Societe Fonciere Lyonnaise : Interim Financial Report – 30 june 2022

INTERIM FINANCIAL REPORT

Six months ended 30 June 2022

SFL 2022 INTERIM FINANCIAL REPORT - 1

OVERVIEW

1.	Interim Management Report	Page 3
2.	Risk Factors	Page 9
3.	Consolidated Financial Statements for the six months
	ended 30 June 2022	Page 12
4.	Statutory Auditors' Review Report	Page 45
5.	Statement by the Person Responsible	Page 47
	for the Interim Financial Report

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1. INTERIM MANAGEMENT REPORT

Board of Directors

On 7 April 2022, the following changes in the membership of the Board of Directors took place:

• Pere Viñolas Serra was appointed Chairman of the Board of Directors, to replace Juan Jose Brugera Clavero, who had reached the age limit of 75 and was required to step down as Chairman in accordance with Article 17, paragraph 2, of the Articles of Association, following the Annual General Meeting of 7 April 2022 at which he was re-elected as a director.
• Angels Arderiu Ibars, Carlos Fernandez-Lerga Garralda, Carlos Krohmer, Luis Maluquer Trepat, Nuria Oferil Coll and Anthony Wyand stepped down from the Board upon expiry of their terms.

Following these changes, as of 30 June 2022, the membership of the Board of Directors of SFL was as follows:

Chairman:

• Pere Viñolas Serra

Directors:

• Ali Bin Jassim Al Thani
• Juan José Brugera Clavero
• Carmina Ganyet i Cirera
• Arielle Malard de Rothschild
• Alexandra Rocca

Senior Management

At its meeting on 15 June 2022, the Board of Directors decided to appoint Dimitri Boulte as Chief Executive Officer to replace Nicolas Reynaud and to appoint Aude Grant to take over from Dimitri Boulte as Managing Director. These changes were effective on 1 July 2022.

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SFL - First-Half 2022 Results

A very active first half and record operating performance

The interim consolidated financial statements for the six months ended 30 June 2022 were approved by the Board of Directors of Société Foncière Lyonnaise on 25 July 2022, at its meeting chaired by Pere Viňolas Serra and attended by the new Chief Executive Officer.

These financial statements show a significant increase in all business indicators, the portfolio's appraisal value and the Company's NAV. First-half 2022 saw a record 21.1% increase in EPRA earnings per share, supported by strong 6.3% like-for-like growth in rental income. This performance, delivered in a more uncertain rental and investment market and an unsettled economic environment, demonstrates the relevance of SFL's business model, the growing polarisation of demand on inner Paris and the hard work of SFL's teams in the first half of the year.

Consolidated data (€ millions)

	H1 2022	H1 2021	Change
Rental income	98.0	86.1	+13.8%
Adjusted operating profit*	78.1	66.6	+17.3%
Attributable net profit	221.5	98.8	+124.3%
EPRA earnings	48.9	43.8	+11.6%
per share	€1.14	€0.94	+21.1%
* Operating profit before disposal gains and losses and fair
value adjustments
	30/06/2022	31/12/2021	Change
Attributable equity	4,442	4,387	+1.2%
Consolidated portfolio value excluding transfer	8,357	7,606	+9.9%
costs
Consolidated portfolio value including transfer	8,942	8,138	+9.9%
costs
EPRA NDV	4,666	4,375	+6.7%
EPRA NDV per share	€108.9	€102.1

A. Very robust first-half results and strong growth in key indicators

1. Sharply higher rental income, up 13.8% as reported (up 6.3% like-for-like)

First-half 2022 consolidated rental income amounted to €98.0 million versus €86.1 million for the same period of 2021, an increase of €11.9 million (up 13.8%):

• On a like-for-like basis (on revenue-generating surface areas, excluding all changes in the portfolio affecting period-on-period comparisons), rental income was €5.0 million higher (up 6.3%). The increase was primarily attributable to new leases signed in 2021 and 2022, mainly in the Edouard VII, 103 Grenelle and Washington Plaza properties, and to the effect of applying rent escalation clauses.

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• Rental income from units being redeveloped or renovated in the periods concerned was up by €4.3 million, reflecting delivery of the redeveloped 83 Marceau building and the signature of leases on several floors refurbished in 2020 and 2021, mainly in the Cézanne Saint-Honoré and Washington Plaza buildings.
• Finally, the acquisition of the Pasteur building in April 2022 generated a significant increase in rental income which more than offset the income lost on disposal of the 112 Wagram and 9 Percier buildings at the beginning of 2021. All told, the net impact of these changes in the portfolio on first- half 2022 rental income was a positive €2.5 million.

Operating profit before disposal gains and losses and fair value adjustments to investment property came to €78.1 million in first-half 2022 versus €66.6 million in the year-earlier period, a significant increase of 17.3%.

1. Portfolio appraisal value of approximately €8.4 billion excluding transfer costs at 30 June 2022
   (up 3.8% like-for-like)

The 3.8% like-for-like increase versus 31 December 2021 led to the recognition of positive fair value adjustments to investment property of €205.4 million in first-half 2022 compared with positive adjustments of €54.7 million in first-half 2021.

III. A record 21.1% increase in EPRA earnings per share compared to 2021

Net finance costs amounted to €13.8 million in first-half 2022 versus €14.8 million in the year-earlier period. The decline of €1.0 million primarily reflected the Group's lower average cost of debt, partly offset by an increase in average debt.

After taking account of these key items, EPRA earnings totalled €48.9 million in first-half 2022, versus €43.8 million in the year-earlier period. EPRA earnings per share stood at €1.14 in first-half 2022, up by a strong 21.1% from €0.94 in first-half 2021.

First-half 2022 attributable net profit came in at €221.5 million, versus €98.8 million in the same period of 2021.

B. First-half 2022 rental activity: SFL is reaping the full benefits of market polarisation

1. Intense leasing activity, with 100% of the office space in the Biome building pre-let, and a record high occupancy rate of 99.4%

Despite the sharp deterioration in the geopolitical and economic situation and contrary to the trends observed in other Paris region markets, the upturn in the Paris commercial property rental market observed in late 2021 continued in first-half 2022, particularly for high quality properties in prime locations. In this environment, the SFL Group signed leases on around 35,000 sq.m. of mainly office space in first-half

2022. Lease deals included:

• Biome, with the complex's 22,000 sq.m. of office space pre-let to La Banque Postale and SFIL; this was a benchmark transaction among the five over-20,000 sq.m. lease deals signed in the Paris region during the first half of the year;
• 103 Grenelle, with two new leases signed on a total of 2,700 sq.m.;
• Edouard VII, with leases signed on 2,700 sq.m., including one on a 1,700 sq.m. retail unit;

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