Scandic Hotels Group AB (publ)

Thank you very much and good morning everyone and thank you for joining us for Scandic's presentation. My name is Jens Mathisen, I'm the CEO of Scandic and with me I have Per Christiansen who is our CFO and together we will walk you through the quarter. So please start on page two. We deliver a good second quarter market conditions are stable across all our markets and We also have good demand and increasing prices. Net sales improved and we report a strong result with higher margins compared to the same quarter last year. I'm very pleased that our sharp focus on control is making an impact in this quarter, which you see. With the economy also stabilizing in most of our markets, we are observing an improvement in the sentiment among property owners. We are maintaining a high pace to expand our pipeline, and we are also investing to create an even more competitive offering. During the quarter, we reopened a large and newly renovated hotel in Stockholm. and we also continue to optimize the portfolio with some exits. GO is expanding, and last week we announced two new signings that I will come back to later on in this presentation. Another highlight is that we have now refinanced our loans. We have secured a long-term financing that reflects the strategic agenda and strong financial position. And of course, Pierre also will come back to that later on in this presentation. Lastly, the bookings for the third quarter looks promising with demand in line with last year and positive price development. So let's move into the quarter and look a bit on that on page three. On this page, you can see the quarterly adjusted EBITDA development since the first quarter of 2021. We report a strong result with an adjusted EBITDA of 841 million Swedish kronor compared to 772 million Swedish in the second quarter last year. This led to an improved margin of 14.3% up from 13.6% in the same quarter last year. The stronger result is mainly due to improved efficiency and cost control. And I'm very pleased with how we managed our operations and controlled the overall working hours in the quarter. Also in this area here, we'll come back on some more financial update later on. Please turn to page four. Here you can see the market occupancy in the second quarter of both this year and last year in the Nordic countries. During the quarter, market development remained stable with overall good demand. Calendar effects due to Easter holidays falling in March this year and April last year had a positive impact on the quarter. And Scandic's occupancy rate improved from 63% in the second quarter last year to 64% in this quarter. Our occupancy rates for the quarter were slightly higher compared to market occupancy for Sweden, Finland and Denmark and in line with the market in Norway. Please turn to page 5. This is market data showing average room rate for Sweden, Norway, Finland and Denmark indexed to the corresponding month back to 2019. The market average room rate continued to develop positively with a year-on-year growth of around 3.2%. Scandic's average room rate increased by 3.4%. We expect continued positive price development, a more stabilized and predictable economy in the Nordics overall. Please turn to page 6. Here you can see the market's REFPA development index to the corresponding month, also back to 2019. REFPA developed positively compared with last year and are above 2019 levels on all markets. Our REFPA increased by 5.2% compared with the second quarter last year. So Scandic's year-on-year REFPA growth was higher than the overall market growth in Denmark and in line with the market growth in Norway. In Sweden and Finland, we had a slightly lower REFPA growth. Sweden experienced a mixed market situation this quarter. Demand in Stockholm and Malmö was boosted by the event calendar featuring Taylor Swift and Eurovision. However, Gothenburg, where we have a strong position, is temporarily struggling due to a weak calendar overall on the event side. Additionally, Gothenburg has seen a notable increase in new capacity over the past few years. Finland had a weak start to the quarter due to strikes. Additionally, demand from international leisure travelers and corporates in Helsinki where we hold a large market share is impacted by the still ongoing geopolitical situation and the shutdown of airspace over Russia. That said, Finland picked up very good, especially in June, where we see a big increase. We always adapt and optimize our operations to match market, ensuring a healthy profitability. The margin improvement you see in Finland this quarter is a good example of that. Please turn to page 7 where you can see the pipeline. The portfolio activity is very high right now and we have increased investments in expanding and maintenance to grow and improve the overall portfolio. Some examples of activities in the quarter were the reopening of Skandik Södrakayen with 323 rooms. The hotel had completely been renovated and also had a very good start. During the quarter, we also left three hotels with a total of 412 rooms to further optimize the portfolio. Preparations for the opening of our second ScandiGo are in full swing. The hotel, which is centrally located in Stockholm, will open in early October. By the end of the quarter, we had 2,200 new rooms in the net pipeline. So a good development on that side as well. Please turn to page eight. Here you see ScandiGo and how we continue to expand ScandiGo. I'm very happy to announce the two new signings that we did in the beginning of July. We have now signed a new ScandiGo in Gothenburg with 176 rooms and one in Umeå. Both hotels are scheduled to open in 2026. In both cases, we will convert office buildings into hotels and the conversions actually allows us to expand ScandiGo brand rapidly, and it's a perfect fit also for this concept. Both hotels will be situated in attractive central locations and are a great complement to our offering in each of these cities. The ScandiGo pipeline now totals close to 900 rooms, which represents almost 50% of our growth pipeline. With that, I would like to hand over to Per. Please turn to page 10.

Thank you, Jens, and good morning, everyone. All in all, this was a good and stable quarter. Net sales increased by 3% to 5.9 billion SEK compared to 5.7 billion SEK in the same period last year. Calendar effects had a positive impact in this quarter. However, the public holidays in May also had a negative effect on demand for meetings and events. We deliver a strong and improved result. The adjusted EBITDA improved to 804 compared to 772 million last year. With a strength in margin of 14.3% compared to 13.6% last year. This improvement is mainly a result of higher efficiency across our market and overall good cost control. market situation with high demand in Stockholm and Malmö do a strong event calendar while the market in Gothenburg had a rather tough quarter with few events the underlying development in Sweden is solid and despite the lower demand in Gothenburg we deliver slightly higher result than last year Norway is performing well tough demand for meeting and events were a bit softer and than expected in the quarter. However, the overall market situation is stable and the booking situation is good for the third quarter. Finland had a weak start to the quarter with demand in April, but picked up well in June due to an active market with more events and increased demand from corporates. Finland also faced a tough comparable quarter as they had hosted the Hockey World Cup in May last year. And I want to say that the Finnish team have adapted to the market situation with optimizing our operations to improve and ensure a healthy profitability. The overall higher activity level and development pace within commercial and digitalization is partly affected in higher group cost compared to last year. Lastly, we want to remind you that we don't expect any one-offs going forward and also remind you that we had positive effects of 31 million in the third quarter last year. Let's turn to page 11. The slide shows free cash flow for the quarter and on a rolling 12-month basis. We report a fee cash flow of 463 million in the second quarter and minus 270 million SEC for the first six months of the year. Compared to the last year, we have increased the investment pace mainly in expansion and maintenance as well as in IT. For the first half year, investments in maintenance increased to 368 million SEC compared to 169 million last year. This was mainly related to ongoing renovations at hotels in Stockholm, Copenhagen and Gothenburg. As we have mentioned before, we expect maintenance CAPEX to reach more normalized levels for the full year and be in the range of 3-4% on net sales. Expansion CAPEX increased to 107 million compared to only 18 million last year. This was mainly related to the opening of Scandic Nuremberg in Germany. We also now have higher COPEX for IT, which relates to overall higher activity levels in digitalization and commercial capabilities. Working capital in the quarter was impacted by repayments of variable rent debts from last year, totaling of 210 million. And we do not expect any more rent debts to be paid in 2024. All in all, free cash flow on rolling 12 amounted to 1.2 billion SEK. now have a strong financial position we only have around 50 percent of the maintenance topics being committed this provides us with good financial flexibility please turn to page 12. this is the net depth adjusted to EBITDA on a rolling 12 basis net depth amounted to 1.7 billion sec at the end of the quarter that included the convertible bond of 962 million and 675 million deferred VAT payments and social contributions in Sweden. Including the convertible bond, our net debt adjusted to EBITDA ratio was 0.7 times, excluding the convertible bond ratio was only 0.3 times. Our financial position is strong, and in the beginning of July, we refinanced our loans, which creates a high financial flexibility going forward. Please turn to page 13 for more details about the refinancing. We have successfully carried out a refinance with a group of banks, effective from the 1st of July. It amounts to 3.25 billion SEK, with the possibility to expand an additional 500 million SEK. This facility is set for a three-year term, with the potential to extend it for an additional two years. We have now secured long-term sustainability linked terms that align with our strategic agenda and reflect our strong financial position. This financing provides us with the flexibility to manage the different outcomes of the convertible bond. Please turn to page 14. The bond matures in October 8 and we want to provide a brief update. In 2021, we issued the bond with a total nominal amount of 1.8 billion SEK and a conversion price of 43.36 SEK. Last year, we did a buyback amounting to 590 million. And as of today, we have a pre-conversion from investors in the bond of 532 million. This brings the total outstanding debt as of today to 678 million SEK. With that, I would like to hand back to Jens for some more final comments.

Thank you very much, Per. And for some comments on the outlook, especially, I would say, for the rest of the year, we expect a continued solid hotel market in the Nordics. Household demand for travel and leisure activities remains high and should be supported by a more stabilized economy in the Nordics overall. July started off positively. On current bookings, we expect a good third quarter with occupancy in line with the last year and slightly higher average room rates. We are maintaining a steady pace in growing and improving our portfolio, and I'm pleased with the progress of expanding the ScandiGo brand. Just before the summer, we also completed the implementation of Oracle Hospitality Cloud of all our hotels. This provides us with good and solid and robust platform to build upon for the future and will further improve our ways of working. We're also driving many exciting initiatives within commercial to further improve our loyalty program and booking channels, such as the web and app. And I look very much forward to speaking more about this once we are ready in the fall. All in all, we are concluding a good quarter with strong results. in the middle of a very busy season and our focus remains very sharp on maintaining high efficiency while delivering exceptional good guest satisfaction. I would like also to thank everyone on this call to join us on this presentation and let's now open up for the Q&A session. So back to you operator.