Union Hotels Collection

Quarterly Report • Mar 28, 2017

UNION HOTELI, D.D. LJUBLJANA REPORT AS OF 31.12.2016 – Q4

The report is based on the first run of balance sheet 1-12-2016 in January 2017 and is unaudited

ACTIVITY OF THE COMPANY

Facility	Address	Hotel Category	Accommodation capacity	GFA in sq. m
Grand Hotel	Miklošičeva
Union & GHU	street 1-3,	4 *	327	31,964
Business	Ljubljana
Hotel Lev	Vošnjakova street
	1, Ljubljana	4 *	173	12,177
	Business building
	with garage next
	to Hotel Lev			3,535
Central Hotel	Miklošičeva
	street 9, Ljubljana	4*	74	4,461
Total hotel Properties			574	52,137

Three operational hotels in the city center of Ljubljana:

CORPORATE GOVERNANCE

• Chairperson of the Supervisory Board: Primož Raktelj
• General Director of the Company: Tomislav Čeh

Tomislav Čeh

General Director

SIGNIFICANT BUSINESS EVENTS IN Q4 2016

• The occupancy rate in competitive hotels in Ljubljana of 3-5 stars category has ranged between 61.2% and 86.5% in the period January – December 2016. Average occupancy rate of all the hotels in Ljubljana has been 70.0% for the same period and 5.1 percentage points above average achieved in the period January – December 2015.
• Business hotels of Union hoteli Group have achieved average occupancy rate in the level of 69.5% in the period January – December 2016, which is 5.4 percentage points above average achieved in the period January – December 2015. The average occupancy within the Group was following: Grand hotel Union and Grand hotel Union Business: 71.6%, Hotel Lev: 64.0% and Central hotel 72.7%.
• In the period January December 2016 business hotels of Union Hoteli Group have achieved 25.1% market share of Ljubljana hotels capacity.
• Grand hotel Union and Grand hotel Union Business have accounted for 121,276 overnight stays in Ljubljana in the period January – December 2016, Hotel Lev has accounted for 58,757 overnight stays and Central hotel for 32,853 overnight stays.
• Union hoteli d.d. Company has reached net sales revenues in the amount of EUR 17.5 million in the period January – December 2016 which is EUR 2.0 million or 12.6% more than in the period January – December 2015.

Union hoteli Group has reached net sales revenues in the amount of EUR 19.2 million in the period January – December 2016 which is EUR 2.2 million or 12.9% more than in the period January – December 2015.

• The Union hoteli d.d. Company's earnings before interest, taxes, depreciation, and amortization (EBITDA, calculated according to IBON methodology) in the period January - December 2016 stood at EUR 5.0 million, which represents a 33.5% increase year-on-year. In the period between 1 January 2016 and 31 December 2016 the Company posted a profit to the amount of EUR 2.3 million, which is 73.8% more than in the same period in 2015.

The Union hoteli Group's earnings before interest, taxes, depreciation, and amortization (EBITDA, calculated according to IBON methodology) in the period January - December 2016 stood at EUR 5.3 which represents a 32.0% increase year-on-year. In the period between 1 January 2016 and 31 December 2016 the Union hoteli Group posted a profit to the amount of EUR 2.4 million, which is 77.5% more than in the same period in 2015.

• As of 31.12.2016 the total employees of the Union hoteli d.d. Company amounted to 247 and of Union hoteli Group amounted to 288.
• The accounting guidelines, used in drafting the report as of 31.12.2016 Q4 are the same as those for preparing the annual financial statements for the fiscal year that ended on 31 December 2015 and as those for preparing the interim condensed financial statements for the period that ended on 30 June 2016, with the exception of newly-adopted standards and explanations which entered into force on 1 January 2016.

KEY FINANCIAL PARAMETERS of Union hoteli d.d. Company
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in EUR UNION HOTELI D.D.
BALANCE SHEET	31.12.2014	30.9.2015	31.12.2015	30.6.2016	30.9.2016	31.12.2016
TOTAL ASSETS	44.729.397	43.983.970	43.556.358	44.012.493	44.389.944	44.489.050
LONG-TERM ASSETS	41.430.282	40.584.281	40.262.636	39.490.398	39.380.311	39.230.322
Intangible assets and long-term deferred costs and accrued revenues	31.787	28.599	23.011	17.482	16.755	40.189
Property, plant & equipment	33.425.363	32.654.536	32.581.733	31.963.289	31.873.568	31.787.019
Long-term financial assets	4.060.433	4.060.459	3.858.225	3.755.761	3.755.765	3.692.101
Long-term operating receivables	0	0	0	0	0	0
SHORT-TERM ASSETS	3.079.365	2.678.795	3.057.453	3.562.725	4.305.549	4.882.292
Inventories	199.864	307.052	267.933	280.801	278.604	282.041
Short-term financial assets	207.261	250.246	401.642	553.829	503.075	204.666
Short-term operating receivables	1.074.981	1.620.472	1.287.787	1.742.218	1.794.229	1.618.923
Cash	1.597.259	501.025	1.100.091	985.877	1.729.641	2.776.662
SHORT-TERM DEFERRED COSTS AND ACCRUED REVENUES	219.750	720.894	236.269	959.370	704.084	376.436
TOTAL EQUITY	32.206.611	32.816.936	32.950.667	33.131.969	34.390.922	34.667.272
Common Equity	7.485.695	7.485.695	7.485.695	7.485.695	7.485.695	7.485.695
Capital reserves	14.572.118	14.572.118	14.572.118	14.572.118	14.572.118	14.572.118
Revenue reserves	5.088.711	5.088.711	5.088.711	5.088.711	5.088.711	5.088.711
Acquired own shares and stakes	0	0	0	0	0	0
Revaluation surplus	-18.536	-18.536	-21.209	-21.209	-21.209	-21.209
Net profit or loss brought forward	4.483.820	4.486.647	4.486.647	5.520.394	5.520.394	5.215.436
Net profit or loss for the period	594.803	1.202.301	1.338.705	486.260	1.745.213	2.326.521
PROVISIONS AND SHORT/LONG-TERM ACCRUED COSTS AND DEFERRED REVENUES LONG-TERM LIABILITIES	1.670.974 2.275.253	1.837.444 6.964.365	1.539.709 5.201.565	1.655.844 4.427.981	1.838.165 4.429.535	1.913.771 3.466.240
Long-term operating liabilities	31.160	33.945	34.965	37.302	38.853	35.073
Long-term financial liabilities	2.244.093	6.930.420	5.166.600	4.390.679	4.390.682	3.431.167
SHORT-TERM LIABILITIES	8.576.559	2.365.225	3.864.417	4.796.699	3.731.322	4.441.767
Short-term operating liabilities	2.769.964	1.860.752	1.921.188	2.357.152	1.780.226	2.253.271
Short-term financial liabilities	5.806.595	504.473	1.943.229	2.439.547	1.951.096	2.188.496
Net financial liabilities Off-balance sheet items	6.453.429 -11.297.820	6.933.868 -10.644.391	6.009.738 -10.249.863	5.844.349 -10.007.109	4.612.137 -9.452.926	2.843.001 -8.343.658
UNION HOTELI D.D.	in EUR
INCOME STATEMENT	31.12.2014	30.9.2015	31.12.2015	30.6.2016	30.9.2016	31.12.2016
Net sales revenues	13.354.265	11.799.667	15.573.025	7.632.347	12.774.968	17.531.780
COGS	9.877.460	7.662.933	10.491.062	5.277.866	8.042.814	10.955.155
Gross sales profit or loss	3.476.805	4.136.734	5.081.963	2.354.481	4.732.154	6.576.625
Selling costs	1.051.707	862.151	1.251.310	615.706	904.344	1.346.369
General and administrative costs	2.327.229	1.801.573	2.356.262	1.148.113	1.721.562	2.458.220
Other operating revenue	808.792	81.080	239.206	45.938	65.294	120.451
EBITDA	3.031.558	3.079.618	3.774.765	1.701.981	3.735.682	5.038.451
Operating profit or loss (EBIT)	906.661	1.554.090	1.713.597	636.600	2.171.542	2.892.487
Financial income from participations	124.286	11.650	11.650	0	0	0
Financial income from operating receivables	7.760	10.673	12.361	3.255	9.239	11.667
Financial income from loans granted	57.747	40.223	52.795	25.435	37.616	49.270
Financial expenses from financial liabilities	378.536	166.596	215.206	77.492	113.321	147.401
Financial expenses from operating liabilities	2.721	1.484	2.078	1.319	1.786	2.361
Financial expenses for impairments and write-offs of financial assets	0	0	681	624	624	624
Profit before tax	715.197	1.448.556	1.572.438	585.855	2.102.666	2.803.038
Net profit or loss for the period	594.803	1.202.301	1.338.705	486.260	1.745.213	2.326.521
OPERATING EXPENSES - COSTS BY NATURE OF EXPENSE	31.12.2014	30.9.2015	31.12.2015	30.6.2016	30.9.2016	31.12.2016
TOTAL OPERATING EXPENSES	13.256.396	10.326.657	14.098.634	7.041.685	10.668.720	14.759.744
Changes in the value of inventories of products and work in progress	0	0	0	0	0	0
Costs of goods, material and services	5.476.031	4.522.053	6.233.624	2.993.896	4.595.902	6.308.502
Labour costs	5.190.690	3.937.495	5.386.684	2.831.689	4.288.688	5.974.669
Amortisation and depreciation	2.034.665	1.463.986	1.959.139	1.015.324	1.514.045	2.026.128
Other costs	555.010	403.123	519.187	200.776	270.085	450.445
Value adjustments of current assets	90.130	61.542	100.759	50.057	50.057	89.507
Losses due to disposal of fixes assets	102	0	1.270	0	38	30.329

UNION HOTELI D.D.
RATIOS	31.12.2014	30.9.2015	31.12.2015	30.6.2016	30.9.2016	31.12.2016
Financial leverage (net financial liabilities/EBITDA)*	2,13	2,01	1,59	1,47	1,04	0,56
Total debt/total equity	0,34	0,28	0,28	0,28	0,24	0,23
Total debt/total capital	0,27	0,23	0,23	0,23	0,20	0,20
Receivables turnover*	10,93	10,48	13,18	9,96	9,69	12,06
Assets turnover*	0,29	0,34	0,35	0,36	0,37	0,40
Current ratio	0,36	1,13	0,79	0,74	1,15	1,10
Quick ratio	0,34	1,00	0,72	0,68	1,08	1,04
Gross margin*	26,04%	32,19%	32,63%	32,24%	34,31%	37,51%
Operating margin*	6,79%	9,17%	11,00%	11,76%	14,09%	16,50%
Net profit margin*	4,45%	7,15%	8,60%	9,42%	11,37%	13,27%
Return on assets*	1,30%	2,41%	3,03%	3,42%	4,26%	5,28%
Return on equity*	1,82%	3,32%	4,11%	4,64%	5,60%	6,88%
Return on investment*	2,31%	3,24%	3,87%	4,18%	5,05%	6,16%
Number of employees	221,00	232,00	234,00	241,00	244,00	247,00

EBITDA is calculated using the IBON methodology. *Quarterly ratios are calculated from data for past 12 months.

in EUR UNION HOTELI GROUP
BALANCE SHEET	31.12.2014	30.9.2015	31.12.2015	30.6.2016	30.9.2016	31.12.2016
TOTAL ASSETS	44.111.231	43.352.536	42.833.945	43.348.233	43.822.309	43.940.362
LONG-TERM ASSETS	40.802.430	39.876.706	39.727.623	38.995.505	38.852.723	38.773.201
Intangible assets and long-term deferred costs and accrued revenues	31.787	28.669	23.076	17.538	16.807	40.236
Property, plant & equipment	36.751.297	35.900.677	35.799.486	35.119.471	34.997.059	34.878.458
Long-term financial assets	106.647	106.673	105.394	104.630	104.634	143.494
Long-term operating receivables	0	0	0	0	0	0
SHORT-TERM ASSETS	3.091.197	2.925.314	2.874.065	3.385.190	4.314.036	4.893.577
Inventories	222.148	332.079	295.708	310.861	304.678	309.720
Short-term financial assets	9.574	100	264	569	499	247
Short-term operating receivables	1.141.559	1.808.538	1.425.156	1.842.951	1.964.476	1.739.274
Cash	1.717.916	784.597	1.152.937	1.230.809	2.044.383	2.844.336
SHORT-TERM DEFERRED COSTS AND ACCRUED REVENUES	217.604	550.516	232.257	967.538	655.550	273.584
TOTAL EQUITY	31.220.528	31.892.430	31.973.191	32.149.168	33.527.574	33.759.115
Common Equity	7.485.695	7.485.695	7.485.695	7.485.695	7.485.695	7.485.695
Capital reserves	14.572.118	14.572.118	14.572.118	14.572.118	14.572.118	14.572.118
Revenue reserves	5.088.711	5.088.711	5.088.711	5.088.711	5.088.711	5.088.711
Acquired own shares and stakes	0	0	0	0	0	0
Revaluation surplus	-11.172	-11.172	-16.093	-16.093	-16.093	-16.093
Net profit or loss brought forward	3.953.913	3.493.199	3.493.200	4.537.803	4.537.803	4.232.845
Net profit or loss for the period	131.263	1.263.879	1.349.560	480.934	1.859.340	2.395.839
PROVISIONS AND SHORT/LONG-TERM ACCRUED COSTS AND DEFERRED REVENUES	1.875.720	1.997.312	1.668.875	1.788.421	2.020.280	2.134.781
LONG-TERM LIABILITIES	2.275.253	6.964.365	5.201.565	4.427.981	4.429.535	3.466.240
Long-term operating liabilities	31.160	33.945	34.965	37.302	38.853	35.073
Long-term financial liabilities	2.244.093	6.930.420	5.166.600	4.390.679	4.390.682	3.431.167
SHORT-TERM LIABILITIES	8.739.730	2.498.429	3.990.314	4.982.663	3.844.920	4.580.226
Short-term operating liabilities	2.933.135	1.993.956	2.047.085	2.543.116	1.893.824	2.391.730
Short-term financial liabilities	5.806.595	504.473	1.943.229	2.439.547	1.951.096	2.188.496
Net financial liabilities	6.332.772	6.650.296	5.956.892	5.599.417	4.297.395	2.775.327
Off-balance sheet items	-8.196.406	-7.491.759	-7.146.725	-6.853.175	-6.349.218	-5.640.632

UNION HOTELI GROUP	in EUR
INCOME STATEMENT	31.12.2014	30.9.2015	31.12.2015	30.6.2016	30.9.2016	31.12.2016
Net sales revenues	14.662.038	12.875.696	16.957.089	8.334.167	14.011.555	19.153.016
COGS	11.157.464	8.738.697	11.878.965	5.974.873	9.147.097	12.469.597
Gross sales profit or loss	3.504.574	4.136.999	5.078.124	2.359.294	4.864.458	6.683.419
Selling costs	1.091.797	862.698	1.251.899	618.085	907.920	1.351.706
General and administrative costs	2.425.009	1.889.623	2.523.177	1.237.972	1.847.573	2.637.743
Other operating revenue	502.161	268.399	472.669	153.703	214.392	324.432
EBITDA	2.763.612	3.312.494	4.029.916	1.801.498	4.004.903	5.320.230
Operating profit or loss (EBIT)	489.929	1.653.077	1.775.717	656.940	2.323.357	3.018.402
Financial income from participations	124.363	11.650	11.650	0	0	0
Financial income from operating receivables	8.343	11.888	13.676	3.685	9.959	12.800
Financial income from loans granted	10.928	2.002	2.098	493	408	152
Financial expenses from financial liabilities	378.999	166.596	216.583	77.492	113.321	147.401
Financial expenses from operating liabilities	2.907	1.887	2.584	2.473	2.986	3.654
Financial expenses for impairments and write-offs of financial assets	0	0	681	624	624	624
Profit before tax	251.657	1.510.134	1.583.293	580.529	2.216.793	2.879.675
Net profit or loss for the period	131.262	1.263.879	1.349.560	480.934	1.859.340	2.395.840
OPERATING EXPENSES - COSTS BY NATURE OF EXPENSE	31.12.2014	30.9.2015	31.12.2015	30.6.2016	30.9.2016	31.12.2016
TOTAL OPERATING EXPENSES	14.674.269	11.491.018	15.654.041	7.830.930	11.902.590	16.459.046
Changes in the value of inventories of products and work in progress	0	0	0	0	0	0
Costs of goods, material and services	6.025.885	5.035.208	6.910.774	3.343.658	5.176.611	7.092.782
Labour costs	5.869.070	4.428.218	6.034.943	3.171.441	4.794.873	6.697.842
Amortisation and depreciation	2.166.850	1.577.286	2.112.499	1.092.230	1.629.180	2.179.716
Other costs	612.464	450.306	595.825	223.601	301.926	488.706
Value adjustments of current assets	106.103	80.045	136.865	52.328	52.328	30.329
Losses due to disposal of fixes assets	730	2.086	4.835	0	38	91.783

UNION HOTELI GROUP
RATIOS	31.12.2014	30.9.2015	31.12.2015	30.6.2016	30.9.2016	31.12.2016
Financial leverage (net financial liabilities/EBITDA)*	2,29	1,81	1,48	1,31	0,91	0,52
Total debt/total equity	0,35	0,30	0,29	0,29	0,25	0,24
Total debt/total capital	0,28	0,24	0,24	0,24	0,21	0,20
Receivables turnover*	11,67	10,20	13,21	10,07	9,59	12,11
Assets turnover*	0,32	0,37	0,39	0,40	0,42	0,44
Current ratio	0,35	1,17	0,72	0,68	1,12	1,07
Quick ratio	0,33	1,04	0,65	0,62	1,04	1,00
Gross margin*	23,90%	29,03%	29,95%	30,05%	32,09%	34,89%
Operating margin*	3,34%	8,68%	10,47%	11,44%	13,52%	15,76%
Net profit margin*	0,90%	6,53%	7,96%	8,99%	10,75%	12,51%
Return on assets*	0,29%	2,43%	3,10%	3,63%	4,46%	5,52%
Return on equity*	0,41%	3,39%	4,27%	5,00%	5,95%	7,29%
Return on investment*	1,23%	3,30%	4,00%	4,46%	5,32%	6,48%
Number of employees	256,00	270,00	274,00	280,00	282,00	288,00

EBITDA is calculated using the IBON methodology.

*Quarterly ratios are calculated from data for past 12 months.