DES GB2012 E

Reports not included A research and development (R&D) report is not required as part of the Management Report because Deutsche EuroShop does not need or pursue any research and development in line with its pri- mary business purpose. The Company’s business purpose, which is to manage assets, does not require procurement in the traditional sense. For this reason, this topic is not covered by a separate section of the Management Report. At the reporting date, Deutsche EuroShop AG employed only four peo- ple and therefore did not prepare a separate human resources report. Report on events after the balance sheet date No further significant events occurred between the balance sheet date and the date of preparation of the consolidated financial statements. Risks and opportunities manage– ment, internal control system PRINCIPLES Deutsche EuroShop’s strategy is geared towards maintaining and sus- tainably increasing shareholders’ assets as well as generating sustain- ably high surplus liquidity from leasing real estate, thereby ensuring that the shareholders can share in the success of the company over the long term through the distribution of a reasonable dividend. The focus of the risk management system is therefore on monitoring com- pliance with this strategy and, building on this, the identification and assessment of risks and opportunities as well as the fundamental deci- sion on how to manage these risks. Risk management ensures that risks are identified at an early stage and can then be evaluated, com- municated promptly and mitigated. Monitoring and management of the risks identified are the focus of the internal control system, which at Group level is essentially the responsibility of the Execu- tive Board. The internal control system is an integral part of the risk management system. Within the framework of their legal mandate for auditing the annual financial statements, the auditor checks whether the early warning system for risks is suitable for detecting at an early stage any risks or developments that might endanger the Company. Risk analysis involves the identification and analysis of factors that may jeopardise the achievement of objectives. The risk analysis pro- cess answers the question of how to deal with risks given ongoing changes in the environment, the legal framework and working con- ditions. The resulting control activities are to be embedded into pro- cesses that are essential to the realisation of business targets. KEY FEATURES Under existing service contracts, the Executive Board of Deutsche EuroShop AG is continuously briefed about the business performance of individual property companies. Financial statements and financial control reports are submitted on a quarterly basis for each shopping center, with medium-term corporate plans submitted annually. The Executive Board regularly reviews and analyses these reports, using the following information in particular to assess the level of risk: 1. Existing properties ¤ Trends in accounts receivable ¤ Trends in occupancy rates ¤ Retail sales trends in the shopping centers ¤ Variance against projected income from the properties 2. Centers under construction ¤ Pre-letting levels ¤ Construction status ¤ Budget status Risks are identified by observing issues and changes that deviate from the original plans and budgets. The systematic analysis of economic data such as consumer confidence and retail sales trends is also incor- porated into risk management. The activities of competitors are also monitored continually. { 133 } DES ANNUAL REPORT 2012 GROUP MANAGEMENT REPORT Reports not included

DES GB2012 E

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