DES 9M Englisch

Nine-month report 2013 DES Nine-month report 2013 { 2 } 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, Aus- tria, 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, financing and communication. The Company’s registered office is in Hamburg. Deutsche EuroShop is an Aktiengesellschaft (stock corporation) under German law. The individual shopping centers are managed as separate companies and, depending on the share of nominal capital or voting rights, are either fully consolidated or accounted for at equity. The share capital amounts to € 53,945,536.00 and is composed of 53,945,536 no-par value registered shares. The notional value of each share is € 1.00. Macroeconomic and sector-specific conditions The eurozone’s economy is slowly recovering from its recession. Ger- many has weathered the crisis well so far and is still considered to be the growth driver within the currency area. While Germany’s gross domes- tic product stagnated in the first quarter of 2013 in comparison to the same quarter of the previous year, it rose by 0.7% in the period from April to June. Experts anticipate an increase of 0.5% for the third quarter. Germany continues to benefit from sound foreign trade and stable demand on the domestic front. In the first nine months of the year, German retail sales were 1.7% higher in nominal terms and 0.2% higher in real terms than in the same period of the previous year. Robust job market development bolstered this trend: 2.8 mil- lion people were out of work in October which corresponded to an unemployment rate of 6.5%. The economic conditions for private consumption remain favourable: the situation on the job market is positive and prices are stable. As a result, private consumer spending should continue to provide a solid basis for domestic demand over the rest of the year. Results of Operations, Financial Position and Net Assets Results of Operations Revenue increased by 18% Revenue amounted to € 138.2 million as at 30 September 2013. This is nearly 18% higher than in the same period of the previous year (€ 117.0 million). Following the increase in the shareholding in the Altmarkt-Galerie Dresden on 1 May 2013, the property is now fully consolidated and the center’s revenue is included in the financial state- ments for the reporting period for five months. The Herold-Center is also included in 2013 for the first time. Revenue from our shopping center portfolio rose by 1.0% (like-for-like) year-on-year. Operating and administrative costs for property: 9.9% of revenue Center operating costs were € 13.6 million in the reporting period, compared with € 12.5 million in the same period of the previous year. Costs therefore stood at 9.8% of revenue (previous year: 10.7%). Other operating expenses of € 4.7 million The other operating expenses of € 4.7 million were slightly higher than those of the previous year (€ 4.5 million) due to one-off costs incurred in connection with the withdrawal from DB 12 Immobilienfonds. EBIT up 19% Earnings before interest and taxes (EBIT) increased by around 19% or € 19.5 million from € 101.0 million to € 120.5 million. Net finance costs up due to one-off effect from the disposal of a shareholding Net finance costs include income of € 15.7 million from the sale of a stake in Ilwro Sp.zo.o. in Poland. Adjusted for this effect, net finance costs were down from € 8.5 million to € -35.8 million. Inter- est expenses were € 3.7 million higher than during the same period of the previous year which can be attributed to the convertible bond issued at the end of the previous year as well as the initial consoli- dation of the Altmarkt-Galerie Dresden for which interest savings were exceeded by the refinancing costs. In addition, the profit share for third-party shareholders rose by around € 1.1 million. Moreover, income from companies included using the equity method fell by € 4.6 million since 1 May 2013, mainly as a result of the consolida- tion of the Altmarkt-Galerie Dresden. Measurement gains / losses The measurement loss amounted to € 6.8 million and included invest- ment costs incurred by our portfolio properties as well as an excess of identified net assets acquired over cost of acquisition in accordance with IFRS 3 from the first full consolidation of the Altmarkt-Galerie Dresden.

DES 9M Englisch

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