Interim Report Q1-3 2003
Key Figures Group 1.1.-30.9. 1.1.-30.9. 2003 2002 Sales 36.7 34.5 Income from investments 5.1 3.2 Net interest income/expense -9.9 -8.5 Result from ordinary activities 7.7 3.9 (Consolidated) net profit/ loss for the period 1.1 -2.1 EBITDA 33.5 28.1 Free cash flow per share (¤) Earnings per share (¤) 0.07 -0.13 € million
Total assets Fixed assets Current assets Equity Liabilities Equity ratio
30.9.2003 964 804 161 528 412 54.8%
31.12.2002 1000 815 186 557 420 55.7 %
AG 1.1.-30.9. 1.1.-30.9. 2003 2002 19.6 16.9 2.8 3.5 20.9
18.6
15.3 1.33 -
13.7 1.19 -
30.9.2003 616 514 102 595 0 96.6 %
31.12.2002 632 513 119 610 7 96.5%
(Ratio of equity to total assets)
DES Shares – Key Figures Sector/industry group Share capital Outstanding shares Share class Dividend 2002 (tax-free) Share price on 30 Dec. 2002 Share price on 30 Sep. 2003 High/low in the period under review Market capitalisation Prime Standard OTC trading Indices ISIN Ticker symbol
Financial Services/Real Estate ¤ 20 million 15,625,000 shares No-par value registered shares ¤ 1.92 ¤ 31.00 ¤ 32.05 ¤ 33.95 / ¤ 29.70 ¤ 501 million Frankfurt and Xetra Dusseldorf, Hamburg, Munich and Stuttgart SDAX, GPR 250, EPIX 30 DE 000 748 020 4 DEQ, Reuters: DEQGn.DE
Contents Letter from the Executive Board
2
News Ticker
3
Business Developments
4
DES Shares
5
Outlook
7
Consolidated Balance Sheet
8
Consolidated Profit and Loss Account
10
Statement of Changes in Equity
10
Cash Flow Statement
12
Notes/Disclosures
14
Profit and Loss Account of Deutsche EuroShop AG
17
Balance Sheet of Deutsche EuroShop AG
18
Executive Bodies
20
Financial Calendar
21
+++ The Shoppingcenter-AG +++
Letter from the Executive Board Dear Shareholders, Ladies and Gentlemen, in August and October we announced the acquisition of equity interests in two new shopping centres. The first is a 50% stake in the Phoenix-Center in Hamburg, which is due to open in autumn 2004, which we acquired with effect from 1 January 2004. The proportionate investment volume amounts to ¤78 million, and the equity interest to ¤25 million. The second is a 65% interest in the Forum Wetzlar shopping centre, which we acquired on 1 October. The proportionate investment volume in this case amounts to ¤73 million, and the equity interest to ¤29 million. This leaves a further ¤18 million of equity available for another investment. Both acquisitions are recording encouraging levels of pre-letting activity. 52% of the floor space in the Forum Wetzlar shopping centre has already been leased one and a half years before its completion, as has 70% of the Phoenix-Center one year before its opening. Six months before its opening, the occupancy ratio at the Pécs Árkád, the third property still under construction in which we have held an equity interest since the end of 2002, is 95%. All our shopping centres that have already started operation have ongoing stable occupancy rates of more than 99%. The construction projects for the three new shopping centres are going according to plan. The same is also true of the expansion of the Main-Taunus-Zentrum, in whose northern section the largest miniMAL supermarket in Germany and a Breuninger Textilhaus are being developed at a cost of around ¤35 million. The refurbishment of a further 4,000 m2 of retail floor space in the Rhein-Neckar-Zentrum was successfully completed in August and was well received by customers, as can be seen from the clear increase in the number of visitors.
2
The Altmarkt-Galerie in Dresden celebrated its anniversary in September, looking back on an opening year that exceeded all expectations. The daily number of visitors has stabilised at a high level, as have sales by retailers. In the meantime, Deutsche Bank sold its remaining 8% stake in the Company. This caused the free float in our Company to rise to 79%, for a market capitalisation of around ¤400 million. Coupled with our intensive investor relations activities, this has led to an encouraging increase in the awareness enjoyed by our Company. We intend to continue on our existing course and would like to take this opportunity to thank you for your confidence in us.
Hamburg, November 2003
Claus-Matthias Böge
Dirk Hasselbring
News Ticker Deutsche EuroShop at the DVFA’s German Midcap Conference – the video of the presentation is now available online. Further details can be found on our website at www.deutsche-euroshop.com
+++ The Shoppingcenter-AG +++
3
Business Developments The third quarter of 2003 coincided with an unusually hot summer in Europe, which affected consumer spending. However, the general consumer climate has been picking up slightly since the middle of the year, so that we are looking forward to Christmas trading with confidence.
Longer Saturday opening a real success The opening times on Saturdays, extended to 8.00 p.m. since 1 June, have generated consistently high sales. For the centres, this basically means additional business. Customers are prepared to travel further now, as they are no longer under pressure to do all their shopping before 2.00 p.m. or 4.00 p.m.
Further improvement in operating result for Deutsche Euroshop AG In the first nine months of the year, Deutsche Euroshop AG generated an operating result (result from ordinary activities) of ¤20.9 million, up from ¤18.6 million in the comparable prioryear period (+12%). Income from investments contributed ¤19.6 million (¤16.9 million), an increase of 16%. This is largely due to the fact that the Altmarkt-Galerie in Dresden contributed to earnings for the entire period under review for the first time in 2003. In addition, the completion of the renovation and restructuring work at the Rhein-Neckar-Zentrum boosted business.
Deutsche Euro Shop AG net profit for the period up 12% As a result of lower interest rates and the net cash used in the acquisition of our equity interest in Allee-Center in Hamm in spring 2002, interest income fell to ¤2.8 million in the period under review, down ¤0.8 million on the prior-year period. After deduction of taxes on income (transfer to the provision for deferred taxes on income) and other taxes, the net profit for the period amounted to ¤15.3 million as against ¤13.7 million in 2002, an increase of around 12%. 4
Positive consolidated sales trend The final completion of the refurbishment works at Rhein-NeckarZentrum also boosted sales by the Group. Thus, sales rose by 6% from ¤34.5 million to ¤36.7 million. Income from investments rose from ¤3.2 million to ¤5.1 million (+59%). This is mainly due to the fact that the shopping centres in Dresden and Kassel, which opened in 2002, contributed to earnings for the entire period for the first time in 2003.
Consolidated net profit for the period at ¤1.1 million Other operating expenses declined by just under 18%, from ¤8.7 million to ¤7.1 million in the first nine months of 2003, as a result of a slow-down in investment activity. A consolidated net loss of ¤-0.3 million was recorded for the third quarter as a result of a ¤0.6 million provision for a roof refurbishment at Centro Commerciale Friuli in Udine, which started in September. Interest income in the first nine months dropped to ¤4.2 million, down ¤1.4 million year-on-year. This was primarily due to lower interest rates in 2003. Overall, the result from ordinary activities almost doubled from ¤3.9 million to ¤7.7 million (+95%). After the deduction of taxes and minority interests, the consolidated net profit for the period amounted to ¤1.1 million (¤-2.1 million).
DES shares Our shares rose slightly in Q3, closing at ¤32.05 on 30 September – up 3% on the closing date for the second quarter.
+++ The Shoppingcenter-AG +++
5
Deutsche EuroShop AG vs. DAX and EPRA January 2003 to September 2003 (indexed, basis 100, in %)
120 110 100 Deutsche EuroShop AG incl. dividend
90
DAX
80
EPRA
1/03
2/03
3/03
4/03
5/03
6/03
7/03
8/03
9/03
10/03 11/03 12/03
Free float now at 79% Since Deutsche Bank sold its last stake in the Company in midSeptember, 79% of DES’s shares are now in free float. Thus, the Otto family as single major shareholder holds the remaining 21%. Overall, the number of our shareholders has increased by around 1,500, due to the placement of Deutsche Bank’s block of shares in three tranches. We currently have more than 5,800 shareholders.
Analyst coverage established The analyst conference in Frankfurt am Main, organised to coincide with the publication of our half-yearly figures for 2003, was received with great interest. Six analysts from well-known institutes in Germany and other European countries now regularly monitor our shares and leverage new groups of investors as a result of their recommendations.
Further rise in share turnover The increased free float, the improved analyst coverage and positive news from the Company led to a 17% rise in share turnover in Q3 as against Q2. Turnover has more than tripled as against Q1.
6
Admission to the SDAX and GPR 250 Indices Admission to the SDAX (from 14 July 2003) and the GPR 250 (from 1 October 2003 – GPR stands for Global Property Research) has helped generate so-called technical demand from indextracking investors and has boosted share turnover. We anticipate a further increase after January 2004 thanks to our admission on to the EPRA Index (European Public Real Estate Association), a leading global index for property shares.
Outlook As a result of the low interest rates, interest income is lower than originally expected. This effect can, however, be offset by higher than projected residual distributions by our investees for 2002 and hence higher than forecast income from investments in fiscal year 2003.
Operating result of Deutsche Euroshop AG in line with expectations We remain confident of achieving Deutsche EuroShop AG’s planned operating result for 2003 of ¤27.6 million and an unappropriated surplus of ¤30 million.
Consolidated result depressed by roof refurbishment in Udine The consolidated result for 2003 will be impacted by the roof refurbishment at the Centro Commerciale Friuli in Udine, the costs of which total approximately ¤2.5 million. We therefore now expect to report a loss of around ¤0.5 million and not a consolidated net profit of ¤1.4 million originally forecasted.
Full investment soon Following the acquisition of our equity investments in Hamburg and Wetzlar, a further ¤18 million is still available for another investment in a shopping centre. From today’s perspective, the chances of being fully invested by the end of the year as planned are good. +++ The Shoppingcenter-AG +++
7
Consolidated Balance Sheet Assets (¤ thousands)
30.09.2003
31.12.2002
3
4
375
414
655,095
670,676
146
168
4,546
8
143,405
143,405
803,567
814,671
A. Business start-up and expansion expenses B. Fixed assets I. Intangible assets Concessions, industrial and similar rights II. Tangible assets 1. Land, land rights and buildings 2. Other equipment, operating and office equipment 3. Payments on account and assets under construction III. Financial assets Other investments
C. Current assets I. Receivables and other assets 931
2,418
2. Receivables from other investees
23,302
16,175
3. Other assets
11,220
13,129
1. Trade receivables
II. Securities Other securities
46,517
0
III. Cash and bank balances
78,627
153,860
160,597
185,582
240
1
964,407
1,000,258
D. Prepaid expenses Total assets
8
Equity and liabilities (¤ thousands)
30.09.2003
31.12.2002
A. Equity I. Subscribed capital II. Capital reserves
20,000
20,000
507,365
528,512
III. Revenue reserves
1,979
1,979
IV. Consolidated unappropriated surplus
1,095
8,853
V. Minority interests
-2,421
-2,527
528,018
556,817
20,168
15,018
B. Provisions 1. Provisions for taxes 2. Other provisions
4,223
7,615
24,391
22,633
408,151
409,434
C. Liabilities 1. Liabilities to banks 2. Trade payables 3. Liabilities to other investees 4. Other liabilities
D. Deferred income
Total equity and liabilities
758
901
1
6,962
3,088
2,746
411,998
420,043
0
765
964,407
1,000,258
+++ The Shoppingcenter-AG +++
9
Consolidated Profit and Loss Account (¤ thousands) 1. Sales 2. Other operating income 3. Personnel expenses 4. Amortisation of intangible assets and depreciation of tangible assets, as well as amortisation of capitalised business start-up and expansion expenses 5. Other operating expenses 6. Income from investments 7. Other interest and similar income 8. Write-downs of investments classified as current assets 9. Interest and similar expenses 10. Result from ordinary activities 11. Taxes on income 12. Other taxes 13. Net profit/loss for the period 14. Minority interests 15. Consolidated net profit/loss for the period
Statement of Changes in Equity (¤ thousands) 01.01.2002
Subscribed capital 20,000
Capital reserves 570,257 -29,361
Dividends/withdrawals Consolidated result
-5,494
Withdrawals from capital reserves Appropriations to revenue reserves Other 30.09.2002
20,000
535,402
01.01.2003
20,000
528,512 -21,147
Dividends/withdrawals Consolidated result Withdrawals from capital reserves Appropriations to revenue reserves Other 30.09.2003
10
20,000
507,365
01.07.-30.09. 2003 12,373
Revenue reserves 1,066
01.07.-30.09. 2002 12,032
01.01.-30.09. 2003 36,653
01.01.-30.09. 2002 34,460
0
90
183
184
223
135
578
298
5,463
5,202
16,614
16,401
3,042
4,218
7,132
8,685
1,427
1,014
5,056
3,150
1,160
1,632
4,158
5,568
0
0
0
120
4,606
4,706
14,053
13,921
1,626
507
7,673
3,937
1,645
1,645
5,845
5,353
185
182
657
713
-204
-1,320
1,171
-2,129
-63
65
-76
59
-267
-1,255
1,095
-2,070
Consolidated unappropriated surplus 639
Minority interests 5,092
597,054
-639
-2,252
-32,252
2,924
-59
Total
2,865 -5,494 500
500 1,566 1,979
-3,273
-3,273
2,924
-492
559,400
8,853
-2,527
556,817
-8,853
-265
-30,265
1,095
76
1,171 0 0
1,979
1,095
296
296
-2,421
528,018
+++ The Shoppingcenter-AG +++
11
Cash Flow Statement (¤ thousands)
1. Consolidated net profit/loss 2. Minority interests
01.01.-30.09. 01.01.-30.09. 2003
2002
1,095
-2,070
76
-59
16,614
16,401
3. Depreciation and amortisation of fixed assets 4. Increase (+) / decrease (-) in provisions 5. DVFA/SG cash earnings
1,758
-3,369
19,543
10,903
0
-6
3,156
6,497
6. Gains on disposal of items of fixed assets 7. Increase (-) / decrease (+) in trade receivables and other assets not attributable to investing or financing activities 8. Increase (+) / decrease (-) in trade liabilities and other liabilities not attributable to investing or financing activities 9. Cash flows from operating activities
-566
-1,724
22,133
15,670
10. Proceeds from disposals of items of tangible assets 11. Payments to acquire tangible assets 12. Payments to acquire intangible assets
0
1,055
-5,509
-116,327
0
-4
13. Proceeds from disposals of items of financial assets 14. Payments to acquire financial assets
0
500
-6,962
-5,243
2,500
2,813
15. Receipts from cash investments for short-term financial planning 16. Payments for cash investments for short-term financial planning 17. Cash flows from investing activities
12
-9,627
-3,546
-19,598
-120,752
01.01.-30.09. 01.01.-30.09.
(¤ thousands)
18. Payments to owners (dividends) 19. Proceeds from borrowings
2003
2002
-30,265
-32,252
0
113,109
20. Repayments of borrowings 21. Cash flows from financing activities
-1,283
-897
-31,548
79,960
-29,013
-25,122
153,860
196,100
296
-3,273
125,143
167,705
22. Net change in cash and cash equivalents 23. Cash and cash equivalents at beginning of period 24. Changes in cash and cash equivalents from changes in Group structure 25. Cash and cash equivalents at end of period
+++ The Shoppingcenter-AG +++
13
Notes/Disclosures Basis of presentation The financial statements of the Deutsche EuroShop Group as at 30 September 2003 have been prepared in accordance with the provisions of the Handelsgesetzbuch (HGB – German Commercial Code), German Accounting Standard 6 (GAS 6), the Aktiengesetz (AktG – German Public Companies Act) and the principles of proper accounting. The financial statements have not been reviewed by an auditor. In the opinion of the Executive Board, they contain all the necessary adjustments required to give a true and fair view of the result of operations as at the interim report date. No conclusions regarding the development of future results can necessarily be drawn from the results of the first nine months as at 30 September 2003. The accounting policies applied correspond to those used in the last consolidated financial statements as at the end of the financial year. A detailed description of these methods was published in the Annual Report 2002.
Basis of consolidation The basis of consolidation is as at 31 December 2002; all consolidation principles have been maintained unchanged. For more information, please refer to the detailed description of the basis and methods of consolidation, and to the principles applied to the annual financial statements, which were printed in full in the Annual Report 2002.
Comparison of quarterly results The comparative figures for Q3 2002 are cautious estimates, as we only converted our accounting in the second quarter of 2003.
14
Given the relatively constant flows of income and expenses in the Deutsche EuroShop Group’s letting business and the cost/benefit ratio of calculating detailed comparative figures retroactively, this presentation is appropriate.
Consolidated financial statement disclosures In the period under review, the total assets of the Deutsche EuroShop Group declined by ¤35.9 million to ¤964.4 million. In particular, this is due to the dividend payment made in June 2003. Net balance sheet equity dropped by ¤28.8 million. At the same time, the balance sheet equity ratio fell slightly to just under 55% (previous year: approximately 56%). In addition, there was a reduction in short-term liabilities to banks, and a further equity contribution was made to our investee Einkaufs-Center Arkaden Pecs KG. For profit and loss account disclosures, please refer to the notes on business developments on pages 4 and 5.
Segment reporting in the Group As the holding company, Deutsche EuroShop AG holds equity interests in German and foreign shopping centres as a single business segment, so no separate segment reporting is therefore presented. Sales are generated exclusively from income from rental and leases. This is broken down as follows: Sales (¤ thousands)
Germany
Inter-
thereof
national
EU
Total
01.01.-30.09.2003
28,959
7,694
7,694
36,653
01.01.-30.09.2002
27,027
7,433
7,433
34,460
+++ The Shoppingcenter-AG +++
15
Dividend A dividend of ¤1.92 per share was distributed in Q2 2003.
Employees As at 30 September 2003, the Group employed three people.
Stock options The variable portion of the remuneration of the Executive Board and the Supervisory Board does not include stock options or similar securities-based incentive systems.
Forward-looking statements This interim report contains forward-looking statements based on estimates of future developments by the Executive Board. The statements and forecasts represent estimates based on all the information currently available. If the assumptions on which the statements and forecasts are based do not occur, the actual results may differ from those currently forecasted.
16
Profit and Loss Account of Deutsche Euroshop AG (¤ thousands)
01.01.-30.09. 01.01.-30.09. 2003
1. Other operating income 2. Personnel expenses 3. Depreciation of tangible assets
2002
29
82
578
298
9
3
4. Other operating expenses
974
1,569
5. Income from investments
19,626
16,920
2,782
3,567
0
120
6. Other interest and similar income 7. Write-downs of investments classified as current assets 8. Interest and similar expenses 9. Result from ordinary activities 10. Taxes on income 11. Other taxes 12. Net profit for the period
0
0
20,876
18,579
5,506
4,900
39
0
15,331
13,679
+++ The Shoppingcenter-AG +++
17
Balance Sheet of Deutsche Euroshop AG 30.09.2003
31.12.2002
4
5
35
33
1. Shares in subsidiaries
387,700
386,891
2. Other investments
126,356
126,356
514,095
513,285
Assets (¤ thousands) A. Fixed assets I. Intangible assets Industrial and similar rights and assets II. Tangible assets Operating and office equipment III. Financial assets
B. Current assets I. Receivables and other assets 1. Receivables from subsidiaries
13,124
0
2. Receivables from other investees
23,302
16,175
688
1,607
3. Other assets II. Securities
45,597
0
III. Cash and bank balances
18,890
100,897
101,601
118,679
27
0
615,723
631,964
C. Prepaid expenses Total assets
18
Equity and liabilities (¤ thousands)
30.09.2003
31.12.2002
A. Equity I. Subscribed capital
20,000
20,000
II. Capital reserves
557,612
557,612
1,979
1,979
III. Revenue reserves IV. Consolidated net profit/unappropriated surplus
15,331
30,000
594,922
609,591
19,689
14,183
B. Provisions 1. Provisions for taxes 2. Other provisions
1,110
1,216
20,799
15,399
C. Liabilities 1. Liabilities to banks
0
0
2. Trade liabilities
1
11
3. Liabilities to other investees
Total equity and liabilities
1
6,963
2
6,974
615,723
631,964
+++ The Shoppingcenter-AG +++
19
Executive Bodies of the Company
Executive Board
Claus-Matthias Böge Dirk Hasselbring
Supervisory Board
Manfred Zaß (Chairman) Dr. Michael Gellen (Deputy Chairman) Thomas Armbrust Dr. Tessen von Heydebreck Dr. Jörn Kreke Alexander Otto
20
Financial Calendar 2003 1 December 2003 Seydler Real Estate Stock Day, Frankfurt am Main
2004 29 March 2004 Deutsche Bank German Corporate Conference, Frankfurt am Main 20 April 2004 Year-end press conference and analyst conference, Hamburg 25 May 2004 Interim report Q1 2004 17 June 2004 Annual General Meeting, Frankfurt am Main 17 August 2004 Interim report H1 2004 16 November 2004 Interim report Q1-3 2004
Deutsche EuroShop AG Investor Relations Oderfelder Strasse 23 D-20149 Hamburg Germany Tel.: +49 (0)40 - 41 35 79-20 Fax: +49 (0)40 - 41 35 79-29 e-mail:
[email protected] www.deutsche-euroshop.com This interim report of Deutsche EuroShop AG is also available in German. Both the English and German versions can also be downloaded as PDF files on the Internet at www.deutsche-euroshop.com. Layout & production GDS GmbH, Gestaltungs-Agentur, Hamburg
