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Deutsche EuroShop AG's H1 2004 according to plan

ss=fontstyle>- Sales up 4.9 %
- Income from investments up 40 %
- Free cash flow up 8 %
- Consolidated net income Euro 0.75 million

Hamburg, 17 August 2004 - The first half of Deutsche EuroShop's (ISIN: DE0007480204) FY 2004  went according to plan. Despite considerable expenses from investment activity the net income amounted to Euro 0.75 million (Euro 0.05 per share).

Sales up 4.9 % In the first half of 2004, sales rose by 4.9% year-on-year to Euro 25.5 million, as against sales growth of 4% in the first quarter of the current financial year. In particular, the modernisation of the Rhein-Neckar Zentrum in 2003 as well as the conclusion of a large number of new rental contracts and the increase in percentage rents at the Centro Commerciale Tuscia in Viterbo, Italy had a positive effect.

Income from investments up 40% The shopping centers in Dresden and Kassel generated appreciably higher income and the investments in Wroclaw and Pécs contributed to earnings for the first time. As a result, income from investees increased by 40% to Euro 5.1 million.

Expenses up Euro 2 million Other operating expenses rose by almost Euro 2 million year-on-year to around Euro 6.1 million due to investment expenses of around Euro 550 thousand relating to the Forum Wetzlar shopping center currently under construction, and expenses of Euro 1.6 million from the roof renovation work at the Centro Commerciale Friuli that was completed in mid-July.

Net interest income/expense impacted by construction period interest At Euro 1.3 million, interest income fell by around Euro 1.7 million year-on- year. This was caused by substantial capital expenditure and the investment of cash and cash equivalents in money market funds. However, the sale of shares in money market funds resulted in price gains of around Euro 0.5 million, which are reported under other operating income and are equivalent to interest income. Interest expenses increased by Euro 0.9 million to Euro 10.3 million due to construction period interest for Forum Wetzlar, which is currently under construction.

Net income for the period totals Euro 0.75 million The result from ordinary activities fell by Euro 1.6 million year-on-year to Euro 4.4 million. Euro 1.4 million of this alone is accounted for by the Forum Wetzlar shopping center that is currently under construction. After the deduction of taxes and minority interests, the net income for the period amounted to Euro 0.75 million, compared with Euro 1.2 million in the prior-year period.

Outlook The management board expects a substantial improvement in the Group's earnings situation, due in particular to the sale of Centro Commerciale Friuli in mid- July 2004, which generated a book profit before taxes of around Euro 3.5 million.

The construction of the investment properties in Hamburg and Wetzlar is progressing as planned. The Phoenix-Center in Hamburg will be opened at the end of September 2004. All the retail space has been let; including the office space, a total of 96% has been pre-let. The letting activities are continuing apace at Forum Wetzlar, which is scheduled to open in spring 2005. 83% of the space had been taken up by the end of July. The construction of the City-Arkaden in Klagenfurt/Austria will be started within the next few days.

The management board is confident that a dividend of Euro 1.92 per share can be distributed for the financial year 2004. In the first half of 2004, the distributable free cash flow increased by around 8% year-on-year to Euro 16.2 million. The target of generating distributable free cash flow of Euro 30 million in financial year 2004 remains achievable from today's perspective.

Key Group Figures

in Euro million

01 Jan-30 June 2004

01 Jan-30 June 2003

Change

Sales

25.5

24.3

+5%

Income from investments

5.1

3.6

+40%

Net interest expense/income

-9.0

-6.4

-41%

Result from ordinary activities

6.0

4.4

+36%

Consolidated net profit for the period

0.75

1.2

-39%

EBITDA*

24.2

23.2

+4%

Earnings per share in Euro

0.05

0.08

-39%

30 June 2004

31 Dec. 2003

Total assets

978.1

980.7

Equity

504.8

535.7

Liabilities

442.8

417.1

Equity ratio

51.6%

54.6%


* including investment inco