Norgani Buys Hotels in Finland

. October 14, 2008

HELSINKI, Finland, ugust 24, 2006. Norgani ASA has become the second largest hotel property owner in Finland through the acquisition of Kapiteeli Plc's hotel portfolio.

The funding was successful through 65% over-subscribed share issue of NOK 522 million. During the second quarter Norgani benefited from a continued positive market development. Annualized pre tax return on paid in equity for the period was 23.2% of which 15.5% is related to sales gains (NOK 3.8 mill) and value adjustments.

The acquisition of Kapiteeli Plc's hotel portfolio establishes Norgani as the second largest hotel owner in Finland and strengthens its position as the largest hotel owner in the Nordic area. The portfolio, 15 hotels and a conference centre, will be taken over on 1 September. The purchase price is EUR 306 million, financed by share issue, a 5 year dept facility and available cash. The share issue of NOK 522 million was over-subscribed by 65%.

The Kapiteeli transaction was not carried out by end of June, hence the Kapiteeli investment is not included in the Q2 report. Norgani started operations 1 July 2005 and figures for the corresponding period in 2005 are thus not available. All figures mentioned are held against the previous quarter, i.e. the first quarter of 2006.

Annualized pre tax return on paid in equity for the period is 23.2% (22%), of which 15.5 % is sales gains (NOK 3.8 million) and value adjustments. Norgani had a turnover of NOK 122.3 million in Q2 (NOK 122.0 million). Value adjustments are NOK 57.3 million (NOK 24.4 million). Operating profit in this quarter is 160.3 million (NOK 142.7 million).

Operating and administrative expenses amounted to NOK 19.7 million or 16.1% of gross rent (15.1%). The increased costs are mainly due to administrative costs through increased use of external consultants (approximately NOK 4 million).

Profit before tax for the period was NOK 91.6 million (NOK 86.5 million). The second quarter results reflect 63 hotels where Rica Hotel Olrud and Quality Hotel Articus were taken over during the period. Norgani realized a gain of NOK 3.8 million through the sale of a minor part of a land lease connected to Quality Hotel Prince Philip in Sweden.

"Our results develop according to plan, and given stable economic conditions, we should meet our financial targets," says Kjell Sagstad, CEO of Norgani.

The market value of the Norgani hotel portfolio is by the end of June 2006 NOK 6.887.7 million. The positive market development continues with a growth in REVPAR of 6.2% (January - June) in Sweden, 7.5% (January - June) in Norway and 4.6% (January - May) in Finland.

Based on the positive development during the second quarter and under continued normal economic conditions Norgani expect to meet the financial target of a pre tax return on paid in equity of minimum 15 percent during 2006. Norgani will benefit from a continued positive hotel market development.

Norgani will after the Kapiteeli investment focus on development of and adjustments in the excisting portfolio. Selling hotels will in this process be considered.

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