FINANCIAL STATEMENTS 3Corporate financial statements as of December 31, 2017 Note 1 Significant events 1.1 Changes in debt A technical loss of €557.8 million was recognized following the Corio SAS merger. This amount corresponds to the difference between the Klépierre raised circa €1.4 billion of new financing in both the bond transferred carrying net asset value of Corio SAS of €197.4 million and and the banking markets. These transactions mainly aimed at both the net book value of Corio SAS equities in the records of Klépierre SA replacing former debts which fell due during the first half and financing canceled for €755.2 million. This technical loss, justified by unrealized future development needs. They are detailed below: capital gains, was allocated in long-term financial investments for an In February 2017, Klépierre issued €500 million worth of new long-term amount of €526.7 million and in the accounts to tangible assets for notes (10 years) bearing a 1.375% coupon. Shortly after, this issuance an amount of €31.0 million. was complemented by a €100 million tap. This issuance allowed to cover the repayment of €615 million of 4% notes maturing in April 2017. 1.3 Payment of dividends In April 2017, Klépierre signed two revolving credit facilities (five years) On April 18, 2017, the shareholders’ meeting approved the payout for an aggregate amount of €200 million. Simultaneously, €200 million of a €1.82 per share dividend in respect of the 2016 fiscal year, and of more expensive and shorter lines was cancelled. In the meantime, proposed a cash payment. Cash dividend paid by Klépierre in 2017 agreements were found with two banks in order to extend €175 million totaled €562 million (excluding dividends for treasury shares). of undrawn facilities to 2022. At the end of June 2017, Klépierre received banking syndicate 1.4 Disposal of Charras real estate assets approval to extend the €850 million syndicated revolving credit facility in Courbevoie signed last year for an additional year. The new final maturity on this line is now July 2022. The Charras shopping centre located in Courbevoie was sold on In December 2017, Klépierre issued €500 million in new 15-year bonds. January 31, 2017 for a sale price of €13.7 million. The coupon was set at 1.625%. This issue covers the refinancing of the bond issue maturing in January 2018 for €291 million. 1.5 Share buyback program Klépierre also partially repurchased three existing bonds maturing On March 13, 2017, Klépierre announced a share buy-back program of in September 2019, February 2021 and March 2021 for a total of its shares up to an aggregate amount of €500 million. All repurchased €97 million. shares will be cancelled. At December 31, 2017, the number of shares 1.2 Internal restructuring repurchased was 9,761,424 for €350.0 million excluding fees and taxes. On March 13, 2017, Klépierre SA completed the merger with Corio SAS, 1.6 Acquisition of equity investments in order to enhance Group legal structure. On May 22, 2017, Klépierre acquired the shares of Nueva Condo The merger was carried out on the basis of net book values with Murcia, a company holding the assets of Nueva Condomina for retroactive accounting and tax effects as of January 1, 2017. €124.1 million. From tax perspective, this merger was completed under the On December 2017, Klépierre acquired the shares of Principe Pio preferential treatment for mergers provided in Articles 208-C and Gestion SA held by Corio Real Estate SL for €180 million and the 210-A of the French General Tax Code (corporate income tax). shares of Klécar Foncier España SLU held by Klécar Foncier Iberica SLU for €192.7 million. Note 2 Accounting principles and measurement methods 2.1 Application of accounting conventions 2.2 Measurement methods The corporate financial statements for the period ended December 31, 2.2.1 Fixed assets 2017, have been prepared in accordance with the general chart of accounts. Property, plant and equipment and intangible assets are recognized General accounting conventions have been applied in compliance with as assets when all the following conditions are met: the following principles: > it is probable that future economic benefit associated with the item > prudence; will flow to the entity; > independence of fiscal years; > their cost or value can be measured reliably. > compliance with the general rules applying to the preparation and At the recognition date, asset values are measured either at their cost presentation of corporate financial statements, and on the basis of acquisition or their cost of construction. of going concern. Financial interest relating specifically to development of fixed assets No changes were made to methods or estimations during the fiscal is included in their acquisition cost. year, except for the first application of the new rules for the recognition on financial instruments and hedge transactions (see notes 2.7 and 2.8 below). 136 KLÉPIERRE 2017 REGISTRATION DOCUMENT