From the CFO:
From attack to active defence
2020 was another very active year for Pandox – but for different reasons than in previous years because of Covid-19. Over a long weekend in mid-March we completely changed tactics, from focusing on acquisitions and growth to addressing liquidity, financial position, minimum rents and government relief programmes. Thanks to Pandox’s well-trained team, we were quickly able to organise ourselves and deal with the main issues in order to strengthen our financial position and secure liquidity.
Clear priorities in a difficult situation
When the WHO confirmed on 11 March 2020 that Covid-19 was a pandemic, we changed our business focus over the course of a long weekend. From being on the attack and looking at acquisitions and growth, we switched to active defence and addressed matters surrounding liquidity, financial position, property valuations, minimum rents and government relief programmes.
For me, and for my colleagues in account-ing and finance, this meant we had new priorities in our daily work. The first priority was to ensure that we were heading in the same direction and working on the key matters. We increased the number of daily checks, to ensure more than ever that all was in order and that we had good control over our liquidity and incoming and outgoing payments. The second priority was to adapt our existing procedures to be more precise; for example, ensuring that our rents were received at the appointed time. The third focus area was to have close, constructive and proactive dialogue with our lenders so that they would feel secure with the decisions we were making. The fourth priority was perhaps the most important: to keep calm – to trust our methods and the “machinery” that we had built up over many years. Many of us have been colleagues for a long time, and we are used to working together both in sunshine and in pouring rain.
Resilient business model
Pandox’s business model, which is largely centred on revenue-based rent, provides powerful leverage when times are good in the hotel market. The defensive qualities of the business model, i.e. minimum and guaranteed rents, tend to be overshadowed in normal years but were particularly important in 2020.
Although the contribution from revenue-based rent was low, our contractual minimum rents and fixed rents amounting to around MSEK 500 per quarter were sufficient to cover all our costs. With this foundation, Pandox is able to report a positive result before changes in value for 2020 – ultimate proof of the defensive qualities of our business model.
Proactive and constructive dialogue with our 11 Nordic and international banking partners meant that in addition to refinanc-ing loans of around MSEK 5,000, we were also able to secure new financing for previously completed acquisitions totalling around MSEK 1,665. I’m particularly pleased about this in a turbulent year.
Ready for any scenario
We do not known when the virus will be under control and the world will return to normal, and this is beyond Pandox’s control. What we can influence is how we ourselves act.
We are going into 2021 with a stable platform, good procedures, strong liquidity, a proven business model, good relationships with lenders, long-term shareholders and a clear plan for the way forward. None of this would be possible, however, without our strong team of “Pandoxers” who are solution- minded, courageous and forward-looking. We’re ready!
Stockholm, March 2021
More from the Annual Report 2020
CEO comment: A clear game plan in a difficult situation
Thanks to a well proven business model, extensive crisis experience, clear priorities and an agile organisation, Pandox has succeeded in navigating its way through the storm relatively well.
From the Chairman: The mother of all crises
Calling 2020 an exceptional year is no exaggeration. For Pandox and the entire hotel industry the year unfolded in a way that we could not have predicted at the start of the year.