Scandic Hotels : year-end report 2020 – Expected recovery after a challenging 2020

The leading hotel company in the Nordics

January - December 2020

EXPECTED RECOVERY AFTER A CHALLENGING 2020

FOURTH QUARTER IN SUMMARY

• • Net sales fell by 71 percent to 1,377 MSEK (4,831).

• • Occupancy dropped to 23 percent during the quarter due to the increased spread of the coronavirus and stricter restrictions from authorities in all markets.

• • Adjusted EBITDA was -282 MSEK (504). Results for the quarter were impacted positively by state aid of

  226 MSEK and rental rebates of around 180 MSEK.

• • Excluding IFRS 16 and items affecting comparability, earnings per share amounted to -2.37 SEK (1.83).

• • At the end of the quarter, Scandic's available liquidity, including credit commitments, was approximately

  1,900 MSEK.

SUMMARY OF THE YEAR

• • Net sales fell by 61 percent to 7,470 MSEK (18,945) and adjusted EBITDA amounted to -1,503 MSEK

  (2,046). Received rental rebates during the year amounted to 196 MSEK and governmental support amounted to 726 MSEK.

• • Adjusted for IFRS 16 and items affecting comparability, earnings per share totalled -37.19 SEK (7.49)

  with a significant negative impact from the impairment of intangible assets carried out during the first quarter.

EVENTS AFTER REPORTING DATE

• • Following negotiations with landlords, Scandic reached agreements for rent reductions of up to 900 MSEK, primarily for the period 2020-2022, most of which apply to 2021.

• • At present, available liquidity including credit commitments amounts to approximately 1,400

  MSEK.

GROUP KEY RATIOS

MSEK	Oct-Dec 2020	Oct-Dec 2019 % change	Jan-Dec 2020	Jan-Dec 2019 % change
Financial key ratios
Net sales	1,377	4,831 -71%	7,470	18,945 -61%
Adjusted EBITDA	-282	504 -156%	-1,503	2,046 -173%
Adjusted EBITDA margin, %	-20.5	10.4	-20.1	10.8
EBIT (Operating profit/loss)	-377	498 -176%	-4,800	2,144 -324%
Net profit/loss for the period	-527	126 -520%	-5,951	725 -921%
Net profit/loss for the period excl. IFRS 16	-462	189 -345%	-5,739	942 -709%
Earnings per share, SEK	-2.75	1.21 -327%	-40.02	7.01 -671%
Earnings per share, SEK, excl. IFRS 16	-2.42	1.84 -231%	-38.62	9.15 -522%
Earnings per share, SEK, excl. IFRS 16 & items affecting comparability	-2.37	1.83 -230%	-37.19	7.49 -597%
Net debt	4,714	3,497	4,714	3,497
Net debt/Adjusted EBITDA, LTM	neg	1.7	neg	1.7
Hotel-related key ratios
RevPAR (SEK)	193	672 -71%	271	707 -62%
ARR (Average Room Rate), SEK	842	1,080 -22%	945	1,071 -12%
OCC (Occupancy), %	23.0	62.2	28.7	66.0
Total number of rooms on reporting date	53,003	52,755 0%	53,003	52,755 0%

THIS INFORMATION IS INFORMATION THAT SCANDIC HOTELS GROUP AB IS OBLIGED TO MAKE PUBLIC PURSUANT TO THE EU MARKET ABUSE REGULATION. THE INFORMATION WAS SUBMITTED FOR PUBLICATION THROUGH THE AGENCY OF THE CONTACT PERSON SET OUT ABOVE AT 07.30 CET ON FEBRUARY 17, 2021.

CEO's COMMENTS

Expected recovery after a challenging 2020

The past year has been tremendously challenging for the entire hotel industry. As we previously announced, our occupancy rate fell to 23 percent in the fourth quarter due to increased spread of the virus and stricter restrictions. Both in December last year and during January this year, occupancy has been around 15 percent, with a certain negative effect during Christmas and the New Year's holidays when about half of the hotels were closed. For February, the occupancy rate is expected to be around 18 percent.

Towards a more normal hotel market from the summer

We are convinced that the hotel market will recover during 2021. As the vaccinations are carried out, we foresee that the restrictions will be eased, which will enable increased travel, sports and cultural events and meetings. Initially we expect that demand will be driven by intra-Nordic travel, which normally accounts for just over 80 percent of Scandic's total guest nights.

In the short term, demand will be completely determined by the pace at which restrictions are eased. We foresee a recovery where occupancy increases month by month, driven mainly by domestic and intra-Nordic leisure travel combined with gradual increase in business travel and meetings for our Nordic customers. We expect that pace of recovery will gradually increase and that occupancy during the summer will be higher than it was during the corresponding period last year. Crucial to this scenario is that infection and death rates due to the pandemic continue to decrease as vaccinations are completed by the summer.

Decisive actions make us well equipped for a recovery

Scandic has acted quickly and decisively the crisis. In a short time, we halved our cost base, which unfortunately affected thousands of team members. In recent months, we've also made great efforts into reaching agreements on lower rental costs with our landlords. We've achieved reductions of up to 900 MSEK, and we've also postponed the planned openings of some hotels in our pipeline for 2021. We continue to work actively to optimize our hotel portfolio and pipeline. I would like to take the opportunity to extend a big thank you to the landlords who have contributed and for the government support we have received during this very special year.

With a significantly reduced cost level combined with our efficient operating model, Scandic has all the prerequisites to reach a good level of profitability when demand returns, even if occupancy is expected to be lower than it was just before the pandemic. Scandic has an attractive hotel offer that is aimed at broad target groups, which makes us well positioned for a recovery in the market.

High focus on financing and liquidity

As occupancy increases, cash outflow will decrease and we continue to expect that we have the capacity to generate positive cash flow at an occupancy rate of around 50 percent. We will shortly present a solution to strengthen our financial position that is aligned with our main owners.

Jens Mathiesen

President & CEO

JANUARY - DECEMBER 2020 | 2

NORDIC HOTEL MARKET DEVELOPMENT

Weak market due to stricter restrictions

During the fourth quarter, there was a further weakening in both average occupancy and average revenue per available room (RevPAR) in the markets where Scandic operates. In all countries, stricter restrictions were introduced by the authorities to reduce the spread of the coronavirus, which has had an extremely negative impact on the hotel market.

For the quarter as a whole, the average occupancy rate was between 24 and 27 percent in the Nordic countries compared with 55 to 68 percent during the corresponding period last year. December was the weakest month of the quarter as occupancy was only between 16 and 18 percent. The level of activity in Germany was also very low due to extensive restrictions.

RevPAR fell by between 59 and 72 percent in the Nordic countries in the fourth quarter compared with the corresponding period in 2019, with Denmark being the market most impacted by restrictions.

Historically low levels in big cities

There have been relatively large disparities in occupancy between destinations. In some smaller towns, activity levels have been comparatively good with demand driven by specific industrial projects. In all of the major cities, however, both occupancy and RevPAR dropped to levels that are less than a third of what is considered normal.

During the fourth quarter, the market's occupancy rate was 23 percent in Stockholm and only about 16 percent in Oslo, Helsinki and Copenhagen. This can be compared with an occupancy rate of between 65 and 75 percent in the Nordic capitals during the period October to December 2019. Market RevPAR dropped by between 75 and 85 percent in the capitals during the fourth quarter.

Continued low occupancy in January

In January 2021, demand remained at approximately the same low level as in December 2020, with average occupancy of between 10 and 21 percent in the Nordic countries.

MARKET OCCUPANCY JANUARY - DECEMBER 2020

70%

60%

50%

40%

30%

20%

10%

0%

jan-20 feb-20 mar-20 apr-20 maj-20 jun-20 jul-20 aug-20 sep-20 okt-20 nov-20 dec-20

Sw ede nNorway

Source: Benchmarking Alliance

REVPAR DEVELOPMENT JANUARY - DECEMBER 2020

+2 0.0 %

-

-20.0%

-40.0%

-60.0%

-80.0%

-100 .0%jan-20 feb-20 mar-20 apr-20 maj-20 jun-20 jul-20 aug-20 sep-20 okt-20 nov-20 dec-20

Sw ede nNorwayFinlandDenmarkFinlandDenmark

HOTEL PORTFOLIO

Existing hotel portfolio

At the end of the period, Scandic had a total of 53,003 rooms in operation at 265 hotels, of which 241 had lease agreements.

During the quarter, Scandic Kotka and Scandic Ikaalinen in Finland, which together include 255 rooms, were exited as well as the 150-room Scandic Ålesund in Norway inconnection with leases expiring. In total, the number of rooms in operation decreased by 156 during the quarter.

Approximately 15 percent of Scandic's lease agreements will expire by the end of 2022, with approximately 25 percent before the end of 2025.

Portfolio changes

Number of rooms

Opening balance October 1, 2020

Lease contracts 49,930

Franchise, Management & Other 3,229

Total 53,159

Change lease contracts -156

Change other operating models 0

Total change during the quarter -156

Closing balance December 31, 2020

Lease contracts 49,774

Franchise, Management & Other 3,229

Total 53,003

Number of hotels in operation and in pipeline

Operational on Dec 31, 2020 of which with

Hotels Lease contractsof which withRooms Lease contractsPipeline on Dec 31, 2020

Hotels

Rooms

Sweden Norway Finland Denmark Other Europe Total

84

78

17,541

16,749

5 1,339

87

71

16,630

14,470 57

61

60

12,159

12,092 4,745 1,718 49,774 -156

4 1,113

27

26

4,955

3 1,574

6 265 -3

6 241 -3

1,718 53,003 -156

2 739

Change during the quarter

14 0

4,822 -270

High-quality pipeline

At the end of the period, Scandic's pipeline comprised 14 hotels with 4,822 rooms, corresponding to about 9 percent of the current portfolio. The number of rooms in the pipeline decreased by 270 during the quarter. In November, Scandic signed an agreement to take over a 150-room hotel in Arlandastad outside Stockholm. The transaction took place without a purchase price and involves a variable rental agreement that provides a low break-even level. Scandic took over the operations of the hotel on January 10, 2021.

Seven hotels in the pipeline are expected to start operating during 2021. Due to the prevailing market situation, however, planned openings have been postponed from the first to the second quarter for Scandic Helsinki Railway Station in Finland and from the first to the third quarter for Scandic Nørreport in Denmark. It is also possible that further hotel openings will be postponed.