Year End Report 2014
- Pandox’ operating cash flow, excluding non-recurring items, amounted to SEK 887.8 M (814.7), which corresponds to a 9 per cent increase. The increase is mainly explained by an improved global economy, increased capacity when renovated hotels have been reactivated, improved results from hotels under own operations and lower financing costs.
- Property management revenues amounted to SEK 1,788.8 M (1,812.5). For comparable entities, including an adjustment for currency effects, the property management revenues increased by 5.1 percent.
- Revenues from Pandox' own operations were SEK 1,598.3 M (1,307.7), representing an increase of 18.2 per cent for comparable units.
- Profit before tax, excluding non-recurring items amounted to SEK 573.4 M (479.0).
- During the reporting period, 15 hotel properties have been disposed of, which has generated a capital gain of SEK 935.2 M.
- After the disposals, Pandox manage a hotel property portfolio comprising 105 hotels, with an approximate room total of 22,000, plus a conference centre. The company operates across 9 countries, in 51 locations and under 16 different brands.
- On December the 1st2013, Pandox AB (publ) acquired the outstanding 50 per cent share of the Norgani group. As a result, the Norgani group will be consolidated as a fully owned subsidiary of Pandox AB (publ) from that date. For comparable units, a pro forma P/L statement for the Pandox group is presented in the interim report on page 6. Comparisons in this interim report are made with the corresponding P/L statement.
The global economic recovery is expected to continue to gain speed during the next few years, albeit at a slow pace. The beginning of 2015 has been signified by somewhat higher insecurity and the differences in economic development between regions seem to increase. A lower oil price should have a positive impact on global growth but acts as a drag on inflation at the same time. The US is still one of the global growth engines while continued weak growth in Europe and lower growth in China are obstacles to recovery. A tense geopolitical situation with, for example, continued unrest in the Ukraine and the Middle East, makes predictions uncertain. Despite those facts, most hotel markets are still showing a positive trend.
The US is still the engine for global growth and commentators expect the American economy to keep growing by about 3.5 per cent in 2015. The development is driven by increased activity, in among other things, private consumption, exports, investments and public sector consumption. The property market has stabilized, unemployment is down and property prices continue to rise, lifting many households out of a paralyzing debt trap. Wage growth is still lagging though.
During the third and fourth quarter, GDP growth stagnated within the Eurozone and the predictions for 2015 keep being revised down from already low levels. The Euro has been weakened, high youth unemployment has a steady grip on many countries and inflation is still too low. Recent developments, including the Greek elections and a tense situation as regards Russia as well as IS, contribute to the uncertainty. Among the green shoots are indications of increasing exports and an improving labour market in Germany. Outside the Eurozone, the UK is at the forefront of the global economic cycle and has seen stable development including solid improvement in employment and a stronger currency.
The Swedish economy continues to perform better than most European countries but is still not really taking off, as the weak global demand dampens exports. Growth is supported by a low oil price, a weak currency and low central bank interest rates. Since mid-February, the main interest rate on deposits has been negative for the first time in history, in an attempt by the central bank to kick-start the economy and up inflation. Unemployment rates continue to go down, and are expected to keep falling during the year, at the same time as private consumption and property investments continue to form a foundation for stable growth.
The Norwegian economy was a positive surprise in 2014 with GDP growth for the year landing at 2.2 per cent, which was much better than expected. A number of challenges remain however and the future outlook is clouded. The oil industry makes up around 20 per cent of the Norwegian economy and a 50 per cent cut in prices will have repercussions. Among other things, we can expect lower investments in the property and oil industries.
The Danish economy has been signified by zero growth for a number of years, but during 2014 the economy turned upwards somewhat, mainly due to more solid private consumption levels, stronger exports, lower household debts and improving property prices. A low inflation puts downward pressure on interest rates and the central bank’s deposit rate is in negative territory similar to the Swedish situation. The outlook for 2016 is uncertain, but commentators are expecting growth to come in at around 2 per cent.
The negative economic development in Finland seems difficult to shake and there are no signs of an imminent recovery. The country still finds itself in recession and in need of a global economic recovery to regain traction in exports. The continued unrest in Russia and the Ukraine where the conflict has escalated further puts an added gloom on the outlook for the year.
Enclosed: Complete Year-End Report
For more information, please contact:
CEO, Pandox AB
+46 (0)708 46 02 02
CFO, Pandox AB
+46 (0)70 237 44 04