DES Nine-Month Report 2012

/ / / 2 DES Nine-month report 2012 Business and Economic Conditions Group structure and operating activities Activities Deutsche EuroShop is the only public company in Germany to invest solely in shopping centers in prime locations. As at the reporting date, it had investments in 19 shopping centers in Germany, Austria, Poland and Hungary. The Group generates its reported revenue from rental income on the space which it lets in the shopping centers. Group’s legal structure Due to its lean personnel structure, the Deutsche EuroShop Group is centrally organised. The parent company, Deutsche EuroShop AG, is responsible for corporate strategy, portfolio and risk management, financ- ing and communication. The Company’s registered office is in Hamburg. Deutsche EuroShop is a public company under German law. The individual shopping centers are managed as separate companies and depending on the share of nominal capital owned are either fully or proportionally consolidated or accounted for using the equity method. The share capital amounts to € 51,631,400.00 and is composed of 51,631,400 no-par value registered shares. The notional value of each share is € 1.00. Macroeconomic and sector-specific conditions The EU debt crisis has not eased over the last few months and has left its mark on the real economy. Economic growth is tailing off noticeably. In its economic forecasts for Germany this year, the German govern- ment anticipates growth of only 0.8%. That puts its estimate far behind the good growth rates experienced during the past two years when gross domestic product grew by more than 3%. However, the German government expects the labour market to remain stable. The key stimuli for 2012 are expected to come from domestic demand, and particularly from willingness to invest and private consumption. An inflation rate of around 2% is predicted. Retail sales developed positively in the reporting period. Following a slightly lower figure at the beginning of the year, it rose over the last few months. In the first nine months of 2012, German retail sales were 1.9% higher in nominal terms than in the same period of the previous year. Results of Operations, Financial Position and Net Assets Increasing our shopping center shareholdings With effect from 1 January 2012, Deutsche EuroShop AG acquired 5.1% of the Rathaus-Center Dessau KG, thus taking its shareholding to 100%. The purchase price of € 5.9 million was paid in early 2012. In addition, with effect from 1 January 2012, around 11% of the Allee- Center Hamm KG (purchase price € 8.9 million) and 0.1% of the Rhein- Neckar-Zentrum KG (purchase price € 0.2 million) were acquired. Deutsche EuroShop AG now holds 100% of the shares in these properties as well. The purchase prices were paid at the end of 2011. These acqui- sitions resulted in an excess of identified net assets acquired over cost of acquisition in accordance with IFRS 3 in the amount of € 0.3 million, which were reported as an expenditure in measurement gains/losses. Deutsche EuroShop AG founded DES Shoppingcenter KG with an investment of € 10 thousand on 30 August 2012. The company was not yet operational in the third quarter of 2012. Results of Operations Revenue increased by 14% Revenue amounted to € 157.1 million as at 30 September 2012. This represents an increase of just under 14% from the same period the previous year (€ 138.0 million) which can be primarily attributed to the higher revenue percentages contributed by the center expansions com- pleted last year in Dresden, Wildau and Sulzbach as well as the acquisi- tion of the Allee-Center in Magdeburg (1 October 2011). Revenue also rose accordingly by 2.5% year-on-year. Operating and administrative costs for property: 10.2% Center operating costs were € 16.0 million in the reporting period, compared with € 15.0 million in the same period of the previous year. Costs therefore stood at 10.2% of revenue (previous year: 10.8%). Other operating expenses of € 4.8 million Other operating expenses amounted to € 4.8 million, slightly below the previous year’s level (€ 5.3 million) which is largely the result of lower ancillary financing costs. EBIT up 16% Earnings before interest and tax (EBIT) increased by € 19.4 million (+16%) from € 117.9 million to € 137.3 million. Net finance costs down € 4.5 million At € -63.4 million, net finance costs fell by € 4.5 million. This can be attributed to the fact that both the interest expense (€ +1.5 million) and the profit share for third-party shareholders (€ +2.9 million) have risen substantially as a result of the expansion measures.

DES Nine-Month Report 2012

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