Scandic Hotels Group AB (publ)

Thank you very much and good morning, everyone, and thank you for joining this presentation of Scandic's third quarter, 2023. As was just said, I'm Jens Mathisen. I'm the CEO of Scandic, and together with me, I have Åse Virén, who is our CFO. We will talk you through the quarters, as always, so let's jump straight into it, and please turn to page two. You probably already saw the results, but I'm very proud to present a new record quarter that is another proof of how we have become a more efficient and profitable and even stronger Scandic. With the continued sharp focus on commercial excellence and efficiency, we deliver an eventful quarter with all-time high net sales, stronger underlying results, new signings, and high guest satisfaction. Market development was solid with high demand from leisure in combination with a good start to the important season for corporate travel and meetings as well. We sold more rooms and more room nights than we did last year and occupancy increased to 71% in this quarter. This was actually an improvement from last year and slightly better than the performance of the overall Nordic hotel market. With high demand and continued positive price development in all our markets, REFPA reached new all-time high levels. The hotel market is resilient against the high inflationary environment, and hotel stays continue to be prioritized for both business and pleasure. Our net debt was at a historically low level at the end of the quarter, and with strong financial position, we keep high pace to grow the portfolio and to build a stronger Scandi. We have intensified collaborations with property owners and it's very satisfying to see how we are growing the portfolio. During the quarter, we announced a new Scandi Go signing with 221 rooms in central Stockholm, which we presented in the Q2 report. We also opened our first ScandiGo in Stockholm this quarter with great success and interest from both guests and property owners. This creates, I think, good conditions for our growth ambition in this growing economy segment. In September, we also signed an agreement for two new hotels in Helsinki. And we also recently announced an extended strategic partnership with Oracle and we are working at full speed to implement a complete cloud-based platform in all our hotels and central functions. This is a very important step in our strategy, which is totally in line with what we have communicated before, to improve guest experiences and create an even more cost-efficient operation in Tobin. I will come back to this later also in the presentation, but all in all, a very strong quarter. Moving on, please turn to page three, where you can see quarterly adjusted EBITDA development since the beginning of 2020. Excluding one-offs, adjusted EBITDA reached a new record level of 1.142 billion Swedish kronor, corresponding to a strong margin of 18.1% Compared with the third quarter in 2019, it's a margin improvement of 2.2 percentage points. It's pleasing to see how we are improving the underlying results while building a stronger Scandic. Including one-offs, we report an adjusted EBITDA of 1.173 billion Swedish kronor. The performance in the quarter was driven by continued solid market development in combination with commercial excellence, high efficiency, and an overall higher activity level within Scandi. Also, we'll, of course, talk you through the financial development later in this presentation. But please turn to page four. Here you can see the monthly market occupancy in the Nordic countries. The market development was solid in the quarter. with demand in line with last year. Scandic's occupancy rate, as I mentioned earlier, increased to 71% in the quarter, which is an improvement compared to the same period last year and slightly better than the performance of the overall hotel market in the Nordic. The good demand was mainly driven by continued high levels of domestic and inter-Nordic travel as well as international tourism. The occupancy compared with 2019 is explained by lower volumes of intercontinental travelers. However, this segment continues to recover. The market also had around 6% more rooms at the end of the quarter compared to the end of the third quarter in 2019. So please turn to page 5. This is market data for average room rates for Sweden, Norway, Finland and Denmark indexed to the corresponding month in 2019. Prices continue to develop positively and Scandic's average room rate in the quarter was 6% higher than in the same quarter last year and 23% higher than in 2019. Also note that Finland is lacking on the markets in September due to exceptionally strong prices in 2019. As we have mentioned before, Finland held the presidency of the Council of the European Union in second half of 2019, which resulted in very high room rates at that time, especially in September, October, and November. So prices is always a key priority for us, and with, I think, very solid occupancy rates which we are seeing right now, we ensure that we maintain our focus to drive prices also going forward. Please turn to page six. Here you can see the market's REFPA development index to corresponding month in 2019. The development was strong in the quarter, with Norway continuing to lead the way with a REFPA level that has been 33 to 36 percent higher than in 2019. Scandic reached a new record level with a REFPA of 933 Swedish kronor in the quarter, compared with 875 last year and 807 in 2019. We also, as mentioned, had 6% more rooms at the end of this quarter compared with the third quarter in 2019, which you need to add. Please turn to page 7. Our increased focus on growing pipeline is showing results. During the quarter, we have strengthened our position in Helsinki and signed an exclusive agreement for two new hotels with a total of 459 rooms. It's a Scandic Hotel and one Scandic Go. This is our first Scandic Go in Finland, and as I mentioned, we see great interest in our new brand in this fast-growing economy segment from both guests and property owners. which gives us quite good confidence in our growth ambitions within this segment. The new hotel will be located in the new unique event area called Garden Helsinki, a few minutes outside Helsinki city center. This is a growing and very key destination and a milestone in Scandic's and Finland's growth journey. The hotels are expected to open in 2028 and will be certified according to the Nordic Swarm eco-label before opening. During the quarter, we also announced a new ScandiGo signing with 221 rooms in central Stockholm, which we also highlighted in the Q2 presentation. Please turn to page eight. During the quarter, we announced two new signature collection hotels to strengthen our offer and to capture the growing demand from Leisure in the upscale segment. The hotels have been part of the pipeline for some time, and we are expected to open in Tromsø 2025 and in Aarhus 2026. I'm happy that we are strengthening the offer with another signature hotel in Norway and that we are now opening our first one in Denmark. Please turn to page 9, where you can see the pipeline. With a strong financial position and strengthening organization within commercial and business development, we keep a high pace to further grow and optimize the portfolio. At the end of the quarter, we had 1,499 new rooms in the net pipeline, which was 582 more than at the end of the previous quarter. I am pleased that we are strengthening our position in key markets as well as bringing our first ScandiGo to Finland. As I mentioned in the previous quarter, we are increasing investment for renovations as well of existing hotels to create a more competitive portfolio. And with our strong financial position, we are determined to get back to our target of maintenance capex of between 3-4% of net sales. With that, please turn to page 10. Earlier this week, we announced the implementation of the complete cloud-based solution Oracle Hospitality Opera Cloud. By connecting all our hotels and central functions on one platform, we will be able to create even better guest experiences and increase efficiency through improved steering, booking, and pricing. This will also allow our team members to spend more time creating value for our guests. One example of this is faster and smoother booking and check-in and check-out processes. We see excellent opportunities to explore more economies of scale and increase growth and profitability over time with this cooperation. We expect all our hotels to be up and running on the platform in the second quarter next year. With that, please turn to page 11 and I hand it over to you, Åsa, to take us through some of the financials.

Thank you, Jens, and good morning, everyone. Let's turn to page 12 and start off with the financial performance in the quarter. As mentioned, net sales increased by 5.2% to a new record level of 6.3 billion SEC. We also delivered a strong result with an adjusted EBITDA of close to 1.2 billion SEC, including one of 31 million SEC and this corresponds to a margin of 18.6%. In this quarter, one-offs included a one-time electricity contribution in Sweden and compensation related to housing for refugees in Norway. Last year, we had one-offs of 76 million SEK in the third quarter. If we exclude one-offs, the adjusted EBITDA reached a new record all-time high level of 1.142 billion SEC with a margin of 18.1%. This was an improvement, as Jens mentioned, by 2.2 percentage points compared with the third quarter in 2019. Thanks to our strong financial position, we have increased the activity level with focus on the overall IT landscape and the implementation of Opera Cloud, as well as the commercial development and the launch of Scandic Go. This was partly reflected in increased costs for the central functions in the quarter. All in all, this was a strong quarter driven by our commercial ability to capture good demand in our markets with continued high efficiency and cost control. I'm pleased with how we grow the business and how we have become more efficient and profitable over time, and for sure this will continue. We expect approximately 20 million SEK in the fourth quarter related mainly to Norwegian housing for refugees. And then please turn to page 13. We had a strong free cash flow in the quarter of 899 million SEK and 1.2 billion SEK year to date. Working capital was impacted by repayment of variable rent debts for 2022 of a little bit more than 700 million SEC and seasonality effects with a larger share of business customers and meetings in September. Altogether, we report a strong cash flow. As we mentioned in the previous quarter, we have had a cautious approach with low capex, but we are gradually ramping up and plan for higher expansion, renovation and IT capex from this quarter going forward. And let's please turn to page 14. We continue to reduce our debt level, which was at a historically low level at the end of the quarter. Net debt decreased to 1.9 billion SEK in the quarter and corresponds to a net debt in relation to adjusted EBITDA of 0.8 times on a rolling 12 months. Excluding the convertible bond, net debt only amounted to 336 million and the net debt in relation to adjusted EBITDA of 0.1 times. Net debt included 1.6 billion related to the convertible bond and 797 million related to deferred VAT and social security payments in Sweden. Due to the strong performance in the nine months of this year, A new rent debt of approximately 400 million SEK has been accrued for 2023. The majority of this will be settled, as you all know, during the first half of 2024. Our available credit facility amounted to 3.4 billion SEK and total available liquidity amounted to 3.6 billion SEK at the end of the quarter. Lastly, the convertible bond has its conversion price at 43.36 SEC and matures in a year from now in October 2024 with a potential dilution of 41.5 million shares. But as you all can see in the numbers, we have available funds to handle this. And then please turn to page 15. And here you can see the net financial items and impact from IFRS 16. Including IFRS 16, the reported financial net was minus 510 million SEK. Excluded for IFRS 16, the financial net was minus 67 million SEK. Non-cash convertible interest was 43 million, and interest payments on bank loans decreased as a result of our lower debt level. Ultimately, cash financial items amounted to 22 million SEK. So with that said, please turn to page 17 and back to you Jens for some final comments and what to see for the future.

Thank you very much Åsa and finally some comments and reflections on the outlook from my side. I'm very proud to conclude that Scandic is standing stronger than ever before. With focus and persistence, we have taken important steps forward to become a more efficient and profitable company with a very strong financial position, all while increasing guest satisfaction. The good momentum from summer months has continued into the fourth quarter, and we are on track for another strong full-year performance. So it's continuing. Based on the current booking situation, we expect a solid fourth quarter with occupancy on par with the same period last year, but at higher prices. We are highly prepared for the future and we are growing the business in a controlled manner with balanced investments and very high efficiency. I want to thank all our employees for their fantastic commitment and our owners and guests for their trust in Scandic. With that said, I think let's hand it back to operator for the Q&A.