DEUTSCHEEUROSHOPANNUALREPORT2013/CONSOLIDATEDFINANCIALSTATEMENTS 181 CURRENCY AND MEASUREMENT RISK The Group companies operate exclusively in the European Economic Area and conduct the greater part of their busi- ness in euro. This does not entail currency risks. A 25 bp change in a material parameter of real estate appraisals would have the following pre-tax impact on meas- urement gains/losses: Basis -0,25% +0,25% Rate of rent increases 1.70% -111.5 116.8 Discount rate 6.65% 104.7 -99.6 Cost ratio 10.90% 9.7 -9.7 INTEREST RATE RISK A sensitivity analysis was implemented to determine the effect of potential interest rate changes. Based on the finan- cial assets and liabilities subject to interest rate risk on the balance sheet date, this shows the effect of a change on the Group’s equity. Interest rate risks arose on the balance sheet date only for credit borrowed the associated interest rate hedges. An increase in the market interest rate of 100 basis points would lead to an increase in equity of €17,444 thou- sand (previous year: €19,112 thousand). The majority of the loan liabilities have fixed interest terms. On the reporting date, loans totalling €215,500 thousand (previous year: €194,651 thousand) were hedged using derivative financial instruments. CAPITAL MANAGEMENT The Group’s capital management is designed to maintain a strong equity base with the aim of ensuring that its ability to repay its debts and its financial well-being are maintained in the future. The Group’s financial policies are also based on the annual payment of a dividend. 31.12.2013 31.12.2012 Equity 1,642,371 1,606,090 Equity ratio (%) 48.4 48.0 Net financial debt 1,445,949 1,306,595 Equity is reported here including the redemption entitlements of shareholders. Net financial debt is determined from the financial liabilities on the balance sheet date less cash and cash equivalents. IN € MILLION € THOUSAND