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Business and Economic Conditions OPERATING ACTIVITIES Deutsche EuroShop AG is the only public company in Germany to invest solely in shopping centers in prime locations. On 31 Decem- ber 2012, it had investments in 20 shopping centers in Germany, Aus- tria, Poland and Hungary. The Group generates its reported revenue from rental income on the space which it lets in the shopping centers. GROUP’S LEGAL STRUCTURE Due to its lean personnel structure, the Deutsche EuroShop Group is centrally organised. The parent company, Deutsche EuroShop AG, is responsible for corporate strategy, portfolio and risk management, financing and communication. The Company’s registered office is in Hamburg. Deutsche Euro- Shop is an Aktiengesellschaft (stock corporation) under German law. The individual shopping centers are managed as separate companies and, depending on the share of nominal capital owned, are either fully or proportionally consolidated or accounted for using the equity method. More information on indirect or direct investment is detailed in the notes to the consolidated financial statements. Deutsche EuroShop shares are traded on the Frankfurt Stock Exchange and other exchanges. As of 31 December 2012, 9.57% of shares were owned by Alexander Otto (2011: 10,0%). The share capital amounts to €53,945,536.00 and is composed of 53,945,536 no-par value registered shares. The notional value of each share is € 1.00. According to section 5 of the Articles of Association, the Executive Board is authorised, with the approval of the Supervisory Board, to increase the share capital by up to a total of € 12,226,331.00 on one or several occasions until 16 June 2015 by issuing up to 12,226,331 (no-par value) registered shares against cash or non-cash contributions (“Authorised capital 2010”, as of 31 December 2012). The Executive Board is authorised, with the Supervisory Board’s approval, to issue, until 15 June 2016, convertible bonds with a total nominal value of up to € 200,000,000 and a maximum term of ten years and to grant the holders of the respective, equally privileged, bonds conversion rights to new no-par value shares in the Com- pany up to a total of 10,000,000 shares (€ 10.0 million), as detailed in the terms and conditions for convertible bonds (“Bond condi- tions”; “Conditional capital 2011”). The convertible bonds may also pay a variable rate of interest, in which case, as with a participating bond, the interest may be dependent in full or in part on the level of the Company’s dividend. In November 2012, Deutsche EuroShop issued a convertible bond with a five-year term and a nominal value of € 100,000,000, for which some 2.8 million no-par shares are cur- rently reserved in conditional capital. GOVERNANCE AND SUPERVISION The Executive Board of Deutsche EuroShop manages the Company in accordance with the provisions of German company law and with its rules of procedure. The Executive Board’s duties, responsibilities and business procedures are laid down in its rules of procedure and in its schedule of responsibilities. The Supervisory Board supervises and advises the Executive Board in its management activities in accordance with the provisions of Ger- man company law and the rules of procedure. It appoints the mem- bers of the Executive Board and significant business transacted by the Executive Board is subject to its approval. The Supervisory Board is composed of nine members, all of whom are elected by the Annual General Meeting. Members of the Executive Board are appointed and dismissed on the basis of sections 84 and 85 of the Aktiengesetz (AktG – German Public Companies Act). Changes to the Articles of Association are made in accordance with sections 179 and 133 of the AktG; the Supervisory Board is also authorised to amend the Articles of Association in line with new legal provisions that become binding on the Company as well as to resolve changes to the Articles of Association that only relate to the wording without a resolution of the Annual General Meeting. More information about the Executive Board and the Supervisory Board can be found in the declaration on corporate governance. DECLARATION ON CORPORATE GOVERNANCE The declaration on corporate governance, in conformity with section 3.10 of the Deutscher Corporate Governance Kodex (German Corpo- rate Governance Code) as well as section 289a (1) of the Handelsge- setzbuch (HGB – German Commercial Code), has been published on the Deutsche EuroShop website at www.deutsche-euroshop.de/ezu. GROUP MANAGEMENT REPORT { 120 } DES ANNUAL REPORT 2012 Business and Economic Conditions

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