Deutsche EuroShop AG Half-Year Financial Report 2016 - Disclosures

The interim financial statements were not audited in accordance with section 317 of the Handelsgesetzbuch (HGB – German Commer- cial Code), nor were they reviewed by a person qualified to carry out audits. In the opinion of the Executive Board, the report contains all of the necessary adjustments required to give a true and fair view of the results of operations as at the date of the interim report. The per- formance of the first six months up to 30 June 2016 is not necessarily an indication of future performance. DISCLOSURES ON THE ­CONSOLIDATED BALANCE ­SHEET AND THE CONSOLIDATED INCOME STATEMENT Investment properties Property held as a financial investment (IAS 40) is measured at fair value. In the ab- sence of special events (such as a new acqui- sition), fair values are determined by an ex- ternal appraiser on an annual basis as at the 31 December reporting date. Jones Lang LaSalle GmbH performed this appraisal as at 31 December 2015 using the discounted cash flow method (DCF). The ap- proach used under this method as well as the related valuation parameters are explained in the consolidated financial statements as at 31 December 2015 (2015 Annual Report, pp. 152 – 153). This is a valuation method from Level 3 of the fair value hierarchy as set out in IFRS 13. Mid-year changes to properties held as a ­ financial investment are the result of addi- tions (€7.5 million) and mainly relate to the 1 April 2016 purchase of a property let to Kar- stadt which is adjacent to our shopping center in Dessau. Financial instruments With the exception of derivative financial in- struments and other financial investments measured at fair value, financial assets and liabilities are measured at amortised cost. Due to the predominantly short-term nature of trade receivables, other assets and liabili- ties and cash and cash equivalents, the carry- ing amounts on the reporting date do not devi- ate significantly from the fair values. The fair values of financial liabilities measured at amortised cost correspond to the cash val- ues of debt-related payments based on current interest rate yield curves (Level 2 in accord- ance with IFRS 13) and amount to €1,545.0 mil- lion as at 30 June 2016 (31 December 2015: €1,502.8 million). The derivative financial instruments measured at fair value are interest rate hedges. Here the fair value is equivalent to the cash value of future net payments expected to be received from hedging transactions (Level 2 in accord- ance with IFRS 13) based on current interest rate yield curves. Liabilities from interest rate ­ hedges came to €56.0 million as at 30 June 2016 (31 December 2015: €50.5 million). SEGMENT REPORTING As a holding company, Deutsche EuroShop AG holds equity interests in shopping centers in the European Union. The holding companies are pure real-estate shelf companies with- out staff of their own. The operational man- agement is contracted out to external service providers under agency agreements, with the result that the companies’ activities are exclu- sively restricted to asset management. Due to the Company’s uniform business activ- ities within a relatively homogeneous region (the European Union), and in accordance with IFRS 8.12, separate segment reporting is pre- sented in the form of a breakdown by domestic and international results. The Executive Board of Deutsche EuroShop AG, as the main decision-maker of the group, assesses primarily the performance of the segments based on revenue, EBIT (earnings before interest and taxes) and EBT (earnings before taxes) before measurement of the indi- vidual property companies. The valuation prin- ciples for the segment reporting correspond to those of the Group. Intra-Group activities between the segments are summarised in the reconciliation. In view of the geographical segmentation, no further information pursuant to IFRS 8.33 is given. The segments of Deutsche EuroShop AG are not subject to any material seasonal influences. Breakdown by geograhical segment in € thousand Domestic International Reconciliation Total Revenue 94,480 7,350 0 101,830 (previous year’s figures) (93,267) (7,377) (0) (100,644) in € thousand Domestic International Reconciliation Total EBIT 84,603 6,595 -2,373 88,825 (previous year’s figures) (84,198) (6,933) (-2,963) (88,168) in € thousand Domestic International Reconciliation Total Net interest income -23,695 -1,579 -1,818 -27,092 (previous year’s figures) (-24,562) (-1,850) (-1,817) (-28,229) in € thousand Domestic International Reconciliation Total Earnings before tax (EBT) 52,036 3,684 4,335 60,055 (previous year’s figures) (52,319) (3,714) (5,484) (61,517) The reconciliation statement primarily dis- closes profits and losses for equity-accounted companies in the amount of €9.5 million (pre- vious year: €10.8 million). Of this, €6.6 mil- lion is domestic (previous year: €8.2 million) and €2.9 million international (previous year: €2.6 million). 7 Deutsche EuroShop AG  Half-year Financial Report 2016 H1 Revenue 94,4807,3500101,830 EBIT 84,6036,595 -2,37388,825 Earnings before tax (EBT) 52,0363,6844,33560,055

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