DES GB2015 Englisch

The possibility cannot be completely excluded that, due for example to a deterioration in the Company’s results of operations, banks may not be prepared to provide refinancing or to extend credit lines. We mon- itor the interest rate environment closely so as to be able to react ap- propriately to interest rate changes with alternative financing concepts or hedging if necessary. With average interest rates at 3.69% (2014: 3.76%), this does not currently represent a significant risk within the Group, particularly as the most recent refinancing was concluded at much lower interest rates than the original financing and the present average interest rate. Deutsche EuroShop AG uses derivatives that qualify for hedge account- ing 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 repay- ment dates, and the basis of calculation used to determine the interest rates are identical for the hedge and the underlying transaction and the party to the contract fulfils the contract. Interest rate swaps and the underlying transaction are reported as one item in the consolidated financial statements. 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 managed network solution. Corrective and preventive maintenance of the system is carried out by an external service provider. A virus pro- tection concept and permanent monitoring of data traffic with respect to hidden and dangerous content are designed to protect against ex- ternal attacks. All data relevant to operations is backed up on a daily basis on multiple storage media. In the event of a hardware or soft- ware 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 day-to-day business. Legal risk The concept for our business model is based on the current legal sit- uation, administrative opinion and court decisions, all of which may change at any time, however. The Company is not currently aware of any legal risks that could have a major impact on its assets or results of operations. EVALUATION OF THE OVERALL RISK POSITION On the basis of the monitoring system described, Deutsche Euro- Shop AG has taken appropriate steps to identify developments that could jeopardise its continued existence at an early stage and to coun- teract them. The Executive Board is not aware of any risks that could jeopardise the continued existence of the Company. Allee-Center, Magdeburg MANAGEMENT REPORT 132 Deutsche EuroShop AG Annual Report 2015

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