2 BUSINESS FOR THE YEAR 2.1 BUSINESS OVERVIEW 42 2.5 PARENT COMPANY EARNINGS 2.1.1 Economic environment 42 AND DISTRIBUTION 57 2.1.2 Retailer sales 42 2.5.1 Summary earnings statement for the parent company Klépierre SA 57 2.1.3 Gross rental income 43 2.5.2 Distribution 58 2.1.4 Net rental income 44 2.1.5 Contribution of assets 2.6 PORTFOLIO VALUATION 58 consolidated under the equity method 45 2.6.1 Property portfolio valuation 2.1.6 Shopping center business summary 46 methodology 58 2.6.2 Valuation 60 2.2 BUSINESS ACTIVITY BY REGION 47 2.2.1 France-Belgium (35.7% 2.7 FINANCIAL POLICY 62 of net rental income) 47 2.7.1 Financial resources 62 2.2.2 Italy (17.7% of net rental income) 48 2.7.2 Interest rate hedging 64 2.2.3 Scandinavia (15.6% 2.7.3 Cost of debt 64 of net rental income) 49 2.2.4 Iberia (9.9% of net rental income) 50 2.7.4 Financial ratios and rating 65 2.2.5 Central Eastern Europe (CEE) 2.8 EPRA PERFORMANCE INDICATORS 65 and Turkey (10.3% of net rental income) 50 2.8.1 EPRA Earnings 65 2.2.6 The Netherlands (4.5% 2.8.2 EPRA Net Asset Value of net rental income) 51 and Triple Net Asset Value 66 2.2.7 Germany (3.9% of net rental income) 52 2.8.3 EPRA Net Initial Yield and 2.2.8 Other retail properties (2.4% “Topped-up” Net Initial Yield 67 of net rental income) 52 2.8.4 EPRA Vacancy rate 67 2.8.5 EPRA Cost ratio 68 2.3 CONSOLIDATED EARNINGS 2.8.6 EPRA Capital expenditure 68 AND CASH FLOW 53 2.3.1 Consolidated earnings 53 2.9 EVENTS SUBSEQUENT 2.3.2 Change in net current cash flow 54 TO THE ACCOUNTING CUT-OFF DATE 69 2.9.1 Interest rate hedging operations 69 2.4 INVESTMENTS, DEVELOPMENT, 2.9.2 Share buyback program 69 AND DISPOSALS 55 2.4.1 Investment market 55 2.9.3 Disposals 69 2.4.2 Capital expenditure 55 2.10 OUTLOOK 69 2.4.3 Development pipeline 55 2.4.4 Disposals 57 2.4.5 Financial investments 57 KLÉPIERRE 2017 REGISTRATION DOCUMENT 41