English edition - Pandox

Pandox
Report on
business
operations
2010
o n e o f t h e l e a d i n g
h o t e l p r o p e r t y c o m p a n i e s i n E u r o p e

The Company
The Business model . . . . . . . . . . . . . . . . . . . 2
The Development . . . . . . . . . . . . . . . . . . . . . 4
Success factors . . . . . . . . . . . . . . . . . . . . . . 6
Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Value-growth . . . . . . . . . . . . . . . . . . . . . . 10
Types of agreements . . . . . . . . . . . . . . . . 10
Business processes . . . . . . . . . . . . . . . . 11
Success stories . . . . . . . . . . . . . . . . . . . . . . 12
Operated by Pandox . . . . . . . . . . . . . . . . . . 14
Market communication . . . . . . . . . . . . . . . . 15
Hotel property market . . . . . . . . . . . . . . . . . 16
Pandox’ hotels and partners . . . . . . . . . . . . 18
Hotel properties
List of hotel properties . . . . . . . . . . . . . . . . . 40
Other information
CEO commentary 2010 and ahead . . . . . . . 44
Board of Directors and auditors . . . . . . . . . . 48
Senior managers and executives . . . . . . . . 50
Team Pandox. . . . . . . . . . . . . . . . . . . . . . . . 52
Finances
Financial overview . . . . . . . . . . . . . . . . . . . 58
Sensitivity analysis . . . . . . . . . . . . . . . . . . . 62
Valuation and fiscal situation . . . . . . . . . . . . 64
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 65
Ten-year overview . . . . . . . . . . . . . . . . . . . 66
Quarterly data 2009–2010 . . . . . . . . . . . . . 68
Financial statements 2010
Report of the Board of Directors . . . . . . . . . 70
Income statement and comments . . . . . . . . 72
Balance sheet and comments . . . . . . . . . . . 74
Changes in equity . . . . . . . . . . . . . . . . . . . 76
Cash flow statement . . . . . . . . . . . . . . . . . . 77
Accounting principles. . . . . . . . . . . . . . . . . 78
Notes to the accounts . . . . . . . . . . . . . . . . 79
Proposed disposition of earnings . . . . . . . . . 84
Auditors’ report . . . . . . . . . . . . . . . . . . . . . 85

Pandox completed
the world’s largest
hotel property transaction in 2010
with the acquisition of Norgani, a portfolio of 73 hotels.
Pandox thereby became
one of the leading
hotel property companies in Europe.
Pandox strengthened
its position
on the Nordic market.
Pandox continued to expand in Brussels and
acquired one of the city’s largest and bestknown
hotels – now called The Hotel.
Pandox is also an international
challenger present in ten countries, including
North America with two large hotels in the centre of Montreal.
Pandox has unique
collaboration with 19 brands,
creating an extensive network.

The business model
The business model is chosen with
consideration to the local prerequisites in
order to obtain a situationadapted strategy.
The procedure is based on a well-developed methodology with
defined structures, known as the Pandox Model, which enables
Pandox’ skilful employees to focus on development and the
creative process.
Several models are used in Brussels. Hotel BLOOM! and The
Hotel are independent hotels operated by Pandox, and the Crowne
Plaza Brussels City Centre is operated with a franchise agreement,
while the Hilton Brussels City is operated under a management
agreement and the Scandic Grand Place through a lease.
Development
Pandox has achieved constant progress in size,
cash flow and value-growth – and consequently
has a stronger market position. The portfolio value
has increased from SEK 800 million to more than
SEK 22 billion, while cash flow has improved by
45 times since the Company was formed in 1995.
4
Read more on page
Success
factors
Pandox has developed rapidly since starting in
1995. The success factors are a combination of
the Company’s strategy, expertise, flexible business
model and industrial owners.
2 |
Pandox 2010

Knowledge,
network and
individual capital
One of Pandox’ most important cornerstones is
to constantly develop the Company’s expertise
and competences. In order to inspire our employees,
an informal leadership style has been devel oped
to give each individual considerable freedom and
development opportunities. The corporate culture
includes an interactive discussion with an extensive
network, which provides valuable input in both
large and small issues.
Consistent
strategy
Pandox has a well-defined strategy that is
thoroughly embodied with the Board of
Directors, senior executives and banks – a
strategy that has been consistently followed
since the Company was formed 15 years
ago. The point of departure is to acquire
under-performing large hotels in strong locations,
where the Company’s specialist expertise
can be used to develop the assets. This
in turn creates prerequisites for long-term
value development and a strong company.
Read more on page
6
Read more
on page
8
Pandox 2010
| 3

The Development
From financial crisis to successful
hotel property company
When Pandox started in 1995, the Company consisted of 18 hotels with 3,000 rooms located in nine
Swedish towns and cities. The business model was new and untried. The Company had weak profita b-
ility and limited capital.
The road to success has since gone via transactions embracing 170 hotel properties to a total value
of SEK 20 billion. With a consistent strategy, Pandox has shown durable and profitable growth, along
with a greater geographic spread.
At the end of 2010, Pandox had 120 hotels with a total of 24,800 rooms
located in 59 towns and cities in 10 different countries in the Nordic Region,
the rest of Europe, and North America. Pandox thereby is one of the
leading hotel property companies in the European market.
266
228
267
272
299
Pandox’ development 1995–2010
Number of hotels
Cash flow SEK M
18
12
14
21
20
53
28
97
31
119
46*
*Hotellus förvärvas med 16 hotellfastigheter.
* Acquisition of Hotellus with 16 hotels.
46
44
45
44
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
1990 – Swedish financial
and property crisis
1999/2000
IT and financial crisis
Acquisitions totalling SEK 20 billion.
Founded in 1995. Pandox has its origins in the financial and property crisis
in the beginning of the 1990s. The Company was formed in 1995 by Securum
and Skanska. The mission was to take over and restructure the hotel
portfolio, and prepare it for sale.
The original hotel property portfolio. In the beginning, Pandox consisted
of 18 hotel properties and three small operating units. All of the hotels were
in Sweden, and most of them were small with weak locations and in poor
condition.
Stock-exchange listing. Pandox was floated on the Stockholm Stock
Exchange in 1997 with a new and untried business concept. The Company’s
portfolio was valued at SEK 1.3 billion and the market capitalisation was SEK
520 million. The listing gave 4,000 new shareholders.
Further to the listing, Pandox expanded substantially with acquisitions of
large hotels in strong locations, while smaller hotels were sold.
Internationalisation. In 2000, Pandox enlarged its geographical strategy to
northern Europe through the acquisition of Hotellus with 16 hotel properties.
Privatised again in 2004. Pandox is bought out from the stock market in
2004, with new industrial owners through Eiendomsspar AS and Sundt AS.
4 |
Pandox 2010

700
445
446
Average
annual return
19%
389
120 *
301
318
* Acquisition of Norgani with 73 hotels.
36*
* Sale of 12 hotels to Norgani.
39
44 45
46
Key indicators 2010
Pandox proforma including Norgani
(before acquisition costs)
Mkr 2010
Number of hotels 120
Number of hotel rooms 24,800
Property revenues, SEK M 1,700
Cash flow, SEK M 700
2005 2006 2007 2008 2009 2010
2007/2008
Global finance crisis
Transactions covering 170 hotels.
Stronger in Europe. The transaction tempo increased further to the privatisation,
and several large hotels were acquired in Berlin, Brussels, Basel,
Copenhagen, Stockholm and Malmö – thus strengthening Pandox as one
of the leading hotel property players in Europe.
Expansion to North America. In 2007–2008, Pandox continued its international
expansion with two acquisitions in Montreal.
Leading in Europe. In August 2010, Pandox announced the acquisition
of Norgani Hotels with a portfolio of 73 hotels in Sweden, Finland, Norway
and Denmark.
Further to the acquisition, Pandox became one of the leading pure hotel
property companies in Europe with regard to geographic spread and number
of hotels and brands. Since starting in 1995, Pandox has carried out acquisitions
for a total of SEK 20 billion representing transactions of 170 hotels.
The value of the Company’s hotel property portfolio amounts to approximately
SEK 22 billion further to the acquisition of Norgani – which implies
that the value has increased about 20 times. This has been achieved
through a good hotel market, active ownership, sound expertise and
profitable acquisitions.
Pandox 2010
| 5

Success factors
Short and rapid
decision-making paths
Pandox’ shareholders and Board of Directors possess industrial expertise in the
Company’s three most important areas: hotel operations, properties and business
development. Their knowledge and experience create confidence, which enables
us to take rapid decisions within, for example, different acquisition questions.
This is a competitive advantage in a significantly slower surrounding world.
Clarion Collection Hotel Bastion, Oslo
Well-defined and
consistent strategy
Pandox has a well-defined strategy within
geography, types of hotel and yield requirements
that have been consistently followed
since the Company was formed.
Flexible business model
Depending on local prerequisites, Pandox
is able to choose between four
operational strategies: through leases
with professional operators where Pandox
remains as a strategic partner; management
agreements where a partner
runs the daily operations on behalf of
Pandox; by managing one’s own operations
through a franchise agreement
under a well-known brand or via an independent
distribution system. The business
model provides excellent opportunities
to create a situation-adapted strategy
“asset by asset”.
Expertise and network
International network provides access to unique expertise
Pandox has a small management
organisation, and all members are
based at the office in Stockholm. In
addition, one of the Company’s executives
is based in Brussels where the
largest operational activities are
located. The model provides major
benefits with rapid decision-making
paths, a high level of interactivity, and
considerable individual freedom. In
order to maintain all business processes
in motion, the organisation is
supplemented by a national and international
network composed of people
with specialist expertise within market,
management, hotel operations,
property development, brand names,
finance and taxes. Pandox works
actively to attract people into the network,
which is a precondition for the
Company’s rapid growth. The model
places demands on both visionary
and operative leadership, as well as
an ability to create forms of collaboration
with individuals with different
backgrounds.
6 |
Pandox 2010

Hyatt Regency, Montreal
Corporate culture
Pandox
Spirit
Acquisition strategy
Pandox primarily acquires hotels with a potential that can be
brought out through active measures and where the Company’s
areas of expertise can be utilised.
Pandox has established an informal
leadership style where a high level of
expertise is combined with minimum
bureaucracy and effective monitoring
methods. The catchwords are inspiration,
simplicity, rapidity, expertise and
visible leadership.
Portfolio of the highest quality
The hotel property portfolio is of very high quality. The hotels are located in
international and dynamic markets such as London, Brussels, Berlin,
Stockholm, Copenhagen and Montreal as well as locations with a high proportion
of domestic demand, which creates balance in revenues. The hotels
have strong locations and are the right size, which provides a critical mass
as well as being marketed by the sector’s most prominent brand names.
The agreement structure with a combination of leases, management agreements
and own operations provides good potential with limited risk.
Strategic alliances
Pandox actively seeks strategic alliances with strong brand names that
have an interest in forming a partnership that creates benefits for both parties.
Pandox currently works with 11 partners under 19 brands.
Choice of countries
and locations
Pandox is establishing in major hotel markets that
have good potential and stable demand.
Pandox 2010
| 7

Strategy
Consistent strategy enables stability
and the spreading of risk
Corner-stones in Pandox’ strategy
One type of asset
– hotel properties
Agreement structure
Geographical market
A hotel property has distinctive features
and differs from other types of property,
which demands specialist expertise to be
able to maintain active and successful
ownership. Pandox therefore invests in
just one type of asset: hotel properties.
Business position: Pandox has
120 hotels with a total of 24,800 rooms.
To maximise value-growth in each hotel
requires a flexible business model that creates
opportunities for a situation-adapted strategy.
Business position: Pandox has a structure
that embraces leases, management agreements,
franchise agreements, as well as agreements
with independent players. The largest
portion concerns leases, which cover 87
percent of revenues.
Focusing on one type of asset requires a
broad geographic market so as to create
growth prerequisites and be able to benefit
from changes in the hotel economic cycle.
Business position: Pandox is currently
located in ten countries, of which Sweden is
the largest market. Major markets outside the
domestic market are Brussels, Copenhagen,
Helsinki and Montreal. Pandox is represented
in 59 locations that have a mix of national and
international demand.
Scandic Kramer, Malmö
Lease structure – Rental revenues
Geographical spread, proportion of hotel rooms
Revenue-based lease, 34%
Revenue-based lease
with guarantee, 52%
Management agreements,
own operation, 4%
Franchise agreement,
own operation, 4%
Own operation, 5%
Other, 1%
Sweden, 51%
International, 49%
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Pandox 2010

Pandox’ vision is to be one of the world’s leading
hotel property companies with regard to specialist
expertise in both hotel and property operations,
and active ownership.
For the vision to become reality, the Company must retain its
specialist expertise regarding the value-growth chain, and that
the balance between international and national revenues, brand
names and types of hotel are maintained. Another important
aspect is to constantly develop the business model so as to
adapt to each situation and choose the best strategy in relation
to local conditions.
Business concept and strategy
Pandox’ business concept, based on expertise within hotel
properties, hotel operations and business development, is to
actively own, develop and lease out hotel properties.
Overall goal
Pandox’ overall goal, through specialist expertise within hotels,
hotel properties and business development, is to achieve optimal
yield and value-growth in the hotel property portfolio. Specific
goals are set each year for the operating net, return on investment,
value-growth in the existing hotel property portfolio, and the
equity/assets ratio. The goals are then broken down to each individual
property and act as guidance upon investment decisions.
Location and size
Type of hotel
Choice of brand
names and partners
Large hotels with strong locations increase
potential and reduce risks, and are attractive
for both partners and guests. Such
hotels have higher liquidity and are easier
to finance.
Business position: All Pandox hotels
have strong locations with an average size
of 207 rooms, which is significantly larger
than the average hotel in Europe.
The hotels shall belong to the uppermedium
and high-price segment.
Business position: The portfolio contains
a mix of upper medium and high-priced
hotels. Examples of upper medium-priced
hotels include many Scandic hotels as
well as the Hotel Berlin, Berlin. High-priced
hotels include InterContinental Montreal
and Hilton Stockholm Slussen.
Each hotel shall have the best possible brand
name that strengthens the profile. This requires
that Pandox maintains a broad network with
national and international hotel companies.
Business position: Pandox currently works with
11 partners under 19 well-known brand names,
as well as a number of independent distribution
channels, thus providing a unique position and
extensive network.
Radisson BLU Hotel, Basel
Hotel Berlin, Berlin
Pandox 2010
| 9

Value-growth
The value-growth chain in a hotel property forms the basis for Pandox’ vision,
strategy and choice of agreement structure. Knowledge of the entire chain is
a precondition for success.
10. Financing and taxes
1. Macro economy
9. Agreement structure
2. Hotel economic cycle
8. Asset management
3. Location and size
7. Investments
4. Competition – new capacity – different market positions
6. Operation and management
5. Brand names
Types of agreement
The value of a hotel property is determined to a considerable degree by how the hotel
agreement is formulated. Pandox endeavours to find agreements that create mutual
incentives and driving forces for maximum development for both parties.
Optimal agreement framework
Pandox’ active and situationadapted ownership
is reflected in the different types of agreement.
The design and formulation of agreements are
guided by factors such as anticipated market
trends, local competition, planned investments,
as well as choice of operator and distributor. A
mixture of different types of agreement provides
Pandox with a structure that increases cash flow
in good times and, with rental guarantees, protects
in declining markets.
Revenue-based agreements
Revenue-based hotel leases are linked to the
sales generated by the hotel business. This form
of lease provides Pandox with a share of growth
in both the market as a whole and in the market
share. To limit the risk, these leases generally
include a minimum guaranteed rent.
Result-based agreements
A result-based lease implies that Pandox
receives a share of the hotel operator’s operating
net. This type of lease requires that Pandox
be informed of and have insight to the operating
company’s finances and accounts. This form of
lease can also have a guaranteed rent.
Fixed-fee agreements
Fixed-fee hotel leases are used in mature markets
and in well-established hotel products. A fixed-fee
lease limits the risk but also the potential.
Management agreements
A management agreement can be perceived as
kind of agent contract, where Pandox owns the
hotel business. Through a management agreement,
a hotel company is assigned to operate
and manage the hotel on behalf of Pandox.
Franchise agreements
In Pandox own operation, franchise contracts
can be entered with a hotel company in order to
gain the benefits of a larger system that embraces
the hotel’s overall marketing and sales.
Lease structure – Rental revenues
Revenue-based lease, 34%
Revenue-based lease
with guarantee, 52%
Management agreements,
own operation, 4%
Franchise agreement,
own operation, 4%
Own operation, 5%
Other, 1%
10 |
Pandox 2010

Business processes
Pandox’ five business processes are implemented to describe the business position,
the external and internal driving forces, and how these interact with each other.
1
Market survey
Gains knowledge of the market situation
and change-pattern.
4
Economic and
financial reporting
Operations are monitored through established
goals, evaluations and valuations.
2
The Pandox Model
The Company’s working methodology
increases cash flow and limits the risk
for each respective hotel.
3
Asset management
Daily management plus major investments
with the objective of increasing the
value of the properties in the long-term.
5
Market
communication
Pandox regularly performs marketing
activities towards target groups.
The Pandox Model – and its four phases
Market analysis
A market analysis is performed
in order to assess a hotel’s profitability
potential and subsequent
ability to pay the agreed rent.
The local market is identified and
analysed with regard to demand,
competition and the current and
future supply.
Market strategy
A strategic plan for each hotel
property is established based on
the respective hotel’s specific
prerequisites, the local market,
and its position in the hotel economic
cycle. The property’s continued
area of use is unconditionally
evaluated while preparing
the strategic plan.
Profitability optimisation
In view of that the value of a property
is influenced by the profitability
of the related hotel operations,
the operator is Pandox’ most
important partner. The hotel
operator is constantly assessed
in order to ensure positive developments
of the hotel’s operations
and the value of the property.
Agreement optimisation
The optimal cash flow of each
respective hotel property is
divided between the operator,
Pandox and other related parties.
Each agreement is formulated in
such a way that all parties
involved are given an incentive to
continuously improve the hotel
property’s overall profitability.
Possibility to
acquire a
hotel property
Action plan
with concrete
measures
Evaluation of
each respective
hotel property
and the portfolio
Market analysis Market strategy Profitability
optimisation
Agreement
optimisation
Sales in accordance
with the strategy
Pandox 2010
| 11

Investments in developm
Pandox has developed a
large number of hotel
properties and hotel
operations during the years.
A selection of the past years’
successful repositioning
and ongoing projects are
here presented.
Investment program: CAD 7.5 million
Accomplished: Modernisation and improvement
of the banqueting hall and other meeting areas.
Holiday Inn Brussels Airport
Vision – the best!
Crowne Plaza
Brussels City Centre
Established
in Brussels
Holiday Inn Brussels Airport was acquired in 2006 when the hotel required substantial
refurbishment and development. With the vision of creating the best upper-mediumpriced
hotel in the area, the change process has been successfully implemented based
on the catchwords of full service, attractive design and high efficiency.
Crowne Plaza Brussels City Centre was
acquired in 2003, and has for several years been
one of Brussels’ business and meeting hotels –
and indeed continues to strengthen its market
position year after year. The hotel, which has
received several international awards, has the
vision of becoming Brussels’ best meeting hotel
in the city centre.
Investment program: EUR 15 million
Accomplished: Repositioning towards the
meeting segment with new concept called
“Balanced Senses”. Upgrading of all rooms,
as well as new restaurant and bar concept in a
classic environment.
Investment program: EUR 8 million
Accomplished: Completely new design for rooms and
lobby, new meeting concept, upgrading of general
facilities and major organisational development.
12 |
Pandox 2010

ent and repositioning
Success
stories
Hyatt Regency Montreal
Outstanding!
InterContinental Montreal
Business
and pleasure
Pandox acquired the InterContinental Montreal
in the summer of 2007. Extensive development
work has since created a completely
new hotel concept – and reactions have been
nothing less than fantastic with several distinctions
and awards. Work is now continuing
with the vision of becoming RevPAR-leader in
Montreal.
Pandox acquired the Hyatt Regency Montreal
in the summer of 2008, and is now investing
in the vision of creating Montreal’s best
meeting and festival hotel. And the hotel is
well on the way to becoming outstanding!
The first stage is already completed with the
upgrading of the hotel’s large banqueting
hall and other meeting rooms. Work is now
continuing with the upgrading of the
reception and lobby.
Investment program: CAD 14 million
Accomplished: New management, new
profile and design in all rooms and the
lobby, new F&B offer.
Hotel BLOOM!, Brussels
Talk of
the town
Pandox acquired the hotel in 2005, which at the
time was considered to be one of the city’s absolutely
poorest hotels. During more than two
years, the hotel was refurbished, upgraded and
developed, and a new concept was produced.
Hotel BLOOM! is a unique hotel with a completely
own concept based on art and design. It has
become a challenger in the Brussels hotel market
and now competes with the major hotels.
Investment program: EUR 13 million
Accomplished: Repositioning, upgrading and
development of the entire hotel. New
management, new concept and new name.
Hotel Berlin, Berlin
Meeting place
Since acquiring the hotel in 2006, Pandox has
created the meeting place of the future in one of
the city’s largest hotels. Extensive re-profiling has
moved the Hotel Berlin, Berlin back to the top –
and is now established as one of the leading
meeting hotels, as well as one of Berlin’s most
creative meeting places.
Investment program: EUR 10 million
Accomplished: Modernisation and improvement
of all rooms and meeting product, as well as
facade, entrance and lobby. New market profile
and new management.
Pandox 2010
| 13

Operated
by Pandox
Crowne Plaza Brussels City Centre
Holiday Inn Brussels Airport
Hotel BLOOM!, Brussels
Hilton Brussels City
The Hotel, Brussels
Crowne Plaza Antwerp
Hotel Berlin, Berlin
Hyatt Regency Montreal
InterContinental Montreal
Pelican Bay, Bahamas
A natural part of Pandox’ active ownership
is to operate its own hotels. Depending on
the local prerequisites, the best strategy
can be to develop operations oneself, and
to choose another solution at a later stage.
This creates a situation adapted strategy –
hotel by hotel.
Another reason is that business cultures vary
among different geographical areas. In the
Nordic region, leases dominate while in North
America the most common form is management
and franchise agreements. Europe has a
mixture of both. It is therefore important to command
different strategies in order to successfully
operate in an international hotel environment.
Having one’s own operational competence also
implies possessing specialist knowledge to
evaluate the hoteloperators, and be able to
carry out acquisitions that include both the
property and operating company.
Further to the growing industry trend of hotel
companies becoming management companies,
it is also natural for Pandox to integrate vertically
and take over operational responsibility.
At the end of 2010, Pandox’ operating companies,
including management agreements,
embraced ten hotels with total revenues of SEK
1.2 billion – located in Berlin, Brussels, Antwerp,
Montreal and the Bahamas.
In recent years, four of the operations that had
been acquired as under-performers and thereafter
redeveloped, were leased with long-term
agreements to well-known operators. In turn,
this created prerequisites for new acquisitions.
The philosophy behind Pandox’ operating
companies is to build up each hotel’s strategy
and competence locally. This implies that the main
part of decision-taking is delegated, and reporting
is made to a board of directors with, normally,
external members who are elected for their specialist
expertise. To be successful with the business
processes requires an ability to attract the
best management, and that such persons be
given substantial influence over operations.
Hotels operated by Pandox
City Hotel Brand name No. rooms Location
Berlin Hotel Berlin, Berlin Independent hotel 701 Central
Montreal Hyatt Regency Hyatt Regency 605 Central
InterContinental Montreal InterContinental 357 City centre
Brussels Crowne Plaza Brussels City Centre Crowne Plaza 354 City centre
Hotel BLOOM! Independent hotel 305 Central
Hilton Brussels City Hilton 283 City centre
The Hotel Independent hotel 4334 City centre
Holiday Inn Brussels Airport Holiday Inn 310 Airport
Antwerp Crowne Plaza Antwerp Crowne Plaza 264 Central
Bahamas Pelican Bay Independent hotel 184 Central
14 |
Pandox 2010

Market
communication
Pandox organises a Hotel Market Day
each year, where current topics that
affect the industry and sector are presented
and discussed. The event has
been held every year since 1997 and
interest is constantly growing. Recent
years have seen a full house with around
300 people taking part, of which a large
part is composed of international guests.
The Hotel Market Day is a dynamic meeting
place where hotel owners, operators, hotel
companies, banks, public opinion lobbyists,
construction companies, politicians and media
come together. They can listen to interesting
presentations that increase knowledge and
insight about the hotel sector’s conditions, and
are given the opportunity to network and obtain
a forecast and prognosis for next year. The
evening always closes with a dinner in a pleasant
and relaxed environment. The event is held
in November at the Hilton Stockholm Slussen,
which apart from being owned by Pandox is a
conference hotel of the highest class. In recent
years, themes taken up have included the effect
of low-price airlines on the hotel industry, the
significance of shopping tourism for a destination,
as well as the signification of the term
“brand profitability” and the business models it
offers. The themes for 2010 were the economic
situation and its consequences for the hotel
industry, as well as social media and their effect
on the sector.
The speakers are top-quality. In November
2010, we had the honour of presenting Simon
Johnson, Director EMEA from CBRE Hotels,
Jan Tissera, CEO of TravelClick International,
and Hermine Coyet Ohlén, Chief Editor of
Swedish Elle. Staffan Olsson, well-known handball
profile and Swedish national handball team
manager and Stefan Lövgren, handball icon and
expert commentator for TV4, were also there
and talked about the Handball World Championship
2011 – a mega event.
Regular information about market trends and acquisitions
When Pandox was formed in 1995, the
publication of a newsletter was started in
order to market the Company vis-à-vis the
capital market prior to being listed on the
stock exchange. The newsletter later was
replaced by the public reports distributed
by the Company. In spite of Pandox no
longer being listed on the Stockholm Stock
Exchange, the flow of information was
maintained to people interested in the hotel
sector and the hotel property market,
which is why Pandox Upgrade is still
regularly issued. The newsletter contains
topics such as market trends and current
Swedish and international hotel market
questions.
Welcome as a subscriber
Pandox Upgrade is free of charge and may
be ordered from Pandox either by telephone
at +46 (0)8-506 205 50 or by sending
an email to pandox@pandox.se
Pandox Upgrade is also available on
www.pandox.com
Pandox 2010
| 15

Development of
the hotel property market
Historically, hotel properties were perceived
as part of the overall property market. Ownership
was often in the hands of institutions
and large property companies that lacked
hotel expertise and had few contact surfaces
with hotel operators. The relationship
between tenant and landlord was in general
based on long leases with solid guarantee
components where the operator/hotel
company took care of all development,
maintenance and service of the properties.
The distinctive features of hotel properties
became clear
During the financial and property crisis in the beginning
of the 1990s, it became clear that the owners,
often institutions and large property companies,
lacked industrial competence. The economic
downturn hit the hotels, which suddenly could not
afford to pay their rent – which in turn caused farreaching
problems for the property owners.
The property crisis led to the banks being
forced to take over a number of hotels, and
banks and other passive owners discovered
that hotels have distinctive features that distinguish
them from, for example, housing and
office buildings. The value growth of a hotel
property is complex in view of that revenues and
results are affected by several factors that
demand extensive knowledge of the sector,
including knowledge of driving forces within the
hotel industry, effects of the choice of brand
name and type of agreement, as well as different
price and product segments, and much more.
Functional and geographical focus
Further to this baptism of fire, the capital market
increased its requirements regarding the strategies
of property companies. The companies
started to specialise, and two principal paths
crystallised: functional and geographical focus.
The majority of property companies chose the
latter and concentrated their portfolio around a
few locations, which also led to them selling
special properties such as hotels and shopping
centres. New structures arose from this situation
where companies with a functional strategy
were formed, and the first pure hotel property
companies were established.
At the same time, several of the large hotel
companies changed their strategies and chose
an “asset light” orientation, implying that they
started to sell their property portfolios.
These were the most important driving forces
behind greater liquidity in the hotel property market.
The new companies were active and in general
managed by people with considerable hotel
experience – which in turn led to greater dynamics
in the market with new contact surfaces and
the spreading of interest in the new players.
Scandinavia led the changes in Europe
Scandinavia was in the forefront of these developments.
Pandox was the first hotel property company
in Europe to be listed on the stock market.
The listing in 1997 in Stockholm led to a more
transparent hotel market further to the improved
availability of information, and the confidence
grew within the capital market. Capona was listed
InterContinental, Montreal
10 largest hotel property owners in Europe
Starwood Capital Group
Foncière des Murs
OCPI
Pandox
Moor Park Capital Partners
Westmont Hospitality Group
The Blackstone Group
Prupim/Prudential
Quinland Private Capital
CapMan
0 200 400
No. of hotels
Source: The information in the graph is an estimation based
on public information and research. Deviations may occur.
16 |
Pandox 2010

Comfort Hotel Børsparken, Oslo
on the Stockholm stock exchange at the end of
the 1990s, and was also founded further to the
reorganisation and industrialisation of the sector.
Over the years that followed, interest in the
hotel industry grew and the number of players
increased. Private equity companies, institutional
owners, high net worth individuals and various
kinds of funds took positions in the market.
Only a few diversified hotel property portfolios
Even if the hotel property market is now established
and transactions with gigantic amounts are
carried out, ownership is still fragmented and
being restructured. If the point of departure is that
there have been, and still are, functional focus
towards one type of property, the situation should
have led to the market’s players owning hotel
properties in many countries managed by several
brand names, so as to be able to benefit from the
change in the hotel economic cycle and use their
specialist competence. But this is not the situation
today. Few companies have any pronounced
global strategy, and only a minority has operations
in several countries and continents.
At company level, there are only eight companies
that have a European property portfolio
with more than 50 hotels. The largest is Starwood
Capital Group that owns close to 1,000 hotel
properties across the world, and where Europe
represents just under 40 percent. Another large
player is Westmont Hospitality Group that owns
about 500 hotels in total, of which 16 percent are
in Europe. Pandox is also a significant player with
120 hotels in 10 countries together with 11 partners
under 19 brand names.
Buyers and sellers in 2010
2010 proved to be a year of surprises. The transactions
market in Europe touched bottom in
2009 and finished at close to 90 percent under
the peak year of 2007. The backdrop to the
downturn was strong macro-economic factors,
which were expected to prevent a rapid recovery.
But after a cautious, albeit positive, start to
2010 both the underlying hotel market and
transactions within the sector accelerated.
By the end of the year one could see that the
trend of the hotel market showed a pattern of a
very sharp V, with a rapid and strong recovery.
The transaction market in Europe had increased
by 150 percent at the end of the year compared
with 2009 and reached a level of EUR 7.8 billion.
The transactions completed during the year
were mainly domestic or within Europe, and the
banks’ continued stringent loan requirements
held down the size of the transactions. About 60
percent were less than EUR 35 million and only
17 percent were over EUR 70 million. The largest
transaction in Europe was Pandox’ acquisition
of Norgani for just over EUR 1 billion.
The most active buyers in the hotel property
market in 2010 were high net worth individuals
and private equity or investment companies.
The largest sales group was composed of
receivers, companies assigned by banks to sell
distressed assets.
Transaction volume on the hotel property market, EMEA 1)
Buyer and seller net shift analysis, EMEA 1) 2010
EUR million
25,000
Sovereign Wealth Fund 2.8
20,000
REIT 2)
Receiver 3)
−13.7
−0.1
15,000
Investment fund/Private equity
Institutional investor
−4.5
9.1
10,000
Hotel operator
HNWI
−2.0
12.8
5,000
Developer/Property company
Other corporates
−5.3
0.9
0
2007
2008
2009
2010
%
–15 0 15
Single acquisitions
Portfolio acquisitions
1)
Europe, Middle East, Africa
2)
Real Estate Investment Trust
1)
Europe, Middle East, Africa
Source: Hotel Investment Outlook 2011, Jones Lang LaSalle
3)
Companies assigned by banks to sell distressed assets
Source: Hotel Investment Outlook 2011, Jones Lang LaSalle
Pandox 2010
| 17

Pandox – 120 hotel prop
one congress centre
and 19 well-known
brand names
presented on
pages 20–39
Pandox currently works with 11 partners
under 19 hotel brand names that
are active within different price and
product segments. Our partners are all
well-known, established and successful.
These partnerships strengthen
Pandox’ knowledge and network and
enable a unique position in the industry.
The hotels are spread over 10
countries and a total of 59 towns and
cities. Pandox’ most extensive partnership
is with Scandic, who operate 57 of
the hotels in Pandox’ portfolio, followed
by Quality Hotel with 12 hotels. Pandox
also works with international brands
such as Hilton, Hyatt, Radisson BLU,
Crowne Plaza and InterContinental.
Each hotel is handled and analysed
based on its individual prerequisites
and surroundings. The business
model, form of partnership and agreement
are chosen depending on each
situation so as to create optimal preconditions
for maximum development
for both parties.
120
hotels
24,800
hotel rooms
18 |
Pandox 2010

erties,
10 COUNTRIES
59 CITIES
19 BRAND
NAMES
Pandox 2010
| 19

Scandic Grand Marina, Helsinki
Scandic Ferrum, Kiruna
Scandic Hasselbacken, Stockholm
Scandic Grand Marina, Helsinki
Strong hotels in good locations
Scandic is the leading hotel chain in the Nordic
Region, and currently has 160 hotels in nine countries.
Pandox and Scandic have a long business
relationship and have collaborated closely ever
since Pandox was established. Today, Pandox
has 57 hotels and one congress centre under the
Scandic brand name, representing 49 percent of
revenues in the total Pandox portfolio.
Scandic has two principal product segments:
city-centre hotels and highway hotels. Of the
city-centre hotels, Pandox’ portfolio includes for
example Scandic Park on Karlavägen and Scandic
Hasselbacken at Djurgården in Stockholm,
Scandic Grand Marina and Scandic Continental
in Helsinki as well as Scandic KNA in Oslo.
20 |
Pandox 2010

Scandic Rosendal,
Tammerfors
Scandic KNA, Oslo
Scandic Star, Lund
Scandic KNA, Oslo
Scandic Park, Stockholm
Scandic Malmen, Stockholm
Scandic Highway City centre Resort No. hotels
Sweden 25 17 42
Norway 1 1 2
Finland 1 6 2 9
Denmark 1 1
Germany 1 1
Belgium 1 1 2
TOTAL 57
CITY centre
hasselbacken
SCANDIC PARK
GRAND MARINA
CONTINENTAL
SCANDIC KNA
SKOGSHÖJD
FERRUM
ROSENDAL
MALMEN
STAR
and others
Pandox 2010
| 21

30 well-positioned highway hotels
The original Scandic hotels are classic highway
hotels that were opened so as to offer car-travellers
overnight accommodation. This hotel
segment is now established over the whole in
the Nordic Region. Pandox’ portfolio contains
30 highway hotels, of which well-known and
popular examples include Scandic Järva Krog,
located just by the E4 at Stockholm’s northern
approach, Scandic Backadal by the E6 at
Gothenburg’s western approach, and Scandic
Klarälven at Karlstad’s E18 ring road.
Scandic and Pandox have created a specific
project with a vision of developing the new
generation of highway hotels – a process that
will start in 2011.
22 |
Pandox 2010

Scandic Linköping Väst
Scandic Västerås
Scandic Örebro Väst
Scandic Järva Krog, Solna
Scandic Västerås
Scandic Backadal, Gothenburg
highway hotels
ÖREBRO VÄST
järva krog
BACKADAL
NORRKÖPING NORD
LINKÖPING VÄST
KLARÄLVEN
VÄSTERÅS
and others
Scandic Bollnäs
Scandic Norrköping Nord
Pandox 2010
| 23

Hilton Stockholm Slussen
BRUSSELS
STOCKHOLM
LONDON
helsinki
BREMEN
DORTMUND
Hilton hotels
– high class in all locations
Hilton is a global hotel company, and is to be
found in most major cities across the world.
Pandox has seven Hilton hotels in its portfolio.
The locations include London, Brussels,
helsinki and Stockholm. Currently a joint refurbishment
program is in progress at the Hilton
Stockholm Slussen.
Hilton Hotels & Resorts Country City No. rooms
Hilton London Docklands UK London 365
Hilton Stockholm Slussen Sweden Stockholm 289
Hilton Brussels City Belgium Brussels 283
Hilton Helsinki Kalastajatorppa Finland Helsinki 238
Hilton Helsinki Strand Finland Helsinki 192
Hilton Bremen Germany Bremen 235
Hilton Dortmund Germany Dortmund 190
TOTAL 1,792
24 |
Pandox 2010

Hilton London Docklands
Hilton, Bremen
Hilton London Docklands
Hilton, Dortmund
Hilton Helsinki Strand
Hilton Helsinki Kalastajatorppa
Pandox 2010
| 25

CLARION
HELSINGBORG
ÖSTERSUND
KARLSTAD
CLARION
COLLECTION
COPENHAGEN
HARSTAD
OSLO
Clarion Collection Hotel Bastion, Oslo
Nordic Choice Hotels – the portfolio
contains all five of the chain’s brands
Nordic Choice Hotels is the fastest growing hotel company
in the Nordic Region and is one of Pandox’ largest
partners with a total of 22 hotels in the portfolio.
The hotels within the Choice family represent 19
percent of Pandox’ revenues. The hotel company
has several brands, and Pandox has all five in its
portfolio, where Quality is the largest with a total of
12 hotels located in Norway and Sweden.
26 |
Pandox 2010

Quality Hotel&Resort, Fagernes
Clarion Hotel Plaza, Karlstad
Clarion Hotel Grand, Helsingborg
Clarion Hotel Mayfair, Copenhagen
comfort
OSLO
COPENHAGEN
BERGEN
qUALITY
resort
fagernes
ØYER
KRISTIANSAND
qUALITY
MOLDE
LINKÖPING
GOTHENBURG
stockholm
KRISTIANSTAD
SÖDERTÄLJE
LULEÅ
SKÖVDE
Quality Park Hotel, Södertälje
Comfort Hotel Børsparken, Oslo
Nordic Choice Hotels Country No. hotels
Clarion Sweden 3
Clarion Collection Norway, Denmark 4
Quality Norway, Sweden 9
Quality Resort Norway 3
Comfort Norway, Denmark 3
TOTAL 22
Pandox 2010
| 27

MONTREAL
BRUSSELS
ANTWERP
Centre of attention
in the Canadian metropolis
InterContinental Hotels & Resorts is one of the
world’s largest hotel companies, and owns the
InterContinental, Crowne Plaza and Holiday Inn
brands. Pandox’ portfolio includes four hotels
located in Antwerp, Brussels and Montreal. The
InterContinental Montreal was acquired in 2007
and has since then been developed and
repositioned. It was named Montreal’s best
hotel last year and ranked as one of the 100
best hotels in the world.
Holiday Inn, Brussels
28 |
Pandox 2010

Crowne Plaza Brussels City Centre, Brussels
Leading in Brussels
Pandox owns two hotel properties operated
under the Crowne Plaza brand name – both
located in Belgium. Crowne Plaza Brussels City
Centre was acquired in 2003 and thereafter
underwent an important investment program.
The hotel has since become one of Brussels’
leading business and meeting hotels, and is
owned and operated by Pandox under a franchise
agreement.
The Crowne Plaza Antwerp, acquired in 2007,
is also owned and operated by Pandox under a
franchise agreement. The hotel has 264 rooms
and is strategically located by Antwerp’s ring
road just 10 minutes from the airport. It is currently
undergoing an extensive refurbishment
program that will be completed in 2011.
Crowne Plaza Brussels
City Centre, Brussels
BRUSSELS
Successful change process
The Holiday Inn Brussels Airport was acquired
in 2006, and needed extensive refurbishment
and development. With the vision of creating
the best upper-medium-priced hotel in the
area, the change process has been
successfully carried out with the catchwords of
full service, attractive design and high efficiency.
Today the hotel is runner-up in its market, and is
owned and operated by Pandox under a
franchise agreement.
InterContinental Hotels & Resorts Country City No. hotels
Crowne Plaza Belgium Antwerp, Brussels 2
Holiday Inn Belgium Brussels 1
InterContinental Canada Montreal 1
TOTAL 4
Pandox 2010
| 29

MONTREAL
Hotel Country City No. rooms
Hyatt Regency Montreal Canada Montreal 605
On the way to something big
Hyatt is an American, stock-market-listed hotel
company with headquarters in Chicago. The
company has eight different brands. Pandox’
hotel in Montreal is operated under the Hyatt
Regency brand.
The Hyatt Regency has a strategically
important position in central Montreal within
walking distance to the Palais des Congrès –
Montreal’s exhibition and congress centre. The
hotel is undergoing refurbishment with the
objective of repositioning as one of Canada’s
best leisure and meeting hotels. The Hyatt
Regency Montreal has 605 rooms and extensive
meeting and conference facilities for 1,000
people.
30 |
Pandox 2010

Radisson BLU Lillehammer Hotel
Radisson BLU Lillehammer Hotel
Lillehammer
Malmö
bodØ
STOCKHOLM
BASEL
linköping
Radisson BLU Hotel, Basel
Radisson BLU Arlandia Hotel, Arlanda
Rezidor Country City No. rooms
Radisson BLU Arlandia Hotel Sweden Stockholm 335
Radisson BLU Hotel, Malmö Sweden Malmö 229
Radisson BLU Hotel, Linkoping Sweden Linköping 91
Radisson BLU Lillehammer Hotel Norway Lillehammer 303
Radisson BLU Hotel, Bodø Norway Bodø 191
Radisson BLU Hotel, Basel Switzerland Basel 205
TOTAL 1,354
Six hotels, three countries
Rezidor is the fastest growing hotel company in Europe. With Scandinavian
origins, the company is now listed on the stock market and is
head quartered in Brussels. Pandox has a long relationship with Rezidor
and currently owns six Radisson BLU hotels located in Sweden, Norway
and Switzerland. During 2010, the Radisson BLU hotels in Malmö and
Basel were developed jointly by Rezidor and Pandox with good results
and where the companies’ respective competences could be utilised.
Radisson BLU Arlandia Hotel, Arlanda
Pandox 2010
| 31

Gothenburg
JÖNKÖPING
Elite Park Avenue Hotel, Gothenburg
Elite Park Avenue Hotel, Gothenburg
Well-known city profiles
Elite Hotels is a privately owned hotel chain with 21 hotels, and has specialised in operating
classic hotels. The Pandox portfolio contains the Elite Park Avenue Hotel on Gothenburg’s
most well-known avenue, and the Elite Stora Hotellet in Jönköping.
Hotel Country City No. rooms
Elite Park Avenue Hotel Sweden Gothenburg 317
Elite Stora Hotellet Jönköping Sweden Jönköping 135
TOTAL 452
Elite Park Avenue Hotel, Gothenburg
32 |
Pandox 2010

Rica Hotel Bodø
hamar
bodØ
Hotel Country City No. rooms
Rica Hotel Bodø Norway Bodø 113
Rica Hotel Hamar Norway Hamar 176
TOTAL 289
Rica Hotel Hamar
Two Norwegians
Rica Hotel Hamar
Rica Hotels has more than 80 hotels in Norway
and Sweden, and two of the Norwegian hotels
are included in Pandox’ portfolio.
The Rica Hotel Bodø is located within walking
distance of the town centre, and has 113
rooms as well as conference facilities for 250
participants.
The Rica Hotel Hamar is a business and
conference hotel located centrally in Østlandet
with 176 rooms and conference facilities for
600 people.
Pandox 2010
| 33

First Hotel, Linköping
First Hotel Royal Star, Stockholm
halmstad
LINKÖPING
STOCKHOLM
BORÅS
Four First hotels
in Sweden
First Hotels is represented with 46 hotels in Sweden, Norway and Denmark. The Pandox portfolio
contains four hotels in Sweden under this brand name, located in Älvsjö outside Stockholm and in
Borås, Linköping and Halmstad.
First Hotels Country City No. rooms
First Hotel Grand, Borås
First Hotel Royal Star Sweden Stockholm 103
First Hotel Linköping Sweden Linköping 133
First Hotel Grand Borås Sweden Borås 158
First Hotel Mårtenson Sweden Halmstad 103
TOTAL 497
Best Western Royal Corner
MORA
växjö
vantaa
Best Western Mora Hotel & Spa
Central locations
Best Western Hotels is a global hotel chain with operations
in 80 countries. The hotels are owned and operated
privately but marketed under the joint name of Best
Western. The Pandox portfolio contains three hotels that
are members of Best Western Hotels, of which the Best
Western Mora Hotell & Spa and the Best Western Royal
Corner in Växjö are two centrally located four-star hotels.
The Best Western Hotel Pilotti is located in Vantaa, Finland.
Hotel, other brand names Country City No. rooms
Best Western Mora Hotell & Spa Sweden Mora 135
Best Western Royal Corner Sweden Växjö 158
Best Western Hotel Pilotti Finland Vantaa 112
Ibis Stockholm Hägersten Sweden Stockholm 190
Omena Hotel Copenhagen Denmark Copenhagen 228
Rantasipi Imatran Valtionhotelli Finland Imatra 135
34 |
Pandox 2010

IMATRA
Castle environment in Finland
Rantasipi Imatran Valtionhotelli is a spa hotel in a castle environment close to the town of Imatra in Finland.
The hotel has 135 rooms, conference facilities for 250 people, and a complete spa centre.
Copenhagen
STOCKHOLM
Ibis – budget
in southern Stockholm
Accor is one of the world’s largest hotel companies with operations in 90
countries and 15 different brands in all segments – including the Ibis brand
name for low-priced hotels represented in 43 countries. The Pandox portfolio
includes the Ibis Stockholm Hägersten, located in southern Stockholm, just
10 minutes from Stockholmsmässan and 15 minutes from central Stockholm.
The hotel has 190 rooms, a restaurant, and several conference rooms.
Centrally located
in Copenhagen
Omena Hotels has ten hotels, of which nine are in Finland and one in
Denmark. The Pandox-owned Omena Hotel Copenhagen is centrally
located in Copenhagen with 228 rooms and a café.
Pandox 2010
| 35

Independent hotels
Brussels
A unique and own concept
Pandox acquired Hotel BLOOM! in 2005, which
since September 2007 has been totally refurbished
and has undergone a complete facelift.
Today, the Hotel BLOOM! is a unique hotel
product with its own concept based on art and
design. It is a distinct challenger in the Brussels
hotel market, with 305 rooms and large conference
facilities, in the city centre that competes
with the major hotels. Hotel BLOOM! is both
owned and operated by Pandox.
Independent hotels Country City No. rooms
Hotel Berlin, Berlin Germany Berlin 701
The Hotel Belgium Brussels 433
Hotel BLOOM! Belgium Brussels 305
Pelican Bay
Bahamas
Grand Bahama
Island 184
Airport Hotel Bonus Inn Finland Vantaa 211
Vildmarkshotellet Kolmården Sweden Norrköping 213
Mr Chip, Kista Sweden Stockholm 150
Stadshotellet Princess Sandviken Sweden Sandviken 84
Hotel Korpilampi Finland Espoo 150
36 |
Pandox 2010

Hotel BLOOM!, Brussels
Hotel BLOOM!, Brussels
Brussels
Best location in the EU city
Hotel BLOOM!, Brussels
The Hotel was acquired in 2010 and is one of
the largest and best-known hotels in Brussels.
The hotel property is located on Boulevard
Waterloo next to the city’s most prestigious
shopping street, Avenue Louise. The hotel,
which is a landmark, has 433 rooms on 26
floors with several conference areas, two restaurants,
as well as a fitness and spa centre.
Pandox’ vision is to recreate the hotel’s historically
strong position as one of the city’s leading
business and meeting hotels in the premium
segment.
Pandox 2010
| 37

Independent hotels, continued
BERLIN
Creative meeting place in Berlin
Since the acquisition of the hotel in 2006, Pandox
has created the meeting place of the future
in one of Berlin’s largest hotels. A comprehensive
repositioning program has brought the Hotel
Berlin, Berlin back to the top. It is now established
as one of the leading meeting hotels and is
one of Berlin’s most creative meeting places. The
hotel has 701 guest rooms and 22 conference
rooms, as well as several restaurants and bars.
The hotel is owned and operated by Pandox.
38 |
Pandox 2010

Complete resort
in the Caribbean
The Pelican Bay Hotel is located in the beautiful
Bahamas, on Grand Bahama Island. The hotel has
been repositioned since Pandox took over the management
agreement, and is now one of the leading
business and meeting hotels in the Bahamas.
Bahamas
kolmården
The major family attraction in Sweden
Vildmarkshotellet is one of the best-known
resort and tourist complexes in Sweden. The
hotel is located outside Norrköping, about
150 kilometres from Stockholm, next to
Scandinavia’s largest wildlife park,
Kolmården. The complex has 213 rooms, of
which most are family-adapted, a large
conference area with capacity for 370 people
in the largest room, a large restaurant and a
lobby bar. A new family spa centre has
recently been completed with waterway,
relaxation areas and treatment room.
Mr Chip, Kista is strategically located in
central Kista, one of Stockholm’s most
expansive areas that is also the centre for
leading companies within the IT and telecom
sectors. The hotel has 150 rooms, conference
facilities, as well as bar and restaurant,
oriented towards business travellers.
The Airport hotel bonus Inn has 211 rooms
and is located just 5 minutes’ drive from Helsinki-
Vantaaa airport and 30 minutes from Helsinki railway
station. The hotel is next to the Leija Business Park –
a shopping and leisure centre.
The stadshotellet princess,
sandviken is located right in the centre of
Sandviken with 84 rooms, conference room
with capacity for 80 people, and a restaurant.
Pandox 2010
| 39

Hotel properties
Property
Operator / Brand name
Type of
agreement Country City Location
Scandic Antwerp Scandic O Belgium Antwerp Ring road
Scandic Grand Place, Brussels Scandic O Belgium Brussels City centre
Scandic Copenhagen Scandic O Denmark Copenhagen City centre
Scandic Continental, Helsinki Scandic OG Finland Helsinki City centre
Scandic Espoo Scandic OG Finland Espoo Ring road
Scandic Grand Marina, Helsinki Scandic OG Finland Helsingfors City centre
Scandic Marina Congress Center, Helsinki Scandic O Finland Helsingfors City centre
Scandic Jyväskylä Scandic OG Finland Jyväskylä Central
Scandic Kajanus, Kajaani Scandic OG Finland Kajaani Exhibition centre
Scandic Kuopio Scandic OG Finland Kuopio Central
Scandic Luosto Scandic OG Finland Luosto Ski resort
Scandic Rosendahl Scandic OG Finland Tampere Central
Scandic Tampere City Scandic OG Finland Tampere Central
Scandic Bergen Airport Scandic O Norway Bergen Airport
Scandic KNA, Oslo Scandic O Norway Oslo City centre
Scandic Alvik, Stockholm Scandic OG Sweden Stockholm Ring road
Scandic Backadal, Gothenburg Scandic OG Sweden Gothenburg Ring road
Scandic Billingen, Skövde Scandic O Sweden Skövde Central
Scandic Bollnäs Scandic OG Sweden Bollnäs Central
Scandic Bromma, Stockholm Scandic OG Sweden Stockholm Ring road
Scandic Crown, Gothenburg Scandic O Sweden Gothenburg City centre
Scandic Elmia, Jönköping Scandic O Sweden Jönköping Exhibition centre
Scandic Ferrum, Kiruna Scandic OG Sweden Kiruna Central
Scandic Grand, Örebro Scandic O Sweden Örebro Central
Scandic Gävle Väst Scandic OG Sweden Gävle Ring road
Scandic Hallandia, Halmstad Scandic O Sweden Halmstad Central
Scandic Hasselbacken, Stockholm Scandic OG Sweden Stockholm City centre
Scandic Helsingborg Nord Scandic OG Sweden Helsingborg Ring road
Scandic Järva Krog, Stockholm Scandic O Sweden Stockholm Ring road
Scandic Kalmar Väst Scandic OG Sweden Kalmar Airport
Scandic Klarälven, Karlstad Scandic OG Sweden Karlstad Ring road
Scandic Kramer, Malmö Scandic O Sweden Malmö City centre
Scandic Kungens Kurva, Stockholm Scandic OG Sweden Stockholm Ring road
Scandic Linköping Väst Scandic OG Sweden Linköping Ring road
Scandic Luleå Scandic OG Sweden Luleå Ring road
Scandic Malmen, Stockholm Scandic OG Sweden Stockholm City centre
Scandic Mölndal, Gothenburg Scandic O Sweden Gothenburg City centre
Scandic Norrköping Nord Scandic OG Sweden Norrköping Ring road
Scandic Park, Stockholm Scandic O Sweden Stockholm City centre
Scandic Plaza, Borås Scandic OG Sweden Borås Central
Scandic S:t Jörgen, Malmö Scandic OG Sweden Malmö City centre
Scandic Segevång, Malmö Scandic OG Sweden Malmö Ring road
Scandic Skogshöjd, Södertälje Scandic O Sweden Södertälje Central
Scandic Star Sollentuna Scandic OG Sweden Stockholm Ring road
Scandic Star, Lund Scandic OG Sweden Lund Central
Scandic Sundsvall Nord Scandic OG Sweden Sundsvall Ring road
Scandic Swania, Trollhättan Scandic O Sweden Trollhättan Central
Scandic Södertälje Scandic OG Sweden Södertälje Ring road
Scandic Umeå Syd Scandic OG Sweden Umeå Ring road
Scandic Uplandia, Uppsala Scandic OG Sweden Uppsala City centre
Scandic Upplands Väsby Scandic O Sweden Stockholm Ring road
Scandic Uppsala Nord Scandic OG Sweden Uppsala Ring road
Scandic Winn, Karlstad Scandic OG Sweden Karlstad Central
Scandic Västerås Scandic OG Sweden Västerås Ring road
Scandic Växjö Scandic OG Sweden Växjö Ring road
Scandic Örebro Väst Scandic OG Sweden Örebro Ring road
Scandic Östersund Syd Scandic OG Sweden Östersund Ring road
Scandic Lübeck Scandic O Germany Lübeck Ring road
Hilton Brussels City Pandox/Hilton M Belgium Brussels City centre
Hilton Helsinki Kalastajatorppa Scandic/Hilton OG Finland Helsinki Ring road
Hilton Helsinki Strand Scandic/Hilton OG Finland Helsinki Central
Hilton London Docklands Hilton O Storbritannien London Central
Hilton Stockholm Slussen Hilton O Sweden Stockholm City centre
Hilton Bremen Hilton O Germany Bremen City centre
Hilton Dortmund Hilton O Germany Dortmund Exhibition centre
O = Revenue-based, OG = Revenue-based with guaranteed rent, OR = Revenue and result-based, R = Result-based,
F = Fixed, IO = Internal revenue-based, M = Management agreement, FR = Franchise, AM = Asset management agreement
Operated by Pandox (Pandox own hotel operations)
40 |
Pandox 2010

Number
of rooms
Total area
(sqm)
Of which
hotels (sqm)
Property designation
Tax assesment
value (SEK M)
204 13,200 13,200 24th div, Borgerhout 1st div, Ar –
100 4,500 4,500 –
484 31,500 25,200 99943-2 –
512 30,000 91-14-468-3 178.4
96 5,245 49-54-17-7 43
462 23,660 91-8-187-8 147.3
0 11,500 0 75.8
150 7,360 179-3-52-23 78.9
191 10,468 205-14-7-5 77.7
137 7,113 297-1-41-6-LI 60.6
59 4,230 758-893-103-1-L159, L37, L188, L189, L195, L212 11.8
213 14,662 837-134-495-1-LI
263 14,457 837-112-187-35,837-112-187-37 131.3
197 9,654 Gnr 114 Bnr 213 33.1
189 11,218 Gnr 209 Bnr 275 14.0
325 12,075 Racketen 9 196
232 9,397 Backa 105:1 53.6
107 7,743 6,844 Fjolner 7 27.6
111 5,150 Sundsbro 10 20.9
144 6,800 3,970 Pundet 1 38.2
338 24,380 21,800 Stampen 5:5 170
220 9,576 Åminne 1 52.2
170 11,100 Hovmästaren 1 19.2*
221 12,900 10,900 Mältaren 1 50.6
201 7,382 Valbo-Backa 6:12 28.4
154 7,617 6,813 Erik Dahlberg 14 & 15 44.8
112 10,025 Hasselbacken 1 102
237 9,399 Floretten 1 41
215 11,300 11,300 Tanken 2 77.6
148 5,485 Hammaren 4 24.6
143 5,694 Sandbäcken 1:3 26.3
113 6,913 6,373 Gripen 1 73.8
257 11,581 9,456 Radien 112*
150 6,105 Osten 2 27.8
159 5,565 Mjölkudden 3:45 21
327 15,130 Gråberget 190
208 11,000 11,000 Laken 1 55.2
150 6,768 Blyet 8 24.2
201 12,290 10,290 Lönnen 30 213
135 10,592 7,961 Balder 6 62.8
288 21,485 14,655 S:t Jörgen 11 222
161 6,284 Kriseberg 14:95 30.6
225 14,115 14,115 Yxan 8 46.2
269 18,573 Centrum 12 138*
196 15,711 15,711 Porfyren 2 102.4
159 4,948 Värdshuset 1 23.6
198 10,399 10,399 Svan 7 48.5
131 5,630 Reparatören 2 24.4
162 5,955 Reparatören 4 26
133 5,402 4,611 Dragarbrunn 16:4 51.8
150 6,955 6,955 Vilunda 6:48 34.6
184 7,518 6,486 Kvarngärdet 3:2 37
199 10,580 10,580 Negern 2 49
174 7,285 Sågen 1 26.1
123 3,982 Kocken 3 21.74
204 7,621 Vindmotorn 2 35
129 4,019 Särrimner 1 21.6
158 9,700 8,800 Grundbuch Lübeck, Blatt 54545 –
Pandox market segments
Sweden
Number of hotels 69
Number of rooms 12,455
Property revenues, SEK M 893
Rest of Nordic Region
Number of hotels 34
Number of rooms 6,641
Property revenues, SEK M 476
Europe
Number of hotels 14
Number of rooms 4,107
Property revenues, SEK M 296
International
Number of hotels 3
Number of rooms 1,146
Property revenues, SEK M 44
Pandox own hotel operations
Number of hotels 10
Number of rooms 3,796
Property revenues, SEK M 1,209
Operating net, SEK M 220
Proportion of total
number of rooms
51%
Proportion of total
number of rooms
27%
Proportion of total
number of rooms
17%
Proportion of total
number of rooms
5%
Proportion of total
number of rooms
16%
283 13,850 13,850 Saint-Josseten-Noode (1div) 032 –
238 23,291 91-30-1-5,91-30-3-2-LI 164.2
192 10,250 91-11-300-7 146.3
365 22,800 21,500 HM Land Registry: SGL465779 –
289 18,416 15,725 Överkikaren 31 365.9
235 21,000 15,100 Grundbuch Altstadt IV, Blatt 60 –
190 12,500 11,300 Grundbuch Dortmund, Blatt 897 –
* tax assesment value 2007
Pandox 2009 2010 | 41

Hotel properties, continued
Property
Operator / Brand name
Type of
agreement Country City Location
Clarion Hotel Grand, Helsingborg Choice Hotels/Clarion Hotel OG Sweden Helsingborg Central
Clarion Hotel Grand, Östersund Choice Hotels/Clarion Hotel OG Sweden Östersund Central
Clarion Hotel Plaza, Karlstad Choice Hotels/Plaza Hotell & Rest Karlstad AB OG Sweden Karlstad Central
Clarion Collection Hotel Mayfair, Copenhagen Choice Hotels/Clarion Collection Hotel O Denmark Copenhagen City centre
Clarion Collection Hotel Twentyseven, Copenhagen Choice Hotels/Clarion Collection Hotel OG Denmark Copenhagen City centre
Clarion Collection Hotel Arcticus, Harstad Choice Hotels/Clarion Collection Hotel O Norway Harstad Ring road
Clarion Collection Hotel Bastion, Oslo Choice Hotels/Clarion Collection Hotel O Norway Oslo City centre
Comfort Hotel Excelsior, Copenhagen Choice Hotels/Comfort Hotel OG Denmark Copenhagen City centre
Comfort Hotel Børsparken, Oslo Choice Hotels/Comfort Hotel O Norway Oslo City centre
Comfort Hotel Holberg, Bergen Choice Hotels/Comfort Hotel O Norway Bergen Central
Quality Hotel & Resort, Fagernes Choice Hotels/Quality Hotel & Resort O Norway Fagernes Ring road
Quality Hotel & Resort Hafjel, Øyer Choice Hotels/Quality Hotel & Resort O Norway Øyer Central
Quality Hotel & Resort Kristiansand Choice Hotels/Quality Hotel & Resort O Norway Kristiansand Ring road
Quality Hotel Alexandra, Molde Choice Hotels/Quality Hotel O Norway Molde Central
Quality Hotel Ekoxen, Linköping Choice Hotels/Quality Hotel OG Sweden Linköping Central
Quality Hotel Grand Kristianstad Choice Hotels/Quality Hotel OG Sweden Kristianstad Central
Quality Hotel Luleå Choice Hotels/Quality Hotel OG Sweden Luleå Central
Quality Hotel Park, Södertälje Choice Hotels/Quality Hotel FR Sweden Södertälje City centre
Quality Hotel Prince Phillip, Stockholm Choice Hotels/Quality Hotel OG Sweden Stockholm Ring road
Quality Hotel Prisma, Skövde Choice Hotels/Quality Hotel OG Sweden Skövde Central
Quality Hotel Winn, Gothenburg Choice Hotels/Quality Hotel OG Sweden Gothenburg Ring road
Quality Hotel, Nacka Choice Hotels/Quality Hotel OG Sweden Stockholm Ring road
InterContinental Montreal Pandox/InterContinental M Canada Montreal City centre
Crowne Plaza Antwerp Pandox/Crowne Plaza FR Belgium Antwerp Central
Crowne Plaza Brussels City Centre Pandox/Crowne Plaza FR Belgium Brussels City centre
Holiday Inn Brussels Airport Pandox/Holiday Inn FR Belgium Brussels Airport
Hyatt Regency, Montreal Pandox/Hyatt Hotels M Canada Montreal City centre
Radisson BLU Hotel, Bodø Rezidor/Radisson BLU O Norway Bodø Central
Radisson BLU Lillehammer Hotel Private O Norway Lillehammer Central
Radisson BLU Hotel, Basel Rezidor/Radisson BLU OG Switzerland Basel Central
Radisson BLU Arlandia Hotel, Arlanda Rezidor/Radisson BLU OG Sweden Stockholm Airport
Radisson BLU Hotel, Linköping Rezidor/Radisson BLU OG Sweden Linköping Central
Radisson BLU Hotel, Malmö Rezidor/Radisson BLU OG Sweden Malmö City centre
First Hotel Grand, Borås Private/First Hotels OG Sweden Borås Central
First Hotel Linköping First Hotels F Sweden Linköping Central
First Hotel Mårtenson, Halmstad First Hotels OG Sweden Halmstad Central
First Hotel Royal Star, Stockholm Private/First Hotels OG Sweden Stockholm Exhibition centre
Elite Park Avenue Hotel, Gothenburg Elite Hotels OG Sweden Gothenburg City centre
Elite Stora Hotellet, Jönköping Elite Hotels OG Sweden Jönköping Central
Rica Hotel Bodø Rica O Norway Bodø Central
Rica Hotel Hamar Rica O Norway Hamar Central
Rantasipi Imatran Valtionhotelli Restel OG Finland Imatra Central
Best Western Mora Hotell & Spa Private OG Sweden Mora Central
Best Western Royal Corner, Växjö Private OG Sweden Växjö Central
Best Western Hotel Pilotti, Vantaa Private OG Finland Vantaa Airport
Ibis Stockholm Hägersten Accor/Ibis OG Sweden Stockholm Ring road
Omena Hotel Copenhagen Omena Hotels F Denmark Copenhagen City centre
Hotel BLOOM!, Brussels Pandox IO Belgium Brussels City centre
The Hotel Pandox IO Belgium Brussels City centre
Hotel Berlin, Berlin Pandox IO Germany Berlin City centre
Pelican Bay, Grand Bahama Island Sundt GB Management/Pandox AM Bahamas
Grand
Bahama Island Resort
Vildmarkshotellet, Kolmården Parks & Resorts Scandinavia O Sweden Norrköping Resort
Mr Chip Hotel, Kista Kista Hotell AB OG Sweden Stockholm Ring road
Stadshotellet Princess, Sandviken Private OG Sweden Sandviken Central
Airport Hotel Bonus Inn, Vantaa Private OG Finland Vantaa Airport
Hotel Korpilampi, Espoo Under construction – Finland Espoo Ring road
O = Revenue-based, OG = Revenue-based with guaranteed rent, OR = Revenue and result-based, R = Result-based,
F = Fixed, IO = Internal revenue-based, M = Management agreement, FR = Franchise, AM = Asset management agreement
Operated by Pandox (Pandox own hotel operations)
42 |
Pandox 2010

Number
of rooms
Total area
(sqm)
Of which
hotels (sqm)
Property designation
Tax assesment
value (SEK M)
164 8,555 7,325 Högvakten 8 59.4
176 8,766 8,766 Borgens 6 33.8
131 5,907 5,907 Höken 1 39.6
105 3,805 Matr.nr 214
200 7,568 7,568 169 Vester Kvarter København –
75 3,540 Gnr 61 Bnr 331, Snr 12–22 27.2
99 4,688 Grnr 207 Bnr 262 og 265 28.5
99 3,600 Matr.nr 212-213 seksjon 1–2
198 7,900 Gnr 207 Bnr 343 og 344 101.9
140 5,720 Gnr 165 Bnr 1083 Snr 1 og 2 47.2
138 10,310 Gnr22 Bnr 177, Gnr 25 Bnr 4, 96, 97, 259, Gnr 26 Bnr 5 49.8
210 9,540 Gnr 17 Bnr 25 57.7
210 9,940 7,075 Gnr 63 Bnr 760, 822 og 823 59.9
163 17,033 Gnr 24 Bnr 812, 815 og 1312 69.2
190 14,671 12,221 Ekoxen 9 & 11 53.7
149 7,524 Hovrätten 41 39.4
209 12,166 Tjädern 19 61.4
157 10,292 10,110 Herkules 13 35.6
201 7,400 Måsholmen 25 57.4
107 3,687 Liljekonvaljen 14 16.3
121 5,800 Backa 149:l & 866:39 32.8
164 10,830 8,090 Sicklaön 363:2 84.8
357 31,091 31,091
264 18,340 16,780
354 28,095 28,095 –
310 21,072 21,072
Hotel BLOOM!, Brussels
605 44,148 29,000 – –
191 15,546 Gnr 138 Bnr 3502 52
303 18,000 Gnr 59 Bnr 103, 104, 138, 275, 432, 434 , 468 118.9
205 17,800 17,000
335 15,260 15,260 Benstocken 1:5 132.7
91 6,354 4,543 Bolaget 1 50.8
229 18,969 18,969 Carolus 33 123
158 9,593 9,365 Prometeus 3 31.9
133 6,540 6,195 Elden 9 & 10 34.1
103 6,657 6,350 Gillestugan 1 41.8
103 4,900 Herrgården 2 26
317 21,998 21,998 Lorensberg 28:4 208
135 11,378 9,379 Alhambra 1 60.6
113 7,981 Gnr.138 Bnr 2189 og 2247 31.3
176 9,250 Gnr 790 Bnr 228 Snr 2 71.7
135 10,097 153-12-1-1 88.2
135 9,161 7,670 Stranden 37:3 24.1
158 7,112 Elden Södra 17 37.6
112 3,068 92-51-317-1 29.5
190 8,339 5,700 Fotsäcken 1 55.4
230 8,000 Matr.nr 89
,
305 23,445 23,445
433 33,000
701 41,093 41,093
Hotel BLOOM!, Brussels
Crowne Plaza, Antwerp
184 7,983 7,983
213 10,300 10300 Marmorbrottet 1:18 37.2
150 5,517 5,517 Knarrarnäs 7 50.2
84 7,003 4,890 Grillen 8 28.527
211 8,414 92-51-203-4 68.6
150 9,777 49-429-3-216 47.5
Pandox 2010 | 43

A completely
new ballgame
CEO commentary
on the past year and the future
2010 was a new successful year
for Pandox with high volume
growth – particularly through the
acquisitions made during the year.
The potential in the Company also
increased through the acquisitions,
simultaneously as risks
declined through having a greater
proportion of agreements with
large and stable hotel companies.
Best year so far
Property management revenues rose to SEK
923 million, representing an improvement of
3.1 percent. For comparable units and
exchange rates, the increase was 5.1 percent.
The operating net rose to SEK 783 million, and
the profit before tax and capital gains amounted
to SEK 313 million, representing a growth of
24 percent. The Company’s most important
key performance data, cash flow, exceeded
half a billion SEK for the first time and
amounted to SEK 519 million. All in all, 2010
was Pandox’ best year ever despite market
conditions being marked by considerable
uncertainty in the beginning of the year.
The good growth is due to several factors.
The strategy of owning large full-service hotels in
central locations, which has been fundamental
since Pandox was established, has been very
successful. Another important reason is the high
standard of the hotel products. Continuous
maintenance and product-development programs
have created modern hotels with strong
market positions. Furthermore, the hotels are
among those that are profitable in the uppermedium
and high-price segments. Another
significant contributory factor to last year’s
increased profitability is lower financing costs.
Pandox has been able to benefit from lower
interest rates by consciously choosing a strategy
with short fixed terms. The flexible business
model has also had a positive effect. The model
enables us to choose the best operational form
with consideration to the prevailing conditions in
local markets and make us able to maximise,
asset by asset, each hotel’s individual strategy.
Pandox signed an agreement on August
23rd to acquire the industry-colleague
Norgani. The purchase price was SEK 9.7
billion and was the largest transactions on
the international hotel market in 2010, and
thereby creating one of Europe’s largest
and leading companies within the hotel
property market.
An exciting growth journey
The last 15 years have been an instructive,
incredibly exciting and relatively short journey.
Pandox was a minor company with 18 small
hotels – all located in Sweden with weak locations
and outdated products. The Company
was initially vulnerable because the business
concept was new and untried. Moreover, cash
flow was negative when the Company was
formed and access to expansion capital was
limited. The growth journey has led to the development
of the Company’s size today, which
embraces 120 hotel properties with 25,000
hotel rooms and operations in ten countries.
The portfolio has been restructured several
times over the years. All in all, completed
transactions have covered 170 hotels with a
total value of SEK 20 billion. The most important
com ponent is and always has been –
expansion shall be achieved with increased
profitability. Our acquisitions have therefore
been concentrated on under-performing
hotels that need active ownership. In other
words, products with high initial risk but also
best potential.
Our acquisition strategy has functioned
well. Cash flow has increased during the Company’s
all 15 years and the average annual
return over the period is 19 percent. Yes!
In addition to the Norgani acquisition, two
individual acquisitions were completed in the
autumn. The first was The Hotel with 433 rooms
located in the prestigious Boulevard Waterloo
and a landmark in the city, which needs radical
refurbishment and modernisation of both product
and organisation. The second was the wellrun
Park Inn Solna, north of Stockholm, with
247 rooms, with entry in January 2011.
There are three underlying reasons for
these acquisitions. Right timing, good potential
and right type of hotel.
44 |
Pandox 2010

InterContinental, Montreal
Clarion Collection Hotel 27, Copenhagen
Right timing. Demand in the hotel industry
quickly developed in the summer, and the
recovery was at an early stage when we
started to work with the acquisitions. This
positive trend has since strengthened.
Good potential. Most of the acquired
hotels are in need of investment and product
development. We believe that the operators
have the same interest. This implies that there
are good prerequisites to find incentives for
joint investments and preconditions for improved
profitability and higher cash flow – to the benefit
of both Pandox and our partners.
Right type of hotel. A large part of Norgani’s
hotels are located in places where Pandox
already has operations and where market conditions
are well-known. The agreement structure
is similar to the one applied in Pandox. All hotels
have revenue-based agreements and joint
responsibility for maintenance issues. The hotels
are mainly full-service products and belong to
Pandox’ prioritised segment in the uppermedium
and high-price classes. The operators
are well-known companies with whom Pandox
already has good business relationships. There
are subsequently major similarities between
the companies, which hopefully will facilitate the
process of merging the portfolios. The same
applies to the acquisition of The Hotel. Pandox
currently owns and operates six hotels with a
total of 1,750 rooms in Brussels. The properties
are in similar product segments and we are
well aware of the challenges that await us.
We have considerable experience of taking over
under-performing units – and in Brussels alone
we have completed five similar projects in
recent years.
Situation-adapted operations
Pandox currently operates ten hotels with a
total of 3,800 rooms located in Brussels,
Antwerp, Berlin, Montreal and the Bahamas.
To operate hotels is a natural part of Pandox’
active ownership. Sometimes it is important to
be able to control all aspects when major
development programs are to be carried out.
And sometimes the hotels are in such a location
that no qualified operators are available for
contractual partnership.
The agreement structure varies between
different geographical areas. In the Nordic region,
leases dominate while in North America franchise
agreements are most common. Northern
Europe has a mixture of the two. It is therefore
important for an international hotel property
company to command all operational forms.
Our own operations, by Nordic standards,
are relatively big. Revenues in 2010 of SEK
1,209 million corresponded to a growth of
12 percent for comparable units. The gross
operation profit (GOP) developed well and
improved with SEK 40 million, further to
stronger demand and higher productivity.
Best developments were achieved by the
InterContinental Montreal. The hotel was repositioned
in 2009 from a traditional business
hotel to a more modern and attractive city
hotel – elegant, with a dose of boutique feeling
and a touch of Europe. The hotel has been
well-received and Bernard Chênevert, the
hotel’s CEO, is currently establishing it as one
of the leading full-service hotels in the city.
Another success story is the Holiday Inn
Brussels Airport. All of the hotel’s 310 rooms
have been upgraded and the conference offer
developed under a concept called “skoj”. The
concept is based on that one shall have fun at
the hotel – easy to like and easy to remember.
Short downturn with quick recovery
The pattern of demand in 2010 had few historical
equals. Despite the downturn being dramatic
in most markets and deeper than previous economic
slumps, the overall downturn phase was
short and the recovery was quick. A very sharp
V-shaped graph. The downturn in the market
started in the autumn of 2008. New York’s volumes
started to decline in September and prices
fell sharply the month after. The RevPAR downturn
continued for 8 months before the fall
weakened. From top to bottom took 1½ years.
Similar patterns were experienced in most
major hotel markets in Europe, while negative
effects on London were comparatively marginal.
There is normally a time delay between various
geographic markets being affected, and a
certain time difference between volumes declining
and prices starting to fall. This time, several
major markets fell in just one four-month period.
Pandox 2010
| 45

Volume and prices basically fell simultaneously.
More dynamics and higher dramatics. The
Nordic market also behaved like a roller coaster.
The normal pattern with relatively stable
demand was not present this time. Helsinki was
hit hard and RevPAR fell by more than 30 percent
during less than 2 years, despite no new
capacity coming onto the market. Another difficult
market was and is Copenhagen, which
combines an economic downturn with a high
proportion of new capacity. To top it all, a price
war has broken out despite volumes appearing
to stabilise again. Oslo has managed well in
a period with a high proportion of new hotels,
while Stockholm should be considered as
being best in class. Prices have been defended
with an impressive revenue-management
process.
For 2011, risks are primarily associated
with possible greater financial anxiety in
Europe. However, 2011 will nonetheless be an
even better hotel year than 2010. Growth in
demand is in a phase where the increase is
subsiding, but the improvement will be composed
to a higher degree of better average
rates – which in turn will increase the efficiency,
profitability and value of the properties.
Portfolio with high quality and potential
Pandox’ hotel property portfolio is constantly
being developed, and is of the highest quality.
The total product offer consists of 120 hotel
properties, of which 10 are own operations,
spread over 10 countries and 59 locations.
Sweden is the largest sub-market and represents
51 percent of revenues. Finland is second
largest with 12 percent. All in all, the Nordic
region dominates the portfolio. Of the international
markets, Belgium is the most important
(7 percent), followed by Germany (6 percent)
and Canada (3 percent).
The portfolio can be divided into locations
that have national and international profiles.
Together, the domestic demand, principally
from Nordic regional towns and cities, represents
44 percent of revenues. These markets
are characterised by stable demand, while
more international dynamics are present in
large markets such as London, Brussels,
Montreal, Berlin and Stockholm. The revenue
mix is therefore in balance with good potential
and limited risk. The agreement structure is
composed of 87 percent leases, while 13
percent comes from own operations.
The portfolio contains many development
projects that currently include the upgrading of
the Scandic Copenhagen with 484 rooms for a
total of DKK 150 million, where Pandox has a
50-percent share. The Hyatt Montreal is being
repositioned towards more of a leisure concept,
and the Crowne Plaza Antwerp has
recently opened a new lobby and developed
its meeting and F&B operations.
The newly acquired Norgani hotels are
generally in need of refurbishment and product
development. Pandox estimates that a joint
investment is required among the operators
and the Company of about SEK 1.5 billion to
enable the hotels to reach a requisite standard
to address the needs of tomorrow’s guests.
We are currently evaluating the prerequisites to
start this process.
Success requires passion with heart and soul
The hotel industry is a fantastic arena in which
to work. Hotels are to be found across the
world from exciting and exotic cities such as
New York, Hong Kong and Rio to family hotels
in small towns. Hotels are important workplaces
– they are an active part of a city’s destination
development. Large hotels become
meeting places for expansive locations where
relations are created and future plans realised.
Exclusive hotels in classical buildings are part
of a city’s image, and a hotel lobby can give
visitors and guests the feeling of being special
and among celebrities. But hotels can also
imply hard work with focus on details and
investment projects. And above all, a hotel
never sleeps, and is always open 24/7.
Irrespective of whether one owns, operates
or works with the marketing of hotels, success
is only achieved through passion with both heart
and soul. To choose our sector is to choose a
lifestyle. For me who have been active within
hotels for close to 30 years, my stimulation is
mainly about the people I have met and still
meet each day. Individuals who have chosen a
service industry as their career and who live
every day in a team. Individuals with talent who
make other people feel well, and who take
care of guests’ questions and needs. The real
Enzo moves on in life
Pandox is looking for a new, adaptable,
creative and well-trained Corporate
Dog with a pleasant bark and the
capacity to lead and inspire.
46 |
Pandox 2010

professional who can and wishes to take
responsibility in the best possible way.
For Pandox, the individual has always been
more important than the system, which has a
strong influence on our philosophy. We call this
the Pandox Spirit. One characteristic is therefore
that the Company does not have a large
office full of people who manage the business
by giving instructions and orders. It is not our
style. What we need is the best and real
“doers” with a strong driving force. To give
them a place requires delegated leadership
where one relies on the employees. We consequently
have fewer and shorter reporting meetings,
with focus instead on what we call the hot
pile – the most decisive and crucial issues. We
rather aim for the evaluation and improvement
of our results from people in our broad international
network than through figures that mostly
describe what has happened. Strong people
who give us an outside-in perspective. People
who can be questioned. This creates a company
that constantly develop and look for new
ideals. Where driving forces and decisions are
at a local level as close to operations as possible,
and where each individual understands the
signification of the term “to deliver”.
Another important component is the ability
to give young people responsibility, people who
perhaps are not quite “ready” – but our point of
departure is that will beats talent. The focused
strategy follows thereafter, along with the systematic
methodology known as the Pandox
Model. The peak is an open atmosphere that
inspires rather than controls, and where it is
important to have fun at work. To be able to
laugh and be together without organisational
obstacles.
Competence and development
are fundamental
Pandox’ profile is characterised by five catchwords.
Competence is the most important, followed
by development, team spirit, passion
and creativity. We try to show this through various
activities. The best known is our Hotel
Market Day that we have arranged for 15 years
now, always in November and by tradition at
the Hilton Stockholm Slussen. The day has
become an important sector event, and we are
very proud of and grateful for the substantial
attendance and support.
Another activity is our support of the
Swedish National Handball Team and Svenska
Handbollsförbundet (SHF). In collaboration
with SHF and the Swedish Olympic Committee,
Pandox has recruited Staffan Olsson,
who is one of the team managers of the
national team – thus enabling a handball
icon to remain in Sweden and develop
Swedish talents in addition to his national
assignment. It is a privilege to actively endorse
and be associated with supporting young
people and positive sport. We believe that
both examples correspond well with our
catchwords, and we have no special
thoughts as to what we might gain in return.
More heart than brains.
Pandox is growing and new employees are
being recruited, the Company’s management
system is being introduced and implemented.
Underlying data for business plans for the new
hotels are being prepared. The Company is
bubbling with life, and new contact surfaces
are being formed. Banks and partners are
striving for attention. Telephones never stop
ringing. A dream existence for all those who are
hungry for challenges and demanding tasks.
I am extremely impressed and proud of
belonging to this new-old gang. Nobody complains
despite long working hours. The attitude
is striking. Nothing is impossible. If we were a
car, the model would be a cross-country vehicle
with four-wheel drive. The same thing in
Brussels. The head office in the form of one
person, Aldert Schaaphok, is in the process of
accelerating the tempo of activities and operations.
New product, new organisation, new
management team, new brand name.
I would like to take this opportunity to raise
my hat to you all. You are really quite fantastic!
Thank you all for your commitment, your
energy, knowledge and open minds. If you had
been handball players, you would all have
played in the World Championship!
And thank you also to Pandox’ owners and
Board of Directors. Just think that you gave us
the opportunity to be leaders in Europe.
Yours sincerely,
Anders
“Woof”
Pandox 2010
| 47

Board of Directors and
LEIV ASKVIG
Member of the Board of Pandox since
2004.
Other appointments:
Chairman of Oslo Børs VPS Holding ASA,
Oslo Børs ASA and Alfarveg AS.
Board member of Eiendomsspar AS,
Verdipairsentralen VPS ASA, Skips AS
Tudor, Astrup Fearnley AS and Agder OPS
Vegselskap AS.
Industrial competence
and experience creates
confidence and ability
to take action
In an international hotel property company
such as Pandox, competence and experience
within the following areas are important:
OLAF GAUSLÅ
CFO of Eiendomsspar AS.
Member of the Board of Pandox since 2004.
• hotel operations and hotel market
• financing
• properties and the property sector
• business development
• brand strategies
• development of international companies
The Board of Directors of Pandox possesses
broad experience and knowledge from
these areas.
CHRISTIAN RINGNES
Chairman.
CEO of Eiendomsspar AS.
Member of the Board of Pandox
since 2004.
Other appointments:
Chairman of NSV-Invest AS, Sundt AS,
Dermanor AS and Mini Bottle Gallery AS.
Board member of Schibsted ASA, Thor
Corporation AS and Oslo By’s Råd for
Byarkitektur.
BENGT KJELL
CEO of AB Handel och Industri.
Member of the Board of Pandox since 1996.
Other appointments:
Chairman of Indutrade AB and Hemfosa
Fastigheter AB.
Board member of Höganäs AB, Helsingborgs
Dagblad AB and Skånska Byggvaror AB.
48 |
Pandox 2010

Auditors
CHRISTIAN SUNDT
Board member of Sundt AS.
Member of the Board of Pandox since 2008.
Other appointments:
Owner and Chairman of CGS Holding AS.
Board member of Sundt Air Holding AS,
Sundt Sepa AS, Sundt Helene AS,
Sundt Air AS, Sundt Eiendom II AS and
Sundt Eiendom I AS.
Work Procedure
The Board of Directors has adopted Rules of
Procedure for its work, directives to the Chief
Executive Officer, as well as management
instructions with regard to reporting. Pandox’
Board of Directors establishes and documents
the objectives and strategy of the
Company each year. The Board has also
adopted a finance policy, an approval policy
and guidelines for decision-making, as well as
a particular strategy regarding acquisitions.
The Board of Directors of Pandox holds
four ordinary meetings each year. The meetings
follow an established annual agenda with
different topics and decisions issues. The
meetings review and discuss the external and
internal reporting of operating results, the
Company’s financial position, as well as various
business matters. Other topics that are
reviewed annually include marketing, strategy
and budget issues. Related material and documentation
is sent to the Board members
approximately one week in advance. The
Company’s auditors attend at least one meeting
each year to present a report of their audit
and their review of the Company’s internal
control systems.
In addition to their ongoing audit, the
Company’s auditors were also commissioned
by the Board to carry out special reviews of
major lease agreements during the year.
HELENE SUNDT
Board member of Sundt AS.
Member of the Board of Pandox
since 2008.
Other appointments:
Owner and chairman of
Sundt Helene AS.
Chairman of Dronningen Eiendom AS
and Lanternen Eiendom AS.
Board member of Sundt Sepa AS,
Sundt Christian Gruner AS and Sundt
Air Holding AS.
MATS WÄPPLING
President and CEO of SWECO AB.
Member of the Board of Pandox
since 2003.
Other appointments:
Board member of SWECO AB and
Vasakronan AB.
Auditors
The task of the auditors is to examine the
Company’s accounts, administration and
financial information. The audit leads to an
Audit Report where the auditors give an
opinion as to whether the annual accounts
and financial statements have been prepared
in accordance with the Swedish
Annual Accounts Act and generally
accepted accounting principles.
Per Gustafsson
Authorised Public Accountant
KPMG
Willard Möller
Authorised Public Accountant
SET Revisionsbyrå AB
Pandox 2010
| 49

Senior managers
and executives
ANDERS NISSEN
CEO.
Employed since 1995.
LIIA NÕU
Senior Vice President,
CFO.
Employed since 2007.
NILS LINDBERG
Senior Advisor
Finance & Insurance.
Employed since 1995.
LARS HÄGGSTRÖM
Senior Vice President
Asset Management.
Employed since 2000.
MIKAEL PLANELL
Vice President
Business Area other Europe, Denmark,
Finland and southern Sweden.
Employed since 2005.
50 |
Pandox 2010

ALDERT SCHAAPHOK
Vice President
Operations Belgium and Canada.
Employed since 2004.
ERIK HVESSER
Vice President
Business Area Stockholm,
northern and eastern Sweden.
Employed since 2006.
LEIF KRISTEN OLSEN
Vice President
Business Area Norway, Gothenburg
and western Sweden.
Employed since 2010.
JONAS TÖRNER
Head of Business
Control & Intelligence.
Employed since 2005.
MAGNE RAMLO
Vice President
Property Manager Norway,
Denmark and part of Sweden.
Employed since 2010.
JOSEFIN BERGQVIST
Senior Analyst
Acquisition & Investment.
Employed since 2006.
Pandox 2010
| 51

Team
People who work at Pandox are
passionate and committed.
Together, we have created
a winning team.
52 |
Pandox 2010

2011
Pandox
Spirit
passion • Knowledge
• Creativity • Teamwork • Network •
# 1
Pandox – one of the leading hotel property companies in Europe
Pandox 2010
| 53

The organisation
is growing
09
1. Josefin Bergqvist
Senior Analyst, Acquisition and Investment
2. Nils Lindberg
Senior Advisor, Finance & Insurance
07
3. Ann-Sophie Forsmark
Property Accountant
4. Jonas Törner
Head of Business Control & Intelligence
5. Anette Paulsson
Analyst, PR & Marketing
6. Anders Nissen
CEO
7. Annelie Sundström Aguilar
Executive Assistant
8. Mikael Planell
Vice President, Business Area other Europe,
Denmark, Finland and southern Sweden.
9. Monica Forsén
Property Accountant
10. Josefin Nilsson
Receptionist
11. Liia Nõu
Senior Vice President, CFO
12. Ulrika Norrbrink,
Property Accountant
13. Erik Hvesser,
Vice President, Business Area Stockholm,
northern and eastern Sweden.
14. Aldert Schaaphok,
Vice President, Operations Belgium and Canada.
15. Louise Ceder,
Property Support
16. Frédéric Sturbois,
Property Manager, Belgium
17. Magne Ramlo,
Vice President, Property Manager, Norway,
Denmark and part of Sweden
54 |
Pandox 2010

17
14
18
21
20
19
16
05
28
29
06
15
30
31
32

13
01
22
08 24
25
11
10 23
03
26 27
12
02
34
33

18. Petter Kristensen,
Property Manager, Sweden and Norway
19. Stefan Kornhammar,
Property Manager, southern and middle Sweden
04
20. Christer Juujärvi,
Facility Manager
21. Petri Jaarto,
Facility Manager
22. Lars Häggström,
Senior Vice President, Asset Management
23. Leif Kristen Olsen,
Vice President, Business Area Norway,
Gothenburg and western Sweden.
24. Jan Van Loock,
Senior Advisor, Property Development, Belgium
25. Taina Koskelo,
Vice President, Property Manager, Finland
26. Göran Jedlöv,
Property Manager, northern and
western Sweden, Stockholm
27. Marjut Mikkola,
Property Support
28. Thérèse Blomqvist,
Property Support
29. Susanne Jusslin,
Property Accountant
30. Tomas Skeppstrand,
Property Accountant
31. Anja Sydner,
Property Accountant
32. Torbjørn Stensen,
Property Accountant
33. Enzo,
Corporate Dog
34. Staffan Olsson,
Director of Health, Sports & Coaching
Pandox 2010
| 57

financial overview

Finances
Financial overview . . . . . . . . . . . . . . . . . . 60
Sensitivity analysis . . . . . . . . . . . . . . . . . . 62
Valuation and tax situation . . . . . . . . . . . . 64
Definitions . . . . . . . . . . . . . . . . . . . . . . . . 65
Ten-year overview . . . . . . . . . . . . . . . . . . 66
Quarterly data 2009–2010 . . . . . . . . . . . . 68
Financial statements 2010 . . . . . . . . . . . . 69
Report of the Board of Directors . . . . . . . 70
Income statement and comments . . . . . . 72
Balance sheet and comments . . . . . . . . . . 74
Changes in equity . . . . . . . . . . . . . . . . . . 76
Cash flow statement . . . . . . . . . . . . . . . . 77
Accounting principles . . . . . . . . . . . . . . . 78
Notes to the Accounts . . . . . . . . . . . . . . . 79
Proposed disposition of earnings . . . . . . 84
Auditor’s report . . . . . . . . . . . . . . . . . . . . 85
Hotel BLOOM!, Brussels

financial overview
Well-weighted risk profile
Financial policy
The basic objective of Pandox’ financial operations
is to achieve the lowest possible financing
costs while simultaneously limiting the risks
related to interest rates, foreign currencies and
borrowings. The interest rate risk is the risk that
changes in interest rate levels which could negatively
affect the Group’s results. Currency risk is
the risk that the Group’s balance sheet and income
statement which could be negatively affected by
changes in the value of the Swedish krona. Finally,
the borrowing risk is the risk that external financing
may become more difficult to find.
Interest rate risk/interest rate strategy
Pandox’ basic objective is that interest rate exposure
shall be adapted so that increased costs as a
result of reasonable changes in interest rates shall
be compensated by higher revenue. The interest
rate risk must therefore be limited through contracting
periods of varying lengths with the aim of
creating an optimal due date structure and fixed
interest periods. The long term objective is that
the average fixed interest period be matched with
the average point in time when rental revenues,
based on underlying leases, are estimated to be
affected by a change in interest rates. Interest
swaps are mainly used for extension of fixed interest
rate periods.
Currency risk/currency risk strategy
Pandox is exposed to currency risks due to certain
of the Group’s assets being denominated in foreign
currencies. Pandox’ policy is to hedge the majority
part of its exposure by raising loans in the local currency
of each respective country and by hedging
with appropriate currency hedging instruments.
Methodology and systems
Pandox has developed and implemented systems
and procedures to enable the continuous monitoring
and reporting of interest rate risk trends.
Financing strategy
In order to gain flexibility and administrative benefits,
Pandox has centralised when possible all
borrowing in the Parent Company. The objective
is to work with long-term framework agreements
that provide scope for borrowing with varying
maturities and fixed margins. Derivative instruments
such as swaps are preferably used for
the extension of fixed interest rate periods.
Capital structure
The objective for the Group’s capital structure is
that the equity/asset ratio long term should meet
internal and external financial strength requirements
in order to enable continued expansion.
Financing
As of 31 December, the Pandox Group’s interest
bearing liabilities amounted to SEK 7,025.8 M
(6,850.5). The loan portfolio has a spread duedate
structure with an average fixed-capital period
Clarion Hotel Grand, Helsingborg
60 |
Pandox 2010

of 6.7 years is without financial covenants and has
an average fixed-interest period of 4.5 years (2.3).
The average interest rate on loans at 31 December
was 3.3 percent (2.6). The financing of hotel
properties is raised in each respective local currency
in accordance with the financial policy. The
Group’s liquid funds amounted to SEK 385.1 M
(326.4). In addition, there was an unutilised credit
facility of SEK 964 M.
Equity capital
The Group’s equity capital as per the balance
sheet at 31 December 2010 amounted to SEK
2,977.5 M of which SEK 1,367.2 M was restricted
equity and SEK 1,610.3 M unrestricted equity.
The Pandox Group’s cash flow, including 50
percent of Norgani’s cash flow for the two months
Pandox has owned the company, amounted to
SEK 518.9 M.
Working capital
Pandox receives rental revenue in advance and
pays most of its operating costs and interest
expense in arrears while hotel operations normally
receive revenues in arrears. Altogether the Group
normally has a relatively small working capital to
finance.
INTEREST STRUCTURE 1) , SEK M
Year due SEK DKK EUR GBP CHF CAD Total Share,% Interest, % 2)
2011 687.8 232.3 754.2 270.0 58.6 258.5 2,261.4 32.2 3.0
2012 225.0 – – – 65.1 – 290.1 4.1 4.2
2013 75.0 – 180.0 – – – 255.0 3.6 4.4
2014 350.0 – 360.1 – – – 710.1 10.1 3.2
2015 100.0 120.8 351.1 – 130.2 – 702.1 10.0 3.7
2016 and later 1,250.0 289.8 1,017.2 – – 250.1 2,807.1 40.0 3.2
Total 2,687.8 642.9 2,662.6 270.0 253.9 508.6 7,025.8 100.0 3.3
Share, % 38 9 38 4 4 7 100
Average interest rate, % 3.6 2.8 3.0 2.0 3.1 3.7 3.3
Average interest rate period, years 4.9 5.4 4.7 0.2 2.4 3.4 4.5
1) Converted to SEK.
2) Average interest rate in percent.
Pandox 2010
| 61

sensitivity analysis
Factors that affect Pandox
Pandox’ operations and profitability are
affected by a number of factors, of which the
most important are described below.
The hotel market
The development of Pandox’ earnings and the
value of its hotel properties are dependent upon
trends within the hotel market, which in turn
closely follow general economic developments.
Business travel and conference activities normally
increase during periods of high economic
activity, while there is a corresponding decrease
during periods of low economic activity. There is
thus a strong connection between economic
trends (GDP) and trends within the hotel market.
Developments of GDP can be closely monitored,
whereas factors that influence local hotel markets
are significantly more complex. The most important
influential factors are local economic conditions,
the proportion of new hotel capacity in the
market, how well developed a market is concerning
brand names and segments, currency fluctuations,
aswell as extraordinary events.
New capacity
New capacity introduced to the market implies an
increased risk for local players. Depending upon
existing demand, additional hotel rooms through
the construction of a new hotel can lead to a rapid
negative influence on occupancy rates and average
prices. To deal with this risk, Pandox has
developed an information system that continually
monitors planned new constructions within its
market areas, and thus enabling Pandox to be
prepared and proactive.
Agreement structure
Pandox has a large proportion of variable leases,
which represented 94 percent of total rental revenue
in 2010 for Pandox wholly owned properties.
About 32 percent of variable leases contained
a guaranteed rent, meaning that 62 percent of
rental revenues were fully variable downwards.
A change in the occupancy rate and the average
room revenue consequently affects Pandox very
differently, depending on the direction of change.
The choice of agreement is based on optimal
distribution of cash flow between Pandox and the
operator so that both parties are motivated to
continuously increase the hotel property’s overall
profitability. Factors that may influence risks associated
with variable leases are the hotel property’s
location, market segment and brand name/operator.
Pandox’ strategy is to operate in a selected
market segment, which in combination with its
hotels market expertise and systems, limits
Pandox’ agreement risk.
Partners
Pandox’ agreement structure, with a large proportion
of variable leases, means that the Company is
more dependent on the individual tenant/operator’s
business than other property companies. The
Company’s strategy to actively cooperate with the
market’s most competitive and powerful operators
with well established brand names, reduces
both the related operative and financial risks.
Pandox’ largest tenants in terms of revenue are
Scandic, Hilton, Rezidor, Elite Hotels, InterContinental
Hotels Group, Choice Hotels and First
Hotels, which together accounted for 84 percent
of all rental revenue in 2010.
Leasing level
The leasing level in Pandox’ wholly owned portfolio
as of 31 December was 99.8 percent. Vacant
space amounting to 1,430 sqm consisted entirely
of store and office premises.
If for any reason a hotel operator should
choose to terminate its lease agreement, Pandox
may either select a new suitable operator as tenant
or operate the hotel under its own management.
With Pandox’ specialist expertise in the
hotel sector, the risk of vacant hotel space is seen
as being extremely low.
For other commercial space, which represents
approximately 8.1 percent of total space in the
Company’s properties, Pandox is exposed to the
same fluctuations in supply and demand for premises
experienced by other property owners.
Changed risk potential
Historically, the hotel industry and hotel property
sector have always been associated with high
risk. The market has however changed significantly
in recent years. Owners have become more
professional with restructured companies and
focused strategies, with a greater holistic view and
specialised expertise. Reports from public companies
have substantially improved information
about the transparency of the market. The proportion
of established strong brand names with
efficient operations has increased. For streamlined
companies with own expertise in hotel operations,
hotel properties and business development, and
who are active owners, the potential risk is considerably
lower than it has been in historic terms.
Decisions by public authorities
The hotel market can be affected by decisions
made by public authorities. Two examples of such
decisions are changes in taxation related to claims
for travel expenses or rules concerning value
added tax both in general and for the hotel and
restaurant industry in particular.
Property tax
Property tax on Pandox’ Swedish properties
amounts to 1.0 percent of the tax assessment
value. Changes in the tax rate or in the tax assessment
value affect Pandox’ earnings. However, an
increase only has a limited impact on the earnings
because many lease agreements are formulated
so that the property tax be passed on to the tenant.
Property tax on properties outside Sweden is
generally less than one per cent of the book value.
About 55 percent of the property tax was debited
to tenants in 2010, which means that the net effect
on Pandox’ earnings amounted to SEK 21.4 M.
Site leasehold rents
In the wholly owned portfolio as of 31 December
2010, Pandox held seven properties via site leasehold
rights. Rents on these properties are currently
calculated in such a manner that a municipality
that normally owns the land receives what is
deemed to be a reasonable real rate of interest on
the estimated market value of the land in question.
Site leasehold rents generally run for periods of 10
to 20 years.
Interest rates
Interest expense is Pandox’ largest single cost
item. Fluctuations in interest rates will therefore
have an impact on Pandox’ earnings. In order to
limit its financial risk, the Company’s average fixed
interest period is 4.5 years. The full effect of a
change in interest rates is accordingly not felt by
Pandox until after this period.
Currency risk
Pandox’ policy is to hedge the major part of its
currency exposure, including shareholders’ equity,
62 |
Pandox 2010

y financing properties in local currencies and by
hedging through means of appropriate currency
instruments. Transaction exposure is limited as
revenue and costs are usually in the same currency.
Sensitivity analysis
The table to the right illustrates how Pandox’
earnings are affected by changes in certain
key factors.
Earnings impact 2010, SEK
Change in rental revenue
Occupancy rate +5 percentage points +49.3
Occupancy rate –5 percentage points –48.7
Average room rate SEK +50 +34.1
Average room rate SEK –50 –34.2
Other commercial premises +/–5 % 1) +/–1.6
Change in other variables
Interest expense during the year +/–1 percentage point +/–22.6
Average interest expense +/–1 percentage point 1) +/–70.3
Exchange rate fluctuation +/–5 % +/–3.0
Operating and maintenance costs +/–5 % +/–3.9
1) The figures in the table are standardised so that the effects of changes in rental revenue and interest rates are immediate, although such
changes do not have full impact in reality until leases and loan agreements are renegotiated.
Crowne Plaza, Antwerp
Crowne Plaza, Antwerp
Pandox 2010
| 63

valuation and tax situation
Hotel property
portfolio value
The valuation of hotel properties with their
specific characteristics demands extensive
know ledge and expertise of the hotel market
and hotel operations.
Cash flow valuation
Pandox continuously evaluates all of its hotel
properties in accordance with a valuation model
based on the properties’ cash flow, and which is
adapted to the characteristics specific to the
hotel industry.
The cash flow calculation is built up from
underneath, with the property operator’s income
statement as the point of departure. This in turn is
based on assumptions as to how the underlying
hotel market will develop in terms of occupancy
and average rates, as well as how each specific
operator’s respective key ratios and figures
develop in this market. The operator company’s
results and forecasts, together with the formulation
of the agreement, provide underlying data to
estimate revenues, which subsequently constitute
the basis of the cash flow calculation. The value
calculated is the present value of the next ten
years’ cash flow, with a supplement for the present
value of the hotel properties’ residual value
after ten years.
The valuation model is based on the following
assumptions:
• Changes in rental revenue during the calculation
period are based on the formulation of individual
agreements and on underlying factors.
• Inflation is assumed to amount to an average
of 2.0 percent annually during the calculation
period.
• Operating costs are assumed to increase in
line with inflation.
• The rate of interest used in the calculation is
based on the real interest rate plus a risk premium
based on location, lease, and form of
ownership.
An internal valuation of Pandox’ wholly owned
hotel properties in accordance with this method
resulted in a total value as of December 2010 that
substantially exceeds the book value. In accordance
with current accounting principles, each
individual property’s recovery value was reconciled
with its book value, further to which it was
noted that no write downs were necessary.
Hotel BLOOM!, Brussels
The Company’s tax situation
The Pandox Group’s property holdings are
reported for accounting purposes as fixed
assets. The consolidated book value as of
31 December 2010 amounted to SEK
8,613.4 M excluding equipment, of which
the consolidated surplus values amounted
to SEK 1,725.2 M.
Accounting of deferred tax
Pandox applies the Swedish Accounting Standards
Board’s general recommendation on
income tax accounting (BFNAR 2001:1). In short,
the recommendation implies that both deferred
tax liabilities and tax claims are to be included in
the financial statements and that any changes will
affect the income statement as deferred tax.
Pandox’ consolidated balance sheet as of 31
December 2010 includes a deferred tax liability in
the net amount of SEK 203.4 M corresponding to
the difference between a deferred tax liability of
SEK 389.1 M and a deferred tax claim of SEK
185.7 M. The deferred tax liability refers mainly to
the estimated deferred tax based on the difference
between the properties’ consolidated book
value and the fiscal residual value of each respective
legal unit. The difference in value has arisen as
an effect of surplus value upon acquisitions of
property in companies, known as pure intrinsic
acquisitions, as well as fiscal depreciation that
exceeds book depreciation. Tax deduction for
annual depreciation of properties has normally
been made at the rate of 3 to 5 percent of a property’s
acquisition cost. As a result, the amount of
fiscal depreciation exceeds that of book depreciation,
and the difference between the book value
and the fiscal value of a property increases year on
year. The deferred tax liability generated by asset
acquisitions has been calculated using the present
value method based on the shortest period of
ownership estimated for each property, and corresponds
to an average tax rate of approximately 10
percent. This is based on regulation for assessing
deferred tax upon pure intrinsic acquisitions,
where the tax effect is taken into consideration
when calculating the acquisition price. The
deferred tax relating to the difference between
book depreciation and fiscal depreciation is calculated
based on the applicable tax rate.
The deferred tax claim pertains mainly to deficit
deductions. At the end of 2010, there were
remaining deficit deductions totalling SEK 513 M
in the Swedish companies. The valuation of
deferred tax claims is based on their potential utilisation
against future taxable profits, and is calculated
according to the applicable tax rate. Consequently,
minor deficit deductions in non-Swedish
companies were reported at the end of 2010.
64 |
Pandox 2010

dEFINITIONs
Hotel BLOOM!, Brussels
Definitions of key data
Property related key figures
Direct yield
Operating net as a percentage of the average
book value of properties and hotel equipment
during the year.
Operating net
Hotel property revenue less operating and maintenance
costs, property tax, ground rent and other
property costs.
Property related administration
The portion of total administration costs that is
directly related to the management and development
of a property. Other administration costs
include central administration and costs for
administration of non-Swedish entities.
Total property revenue
The sum of rental revenue and other property
revenue.
Financial key figures
Return on equity
Profit after net financial items and paid tax as a
percentage of average equity.
Return on total assets
Profit after net financial items, plus financial costs
as a percentage of average total assets.
Interest coverage ratio
Profit before tax less depreciation and net financial
items (EBITDA) in relation to net financial items.
Equity/asset ratio
Equity at the end of the year as a percentage of
total assets.
Hotel market related key figures
Occupied rooms
Number of sold room nights during a given period
of time – normally one year.
Available rooms
Available room capacity during a given period of
time – normally one year.
Occupancy rate
Number of occupied rooms as a percentage of
the number of available rooms.
Average room rate
Total revenue from sold rooms divided by the
number of occupied rooms.
RevPAR
(Revenue Per Available Room)
Total revenue from sold rooms divided by the
number of available rooms.
Market penetration
The performance of an individual hotel in relation
to the average of the market.
GOP (Gross Operating Profit)
Net profit in hotel operator companies before
depreciation, rent, net financial items and taxes.
Pandox 2010
| 65

ten-year overview
Condensed consolidated income statement
SEK M 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Property operations
Rental revenue 551.1 536.2 535.1 562.7 548.8 605.0 747.5 872.3 850.6 884.2
Other property revenue 24.0 26.0 26.5 30.2 25.2 29.9 34.7 43.2 44.6 39.1
Total property revenue 575.1 562.2 561.6 592.9 574.0 634.9 782.2 915.5 895.2 923.3
Operating and maintenance costs –96.7 –93.2 –100.1 –118.7 –103.8 –111.5 –126.3 –132.8 –117.0 –140.6
Operating net 478.4 469.0 461.5 474.2 470.2 523.4 655.9 782.7 778.2 782.7
Depreciation –56.2 –63.2 –64.3 –70.3 –78.2 –91.3 –129.3 –163.8 –193.6 –194.3
Income from property operations 422.2 405.8 397.2 403.9 392.0 432.1 526.6 618.9 584.6 588.4
Hotel operations
Operating revenue 39.7 60.1 81.3 216.8 250.2 420.0 788.8 1,105.3 1,095.0 1,208.6
Operating costs –39.3 –58.2 –75.7 –204.4 –239.4 –407.7 –768.2 –1,084.5 –1,129.0 –1,202.8
Operating income hotel operations 0.4 1.9 5.6 12.4 10.8 12.3 20.6 20.8 –34.0 5.8
Gross income 422.6 407.7 402.8 416.3 402.8 444.4 547.2 639.7 550.6 594.2
Administrative costs –33.9 –34.5 –35.5 –39.3 –42.5 –51.9 –55.4 –64.6 –68.3 –72.4
Other revenue/realisation results 8.6 28.8 7.4 – 444.4 39.9 3.4 6.9 – –
Operating income 397.3 402.0 374.7 377 804.7 432.4 495.2 582.0 482.3 521.8
Non-recurring financial income & costs – – – –56.1 – – – – 79.5 431.2
Profit from associate companies – – – – – – – – – 5.7
Net financial items for current operations –178.1 –171.0 –159.2 –148.4 –137.4 –166.4 –232.4 –294.7 –229.8 –214.0
Income after financial items 219.2 231.0 215.5 172.5 667.3 266 262.8 287.3 332.0 222.9
Deferred tax –28.3 –44.2 –50.3 –47.6 36.8 –33.0 –23.5 34.2 –10.1 –65.7
Tax –0.2 –0.1 11.4 –0.2 –15.8 –31.4 –9.3 –22.2 –20.4 –111.2
Income/loss for the year 190.7 186.7 176.6 124.7 688.3 201.6 230.0 299.3 301.5 567.8
66 |
Pandox 2010

Condensed consolidated balance sheet
SEK M, as of 31 December 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Assets
Properties including hotel equipment 5,036.8 4,961.4 5,276.7 5,262.8 5,477.5 6,907.5 8,223.8 9,212.5 9,348.0 9,200.5
Other fixed assets 5.4 6.9 7.2 6.9 113.7 172.8 139.0 794.6 843.3 1,170.3
Current assets 37.1 29.5 34.6 58.6 201.7 174.4 223.1 241.2 158.4 276.0
Cash and bank 86.7 213.2 137.5 58.0 236.4 174.1 272.8 347.7 326.4 385.1
Total assets 5,166.0 5,211.0 5,456.0 5,386.3 6,029.3 7,428.8 8,858.7 10,596.0 10,676.1 11,031.9
Equity and liabilities
Shareholders’ equity 1,772.1 1,853.9 1,919.2 1,923.0 2,307.7 2,272.3 2,407.7 2,729.2 2,996.7 2,977.5
Deferred tax liability 37.0 83.5 135.9 184.3 208.5 279.7 352.5 335.2 363.0 389.1
Interest bearing liabilities 3,178.5 3,070.6 3,211.9 3,080.4 3,165.3 4,398.5 5,516.8 6,808.6 6,850.5 7,025.8
Non-interest bearing liabilities 178.4 203.0 189.0 198.5 347.8 478.3 581.7 723.0 465.9 639.5
Total equity and liabilities 5,166.0 5,211.0 5,456.0 5,386.3 6,029.3 7,428.8 8,858.7 10,596.0 10,676.1 11,031.9
Key data
Property related key data
Book value of properties including
hotel equipment, SEK M 5,036.8 4,961.4 5,276.7 5,262.8 5,477.5 6,907.5 8,223.8 9,212.5 9,348.0 9,200.5
Total property revenue, SEK M 575.1 562.2 561.6 592.9 574.0 634.9 782.2 915.5 895.2 923.3
Operating net, SEK M 478.4 469.0 461.5 474.2 470.2 523.4 655.9 782.7 778.2 782.7
Direct yield, % 9.6 9.5 9.3 9.1 8.5 8.1 8.6 9.2 8.4 8.6
Financial key data
Interest coverage ratio, multiple 2.6 2.6 2.7 2.2 3.2 2.9 2.7 2.5 4.5 3.5
Return on total assets, % 8.0 7.8 7.1 7.0 14.2 5.9 6.1 6.2 5.5 8.9
Return on equity, % 11.0 12.6 12.0 12.0 30.8 10.4 11.0 10.8 11.2 22.9
Equity/assets ratio, % 34.3 35.6 35.2 35.7 38.3 30.6 27.2 25.8 28.1 27.0
Cash flow from current operations, SEK M 267.2 265.8 272.4 298.9 301.4 317.6 389.0 444.5 446.4 518.9
Investments excluding acquisitions, SEK M 149.1 67.3 60.8 70.5 165.1 282.6 274.9 269.3 312.5 197.7
Property acquisitions, SEK M 141.9 – 370.7 – 661.3 1,327.8 1,063.4 370.9 163.3 332.0
Pandox 2010
| 67

Quarterly data
Quarterly data
CONDENSED INCOME STATEMENTS
2009 2010
SEK M Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Total property revenue 203.0 230.8 218.1 243.3 201.2 234.4 241.2 246.5
Operating net 171.0 201.9 188.9 216.4 167.7 199.8 210.4 204.8
Income from property operations 125.1 155.3 139.8 164.4 119.9 149.6 161.5 157.4
Income from hotel operations –30.7 0.9 –1.6 –2.6 –24.1 14.5 3.9 11.5
Operating income 77.5 138.6 123.3 142.9 78.7 145.6 148.3 149.2
Net financial items –74.6 –57.4 6.9 –25.2 –12.0 –50.4 341.3 –56.0
Income after financial items 2.9 81.2 130.2 117.7 66.7 95.2 489.6 93.2
Income after tax 0.7 57.0 114.5 129.3 55.0 73.6 353.0 86.2
CONDENSED CONSOLIDATED BALANCE SHEETS
2009 2010
SEK M 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 31 Dec
Assets
Properties including hotel equipment 9,309.9 9,319.1 9,228.8 9,348.0 9,138.8 9,128.7 9,130.2 9,200.5
Other fixed assets 1,214.2 1,180.6 869.4 843.3 737.4 724.3 230.7 1,170.3
Current assets 166.0 202.6 181.9 158.4 144.0 190.9 197.2 276.0
Cash and bank 244.4 313.0 371.4 326.4 472.2 659.2 1,351.1 385.1
Total assets 10,934.5 11,015.3 10,651.5 10,676.1 10,492.4 10,703.1 10,909.2 11,031.9
Equity and liabilities
Shareholders’ equity 2,700.0 2,771.9 2,798.5 2,996.7 2,906.7 2,715.8 3,045.0 2,977.5
Deferred tax liability 336.0 352.4 363.2 363.0 376.4 394.9 403.6 389.1
Interest bearing liabilities 7,171.8 7,333.2 6,952.6 6,850.5 6,711.1 7,086.5 6,920.6 7,025.8
Non-interest bearing liabilities 726.7 557.8 537.2 465.9 498.2 505.9 540.0 639.5
Total equity and liabilities 10,934.5 11,015.3 10,651.5 10,676.1 10,492.4 10,703.1 10,909.2 11,031.9
PROPERTY RELATED KEY DATA
2009 2010
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Direct yield, % 7.3 8.7 8.2 9.3 7.3 8.8 9.3 8.9
FINANCIAL KEY DATA
2009 2010
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Interest coverage ratio, multiple 1.7 3.7 2.8 6.1 2.5 3.9 3.4 4.2
Return on total assets, % 2.9 5.2 7.2 6.4 4.3 5.4 20.2 5.5
Return on equity, % 0.2 10.8 18.5 15.2 9.5 13.4 50.7 18.3
Equity/assets ratio, % 24.7 25.2 26.3 28.1 27.7 25.4 27.9 27.0
Cash flow from current operations, SEK M 48.9 124.0 110.6 162.9 76.1 146.1 139.6 157.1
Investments excluding acquisitions, SEK M 86.3 76.8 78.1 71.3 41.3 53.8 45.5 57.1
Property acquisitions, SEK M – – 163.3 – – – 332.0 –
68 |
Pandox 2010

Financial statements
2010
Property revenues and total revenues
Pandox’ property revenues for 2010 amounted to SEK 923.3 M (895.2), which
for comparable units, including adjustment for currency effects, represented
an increase of 5.1 percent against 2009. The Group’s total revenue amounted to
SEK 1,917.9 M (1,778.5).
Cash flow
Cash flow from ongoing operations, excluding share of profits from associate
companies and capital gains, amounted to SEK 502.5 M (446.4). When including
50 percent of the cash flow from Norgani for the two months that Pandox has
owned the company, total cash flow amounted to SEK 518.9 M.
Acquisitions during the year
On 6 September, Pandox acquired the Brussels Hilton, name changed to
The Hotel. The acquisition price was EUR 29 M, and covers the hotel property
and its operating activities.
On 4 November, Pandox acquired Norgani Hotels AS in close cooperation
with its owners. The acquisition price was SEK 9.7 billion. Norgani’s portfolio
is composed of 73 hotel properties in the Nordic region. Pandox’ proportion
of ownership amounts to 50 percent, but the Company will manage the whole
property portfolio.
Profits
The pre-tax profit for 2010, excluding capital gains, amounted to SEK 313.5 M
(252.5). Profit after tax amounted to SEK 567.8 M (301.5).
Pandox 2010
| 69

Financial Statements
Report of the Board of Directors
The Board of Directors and Chief Executive
Officer of Pandox AB, Swedish corporate
registration number 556030-7885,
hereby submit the annual report and
consolidated accounts of the Company
for the financial year 2010.
Operations and strategy
Pandox is one of Europe’s leading hotel property
companies. The Company has built up
specialist expertise within the key areas of hotel
markets, hotel operations, hotel properties and
business development. Active ownership, with
well developed strategic plans for each hotel,
enables the creation of good prerequisites for
stable and improved cash flows, and thereby
growth in value for the shareholders.
Pandox’ strategy is to own one type of
property – hotel properties. Its focus is
strengthened by a prioritised market segment.
Pandox is to own large hotel properties in
Sweden, major locations in Europe, as well as
developing regions in Eastern Europe and
North America.
The hotels should be in central and strong
locations such as city centres, airports and
exhibition centres. The hotels should be in the
upper medium to high price range and focus on
the business and leisure segments.The hotels
owned by Pandox are operated and marketed
by the most powerful players in the hotel market,
who with well known brands and dynamic
independent distribution channels create strong
market positions and thereby stable revenues.
Revenues are created by flexible agreements
related to the operator’s turnover and
results or through management agreements
where Pandox assigns a third party to manage
operations, or alternatively through its own management.
Irrespective of the form of operation,
Pandox contributes via its active ownership to
increasing total cash flows and reducing risks.
At the end of the year, the Company’s
portfolio contained 120 hotel properties of
which 46 in the Pandox portfolio and 74 in
the Norgani portfolio including one conference
center. Pandox operates ten hotels of which
one via an asset management assignment.
Pandox owns and develops assets in Sweden,
Denmark, Finland, Norway, Belgium, Germany,
Switzerland, the United Kingdom, Canada and
the Bahamas.
Accounting principles
Pandox does not apply IFRS. As an unlisted
company, Pandox is not subjected to IFRS
reporting requirements. Pandox applies the
Swedish Annual Reports Act and generally
accepted accounting principles, as well as the
recommendations of the Swedish Accounting
Standards Board unless otherwise stated. The
Group’s properties are reported in the balance
sheet at their acquisition cost less accumulated
depreciation.
Ownership situation
Pandox is since the beginning of 2004 owned
by the Norwegian companies Eiendomsspar
AS and Sundt AS through their wholly owned
Swedish company APES Holding AB.
The hotel market
The global recovery further to the finance crisis
continues and surprised positively in the second
half-year 2010w both in the United States
and in Europe. However, the American economy
still has problems with high unemployment,
falling house prices and a budget deficit.
Like in the US, several European countries
are wrestling with large deficits in their public
finances, which could restrain growth in the
region. However, Europe is showing considerable
variations in growth preconditions whereby
Germany and Sweden are breathing optimism
while certain countries, particularly in southern
Europe, see a tougher future ahead of them. The
current trend is that the general pace of improvement
is continuing, although the overall picture is
still split and developments are uneven.
Within this global environment, Pandox’
hotel property portfolio performed well. Property
management revenues grew by 3.1 percent
during the period, and even 5.1 percent for
comparable units and exchange rates. Growth
within operational activities was 12 percent,
which is partly due to hotels that have undergone
major investment programs are now once
again being operated with full capacity. The rate
of improvement was better than the market on
average, which implies that the hotels in Pandox’
portfolio in general took market shares.
Profits and cash flows continued to rise.
The driving force is a combination of an
improved hotel market, the Company’s strategy,
high quality in the portfolio, lower financing
costs, and the Company’s active ownership.
Occupancy and rates increase in USA
The recovery in the American hotel market has
been primarily driven by an increase in demand,
even if rates have also started to rise. The current
trend is that all segments and areas are
increasing in demand. Occupancy rose during
the period by almost 5 percent, while average
rates basically stood still. New York, which is
always early in the economic cycle, showed
good developments in both average rates and
occupancy. Overall, RevPAR increased by
about 13 percent in the city.
Demand has returned in Europe
In Europe, demand returned in the major international
cities. The autumn was relatively strong
and the short trend is showing improved average
rates, which will strengthen profitability in
the sector. London had an unexpectedly low
and short downturn after the outbreak of the
finance crisis, but has now reached a phase
where rates are rising more than occupancy.
RevPAR increased by 12 percent compared
with 2009.
The picture in the Nordic Region is divided.
The market in Copenhagen continues to be
tough with a price war that has further contributed
to the downturn. RevPAR fell by 14 percent
and the trend continues to be negative.
Oslo also trailed behind the recovery in Europe,
but had a good end of the year. Stockholm
showed good growth with an increase in
RevPAR of 8 percent compared with last year.
Developments in Gothenburg were also
positive, while trends in Malmö were negative
during the year as expected.
Pandox’ portfolio
Pandox’ hotel property portfolio continued to
perform well. All Stockholm hotels improved
better than the market in general. In Gothenburg,
the Elite Park Avenue managed better
than its competitors while the Scandic Crown
and Scandic Mölndal developed just under the
market’s average. In Malmö, the Scandic
Kramer and Scandic S:t Jörgen performed in
line with the market, while the ongoing refurbishment
of the Radisson Blu reduced revenue
capacity and thereby the possibility to follow
the market. Regional towns and cities were
relatively stable.
Of the international hotels, the InterContinental
and Hyatt in Montreal performed
70 |
Pandox 2010

extremely well with increased market shares in
both rates and occupancy. InterContinental,
which has recently undergone a major development
program, is now among the RevPARleaders
in the city while simultaneously showing
good productivity trends during the year.
Further to several years’ successful work,
the Hotel Berlin, Berlin has achieved a high level
of revenues, productivity and profit. Of the
Belgian hotels, Holiday Inn Brussels Airport,
which has also undergone a large development
program, showed the best growth. Hotel
BLOOM! had strong productivity trends, and
the Hilton Brussels City took market shares.
In Copenhagen, the Scandic Copenhagen
suffered from over-establishment but nonetheless
defended its market share reasonably
well, while the Clarion Collection Hotel 27
with its lower sensitivity to economic fluctuations
developed better than the market
on average.
Revenues and operating net
– property operations
Property management revenues for the year
amounted to SEK 923.3 M (895.2). For comparable
units and currencies, the portfolio improved
by just over 5 percent. This increase is main ly
attributable to a generally better underlying
hotel economic climate and that last year’s
refurbishment projects at the InterContinental
Montreal, Hyatt Montreal and Holiday Inn
Brussels Airport have now been completed
and were operated with full capacity this year.
However, at the hotel property level in each
respective submarket, there are relatively large
differences in results depending on the location,
market segment, type of agreement and operator.
Property costs excluding depreciation
amounted to SEK 140.6 M (117.0). The rise is
mainly due to increased maintenance work in the
newly acquired The Hotel and in a number of
other hotel properties.
The operating net increased overall by SEK
4.5 M to SEK 782.7 M (778.2).
Revenues and income – hotel operations
Total revenues from hotel operations amounted
to SEK 1,208.6 M (1,095.0) where all units
increased their sales compared with 2009. For
comparable units and adjusted for currency
effects, revenues rose by 12.0 percent with the
InterContinental Montreal and Holiday Inn Brussels
Airport contributing most. The overall profit
from hotel operations amounted to SEK 5.8 M
(loss: -34.0), which includes a market-level rent
that is reported under property revenues.
Portion of profits from Norgani
Pandox’ portion of the profits in Norgani for the
almost two months the company has been
owned amounted to SEK 5.7 M before tax, and
are reported under net financial items according
to the equity method.
Income
The Group’s profit for 2010 before tax and
excluding capital gains amounted to SEK 313.5
M (252.5), and the Group’s profit after tax
amounted to SEK 567.8 M (301.5).
Financing and cash flow
Net financial items relating to current operations
for the period January-December 2010
amounted to SEK -214.0 M (-229.8). The
Group’s interest-bearing liabilities amounted as
of 31 December 2010 to SEK 7,025.8 M
(6,850.5). The loan portfolio has a spread duedate
structure with an average fixed-interest
period of 4.5 years. The average interest rate
on loans at 31 December 2010 was 3.3 percent.
Financing of Swedish properties has been
made in Swedish kronor (SEK), while properties
outside Sweden have essentially been financed
in each respective local currency.
Available liquid funds, including unutilised
bank overdraft and credit facilities totalling SEK
989 M amounted to SEK 1,349 M (1,808).
Cash flow before changes in working capital
and investments, and excluding capital gains,
profits from associated companies and tax,
amounted to SEK 502.5 M (446.4). Pandox’
cash flow, including 50 percent of Norgani’s cash
flow for the two months Pandox has owned the
company, amounted to SEK 518.9 M.
Investments
The Group’s investments, excluding acquisitions,
amounted for the period to SEK 197.7 M (312.5).
Investments included, among other things, the
refurbishment programs at the Crowne Plaza
Antwerp, Scandic Plaza Borås and Radisson
BLU Hotel, Basel and Malmö, as well as product
improvements at a large number of properties.
The net book value of hotel properties
amounted to SEK 9,200.5 M (9,348.0). The
market value of the hotel properties significantly
exceeds their book value.
Taxes
The Swedish Tax Agency has in a reassessment
notice dated October 2007, decided to
increase the assessed income of a number of
Pandox’s subsidiaries by in total SEK 430 M
(corresponding tax effect of SEK 120.4 M) as a
consequence of the sale of real estate through
non-Swedish subsidiaries carried out in 2005.
The decision has been appealed to the county
administrative court. The case has been put on
hold awaiting the Supreme Administrative
Court’s judgement in another (non-Pandox
related) case. The Company is of the opinion
that all transactions and claims have been
made in accordance with applicable laws and
therefore no reserves have been booked in the
Groups’ accounting.
Personnel
Central administration counted 16 employees
as at 31 December. Figures concerning average
number of employees, as well as salaries
and other remuneration are set out in Note 16.
The work of the Board of Directors 2010
The Board of Directors of Pandox has been
composed of seven members since the Annual
General Meeting of Shareholders held in 2009.
During the year, the Board has held four ordinary
meetings in accordance with the established
annual agenda. The meetings have
reviewed and discussed external and internal
report ing of operating results and the Company’s
financial position as well as various business
matters. Other important items that are
regularly studied and reviewed each year are
markets, strategy, finance, and budget issues.
Parent Company
Property activities in the Group’s property-owning
companies are administered by staff
employed by the Parent Company, Pandox AB.
The cost of these services has been invoiced to
the Group’s subsidiaries. Invoicing in 2010
amounted to SEK 57.8 M (51.1). The profit for
the year amounted to SEK 56.7 M (–400.0).
Outlook for 2011
The level of economic activity is expected to
improve in most markets where Pandox is represented.
Scandinavia, Germany and Canada
are forecasted to have strong growth, which
will have a positive effect on demand in the
hotel industry in 2011. Through the acquisition
of Norgani, Pandox will report considerably
better results in the forthcoming year. Also for
comparable units, the Company will strengthen
its profits and cash flow.
Pandox 2010
| 71

Financial Statements
Income statement
Group
Parent Company
SEK M 2010 2009 2010 2009
Property operations
Rental revenue note 1, 2, 3 884.2 850.6 – –
Other property revenue 39.1 44.6 – –
Total property revenue 923.3 895.2 – –
Property costs –140.6 –117.0 – –
Operating net 782.7 778.2 – –
Depreciation as per plan note 4 –194.3 –193.6 – –
Income from property operations 588.4 584.6 – –
Hotel operations
Operating revenue 1,208.6 1,095.0 – –
Operating costs –1,202.8 –1,129.0 – –
Operating income from hotel operations note 1, 2, 16 5.8 –34.0 – –
Gross income 594.2 550.6 – –
Administrative costs note 4, 15, 16 –72.4 –68,3 –71.8 –62.3
Other revenue note 5 – – 57.8 51.1
Operating income 521.8 482.3 –14.0 –11.2
Interest income note 6 5.7 25.5 1,044.5 457.8
Interest expense –212.0 –256.5 –177.1 –202.9
Portion of profits from associate companies 5.7 – – –
Other financial income and costs note 6 423.5 80.7 –787.9 188.1
Net financial items 222.9 –150.3 79.5 443.0
Income before tax 744.7 332.0 65.5 431.8
Tax note 7 –111.2 –20.4 –8.8 25.3
Deferred tax note 7 –65.7 –10.1 – –57.1
INCOME FOR THE YEAR 567.8 301.5 56,7 400.0
Specification of external revenue
Revenue from property operations 923.3 895.2
Of which internal rentals –214.0 –211.7
Revenue from hotel operations 1,208.6 1,095.0
Total external revenue 1,917.9 1,778.5
72 |
Pandox 2010

Comments on the income statement
Rental revenue
Rental revenue pertains to hotel premises, hotel
furniture and equipment, and other commercial
premises. Rental revenue for 2010 increased in
relation to the previous year and amounted to
SEK 884.2 M (850.6).
Other property revenue
Other property revenue is primarily comprised
of costs debited for heat, electricity and property
tax.
BREAKDOWN OF OTHER PROPERTY REVENUE
SEK M 2010 2009
Payment for operating costs 12.6 10.3
Invoicing of property tax 26.5 34.3
Total 39.1 44.6
Property costs
Operating costs
Operating costs are costs that directly pertain
to the operation of the properties, such as heat,
water, electricity, and maintenance. Costs are
reported gross, meaning that the portion of
costs debited to tenants is reported as revenue
under the heading Other Property Revenue,
and that total costs are reported among costs
in their full amount.
Maintenance costs
Maintenance costs are costs incurred to maintain
the standards of buildings and equipment.
Pandox’ leases are in most cases structured
sothat the tenants – the hotel operators – are
responsible for the greater part of interior maintenance
of the properties.
Ground rent
A total of seven properties owned by Pandox
are held under site leasehold rights. The conditions
and maturities in all cases are based on
prevailing market terms.
Property tax
Pandox’ Swedish hotel properties are liable to
property tax at the rate of 1 percent of the tax
assessment value. Properties located outside
Sweden are subject to varying percentages
and underlying basis.
Other costs
These costs include costs of legal counsel on
leasing matters, insurance premiums, and
costs of leasing external premises.
BREAKDOWN OF PROPERTY COSTS
SEK M 2010 2009
Operating costs 24.4 21.9
Maintenance costs 53.8 30.9
Ground rents 7.9 1.5
Property tax 47.9 58.5
Other costs 6.6 4.2
Total 140.6 117.0
Operating net
The operating net for 2010 amounted to SEK
782.7 M, representing an increase of SEK 4.5 M.
Direct yield amounted to 8.6 percent (8.4).
Hotel operations
For accounting purposes, the hotel operations
conducted by Pandox are charged with internal
rent. The internal rent is linked to the operator’s
revenue and based on what are deemed to be
market conditions. The internal rent is debited
to hotel operations and credited to revenue in
property management.
In 2010 Hilton Brussels, name changed to
The Hotel Brussels, was acquired. With that,
nine wholly owned hotel operations remains in
Pandox portfolio at the end of 2010 of which
five were directly operated by Pandox and four
via management contracts.
Administrative costs
Administrative costs relate to central administration,
as well as foreign hotel property administration.
All central administrative staff is
based at the Stockholm office. The remuneration
of staff and auditors is set out in Notes 15
and 16.
Pandox 2010
| 73

Financial Statements
Balance sheet
Group
Parent Company
SEK M 2010 2009 2010 2009
ASSETS
Fixed assets
Tangible fixed assets
Properties note 8 8,613.4 8,735.8 – –
Equipment note 9 588.2 613.5 1.1 1.3
9,201.6 9,349.3 1.1 1.3
Financial fixed assets
Shares and participations in subsidiaries note 10 – – 3,310.6 4,270.6
Other shares and participations note 11 916.6 610.2 904.3 –
Amounts due by Group companies – – 3,883.6 3,885.3
Other long-term receivables 66.9 15.6 65.9 14.7
983.5 625.8 8,164.4 8,170.6
Deferred taxes recoverable 185.7 216.2 – –
Total fixed assets 10,370.8 10,191.3 8,165.5 8 ,171.9
Current assets
Inventories 8.3 8.2 – –
Accounts receivables 167.4 99.7 – –
Tax receivables 2.2 5.3 – –
Other receivables 13.5 16.9 2.8 5.6
Prepaid costs and accrued revenue 84.6 28.3 48.4 1.5
Cash and bank 385.1 326.4 447.9 199.3
Total current assets 661.1 484.8 499.1 206.4
TOTAL ASSETS 11,031.9 10,676.1 8,664.6 8,378.3
Comments on the balance sheet
Properties and equipment
One hotel property was acquired in 2010.
Depreciation of properties amounted to SEK
112.0 M (108.8), and the year’s investments to
SEK 105.0 M (224.1). The book value of equipment,
including hotel furniture and fixtures
amounted to SEK 588.2 M (613.5). Depreciation
amounted to SEK 82.7 M (85.2) and investments
to SEK 92.9 M (89.4).
The greater part of the book value of furniture,
fixtures and equipment, representing SEK
588.2 M, pertains to that used by hotel operators.
In certain cases, these items are included
as an unspecified portion of the revenue-based
rent that the operator is being charged. When
these items are included in rental revenues,
Pandox includes their value in the property
value used to calculate direct yield from the
properties. At the end of the year, the book
value of the properties, including hotel furniture,
fixtures and equipment, amounted to SEK
9,200.5 M. Other items consist of administration
equipment with a book value of SEK 1.1 M.
Other long-term receivables
Pertain to a long-term promissory note and to a
pledged deposit.
Inventories
Relate to stocks of consumables in the hotel
operations.
Trade accounts receivable
Pandox’ accounts receivable normally consists
of rental receivables and trade receivables in
hotel operations. Since rent is generally paid
quarterly and monthly in advance, amounts
outstanding at year-end mainly comprise
accrued revenue-based rents.
Other receivables
Short-term receivables such as those pertaining
to costs that are to be debited to external
parties.
Prepaid costs and accrued revenue
This item is comprised mainly of prepaid costs
for the following year, such as insurance premiums
and rents.
Cash and bank deposits
The liquidity of the Pandox Group is primarily
managed by the Parent Company through a
central bank account structure where liquidity
74 |
Pandox 2010

Group
Parent Company
SEK M 2010 2009 2010 2009
EQUITY AND LIABILITIES
Equity
Restricted equity
Share capital 373.5 373.5 373.5 373.5
Restricted reserves 993.7 1,051.1 830.0 830.0
Total restricted equity 1,367.2 1,424.6 1,203.5 1,203.5
Unrestricted equity
Unrestricted reserves 1,042.5 1,207.6 134.9 129.1
Profit for the year 567.8 301.5 56.7 400.0
Total unrestricted equity 1,610.3 1,572.1 191.6 529.1
Total shareholders’ equity 2,977.5 2,996.7 1,395.1 1,732.6
Provisions
Deferred tax liabilities note 7 389.1 363.0 – –
Pension provisions 3.1 – 3.1 –
Total provisions 392.2 363.0 3.1 –
Liabilities
Liabilities to credit institutions note 12 7,025.8 6,850.5 4,235.2 4,199.7
Trade accounts payable 117.1 87.3 35.7 21.3
Liabilities to Group companies – – 2,956.3 2,335.4
Tax liabilities 10.2 13.9 1.4 –
Other liabilities 219.1 98.3 3.3 3.0
Accrued expenses and prepaid revenue note 13 290.0 266.4 34.5 86.3
Total liabilities 8,054.4 7,679.4 7,266.4 6,645.7
TOTAL EQUITY AND LIABILITIES 11,031.9 10,676.1 8,664.6 8,378.3
Pledged assets note 14 5,071.8 4,961.9 12.2 12.2
Contingent liabilities note 14 3.1 2.5 2,647.6 2,675.3
is assembled in a joint interest-bearing transaction
account. Surplus liquidity can also be
invested as a fixed term bank deposit. In addition,
Pandox has unutilised credit facilities for a
total of SEK 964 M.
Liabilities to credit institutions
As at 31 December 2010, Pandox’ total interest-bearing
liabilities amounted to SEK 7,026
M, spread over five lenders and six currencies.
Because financing is arranged mainly through
long-term credit agreements, the majority of
the debt is considered as long-term. As regards
fixed interest rates, debt amounting to SEK
2,261 M carries a fixed interest rate for a period
of less than one year. Further details are set out
in the Financial Overview section on page 60.
Deferred tax liability
In 2010 the deferred tax items are accounted for
on a gross basis. Further details are set out in
the Pandox’ Tax Situation section on page 64.
Accrued expenses and prepaid income
The amount pertains essentially to accrued
interest expense and prepaid rent.
Pledged assets
This item refers mainly to property mortgages
pledged to credit institutions as collateral for
loans.
Contingent liabilities
The Parent Company’s contingent liabilities
refer mainly to guarantees to banks with regard
to subsidiaries’ debts.
Pandox 2010
| 75

Financial Statements
Changes in equity
SEK M
Share capital
Restricted
reserves
Unrestricted
reserves
Profit
for the year
Group 2009
Opening balance 373.5 1,050.2 1,006.2 299.3 2,729,2
Appropriation of profits – – 299.3 –299.3 –
Other changes – –69.4 69.4 – –
Dividend – – – – –
Group contribution – – – – –
Translation differences including tax effect – 70.3 –104.3 – –34.0
Profit for the year – – – 301.5 301.5
373.5 1,051.1 1,270.6 301.5 2,996.7
Group 2010
Opening balance 373.5 1,051.1 1,270.6 301.5 2,996.7
Appropriation of profits – – 301.5 –301.5 –
Other changes – 3.1 –3.1 – –
Dividend – – –373.5 – –373.5
Group contribution – – –88.8 – –88.8
Translation differences – –68.7 –64.2 – –132.9
Equity fund relating to associate companies – 8.2 – – 8.2
Profit for the year – – – 567.8 567.8
373.5 993.7 1,042.5 567.8 2,977.5
Total
Parent Company 2009
Opening balance 373.5 830.0 219.4 –161.1 1,261.8
Appropriation of profits – – –161.1 161.1 –
Dividend – – – – –
Group contribution – – 70.8 – 70.8
Profit for the year – – – 400.0 400.0
373.5 830.0 129.1 400.0 1,732.6
Parent Company 2010
Opening balance 373.5 830.0 129.1 400.0 1,732.6
Appropriation of profits – – 400.0 –400.0 –
Dividend – – –373.5 – –373.5
Group contribution – – –20.7 – –20.7
Profit for the year – – – 56.7 56.7
373.5 830.0 134.9 56.7 1,375.1
The number of shares as at 31 December 2010 amounted to 24,900,000 with one vote per share and a nominal value of SEK 15 per share.
76 |
Pandox 2010

Cash flow statement
Group
Parent Company
SEK M 2010 2009 2010 2009
Current operations
Profit/loss before financial items 521.8 561.7 –14.0 –11.2
Depreciation 194.7 194.0 0.4 0.4
Interest received 5.7 4.6 89.1 457.8
Interest paid and other financial costs –216.4 –247.0 –54.0 –88.4
Tax paid –80.1 –26.2 – –
Cash flow from current operations before change in working capital and investments 425.7 487.1 21.5 358.6
Change in working capital
Increase/decrease (±) in operating receivables –120.7 87.5 –72.3 96.0
Increase/decrease (±) in operating liabilities –142.0 –98.8 15.2 1,349.2
Total change in working capital –262.7 –11.3 –57.1 1,445.2
Cash flow from current operations after change in working capital and investments 163.0 475.8 –35.6 1,803.8
Investment operations
Change in shares and participations 147.0 –65.7 –904.3 –434.9
Investments in properties and equipment –197.9 –313.5 –0.2 –1.0
Acquisition of properties and equipment –261.1 –163.3 – –
Change in interest-bearing receivables –51.1 – –38.9 –
Total investments –363.1 –542.5 –943.4 –435.9
Cash flow after investments –200.1 –66.7 –979.0 1,367.9
Financing operations
Change in financial fixed assets – – – –920.5
Change in interest-bearing loans 649.6 42.0 1,061.1 –359.5
Dividend –373.5 – –373.5 –
Cash flow from financing operation 276.1 42.0 1,227.6 –1,280.0
Change in liquid funds 76.0 –24.7 248.6 87.9
Liquid funds at the beginning of the year 326.4 347.7 199.3 111.4
Exchange rate difference in liquid assets –17.3 3.4 – –
Liquid funds at the end of the year 385.1 326.4 447.9 199.3
Change in liquid funds 76.0 –24.7 248.6 87.9
Pandox 2010
| 77

Financial Statements
Accounting principles
The annual report and accounts have been
prepared in accordance with the Swedish
Annual Accounts Act and generally accepted
accounting principles, as well as taking into
account the recommendations of the Swedish
Accounting Standards Board if not stated otherwise.
Pandox’ accounting and evaluation
principles are in general unchanged compared
with last year.
Consolidated accounts
The consolidated accounts for the Group include all
subsidiaries as at financial year-end.
The consolidated accounts have been prepared
in accordance with the purchase method, whereby
assets and liabilities have been taken over at market
value in accordance with an acquisition analysis. The
difference between acquisition value and acquired
shareholders’ equity has been added to land and buildings
as surplus value. Surplus value is amortised in
accordance with the same principle used for properties.
Estimated deferred tax liability with respect to
Group surplus value and estimated deferred tax recoverable
are reported net as a deferred tax liability in the
balance sheet.
Tax
Pandox applies the Swedish Accounting Standards
Board’s general recommendation regarding income
tax accounting (BFNAR 2001:1). Briefly, the recommendation
implies that both deferred tax liabilities and
tax recoverable shall be included in the financial statements,
and that any changes shall affect the income
statement as deferred tax. The deferred tax relating to
the difference in book depreciation and fiscal depreciation
shall be calculated using the prevailing tax rate.
Acquisitions based on the deferred tax liability
relating to asset acquisitions shall be based on the
acquisition price and be calculated from each respective
property’s shortest estimated period of ownership,
resulting in an average tax rate of approximately
10 percent.
The deferred tax recoverable pertaining to estimated
tax recoverable related to deficit deductions in the
Company are valued based on the estimated potential
utilisation against future taxable profits, and are calculated
based on the prevailing tax rate.
Property operations
The Group’s properties are reported in the balance
sheet as fixed assets in view of the purpose of the holdings
being the long-term ownership, management
and development of the properties.
Hotel operations
The hotel operations conducted by Pandox are charged
with internal rent for accounting purposes. The
internal rent is linked to the operating companies’
revenue and based on what are deemed to be market
conditions. The internal rent is expensed to hotel operations,
and carried as revenue in property operations.
Tangible fixed assets
When new construction and additions are carried out,
all direct costs including project costs are capitalised.
In the case of refurbishments, direct costs related to
the improvement of properties compared with their
original condition are capitalised.
Costs of repairing a property to its original condition
are not capitalised. An exception to this principle
involves the costs of measures taken further to neglected
maintenance established at the time of an
acquisition, and where the acquisition price is
adjusted accordingly.
Costs of tenant-related modifications that imply
that the rent may be increased are capitalised and
depreciated over the remaining period of the lease.
Depreciation according to plan is calculated on
the acquisition value at the following percentages:
%
Buildings 1.0
Building fixtures 4–6.7
Land improvements 3.5
Equipment 6.7–33
Pandox changed the depreciation rate for buildings
from 1.5 percent to 1 percent with effect from 2000.
Depreciation according to plan is calculated on
the acquisition value and a residual value of SEK 0.
Associate companies
Shares in associate companies are accounted for
under the equity method. The book value of shares in
associate companies corresponds to the Group’s
share of the equity in the associate companies plus
any consolidated surplus or deficit values. In the
Group’s income statement ’Portion of profits from
associate companies’ includes the Group’s share of
associates’ profits after financial items adjusted for
any depreciation of consolidated surplus or deficit
values. The Group’s share of reported taxes are included
in the consolidated tax expenses. Share of profits
earned after the acquisition of associate companies
which have not yet been realized through dividends,
are allocated to the equity fund that forms part of the
Group’s restricted reserves.
Write-down of fixed assets
The Group’s properties are continuously valued in
accordance with an internal cash flow model, which
also fulfils the requirement to calculate the utilisation
value in accordance with current accounting principles
whereby the recoverable value, which is the greater
of the net sales value and the utilisation value, is
compared with the property’s book value in order to
assess the need for a possible write-down.
Leasing
Pandox reports all leasing contracts as operational.
Leasing contracts entered into concern private cars
and office machines. They are not significant in size
and do not therefore influence an assessment of the
Group’s results and financial position.
Revenue
Management revenue pertains to rental revenue as
well as re-debited operating costs and property tax.
Revenue and costs related to the operations of hotel
operators are reported separately in the consolidated
income statement. Rental revenue is spread over a
period of time in accordance with the terms of each
lease. This implies that rent paid in advance is reported
as prepaid rental revenue.
Shares and participations
Shares and participations in subsidiaries and subsidiaries
of subsidiaries have been stated at acquisition
value with the exception of holdings that may have
been written down to their estimated actual value.
Financial instruments
Interest swaps are used to change underlying financial
liabilities’ interest-due structure. Revenue and costs
related to interest swaps are reported net as interest
costs, and are spread over the duration of each contract.
International subsidiaries
International subsidiaries are stated as per the current
rate method, which implies that the income statement
is restated at the average exchange rate of the period,
and the balance sheet at the exchange rate prevailing
on the closing day. The exchange rate difference that
arises as a result of this method is recorded directly
against the Group’s equity. Any companies acquired
during the year are included in the Group at an amount
relating to the period following such acquisition.
Receivables and liabilities expressed in
foreign currencies
Receivables and liabilities expressed in foreign currencies
are restated at the rate of exchange prevailing on
balance sheet date. Any differences that may arise are
either credited or debited to income. When loans or
forward contracts are entered into to hedge investments
in international subsidiaries, any exchange rate
differences that may arise are offset in the Group by an
amount corresponding to the differences arising from
the recalculation of the net assets of international subsidiaries.
Other receivables and liabilities
Receivables have been stated in the amounts expected
to be received. Other assets and liabilities have
been stated at nominal values.
78 |
Pandox 2010

Notes to the accounts
NOTE 1 SEGMENT reporting
Primary segment
Pandox’ primary segment is comprised of two operating branches – property operations and hotel operations. Information in accordance with segment reporting is presented
in the consolidated income statement and balance sheet.
Secondary segment
Year 2010 Stockholm Gothenburg Öresund Rest of Sweden International Adjustment Total
Property revenue 206.0 87.2 158.0 133.9 338.2 –214.0 709.3
Property costs –37.3 –9.3 –31.5 –20.0 –42.5 – –140.6
Operating net 168.7 77.9 126.5 113.9 295.7 –214.0 568.7
Book value of properties 1,391.8 749.2 1,461.2 1,020.1 4,578.2 – 9,200.5
Investments 32.5 7.0 37.5 37.4 83.3 – 197.7
Operating revenue – hotel operations – – 7.6 – 1,201.0 – 1,208.6
Operating costs – hotel operations – – –7.6 – –1,195.2 214.0 –988.8
Operating profit – hotel operations – – 0.0 – 5.8 214.0 219.8
Year 2009 Stockholm Gothenburg Öresund Rest of Sweden International Adjustment Total
Property revenue 167.7 85.2 182.3 120.1 339.9 –211.7 683.5
Property costs –26.5 –7.2 –30.7 –15.8 –36.8 – –117.0
Operating net 141.2 78.0 151.6 104.3 303.1 –211.7 566.5
Book value of properties 1,386.2 756.1 1,488.1 998.8 4,718.8 – 9,348.0
Investments 50.6 1.8 12.2 13.9 234.0 – 312.5
Operating revenue – hotel operations 16.1 – 8.9 – 1,070.0 – 1,095.0
Operating costs – hotel operations –15.4 – –9.2 – –1,104.4 211.7 –917.3
Operating profit – hotel operations 0.7 – –0.3 – –34.4 211.7 177.7
NOTE 2 rental revenue
Revenues from hotel operations pertain to business, of which four are operated under management agreements with Hilton (2), InterContinental and Hyatt respectively, as well
as the five hotels operated by Pandox. Rent and remuneration for other property costs which were paid by these hotel operator companies to the property company are
reported gross, i.e. they have not been eliminated in the income statement. This is done to provide a more accurate picture of the operating net generated by the property company
and the operating income of the hotel operating company. The elimination of these items would imply that the total management revenue and the operating company’s
operating costs would be reduced by SEK 214.0 M for the year 2010 (211.7).
NOTe 3 geographical distribution
of rental revenue
% 2010 2009
Sweden 54 53
Denmark 7 8
United Kingdom 5 5
Germany 12 13
Belgium 14 15
Switzerland 3 2
Canada 5 4
Total 100 100
NOTe 4 depreciation according to plan
Group
Parent Company
SEK M 2010 2009 2010 2009
Buildings –111.2 –108.0 – –
Land improvements –0.8 –0.8 – –
Equipment –82.7 –85.2 –0.4 –0.4
Total depreciation –194.7 –194.0 –0.4 –0.4
Note 5 OTHER revenue
Property activities in the Group’s property-owning companies are administered by
staff employed by the Parent Company. The cost of these services has been invoiced
to the Group’s subsidiaries. Invoicing in 2010 amounted to SEK 57.8 M (51.1).
Note 6 interest INCOME AND OTHER FINANCIAL
INCOME AND COSTS
The interest income of the Parent Company is divided into SEK 86.6 M (77.3) from
Group companies, SEK 2.5 M (1.1) from external parties, and SEK 955.4 M (379.4)
from dividends from subsidiaries. Of SEK –787.9 M (188.1) in other financial income
and cost in the Parent Company, SEK 178.2 M (190.3) pertains to currency effects in
valuation of liabilities in foreign currency at closing date exchange rate and SEK
960.0 M to write-down of shares in subsidiaries. Of SEK 5.7 M (25.5) in Group interest
income, SEK 4.6 M (4.6) refers to external interest income and SEK 1.1 M (20.9)
refers to dividends from other shares and participations. Other finacial and costs in
the Group amounts to SEK 423.5 M (80.7) of which SEK 431.2 M (79.5) pertains to
capital gains further to the sale of shares in HOST Hotels & Resorts Inc.
Depreciation amounts to a total of SEK 194.7 M of which SEK 194.3 M (193.6) refers to property
operations and SEK 0.4 M (0.4) to administration.
Pandox 2010
| 79

Financial Statements
NOTe 7 deferred tax and actual tax
Group
Parent Company
SEK M 2010 2009 2010 2009
Deferred tax expense for the year
Deferred tax expense relating to temporary differences –24.0 –38.5 – –0.7
Deferred tax expense relating to deficit deductions –47.5 –15.9 – –56.4
Deferred tax expense relating to other provisions 1.8 44.3 – –
Deferred tax expense relating to associate companies 4.0 – – –
Deferred tax reported in the income statement –65.7 –10.1 – –57.1
Actual tax in the income statement –111.2 –20.4 –8.8 25.3
of which relating to associate companies –5.5 – – –
Difference between reported tax and nominal tax rate
Reported profit before tax 744.7 332.0 65.5 431.8
Tax as per applicable tax rate –195.8 –87.3 –17.2 –113.6
Tax effect due to nontaxable income 22.1 36.8 272.7 134.5
Tax effect of nondeductible costs and other tax adjustments –32.3 –21.1 –264.3 –52.7
Tax effect relating to foreign operations 29.1 41.1 – –
Reported tax expense –176.9 –30.5 –8.8 –31.8
Deferred tax recoverable
Deficit deductions 173.4 205.2 – –
Other deferred tax recoverable 12.3 11.0 – –
Total deferred tax recoverable 185.7 216.2 – –
Deferred tax liabilities
Differences between book value and fiscal value of properties 389.1 363.0 – –
Total deferred tax liabilities 389.1 363.0 – –
Total deferred tax liabilities/recoverable net –203.4 –146.8 – –
The Group’s nominal tax rate is estimated at 26.6 percent and in the Parent Company it amounts to 26.3 percent. The effective income tax rate in the Group amounted in
2010 to 23.8 percent (9.2) and in the Parent Company to 13.4 percent (7.4).
NOTe 8 land and buildings
Group
SEK M 2010 2009
Opening acquisition value 9,798.7 9,641.4
Reclassified as equipment –0.6 –5.2
Acquisition of properties 320.6 89.4
Investments 105.0 224.1
Disposals – –
Translation differences – balance sheet –468.5 –151.0
Closing accumulated acquisition value 9,755.2 9,798.7
Opening depreciation –1,062.9 –975.6
Disposals – –
Depreciation for the year –112.0 –108.8
Translation differences – balance sheet 33.1 21.5
Closing accumulated depreciation –1,141.8 –1,062.9
Closing residual value 8,613.4 8,735.8
Tax assessment value of Swedish properties 2,900.8 2,521.7
Of which land 858.7 707.9
Book value Swedish properties 3,945.2 3,903.5
80 |
Pandox 2010

NOTe 9 equipment
Group
Parent Company
SEK M 2010 2009 2010 2009
Opening acquisition value 1,037.9 900.4 4.6 3.6
Reclassified from land and buildings 0.6 5.2 – –
Acquisition of equipment 11.3 73.9 – –
Investments 92.9 89.4 0.2 1.0
Disposals – – – –
Translation differences – balance sheet –87.9 –31.0 – –
Closing accumulated acquisition value 1,054.8 1,037.9 4.8 4.6
Opening depreciation –424.4 –353.0 –3.3 –2.9
Disposals – – – –
Depreciation for the year –82.7 –85.2 –0.4 –0.4
Translation differences – balance sheet 40.5 13.8 – –
Closing accumulated depreciation –466.6 –424.4 –3.7 –3.3
Closing residual value 588.2 613.5 1.1 1.3
NOTe 10 shares and participations in subsidiaries
Corp. Reg. No.
Registered
office
Number
of shares
Par value
Percent
owned
Book value
Parent Company
Hotab Förvaltnings AB 556475-5592 Stockholm 1,000 100 100 285.1
Pandox Förvaltning AB 556097-0815 Stockholm 5,500 100 100 304.7
Hotab 6 AB 556473-6352 Stockholm 1,000 100 100 0.1
Fastighets AB Grand Hotel i Helsingborg 556473-6329 Stockholm 1,000 100 100 15.9
Pandox Fastighets AB 556473-6261 Stockholm 1,000 100 100 0.1
Fastighets AB Mora Hotell 556475-9370 Stockholm 1,000 100 75 5.7
Fastighets AB Stora Hotellet i Jönköping 556469-4064 Stockholm 1,000 100 100 30.1
Pandox Belgien AB 556495-0078 Stockholm 1,000 100 100 4.0
Pandox Hotel Management AB 556469-9782 Stockholm 1,000 100 100 0.1
Hotellus Holding AB 556475-9446 Stockholm 1,000 100 100 11.5
Pandox Luxemburg AB 556515-9216 Stockholm 10,000 10 100 68.3
Fastighets AB Porpur 556349-8327 Stockholm 10,000 100 100 0.1
Pandox i Halmstad AB 556549-8978 Stockholm 1,000 100 100 8.7
Pandox i Borås AB 556528-0160 Stockholm 1,000 100 100 61.5
Grand i Borås Fastighets AB 556030-7083 Stockholm 6,506 100 100 10.0
Hotell Värmdövägen 84 AB 556286-4826 Stockholm 1,000 100 100 4.3
Hotellus International AB 556030-2506 Stockholm 7,480,000 100 100 970.2
KB Lorensberg 49:2 916833-3269 Gothenburg – – 100 0.0
Hotellus Östersund AB 556367-3697 Stockholm 1,000 100 100 3.0
Ademrac Holding 1 AB 556683-3371 Stockholm 10,093 100 100 219.4
Ademrac Holding 2 AB 556683-3363 Stockholm 10,010 100 100 219.6
Ademrac AB 556426-2748 Stockholm 1,790,042 100 6.6 3.4
Le Nouveau Palace SA 446188 Brussels 3,000 – 100 291.4
Convention Hotel International AG 270.3.001.168-3 Basle 14,000 – 100 6.2
Hotellus Denmark A/S 28970927 Copenhagen 5,000 – 100 66.2
Hotel Bloom SA 0476.704.322 Brussels 68,808 – 100 67.3
Pandox Belgium SA 0890.427.732 Brussels 100,000 – 100 471.6
Pandox i Malmö AB 556704-3723 Stockholm 1,000 100 100 142.0
Ypsilon Hotell AB 556481-4134 Stockholm 1,000 100 100 39.8
Pandox Kolmården AB 556706-8316 Stockholm 100,000 1 100 0.1
Hotellus Sverige Ett AB 556778-8699 Stockholm 1,000 100 100 0.1
Hotellus Sverige Två AB 556778-8707 Stockholm 1,000 100 100 0.1
Total Pandox AB 3,310.6
cont.
Pandox 2010
| 81

Financial Statements
NOT 10 shares and participations in subsidiaries, cont.
Corp. reg. no.
Registered office
Corp. reg. no.
Registered office
Group
Arlanda Flyghotell KB 916500-8021 Stockholm
Fastighetsbolaget Utkiken KB 916611-7755 Stockholm
Fastighets AB Hotell Kramer 556473-6402 Stockholm
Hotellus Nordic AB 556554-6594 Stockholm
Hotellus Järva Krog AB 556351-7365 Stockholm
Hotellus Mölndal AB 556554-6636 Stockholm
Bioeffect AB 556244-5030 Stockholm
Vestervold KB 916631-9534 Stockholm
Hotellus Mellansverige AB 556745-4656 Stockholm
Skogshöjd Handels & Fastighets AB 556066-0432 Stockholm
Hotellus Belgium NV – Belgium
Grand Hotel Brussels NV – Belgium
Town Hotel SA – Belgium
Elba Belgium Holding BVBA – Belgium
Elba Leasehold BVBA – Belgium
Elba Freehold BVBA – Belgium
Holcro NV – Belgium
Hotellus Suomi OY – Finland
Hotellus Nord OY – Finland
Euro Lifim BV – Netherlands
Hotellus Europe BV – Netherlands
Pandox Holland BV – Netherlands
Pandox Holland 2 BV – Netherlands
Hotellus Luxembourg Sarl – Luxemburg
Hotellus Deutschland GmbH – Germany
Atlantis mbH – Germany
Pandox Berlin GmbH – Germany
Hotellus Canada Holdings Inc – Canada
Hotellus Montreal Holdings Inc – Canada
NOTE 11 OTHER SHARES AND PARTICIPATIONS
Other shares and participations of SEK 610.2 M in 2009 referred to the American hotel property company HOST Hotels and Resorts Inc. During 2010 all shares in the company
was sold. Other shares and participations of SEK 916.6 M in 2010 refers to the shareholding of Sech Holding AB that during the autumn 2010 acquired 100 percent of
the shares in Norgani Hotels AS. Pandox ownership of Sech Holding AB amounts to 50 percent and is reported according to the equity method.
NOTe 12 liabilities to credit institutions
Group
Parent Company
SEK M 2010 2009 2010 2009
Liabilities that fall due within one year following balance sheet date 810.0 738.9 793.6 562.3
Liabilities that fall due between one and four years following balance sheet date 1,000.7 980.5 700.0 809.1
Liabilities that fall due five or more years following balance sheet date 5,215.1 5,131.1 2,741.6 2,828.3
Total 7,025.8 6,850.5 4,235.2 4,199.7
NOTe 13 accrued assets and contingent revenue
Group
Parent Company
SEK M 2010 2009 2010 2009
Prepaid rents 50.1 54.7 – –
Accrued interest expenses 22.9 16.3 18.3 11.0
Property tax 7.8 4.7 – –
Unrealised hedge results 3.4 64.1 3.4 61.6
Other 205.8 126.6 12.8 13.7
Total 290.0 266.4 34.5 86.3
NOTe 14 pledged assets and contingent liabilities
Group
Parent Company
SEK M 2010 2009 2010 2009
Pledged assets for loans from credit institutions
Property mortgages 5,052.6 4,942.1 – –
Pledged deposit 19.2 22.3 12.2 14.7
Contingent liabilities 3.1 2.5 2,647.6 2,675.3
82 |
Pandox 2010

NOTe 15 audit fees and remuneration
Group
Parent Company
SEK M 2010 2009 2010 2009
KPMG
Audit assignments 3.4 3.5 0.8 1.0
Other assignments 1.5 1.4 – –
SET Revisionsbyrå
Audit assignments 0.1 0.1 0.1 0.1
Other
Other assignments 0.1 0.2 – –
Total 5.1 5.2 0.9 1.1
NOTE 16 PERSOnnel
Group
Parent Company
2010 2009 2010 2009
Average number of employees
Men 509 474 8 9
Women 517 468 8 9
Total 1,026 942 16 18
Of whom employed in Sweden 16 31 16 18
Of whom employed in Belgium 436 341 – –
Of whom employed in Germany 196 189 – –
Of whom employed in Canada 378 381 – –
Board of directors and senior managers and executives
Men 11 11 10 10
Women 2 2 2 2
Total 13 13 12 12
Wages, salaries and other remuneration, SEK M
Board of Directors and CEO
Wages, salaries and other remuneration 5.5 5.6 5.5 5.6
Social security costs 1.6 1.6 1.6 1.6
Pension costs 0.7 0.8 0.7 0.8
Total 7.8 8.0 7.8 8.0
Other employees
Wages, salaries and other remuneration 369.4 355.3 17.0 15.0
Social security costs 79.3 69.5 5.3 5.0
Pension costs 11.7 11.6 4.1 4.4
Total 460.4 436.4 26.4 24.4
Wages, salaries and other remuneration per country, SEK M
Sweden
Board of Directors and CEO 5.5 5.6 5.5 5.6
Other employees 17.0 19.6 17.0 15.0
Belgium other employees 141.9 132.4 – –
Germany other employees 44.5 44.9 – –
Canada other employees 166.0 158.4 – –
Total 352.4 360.9 22.5 20.6
Personnel employed in Belgium relate to the operator activities of the Crowne Plaza Brussels City Centre, the Holiday Inn Brussels Airport, the Crowne Plaza antwerp,
The Hotel, the Hilton Brussels City, and the Hotel BLOOM!. Personnel employed in Germany to Hotel Berlin, Berlin and in Canada to InterContinental Montreal and
Hyatt Regency Montreal.
The remuneration of the Members of the Board is established by the Annual General Meeting of Shareholders. The remuneration of the Chief Executive Officer (CEO) is
composed of a basic salary, a bonus, a company car, and a retirement pension scheme. The age of retirement of the CEO is 65 years, with the possibility of retiring at the age
of 60. In the case of termination, the CEO shall be given a period of notice of 24 months by the Company, with a deduction clause. Upon resignation by the CEO, a period of
notice of 6 months shall apply.
Sickness absence in the Parent Company amounted to 0.1 percent (0.5).
Pandox 2010
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Financial Statements
Proposed disposition of earnings
The following profits are at the disposition of the forthcoming Annual General Meeting of Shareholders:
Balance brought forward SEK 134,856,053
Profit for the year SEK 56,742,661
SEK 191,598,714
The Board of Directors and Chief Executive Officer propose that the accumulated profits be appropriated as follows:
Dividend to the shareholders,
SEK 7.00 per share SEK 174,300,000
Amount to be carried forward SEK 17,298,714
SEK 191,598,714
Stockholm, 14 February 2011
Christian Ringnes
Chairman
Leiv Askvig Christian Sundt Olaf Gauslå
Bengt Kjell Helene Sundt Mats Wäppling
Anders Nissen
Chief Executive Officer
Our audit report pertaining to this annual report and consolidated
financial statements was submitted on 15 February 2011.
Per Gustafsson
Authorised Public Accountant
Willard Möller
Authorised Public Accountant
84 |
Pandox 2010

Auditor’s Report
To the annual meeting of the shareholders of Pandox AB
Corporate identity number 556030-7885
We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the board of
directors and the managing director of Pandox AB for the year 2010. The company´s annual accounts and the consolidated accounts
are included in the printed version on pages 70–84. These accounts and the administration of the company and the application of
the Annual Accounts Act when preparing the annual accounts and the consolidated accounts are the responsibility of the board of
directors and the managing director. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts
and the administration based on our audit.
We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we
plan and perform the audit to obtain high but not absolute assurance that the annual accounts and the consolidated accounts are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
accounts. An audit also includes assessing the accounting principles used and their application by the board of directors and the
managing director and significant estimates made by the board of directors and the managing director when preparing the annual
accounts and the consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the
consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined significant decisions, actions taken
and circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or the
managing director. We also examined whether any board member or the managing director has, in any other way, acted in contravention
of the Companies Act, the Annual Accounts Act or the Articles of association. We believe that our audit provides a reasonable
basis for our opinion set out below.
The annual accounts and the consolidated accounts have been prepared in accordance with the Annual Accounts Act and give a
true and fair view of the company’s and the group’s financial position and results of operations in accordance with generally accepted
accounting princi ples in Sweden. The statutory administration report is consistent with the other parts of the annual accounts and the
consolidated accounts.
We recommend to the annual meeting of shareholders that the income statements and balance sheets of the parent company and
the group be adopted, that the profit of the parent company be dealt with in accordance with the proposal in the administration report
and that the members of the board of directors and the managing director be discharged from liability for the financial year.
Stockholm, 15 February 2011
Per Gustafsson
Authorised Public Accountant
Willard Möller
Authorised Public Accountant
Pandox 2010
| 85

Hotel BLOOM!, Brussels
86 |
Pandox 2010

Production: Pandox in cooperation with Hallvarsson & Halvarsson. Photo: Ulf Blomberg, Peter Hoelstad and others. Printing: Elanders, Falköping, 2011.

Pandox AB
Corp. Reg. No. 556030-7885
www.pandox.com