Message from the Chairman of the Supervisory Board

	Chairman of the Supervisory Board Alain Hagelauer

In 2009, ANF showed its resilience, coming through this recession period in a business sector where the downturn was slower and to date not as strong as in other areas.

This performance was notably based on the balanced and diversifi ed nature of its real estate assets, which provide it with a real level of protection, but also on pushing forward with a strategy of ongoing economic and fi nancial development that is sustainable, profi table and prudent.

In addition, although the outlook for a recovery in the real estate market looks pretty grim for 2010 and not much brighter for 2011, the Company’s business model should continue to generate satisfactory levels of operating income.

So, for example, the hotel portfolio leased to the B&B budget hotel chain, which generates close to half of ANF’s revenue on a recurring basis and over half its operating margin is a key factor to long-term profi tability and helped consolidate appraisal values compared to the prior year.

Similarly, the city centre concentration of the real estate assets in Lyons and Marseilles in attractive locations and the quality product offering are further positives enabling the renewal of leases on better terms compared to prior rent levels.
As regards risks of fi nancial deterioration, while they clearly exist they have been well identifi ed and controlled by the Company’s teams, who manage them on a rigorous and systematic basis to correct or attenuate any negative effects. Our challenges include, for example, the relatively high vacancy rate in the Marseilles residential real estate assets, which it wasn’t possible to bring down over the year, but which didn’t rise either despite the worsening situation for tenants in terms of jobs and salaries. The positive, however, was that departures were offset by new rentals at higher rents, even if turnover was a little up on previous years.

It was the same story in the retail sector with few stores beating their revenue targets, something that would have triggered rent increase clauses. Thankfully closures were also few and far between and were quickly offset by the arrival of new tenants.

It should be emphasised that in this sector and with a view to underpinning store sales levels, ANF moreover regularly contributes to fi nancing various local promotional drives built around the major annual events, to reaffi rm its role as an active partner committed to the same retail development goal.



Managed in that way, ANF’s business model can be termed both defensive, by safely navigating challenging economic times, but also a generator of income and cash fl ow, making possible the pursuit of a selective and prudent growth strategy, the continued payout of a substantial dividend while keeping debt ratios amongst the lowest of listed real estate companies having published their results as of the date of fi ling of the Registration Document. It should thus be possible to fi nance and develop the major land reserves held by the Company on the best possible terms.

The Supervisory Board will continue to actively help and continually support ANF’s Executive Board and teams, who are effectively and dynamically taking the necessary actions in response to the weak and uncertain economic climate, while pushing forward with new developments, optimising asset rotation and providing a sustainable and profi table basis for the Company’s growth.