REVENUE AND OPERATING NET - PROPERTY OPERATIONS

Total property revenue for the first 9 months of 1999 amounted to SEK 196.0 M (170.6). Property expenses excluding depreciation totalled SEK 39.4 M (34.2).

The operating net rose by SEK 20.2 M to SEK 156.6 M (136.4). The change compared with the corresponding period of 1998 is chiefly attributable to the surplus from properties acquired in 1998 and 1999, and development of these according to the Pandox model. Furthermore, the continued strong hotel market has generated higher earnings from turnover- and income-based lease agreements. Adjusted for properties acquired and sold, the operating net was SEK 160.1 M (144.2). The adjusted direct yield before administrative costs during the period was 9.4 per cent (9.2). The adjusted direct yield including property-related administrative costs was 9.0 per cent (8.9).

REVENUE AND INCOME- HOTEL OPERATIONS

As of 1 January 1999 Pandox conducts no hotel operations. In the corresponding period of 1998, Pandox operated the Hotell Park Astoria in Enköping.

INCOME

Consolidated income after tax rose by SEK 11.8 M over the preceding year, and net income for the period was SEK 59.0 M (47.2). The earnings increase is mainly explained by a higher operating net from property operations, primarily due to acqui-sitions. Income was also affected by a capital gain of SEK 4.1 M (3,5).

FINANCING AND CASH FLOW

The period's net financial items amounted to SEK -57.1 M (-52.8). The Group's interest-bearing liabilities as per 30 September 1999 totalled SEK 1,385.6 M. The average fixed-interest period in the loan portfolio is 2.2 years and the average interest rate is 5.61 per cent. The mortgaging ratio for the properties is 60.9 per cent.

Disposable liquid assets including unutilised overdraft facilities of SEK 50 M amounted to SEK 76.4 M.

Cash flow from operating activities before change in working capital for the period amounted to SEK 84.8 M (73.9), corresponding to SEK 5.65 per share (4,70).

PROPERTY PORTFOLIO
Pandox has acquired four hotel properties during the first 9 months of the year. In January, Pandox assumed ownership of the Provobis Star Hotel in Lund. The purchase price including acquisition costs was SEK 101 M. Since financial settlement took place on 1 January 1999, the property is included in income for the entire period.

On 1 April Pandox took over the Scandic Hotel Hallandia property in Halmstad, which was acquired for a price of SEK 49 M. On 1 July Pandox assumed ownership of First Grand Hotel property in Borås for a price of SEK 69 M including acquisition costs. An agreement was signed in Septem-ber to acquire the Quality Hotel Nacka property (formerly Fogg´s Hotel) for a price of SEK 122 M including acquisition costs. The property is consolidated in Pandox as of 1 October 1999.

The Hotell Bohème property in Gothenburg, with 52 rooms, was divested during the period. The hotel property with related equipment was sold for SEK 15 M, providing a consolidated capital gain of SEK 4.1 M.
Pandox's property holdings as per 30 September 1999, including Quality Hotel Nacka, consist of 31 hotel properties with a combined 4,904 hotel rooms and floor space of 292,069 sq.m. The book value of the properties including hotel equipment, but excluding Quality Hotel Nacka, as per 30 September 1999 was SEK 2,276.8 M.

The Group's investments during the period amounted to SEK 20.9 M, and mainly pertained to hotel improvements in a number of properties.

FORECAST

With the current portfolio of hotel properties, the anticipated income after tax including capital gains for 1999 is SEK 80 M. Cash flow from operating activities is expected to be SEK 117 M, corresponding to SEK 7.80 per share.

Stockholm, 22 October 1999


Anders Nissen
Managing Director


The full interim report including tables is available to download from the enclosed link.