Deutsche EuroShop AG Interim Report 2015 - Report on Events after the Balance Sheet Date/Outlook/Risk Report

Management ReportDeutsche EuroShop 3 Interim Report 9M 2015 to further increases in their prices. Inflation has remained at a very low level in 2015, and this is expected to persist in 2016. In this light, we remain cautiously optimis- tic but expect that Deutsche EuroShop’s business will perform positively and generally according to plan this year. Expected results of opera- tions and financial position Our forecast for 2015 assumed averaged inflation of 1.0%, The annual inflation rate in 2015 from January to September was merely 0.3%. None- theless, with the exception of earnings before interest and taxes (EBIT), we are standing by our forecast. Against the background of adjusted inflation assumptions, we expect our overall results to be at the lower end of the ranges we targeted. Due to the non-recurring effects in other operating expenses and slightly higher property operating costs, we anticipate an EBIT result that is some- what below the previous range: • Revenue: €201 to 204 million • Earnings before interest and taxes (EBIT): €175 to 178 million (previously: €177 to 180 million) • Earnings before taxes (EBT) excluding valua- tion gains / losses: €126 to 129 million • Funds from operations (FFO) per share: €2.24 to €2.28 Based on the forecast for financial year 2015 and in particular against the backdrop of changes in the baseline data for the inflation trend and ex- pectations, we are making a slight change to our forecast for financial year 2016 and are predicting the following ranges: • Revenue: €200 to 204 million (previously: €203 to 206 million) • Earnings before interest and taxes (EBIT): €175 to 179 million (€179 to 182 million) • Earnings before taxes (EBT) excluding valua- tion gains / losses: €127 to 130 million (€130 to 133 million) • Funds from operations (FFO) per share: €2.26 to €2.30 (€2.30 and €2.34) Dividend policy We intend to maintain our long-term, reliable dividend policy and anticipate that we will be able to pay a dividend of €1.35 per share to our shareholders for 2015. Risk Report There have been no significant changes since the beginning of the financial year with regard to the risks associated with future business develop- ment. We do not believe the Company faces any risks capable of jeopardising its continued exist- ence. The information provided in the risk re- port of the consolidated financial statements as at 31 December 2014 is therefore still applicable. Report on Events after the Balance Sheet Date No further significant events occurred between the balance sheet date of 30 September 2015 and the date of preparation of the financial statements. Outlook Economic conditions In April 2015, the German federal government increased its growth forecast for gross domestic product in the current year from 1.5% to 1.8%. Positive overall consumer sentiment, a sustained high level of foreign trade and the stable labour market situation are again lending momentum to the German economy in 2015. The German Retail Federation (HDE) has also increased its estimate for retail sales (including online spend- ing) and expects a rise of 2.0% (previously 1.5%) in 2015. However, some geopolitical trouble spots re- main. As a result of the additional funds the coun- tryhasreceived,thedramasurroundingtheGreek debt crisis has abated somewhat in recent months, although the financial situation remains strained. The most recent economic data from across the world have been very mixed. The cooling econ- omy in China and the sanctions against Russia are now also having an impact on the German econ- omy. The European Central Bank is maintaining its very expansionary monetary policy, which has resulted in continuing low interest rates and high demand for real assets, sometimes leading EPRA EARNINGS 30.09.2015 30.09.2014 in € thousand per share (€) in € thousand per share (€) Consolidated profit 73,579 1.37 69,472 1.29 Valuation gains / losses 2,812 0.05 4,411 0.08 Valuation gains / losses for equity-accounted companies 74 0.00 318 0.01 Deferred taxes -502 -0.01 -890 -0.02 EPRA earnings 75,963 1.41 73,311 1.36 Weighted number of shares 53,945,536 53,945,536 Diluted EPRA earnings 1.33 1.29 Weighted number of shares 57,105,094 56,959,975 Funds from operations (FFO) up 2.4% FFO rose from €88.1 million to €90.6 million, or from €1.64 to €1.68 per share (+2.4%). Funds from Operations 30.09.2015 30.09.2014 in € thousand per share (€) in € thousand per share (€) Consolidated profit 73,579 1.37 69,472 1.29 Bond conversion expense 725 0.01 725 0.01 Valuation gains / losses 2,812 0.05 4,411 0.08 Valuation gains / losses for equity-accounted companies 74 0.00 318 0.01 Deferred taxes 13,389 0.25 13,152 0.25 FFO per share 90,579 1.68 88,078 1.64 Financial position and net assets Net assets and liquidity The Deutsche EuroShop Group’s total assets remained virtually unchanged compared with the previous year at €3,492.1 million. Whereas non-current assets increased by €5.4 million, re- ceivables and other current assets decreased by €4.0 million. Cash and cash equivalents dropped by €1.4 million versus 31 December 2014 to €56.9 million (€58.3 million). Equity ratio of 50.4% The equity ratio (including the shares of third- party shareholders) was 50.4%, 0.3 percentage points higher than on the last reporting date (50.1%). Liabilities As at 30 September 2015, financial liabilities stood at €1,419.0 million, which was €11.2 mil- lion lower than on 31 December 2014. Non- current deferred tax liabilities increased by €14.4 million to €241.8 million due to additional provisions, while redemption entitlements for third-party shareholders rose by around €0.9 mil- lion to €227.9 million. Conversely, other current and non-current liabilities and provisions shrank by €11.2 million. This was due mainly to ­changes of €6.3 million in the present value of interest rate hedges. EPRA EARNINGS 30.09.201530.09.2014 Consolidated profit 73,5791.3769,4721.29 Valuation gains / losses 2,8120.054,4110.08 Valuation gains / losses for equity-accounted companies 740.003180.01 EPRA earnings 75,9631.4173,3111.36 Weighted number of shares 53,945,53653,945,536 Diluted EPRA earnings 1.331.29 Weighted number of shares 57,105,09456,959,975 Funds from Operations 30.09.201530.09.2014 Consolidated profit 73,5791.3769,4721.29 Bond conversion expense 7250.017250.01 Valuation gains / losses 2,8120.054,4110.08 Valuation gains / losses for equity-accounted companies 740.003180.01 Deferred taxes 13,3890.2513,1520.25 FFO per share 90,5791.6888,0781.64

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