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ePaper created 2014-04-29, 17:58:02 | version 1.30.00
DEUTSCHEEUROSHOPANNUALREPORT2013/GROUPMANAGEMENTREPORT 133 Deutsche EuroShop AG uses derivatives that qualify for hedge accounting to hedge interest rate risks. These interest rate swap transactions transform variable interest rates into fixed interest rates. An interest rate swap is an effective hedge if the principal amounts, maturities, repricing or repayment dates, interest payment and principal repayment dates, and the basis of calculation used to determine the interest rates are identical for the hedge and the under- lying transaction and the party to the contract fulfils the contract. Interest swaps and the underlying transaction are reported as one item. Financial instruments are not subject to liquidity or other risks. The Company counters the risk of default by stringently examining its contract partners. A test of effectiveness for the hedges described is implemented regularly. RISK OF DAMAGE The property companies bear the risk of total or partial destruction of the properties. The insurance payouts due in such a case might be insufficient to compensate fully for the damage. It is conceivable that insurance cover is not sufficient for all theoretically possible losses or that the insurers may refuse to provide compensation. IT RISK Deutsche EuroShop’s information system is based on a centrally man- aged network solution. Corrective and preventive maintenance of the system is carried out by an external service provider. A virus protec- tion concept and permanent monitoring of data traffic with respect to hidden and dangerous content are designed to protect against exter- nal attacks. All data relevant to operations is backed up on a daily basis. In the event of a hardware or software failure in our system, all data can be reproduced at short notice. PERSONNEL RISK Given the small number of employees of Deutsche EuroShop AG, the Company is dependent on individual persons in key positions. The departure of these key staff would lead to a loss of expertise, and the recruitment and induction of new replacement personnel could tem- porarily impair ongoing day-to-day business. LEGAL RISK The concept for our business model is based on the current legal situation, administrative opinion and court decisions, all of which may change at any time, however. EVALUATION OF THE OVERALL RISK POSITION On the basis of the monitoring system described, Deutsche EuroShop has taken appropriate steps to identify developments that could jeop- ardise its continued existence at an early stage and to counteract them. The Executive Board is not aware of any risks that could jeop- ardise the continued existence of the Company.