99, the Group has entered into a total of 48 leases, for most of which there is an option to renew for five to ten years after the expiry of the term of the agreement. The average remaining term on the Group’s leases is approx. 10.4 years. Annual external rent costs in the Group are estimated to amount to approx. NOK 510 million in 2000.
24
Notes
N OT E 8 I N V E S T M E N T S I N S U B S I D I A R I E S The following companies form part of the Group in 1999:
Voting share Book value in
Companhy Time of acquisition Registered office and interest parent company
Choice Hotels Scandinavia ASA
*Choice Hotels AS 1994 January Oslo 100% 68,202
*Mastemyr Hotell AS 1998 January Oppegård 100% 21,377
*Vestlia Hotel AS 1996 December Geilo 100% 14,562
*Grønningen Invest AS 1998 July Kristiansand 100% 28,827
*Inter Nor Hotels AS 1998 October Oslo 100% 50
*Home Hotels AS 1998 October Oslo 100% 50
*Hotell Service AS 1999 January Ringerike 100% 14,020
*Quality Holding Fagernes AS 1999 April Fagernes 100% 40,000
Quality Fagernes Hotel AS 1999 April Fagernes 100% –
AS Fagernes Turisthotell 1999 April Fagernes 87% –
*Choice Skagerak Eiendom AS 1999 September Kristiansand 100% 8,150
Comfort Hotel Skagerak AS 1999 September Kristiansand 100% –
*Choice Savoy Eiendom AS 1999 September Oslo 100% 220
*Quality Hotel Hamneset AS 1999 July Harstad 100% 110
Hamneset Hotell ANS 1999 July Oslo 100% 26
Hamneset Restaurant ANS 1999 July Oslo 100% 0
Hamneset Forretning ANS 1999 July Oslo 100% 0
*Lundehaven AS 1999 November Oslo 100% 6,632
Unit One Eiendom AS 1999 November Oslo 100% –
*Comfort Hotel Majorstuen AS 1993 January Oslo 100% 300
*Comfort Hotel Holberg AS 1994 May Bergen 100% 311
*Comfort Hotel Børsparken AS 1995 June Oslo 100% 101
*Comfort Home Hotel Amanda AS 1996 December Haugesund 100% 100
*Comfort Home Hotel Atlantic AS 1996 December Sandefjord 100% 100
*Comfort Home Hotel Hammer AS 1996 December Lillehammer 100% 100
*Comfort Home Hotel Tollboden AS 1996 December Drammen 100% 100
*Comfort Home Hotel With AS 1996 December Tromsø 100% 100
*Comfort Home Hotel Bakeriet AS 1996 December Trondheim 100% 100
*Comfort Home Hotel Bryggen AS 1996 December Ålesund 100% 100
*Comfort Home Hotel Grand AS 1997 January Bodø 100% 200
*Comfort Hotel Grand AS 1998 January Stavanger 100% 2,791
*Comfort Hotel Nobel AS 1999 February Molde 100% 110
*Quality Airport Hotel Stjørdal AS 1990 May Stjørdal 100% 702
*Quality Hafjell Hotel AS 1991 June Øyer 100% 4,157
*Quality Park Hotel AS 1992 September Oppegård 100% 617
*Quality Panorama Hotel AS 1992 September Trondheim 100% 227
*Quality Airport Hotel Stavanger AS 1994 October Stavanger 100% 809
*Quality Airport Hotel Gardermoen AS 1994 October Jessheim 100% 300
*Quality Kristiansand Hotel AS 1995 June Kristiansand 100% 101
*Quality Residence Hotel AS 1995 September Sandnes 100% 866
*Quality Vestlia Hotel AS 1996 December Geilo 100% 200
*Quality Maritim Hotel Florø AS 1996 December Florø 100% 100
*Quality Skjærg. Hotel og Badepark AS 1996 January Langesund 100% 0
*Quality Edvard Grieg AS 1996 October Bergen 100% 100
Quality Ringerike Hotel AS 1999 January Ringerike 100% 110
*Quality Sarpsborg Hotel AS 1999 June Sarpsborg 100% 220
*Quality Hotel Leangkollen AS 1999 September Asker 100% 210
*Quality Hotel Halvorsbøle AS 1999 September Jevnaker 100% 210
*Quality Hotel Savoy AS 1999 September Oslo 100% 220
*Quality Hotel Grand Farris AS 1999 September Larvik 100% 220
*Clarion Royal Christiania Hotel AS 1997 January Oslo 100% 20,562
25
Voting share Book value inCompanhy Time of acquisition Registered office and interest parent company
*Clarion Admiral Hotel AS 1997 January Bergen 100% 5
*Clarion Oslo Airport Hotel AS 1997 February Gardermoen 100% 300
*Clarion Tyholmen Hotel AS 1997 January Arendal 100% 7,460
*Clarion Ernst Hotel AS 1997 June Kristiansand 100% 10,806
*Clarion Stavanger Hotel AS 1999 June Stavanger 100% 220
*Choice Hotels Sweden AB 1996 December Stockholm 100% 60,920
AB Liljekonvaljen 1996 December Göteborg 100% –
Bilan Home Hotel AB 1996 December Karlstad 100% –
Bolinder-Munktell Home Hotel AB 1996 December Eskilstuna 100% –
Eurostop Hotell & Restauranger AB 1998 January Stockholm 100% –
Fregatten Home Hotel AB 1996 December Varberg 100% –
Förvaltnings AB Bataljonen 1996 December Göteborg 100% –
HB Harpan 1996 December Göteborg 100% –
HB Nithammaren 1996 December Göteborg 100% –
HB Ran 1 1996 December Göteborg 100% –
Home Hotel Ekonomiledning AB 1996 December Stockholm 100% –
Home Hotel i Göteborg AB 1998 April Göteborg 100% –
Home Hotel i Malmö AB 1998 April Malmö 100% –
Home Hotel i Oskarshamn AB 1996 December Oskarshamn 100% –
Home Hotel i Umeå AB 1996 December Umeå 100% –
Home Hotel i Jönköping AB 1996 December Jönköping 100% –
Q Hotel i Kristianstad AB 1998 March Kristianstad 100% –
Majoren Home Hotel AB 1996 December Skövde 100% –
Göteborgs Kongresservice AB 1997 December Göteborg 100% –
Hotell Panorama Göteborg KB 1997 December Göteborg 100% –
Hotellfastigheter i Göteborg AB 1996 December Göteborg 100% –
KB Fregatten 1996 December Göteborg 100% –
Kompaniet Home Hotel AB 1996 December Nyköping 100% –
Packhuset Home Hotel AB 1996 December Kalmar 100% –
Tapto Home Hotel AB 1996 December Stockholm 100% –
Prize Hotel AB 1998 February Stockholm 100% –
Svenska Prize Hotel AB 1998 February Stockholm 100% –
Hotell Renen AB 1998 February Duved 100% –
Hotell Stenesta’n AB 1998 February Sundsvall 100% –
Hotell Ekoxen AB 1999 January Linköping 100% –
Collegium i Mjärdevi AB 1999 January Linköping 100% –
Sumaken AB 1999 January Linköping 100% –
Ekoxen Service AB 1999 January Linköping 100% –
Prince Philip Hotel Stockholm AB 1999 October Stockholm 100% –
Stenungsbaden Yacht Club Hotel AB 1999 October Stenungssund 100% –
AB Selma Lagerlöf Hotel & SPA 1999 October Sunne 100% –
*Choice Hotels Denmark AS 1998 Juni København 100% 567
Comfort Hotel Excelsior AS 1998 Juni København 100% –
Total 317,148
*Shares owned directly by the parent company.
26
Notes
N OT E 9 I N V E S T M E N T I N OT H E R S H A R E S
Cost of Value enteres
The parent company: Interest acquisiton in balance sheet
Capital assets:
Via Gruppen AS 7.9% 2,821 2,821
Vesterport AS 50.0% 1,381 1,381
Minor share investments in Norway 458 458
Total 4,660 4,660
The Group:
Capital assets:
Via Gruppen AS 7.9% 2,821 2,821
Vesterport AS 50.0% 1,381 1,381
Minor share investments in Norway 1,290 1,290
HB Terminalhotellet 50.0% 6,130 6,130
Minor share investments in Sverige 1,762 1,716
Total 13,384 13,338
N OT E 10 A C C O U N T R E C E I VA B L E FA L L I N G D U E A F T E R M O R E T H A N O N E Y E A R
The parent company The Group
1998 1999 1999 1998
7,500 0 Other receivables 12,958 25,943
96,900 191,685 Intragroup loans made 0 0
N OT 11 D R AW I N G R I G H T S
Unused drawings rights on the Group account system in Norway amount to NOK 50.0 million as at 31.12.99. Unused drawing rights in Sweden amount to SEK 15.0 million as at 31.12.99.
27
N OT E 12 S H A R E C A P I TA L A N D S H A R E H O L D E R I N F O R M AT I O NAs at 31.12.99, the share capital consists of 39,640,285 shares at NOK 0.10. All shares have the same voting and dividend rights.
Ownership structure
List of the largest shareholders in the company as at 31.12.99: No. of shares Interest Voting share
Petter Anker Stordalen and companies 13,479,949 34.01% 34.01%
Choice Hotels Scandinavia ASA 3,239,810 8.17% 8.17%
Credit Suisse Equity Fund 2,000,000 5.05% 5.05%
Morgan Stanley & Co 1,959,000 4.94% 4.94%
Storebrand 1,666,700 4.20% 4.20%
State Street Bank & Trust 1,403,400 3.54% 3.54%
Alfred Berg Norge AS 1,166,110 2.94% 2.94%
Verdipapirfondet Delphi Norge 1,082,500 2.73% 2.73%
AB Invest AS 1,002,500 2.53% 2.53% Sektor Eiendomsutvikling AS 1,000,000 2.52% 2.52% Joh-System AS 1,000,000 2.52% 2.52% Harald Jacobsen 784,515 1.98% 1.98% Industrifinans 725,900 1.83% 1.83% Tine Pensjonskasse 670,500 1.69% 1.69%
CG Holding Invest ANS 625,000 1.58% 1.58%
Statoils Pensjonskasse 615,000 1.55% 1.55%
Frank Varner and company 600,000 1.51% 1.51%
Verdipapirfondet Avanse 564,000 1.42% 1.42%
Tore Aksel Voldberg 450,000 1.14% 1.14%
Centra Invest AS 400,000 1.01% 1.01%
Total > 1% interest 34,434,884 86.87% 86.87%
Total other interest 5,205,401 13.13% 13.13%
Total number of shares 39,640,285 100.00% 100.00%
As at the end of 1999, the company had 580 shareholders.
Shares and options owned or controlled by members of the Board of Directors and the Managing Director:
Name Office No. of shares Options
Henrik A. Christensen Chairman of the Board 83,000 416,000
Petter Anker Stordalen MD/Board member 13,479,949 2,570,000
Arvid Ramsdal Board member 58,000 66,000
Ragnar Sjoner Board member 41,000 66,000
Own shares:
Acquisition of own shares Number Payment Average per share Share
January 1999 95,000 1,115 11.74 0.24%
March 1999 3,541,810 56,569 15.97 8.93%
June 1999 327,000 6,396 19.56 0.82%
Gross acquisition 3,963,810 64,080 16.17 10.00%
Sale of own shares
June 1999, redeemed Directors’ options – 99,000 – 1,122 11.33 – 0.25%
August 1999, part settlement for acquisition of Quality Savoy Hotel – 625,000 – 12,500 20.00 – 1.58%
28
Notes
N OT E 13 E Q U I T Y C A P I TA L
The parent company Share capital Own shares Premium reserve Other EQ Contributed other EQ *
) Total
Equity capital, 31 december 1998 3,964 0 0 302,745 0 306,709
Revaluation reserve 0 0 17,280 – 17,280 0 0
Premium from legal reserve 0 0 46,995 – 46,995 0 0
Equity capital 1 January 1999 3,964 0 64,275 238,470 0 306,709
Capital increase 59,460 0 – 8,925 – 50,535 0 0
Capital reduction **) – 59,460 0 0 5,797 0 – 53,663
Net acq./sale of own shares (see note 12) 0 – 324 0 – 55,515 5,381 – 50,458
Tax on gain from sale of own shares 0 0 0 0 – 1,506 – 1,506
Allocated dividend 0 0 0 – 53,515 0 – 53,515
Profit for the year 0 0 0 32,521 0 32,521
Equity capital, 31 december 1999 3,964 – 324 55,350 117,223 3,875 180,088
*) Contributed other equity capital is the net gain after transactions with own shares. **) tNOK 5,797 applies to own shares
The Group Total
Equity capital, 31 december 1998 441,341
Minority interests, 31 december 1998 4,245
Deferred tax advantage entered in the balance sheet in accordance with the new Norwegian Account Act 58,200
Equity capital, 1 January 1999 503,786
Foreign currency translation difference 885
Minority interest in connection with acquisition 6,078
Capital reduction – 53,663
Net effect from acquisition/sale of own shares (see above) – 51,964
Allocated dividend – 53,515
Profit for the year 83,634
Equity capital, 31 december 1999 435,241
N OT E 14 O P E N I N G VA L U E A D J U S T M E N T ( O VA ) A M O U N T S
The average ova per share as at 01.01.1999 has been estimated at NOK 0.22 (39,640,285 shares at nom. NOK 0.10). The average ova per share as at 01.01.1998 was estimated at minus NOK 0.18 (39,640,285 shares at nom. NOK 0.10). The average ova per share as at 01.01.1997 was estimated at NOK 25.08 (622,195 shares at nom. NOK 5.00).
