Highlights
. Strong operational and financial performance generating increased earnings of €2.42 per share
. Vacancies remain at only 1%
. A dividend of €2.18 per share is proposed
. Joint venture with AXA on Passage du Havre at a yield of 3.7% confirms strength of market for prime French
centres
. Property valuations within 0.4% of June 2018
Key results
. Net property income increased 3.9%
. Direct investment result increased 3.9%
. Like-for-like rental growth was 2.1% overall
. Average uplift of 8.9% on renewals and relettings
. Retail sales growth positive

Chief Executive’s commentary
“Notwithstanding slowing European economies, fears of world trade wars and the French “Gilets Jaunes” protests, our
2019 financial year has been a good one in terms of rental income and vacancies. Property valuations are stable with a
very small decrease of 0.4% overall and our earnings have risen notwithstanding the properties we have sold. We will increase the dividend once more this year and move to two dividend payments per annum from next year, without any
diminution in the total payout.
Our centres continue to perform well with shop sales turnover positive over the year except in France due to protesters blocking access to the centres which reduced the overall growth to -1.8%. Whilst lease negotiations are often taking
longer than in previous years, relettings and lease renewals of our shops are showing solid rental uplifts averaging 8.9% overall. The French group AXA, one of the world’s largest and most experienced property investors, has demonstrated its confidence in the French market for prime shopping centres by becoming our 50% joint venture partner in central Paris Passage du Havre at a price at the level of our 2018 independent property valuation and a net yield of 3.7%. This property has been an outstanding performer for Eurocommercial, having doubled in value since acquisition. Other prime retail deals in France are at similar levels reflecting the underlying strength of the sector.
There has been much recent comment on the very poor retail property climate in the UK with rents under extreme pressure through bankruptcies and yields rising with an expectation that those conditions are caused by online sales and
will spread to Western European markets. We believe that this is highly unlikely because the main reason for the UK problems is that tenants’ occupancy costs (rents + business rates) are often double those in our markets of Belgium,
France, Italy and Sweden. The weakening economic climate due to Brexit is also reducing consumer confidence in the UK.
Eurocommercial’s sensible occupancy cost ratios averaging 8.9% allow retailers to make a profit in our centres, so our vacancies remain at around 1%, still the lowest in the industry and compare with an average of 10-15% in the UK or US.
Online sales are increasing in our markets, but the rate of growth is slowing. Shops are seen by retailers nowadays as very effective marketing tools, more relevant often than electronic advertising. Shops will continue as a key channel for brands to engage with and acquire customers. It will remain vital for retailers therefore to be present in the best and most profitable
shopping centres. Good retailers increasingly ensure that their physical and online ‘stores’ complement each other, with an emphasis on click & collect and in store returns rather than expensive home delivery.
Our balance sheet remains strong. The purchase of the prime Woluwe shopping centre in Brussels – a long term strategic purchase for the company last year increased net debt slightly to €1.9 billion, however, our loan to value ratio (LTV) will reduce to approximately 43% after closing the committed sale at a price of €203 million of 50% of Passage du Havre to our joint venture partner AXA and other sales are under negotiations. As we announced at the time of the acquisition of Woluwe, we plan to extend and redevelop this prime centre.
In conclusion, I am extremely proud of our country management teams who have been able to achieve excellent results with our retailer partners. The experience and proactive approach of our people, 56% of whom are women by the way, mean we continue to adapt our centres and capture strong local demand, contributing to the overall success of the group.
Whilst we remain sensitive to the evolving global retail landscape, we look to next year with confidence in the strong belief that good, well managed shopping centres continue to have a sound future.

2018/19 Operational and financial review Rental growth
During the 12-month period, 248 leases were renewed or relet in Eurocommercial’s centres, resulting in an average uplift in
minimum guaranteed rent for those shops of 8.9%. The like-for-like (same floor area) rents of all Eurocommercial’s galleries increased by 2.1% overall at 30 June 2019, when compared with 30 June 2018, driven mainly by indexation and
relettings/renewals. Rental growth for the year in France and Sweden was strong at 2.9% for both countries. In Italy, rental growth was 1.9%. In Belgium, it was slightly negative at -0.5%.

Average rental uplift on
relettings and renewals % of total leases relet and renewed Number of relettings and renewals Like-for-like rental growth
Overall 8.9% 14.6% 248 2.1%
Belgium 8.2% 12.4% 16 -0.5%
France 11.0% 10.5% 53 2.9%
Italy 11.9% 12.3% 87 1.9%
Sweden 4.6% 25.8% 92 2.9%

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