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ePaper created 2015-05-08, 10:57:20 | version 1.38.0
50 ANNUAL REPORT 2014Deutsche EuroShop INVESTOR RELATIONS Deutsche EuroShop is a trans- parent company that operates in accordance with a strategy geared towards long-term suc- cess. This focus on constancy is a key aspect of our corporate culture. Corporate Governance B ased on the legal and company-specific con- ditions governing the management of a listed company, we strive to promote the trust of investors, creditors, employees, business partners and the public in our management and supervision of our Company. This goal is consistent with the objec- tives of a demanding corporate governance system. In conformity with section 3.10 of the Deutscher Corporate Governance Kodex (Ger- man Corporate Governance Code) as well as section 289a (1) of the Handelsgesetzbuch (HGB – Ger- man Commercial Code), this dec- laration contains a report by the Executive Board, also on behalf of the Supervisory Board, on corpo- rate governance. Objectives and strategy The management focuses on invest- ments in high-quality shopping centers in city centers and estab- lished locations offering stable long- term value growth. Another key in- vestment target is the generation of high surplus liquidity from long- term leases in shopping centers, which is paid out to shareholders in the form of an annual dividend. In order to achieve these targets, the Company invests its capital in shop- ping centers in different European regions in accordance with the prin- ciple of risk diversification. Germa- ny is the main focus for investment. Indexed and turnover-linked com- Board, which notifies the Super- visory Board. The committees ad- vise on the development of the portfolio properties, their turnover trends, accounts receivable, occu- pancy rates, construction measures and liquidity, as well as investment cost trends for our new develop- ment projects. The sales trends and payment patterns of tenants are ob- served in detail so that consequences can be drawn from these wherever required. New investment opportunities are examined by the Executive Board and, if necessary, presented to the Supervisory Board at regular Super- visory Board meetings. Investment decisions are made by the Executive Board and then submitted to the Su- pervisory Board for approval within the framework of a decision paper. Moreover, the Executive and Su- pervisory Boards discuss develop- ments on the capital and credit mar- kets as well as the effects of these not only on the Company’s strategy but also in terms of raising equity and obtaining borrowed capital. The Supervisory Board and its committees also discuss other topi- cal issues with the Executive Board as required. Transactions requir- ing the approval of the Superviso- ry Board are discussed and resolved upon at the scheduled meetings. For transactions requiring ap- proval, teleconferences are also con- ducted with the Supervisory Board or its committees and circular reso- lutions are passed in writing. C mercial rents ensure that we achieve our high earnings targets. The Company may invest up to 10% of equity in joint ventures in shopping center projects in the early stages of development. New investments should be financed from a balanced mix of sources, and borrowing may not ac- count for more than 55% of financ- ing across the Group over the long term. As a general rule, long-term interest rates are fixed when loans are taken out or extended with the goal of keeping the duration (aver- age fixed interest period) at over five years. High-yield, stable portfolio Deutsche EuroShop AG holds a bal- anced, diversified portfolio of shop- ping centers in Germany and other parts of Europe. We focus our in- vestment activities on prime loca- tions in cities with a catchment area of at least 300,000 residents in order to guarantee a sustained high level of investment security. Seizing opportunities and maximising value In line with our buy and hold strat- egy, we consistently place greater importance on the quality and yield of our shopping centers than on our portfolio’s rate of growth. We moni- tor the market continuously and act as buyers when an opportunity aris- es. Short decision-making channels and considerable flexibility in terms of potential investment and financ- ing structures enable us to adapt to any competitive situation. At the same time, we are committed to op- timising the value of our portfolio’s existing properties. Tailored rent structure One key component of our leas- ing concept is a differentiated rental system. While individual owners in city centres are often concerned with achieving the highest possible rents for their property (which results in a monostructured retail offering), we ensure an attractive sector mix and long-term optimisation of our rental income through combined costing. The rent our lessees pay is dependent on their sector and turnover. Indexed minimum rents (based on the con- sumer price index) provide a guar- anteed minimum level of income for Deutsche EuroShop AG during economic slowdowns. The concept of shopping as an experience We have outsourced center manage- ment to an experienced external partner, Hamburg-based ECE Pro- jektmanagement G.m.b.H. & Co. KG (ECE). ECE has been designing, planning, building, letting and managing shopping centers since 1965. The company is currently the European market leader, with almost 200 shopping centers un- der management. We consider pro- fessional center management to be the key to the success of a shop- ping center. In addition to guaran- teeing standard opening hours and a friendly, bright, safe and clean environment, the center manage- ment can employ unusual displays, promotions and exhibitions to make shopping an experience. The 500,000 to 600,000 people who visit our 19 centers on average every day are fascinated by the variety of sectors represented but also by our wide range of car shows, casting shows, fashion shows and attrac- tions for children. As a result, the shopping centers become market places where there is always some- thing new and spectacular on offer. Working methods of the Execu- tive and Supervisory Boards The strategic orientation of the Company is coordinated between the Executive Board and the Su- pervisory Board, and the progress of strategy implementation is dis- cussed at regular intervals. The Ex- ecutive Board is required to inform the Supervisory Board regularly, promptly and in detail of business developments. The Executive and Supervisory Boards examine the Company’s net assets, financial po- sition and results of operations, as well as its risk management, regular- ly and in detail. In this context, the formal conditions for implement- ing an efficient system of managing and monitoring the Company are checked, as is whether the means of supervision are effective. The signif- icant factors affecting the business are determined by the Executive Declaration on corporate governance City-Arkaden, Klagenfurt, Austria