PowerPoint Presentationfile,171_epp-annual...visible in EPP’s shopping centres Country update • Poland was one of the least impacted economies in Europe in 2020 with GDPdown only

Annual results 2020

March 2021

COVID-19 & economic update

Agenda

Financial review

Operational review

Outlook & guidance

Annual results 2020 | Agenda | (2)

2020 summary

(3)

Footfall and sales reboundquickly post lockdowns as customers are eager to do in-store shopping.

Customers miss the social interaction and feel safe due to high sanitary standards at EPP shopping centres.

EPP safely managed its financial liquidity during the pandemic as the result of a disciplined approach undertaken.

EPP operates in a resilient and strong economy with a small GDP drop in 2020.

Polish economy benefits from low unemployment and consistently rising wages which will continue to drive growth in retail spending.

Retail rebounds Liquidity & discipline Resilience and prospects

Annual results 2020 | 2020 summary | (3)

2020 summary

Annual results 2020 | 2020 summary | (4)

Tenants

• Debt collections >90% on average despite two lockdowns

• Long term approach taken with tenants with support provided in exchange for lease extensions

• Tenants continue to open new stores in the portfolio i.e. Primark, Modivo, CCC, PEPCO, Carrefour, Martes Sport and Dealz

Key financial indicators

• Distributable earnings per share reached €5.56 cents exceeding the guidance provided as a range of €4.75 to €5.25 cents per share

• Stable liquidity position with €152 million cash on hand; post the tranche 3 acquisition expected cash of €88 millon

• LTV increased to 54.8% as a result of COVID-19 impact but within average LTVcovenant levels of 67%

Key operational indicators

• Currently 96% of EPP’s retail GLA allowed to trade

• Occupancy at a stable level of 96%

• High conversion rates seen post lockdowns with tenant sales growth outpacing footfall increase

• Footfall in Poland is recovering faster than in other European countries – which is visible in EPP’s shopping centres

Country update • Poland was one of the

least impactedeconomies in Europe in 2020 with GDP down only by 2.8%

• Cumulative GDP growth of 8% expected in the next 2 years

• Low COVID-19 transmission rates in centres confirmed by the government

• One of the few countries where legally landlords could not charge rent during lockdowns

2020 summary

COVID-19 &economic update

Annual results 2020 | COVID-19 & economic update | (5)

TOMASZTRZÓSŁOCEO


5.6%

As of 27 February 2021

4.9%

3.9%

3.8%4.4% 7.1%

5.5%

4.8%

5.7%

5.8% 5%

4.7%

4.4%

4.3%

7.2%

2.5%

3.3%

6%

2.4%

5.8%

Number of doses administered in

Poland

3.3 million

Source: Gov.plOurworldindata.orgEuropean Centre for Disease Prevention and Control

Share of people who received at least one dose of COVID-19 vaccine

More than 3 million of COVID-19 vaccine doses administered in Poland within first two months of the vaccination programme

5.7% of Poles vaccinated (27 Feb 2021) and rising

COVID-19 infection rates expected to steadily decline in spring as vaccination programmeprogresses further and winter infection season finishes

Poland vs EU average of 4.8%

5.7%


Poland is in the topof European countries with one of the highest rates of COVID-19vaccine doses administered per 100 people

Source: Official data collated by Our World in Data – 28 February 2021

COVID-19 vaccinations per 100 people


CURRENTLY 96% OF EPP’s RETAIL GLA IS ALLOWED TO TRADE • The Polish government keen to restore the economic activity as soon as

possible:o Majority of shopping centres allowed to trade o Cinemas, theatres, art galleries, philharmonics operative (50% of

capacity)o Swimming pools and ski slopes open and outdoor sport allowed

• Lockdown-related legislation in place o Current legislation allows tenants not to pay the rent during

lockdowns in exchange for extending the contract by 6 months plus the time of closure for each lockdown - tenants that do not elect this option will be required to pay the rent for the time of lockdown

• Poland offering economic support to companies, both from national and EU funds

o €70 billion from Polish governmental aid aimed at stimulating the economy and providing financial support to companies

o €173 billion in grants and loans from European Union economicrecovery fund and a 7-year EU budget

COVID-19 UPDATE

Annual results 2020 | COVID-19 & economic update |

Polish economy is in a good shape and has capacity for further stimulus

Resilient macro environment

(9)

• Salary growth expected to continue despite pandemic

• Unemployment expected to reduce again to record low levels and reach 3.5% in 2021

• Wage growth and unemployment expected to continue to outperform EU average

European Union

Euro area

Belgium

Bulgaria

Czechia

Denmark

Germany

Estonia*

Ireland

Greece**Spain

FranceCroatia Italy

Cyprus

Latvia

Lithuania

Luxembourg

Hungary*MaltaNetherlands

Austria

Poland

Portugal

RomaniaSlovenia

Slovakia

FinlandSweden

UK***Norway*

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0% 25% 50% 75% 100% 125% 150% 175% 200% 225%

Une

mpl

oym

ent

rate

(Dec

. 202

0)

Quarterly government debt as a percentage of GDP (Q3 2020)*unemployment as of Nov. 2020 **unemployment as of Oct. 2020 ***unemployment as of Sept. 2020

Source: Eurostat – January 2021


3,877 4,004 4,151 4,291 4,5284,835

5,182 5,3175,583

6,119

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2013 2014 2015 2016 2017 2018 2019 2020 (f) 2021 (f) 2022 (f)

Average monthly salary (PLN)

Aver

age

mon

thly

sala

ry(P

LN)

Une

mpl

oym

entr

ate

Wages have proved resilient and low unemployment stable

Resilient macro environment

Source: Statistics Poland, National Bank of Poland, Oxford Economics - January 2021 (10)

10,3%

2,7%

12,0%

8,5%

0%

2%

4%

6%

8%

10%

12%

14%

Unemployment rate in Poland Unemployment rate in Eurozone

• Salary growth expected to continue despite the pandemic

• Unemployment expected to reduce again to record low levels and reach 2.7% in 2022

• Wage growth and low unemployment expected to continue and outperform EU average

GDP growth forecast 2020 – 2022 (%)

European and UK macro outlook

EU-14 & UK average

0.9%


0.9

0.7

0.6

0.5

0.3

0.6 0.6

2.5

0.0

1.8

0.9

0.9

0.4

1.0

0.3

1.2

1.8

1.1

1.1

2.3

1.2

0.4

Source: Oxford EconomicsDecember 2020

GDP growth forecast 2020 – 2022 (%)

European and UK macro outlook


Poland expected to outperform European

peers

1.8%

Source: Oxford Economics– December 2020

0.9

0.7

0.6

0.5

0.3

0.6 0.6

2.5

0.0

1.8

0.9

0.9

0.4

1.0

0.3

1.2

1.8

1.1

1.1

2.3

1.2

0.4


Retail rebounding as restrictions ease Macro & market summary

(13)

• Poland manages the vaccination process well, with a growing number of the population vaccinated,this should support dynamic recovery of the economy in the coming months

• E-commerce penetration is growing during lockdowns and declines sharply as customers return to shopping centres - a clear indication that consumers long for in-store shopping

• Poland remains economically stable and is well positioned for further growth with low unemployment and rising wages

• The Polish real estate market is the largest and most liquid in the CEE and continues to see rising interest from investors

Operational review

MICHAŁ ŚWIERCZYŃSKIMember of the BoardAsset Management

Annual results 2020 | Operational review | (14)

WARSAW

ZAMOSC

PRZEMYSL

CZELADZ

KIELCE

ZABRZE

BELCHATOW

LODZ

POZNAN

JELENIAGORA

KLODZKO

KRAKOW

KALISZ

Berlin

Dresden

Prague

Brno

Lviv

Munich

Gdansk

WROCLAW

SZCZECIN

INOWROCLAW

WLOCLAWEK

LOMZADEVELOPMENT PROJECT

1RETAIL ASSETS

25

POZNAN

RADOM

CZESTOCHOWABYTOM

M2 RETAIL GLA> 900 000


Top assets in affluent retail destinations

Solid portfolio

OFFICES

6

120 million footfall portfolio

Stable and improving KPI’s YoY since 2015 with near 100% occupancy

Historical debt collection ratio of 99.5%

Annual results 2020 | Operational review |

Section 2

Tenant mix (1)

International tenantsPolish chain tenants Local tenants

50%41%

9%

Consistently high occupancy

Occupancy (%) Retail Retail WALT: [5.3] years (1)

Strong track record outperforming the market – tenant turnover

98.4 98.4 98.6 99.1 99.4 99.1 99.2 96.0

FY16 HY'17 FY'17 HY'18 FY'18 HY'19 FY'19 FY'20

2% 2%

-1%

1%

3%

7%

1%

5%

-2%

0%

2%

4%

6%

8%

2016 2017 2018 2019Polish Council of Shopping Centres EPP

(16)(1) by GLA as at 31 December 2020

Fashion & Accessories

43%

Food / Groceries / Supermarkets

16%

Entertainment

11%Health & Beauty

6% Household appliances & Accessories

7%Speciality Goods

5%Electronics

6%Food Court,

Restaurants & Caffe

3%Other

1%Services

2%

Track record of outperforming the market

74%

75%

73%

74%

75%

76%

Percentage in 2020 vs. 2019PRCH EPP

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=&url=http://www.auchangdansk.pl/pl/zakupy/mapa-centrum&psig=AOvVaw1bcnbV3waiz2ZJXoYk9KMn&ust=1521661575164403


100% 104%

44%

15%

53%

69%78% 78%

84%

70%

41%

65%

35%

71%

103% 106%

36% 36%

69%

82%

93% 97%89%

79%

37%

77%

January2020

February2020

March2020

April2020

May2020

June2020

July2020

August2020

September2020

*October2020

November2020

December2020

January2021

February2021

(17)* October – Increase in COVID-19 case numbers and restrictions imposed on F&B & fitness Source: Company data, February 2021

Strong rebounds post lockdowns Strong footfall and turnover recovery

First lockdown14 March to 3 May

21 % GLA operational

F&B & entertainment operating

Third lockdown28 December – 31 January

30% GLA operational

F&B and entertainment non-operating

Second lockdown7-27 November

30% GLA operational

Footfall Turnover


Categories performance since May2020 vs the same period in 2019 (%) (a)

Electronics +2%

Household & appliances +1%

Speciality goods (b) -12%

Health & beauty -12%

Food & groceries -12%

Fashion & accessories -18%

(18)Source: Company data, February 2021

Consistently high conversion rates Strong rebounds post lockdowns

(a) Excluding November(b) Speciality goods: gifts, jewellery, pet stores, sport equipment, luggage, etc.

53%

65%71%69%

77%

May 2020 December 2020 February 2021

Footfall Turnover


Work continuing in the challenging times Asset management initiatives

(19)

Footfall growth of 23% YoY | 6 new brands | Tenant mix tailored to clients’ expectations

Olympia shopping centre



(20)





(21)




Work continuing in the challenging times Asset management initiatives Olympia

shopping centre


New store openings


5.60% 5.60%

8.10%

11.90%

9.10%

7.70%

6.50%6.10%

6.80%7.30%

11.40%

9.10%

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

Jan 2020 Feb 2020 Mar 2020 Apr 2020 May 2020 Jun 2020 Jul 2020 Aug 2020 September October November December

Share of e-commerce in total retail sales (%)

Source: Statistics Poland, January 2021

Swift return of customers to centres post lockdowns

E-commerce in Poland in 2020

(24)

First lockdown14 March to 3 May

Second lockdown7 to 27 November


Online embraces offline

Quick, accessible and efficient

Customers prefer to touch and feel products – better experience

Click-and-collect is a key driver for additional in-store sales

Traditionalretail

E-commerce

Omni-channelClick-and-collect

E-commerce in Poland Enhances in-store sales

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=&url=http://www.auchangdansk.pl/pl/zakupy/mapa-centrum&psig=AOvVaw1bcnbV3waiz2ZJXoYk9KMn&ust=1521661575164403


Click-and-collect

Omni-channel at EPP’s shopping centres

(26)


• Well established shopping centres driving clients and tenants demand

• Strong recovery post-lockdown periods

• Secure KPI’s despite the pandemic

• Continued tenants interest RETAIL WALT (years)

May 2020 4.7 years

5.3

FOOTFALL

as % of 2019 (Jun – Sep)

80%TENANT TURNOVER

as % of 2019 (Jun – Sep)

90%

98%DEBT COLLECTION RATIO

(Jul to Sept 2020)

Key operational takeaways

(27)

Financial review

JACEKBAGIŃSKICFO

Annual results 2020 | Financial review | (28)

Annual results 2020 | Financial review |

€ million FY 2020 FY 2019 Movement Change (%)

Net operating income (1) 110.8 148.3 (37.5) (25.2%)

Administration costs (13.7) (15.7) 2.0 (12.7%)

EBITDA 97.1 132.6 (35.5) (26.7%)

Interest expense (2) (38.3) (35.6) (2.7) 7.6%

Current taxation (3.1) (9.8) 6.7 (68.4%)Joint-ventures (3) 2.0 4.4 (2.4) (54.6%)Antecedent dividend 0 2.8 (2.8) (100%)

Distributable earnings 50.5 105.5 (55.0) (52.2%)

No. of shares (‘million) 907.9 907.9 0 0

Distributable earnings per share (€cents) 5.56 11.62 (6.06) (52.2%)

1) includes net property income, other income and other expenses

2) finance expenses excluding IFRS amortised cost valuations, IFRS 9 remeasurements

Earnings in line with guidance but signficantly impacted by COVID-19Snapshot of income statement

(29)

3) operating profit of joint-ventures, excluding fair value remeasurements, deferred taxes and other

• Net operating and JV income was negatively impacted by almost €40 million as a result of the legally enforced lockdowns of approx. 10 weeks and rental concessions granted

• Operational and administrative costs were optimised

• Interest increased as a result of increased utilisation of corporate debt facilities

• Lower current income tax due to lower earnings and exemption from application of GAV tax until end of 2020


€ million FY 2020 FY 2019 Movement Change (%)

Investment properties 2 125 2 321 (196) (8.4%)

Investment in JVs 162 171 (9) (5.3%)

Cash and cash equivalents 152 67 85 126.9%

Total assets 2 476 2 606 (130) (5.0%)

Bank borrowings 1408 1 325 83 6.3%

Net asset value excl. deferred tax 987 1 196 (209) (17.5%)

No. of shares (‘million) 907.9 907.9 0 0%

NAV per share (€euro) 1.09 1.32 (0.23) (17.5%)

Cost of debt 2.6% 2.5% 0 0.1%

Hedging 84% 84% 0 0%

Loan to value (net) 54.8% 50.0% 4.8 pp

Balance sheet stableSnapshot of financial position

(30)

Annualised yield of the portfolio

6.9%

• Valuations declined by 8.4% on like for like basis as a result of o Exit cap rates increased

by 25 bpso Discount rates increased

by 10 bps• Cash balances increased as

result of drawdown of available corporate facilities and retention of H2 2019dividend and 2020 earnings

• Bank borrowings increased as a result of utilisation of corporate debt facilities

• NAV decline as a result of property devaluations


67.0%

55.0%

47.4%

51.9%50.0%

54.8%

Average LTVcovenant

2016 2017 2018 2019 2020

Net LTV as at 31 December 2020

Stable and liquid Liquidity position

(31)

• Cash on hand of €152 million

• LTV has increased as result of utilisation of debt facilities and devaluation of property values

• Limited debt maturities over the next 12months and well capitalised for the period ahead

• Average LTV covenant level for the period was 67% with sufficient headroom remaining

• Post the acquisition of the Metro tranche 3 acquisition LTV is expected to increase by 2 pp and cash on hand declines to €88 million

0

200

400

600

800

1000

2021 2022 2023 2024 2024>

Debt maturity profile € millionas at 31 December 2020

WADM 2.3 years

– 11 loans2022– 12 loans2023

Outlook & guidance

Annual results 2020 | Outlook & guidance | (32)

Annual results 2020 | Outlook & guidance |

Power Park acquisitionMetro tranche 3

(33)

• EPP is about to purchase tranche 3 at a reduced price of €106 million

• The deal is financed out of cash in hand and EUR 45m of debt – post the transaction group LTV is expected to increase by 2 pp.

• New Auchan leases concluded increasing the WALT of the investment to 8 years providing long term income certainty

• Transaction is earnings accretive with a reversionary yield of c7.5% (after Metro master lease expires)

Annual results 2020 | Outlook & guidance |

Approach• Targeting a single or group of assets to be selected

across the current portfolioStructure

• Direct sales‚ or stake-sales with EPP remaining as active asset manager to benefit from EPP’s platform and expertise

Execution• Dedicated industry veteran recruited to drive the

disposal process• Support from in house expertise with a successful track

record of managing assets • Dedicated JV team already in place

Timing• 18 – 24 months


Disposal programme


Operations• Consistently high

conversion rates seen post lockdowns with tenant sales exceeding footfall recovery

• EPP continues with high occupancy and good debt collection ratios

• WALT now substantially extended

Strategy• Target to reduce LTV

materially over the next 18-24 months, predominantly via asset recycling

• Progress with omni-channel, click-and-collect and other initiatives in order to boost footfall, turnoverand revenue at EPP shopping centres

Finance• The business is prudently managed and can meet all its

financing needs

• Appropriate headroom in financial covenants of its debt portfolio

Retail market• Customers are eager

to visit centres and physical shopping remains most favoured form of shopping for Poles

• EPP has well-positioned and attractive assets that will benefit significantly from the broader reopening of the economy

Economy • GDP growth is expected

to be above average in the EU

• Progress of thevaccination programme should further facilitate the recovery

• Poland continues to be one of the most attractive investmentmarkets in Europe

Key takeaways

Dividends • Dividend decisions dependent on progress made with

disposals, refinancing of the 2022 debt and overall improvement of capital structure

Annual results 2020 | Outlook & guidance | Annual results 2020 | Outlook & guidance | (36)

2021 DEPS guidance

€7 to €7.25 cents

Assumptions • The Polish economy continues its

recovery and the vaccination programme progresses as planned

• No significant tenant failures occur • No further lockdowns occur that will

have a material impact on the operations of shopping centres

Thank you

This document has been prepared and issued by and is the sole responsibility of the management of EPP N.V. (the “Company” or “EPP”) andits subsidiaries. No information made available in connection with this presentation may be passed on, copied, reproduced, in whole or in part,or otherwise disseminated, directly or indirectly, to any other person.

This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase orsubscribe for, any securities of the Company nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on inconnection with, any contract commitment or investment decision in relation thereto nor does it constitute a recommendation regarding thesecurities of the Company. Investors and prospective investors in securities of the Company are required to make their own independentinvestigation and appraisal of the business and financial condition of the Company and the nature of the securities.

This presentation and any materials distributed in connection with this presentation may include certain forward-looking statements, beliefs oropinions, including statements with respect to the Company’s business, financial condition and results of operations. These statements, whichcontain the words “anticipate”, “believe”, “intend”, “estimate”, “expect”, “forecast” and words of similar meaning, reflect the managementbeliefs and expectations and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in thefuture. No representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved.There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by thesestatements and forecasts. Past performance of the Company cannot be relied on as a guide to future performance. Forward-lookingstatements speak only as at the date of this presentation and the Company expressly disclaims any obligations or undertaking to release anyupdate of, or revisions to, any forward-looking statements in this presentation. No statement in this presentation is intended to be a profitforecast. As a result, you are cautioned not to place any undue reliance on such forward-looking statements. The information on which thesestatements has been based has not been reviewed or reported by EPP’s auditors.

This document speaks as of the date hereof. No reliance may be placed for any purposes whatsoever on the information contained in thisdocument or on its completeness, accuracy or fairness. The Company, its advisers and each of their respective members, directors, officersand employees are under no obligation to update or keep current the information contained in this presentation, to correct any inaccuracieswhich may become apparent, or to publicly announce the result of any revision to the statements made herein except where they would berequired to do so under applicable law, and any opinions expressed in them are subject to change without notice. No representation orwarranty, express or implied, is given by the Company, or any of its subsidiary undertakings or affiliates or directors, officers, any of itsdirectors or employees or any other person as to the fairness, accuracy or completeness of the information or opinions contained in thispresentation and no liability whatsoever for any loss howsoever arising from any use of this presentation or its contents otherwise arising inconnection therewith is accepted by any such person in relation to such information.

Disclaimer

Annual results 2020 | Disclaimer |

EPP IR Contact details

Curwin RittlesPoland - Warsawe-mail: [email protected]

Michèle MackeySouth AfricaSingular Systems IRe-mail: [email protected]

www.epp-poland.com

Annual results 2020 | Contact |

Documents

PowerPoint Presentationfile,171_epp-annual...visible in EPP’s shopping centres Country update • Poland was one of the least impacted economies in Europe in 2020 with GDPdown only