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DES GB2013 E

DEUTSCHEEUROSHOPANNUALREPORT2013/GROUPMANAGEMENTREPORT 125 FINANCIAL POSITION PRINCIPLES AND OBJECTIVES OF FINANCIAL MANAGEMENT For the purposes of financing its investments, Deutsche EuroShop uses the stock exchange to raise equity, as well as the credit and capital markets to borrow funds. Within the Group, both the individual property companies and Deutsche EuroShop AG borrow from banks and serve as bond issuers. Deutsche EuroShop’s credit standing has been shown to be advantageous when negotiating loan terms. The Group can also arrange its financing independently and flexibly. Loans and bonds are taken out in euros for all Group companies. In general, the use of equity and loans for investments should be equally weighted and the equity ratio in the Group (including third-party inter- ests) should not fall significantly below 45%. We finance our real estate projects on a long-term basis and also use derivative financial instruments to hedge against rising capital mar- ket rates. Hedging transactions are used to hedge individual loans. An available credit line enables Deutsche EuroShop to react quickly to investment opportunities. Any cash not needed is invested in time deposits for the short term until it is used for investments, to finance ongoing costs or to pay dividends. FINANCING ANALYSIS: IMPROVED INTEREST RATE CONDITIONS As at 31 December 2013, Deutsche EuroShop Group reported the following key financial data: 2013 2012 Change Total assets 3,394.9 3,347.6 +47.3 Equity (including third- party interests) 1,642.4 1,606.1 +36.3 Equity ratio (%) 48.4 48.0 0.4 Net financial liabilities 1,445.9 1,306.6 +139.3 Loan to value ratio (%) 43 41 2 At €1,642.4 million, the Group’s economic equity capital, which com- prises the equity of the Group shareholders (€1,428.9 million) and the equity of the third-party shareholders (€213.4 million), was €36.3 mil- lion higher than in the previous year. At 48.4%, the equity ratio was up slightly year-on-year. € MILLION 2013 2012 Convertible bond 93,556 91,943 Non-current bank loans and overdrafts 1,295,996 1,184,360 Current bank loans and overdrafts 97,207 191,298 Total 1,486,759 1,467,601 Cash and cash equivalents -40,810 -161,006 Net financial liabilities 1,445,949 1,306,595 Current and non-current financial liabilities rose from €1,467.6 million to €1,486.8 million in the year under review, an increase of €19.2 mil- lion. At the same time, cash and cash equivalents dropped €120.2 mil- lion, pushing net financial liabilities up €139.4  million, from €1,306.6 million to €1,445.9 million. Following the takeover of the Altmarkt-Galerie Dresden and its subsequent consolidation, financial liabilities added €187.1 million, while loans amounting to €109.9 mil- lion were deconsolidated. Meanwhile, loans amounting to €59.7 million were repaid. During the year under review, 13 existing loans taken out to finance the Main-Taunus-Zentrum were replaced by a new loan in the amount of €220.0 million. Whereas the average residual maturity when the loans were replaced was 0.9 years with average interest at 3.88%, the new loan was taken out for 10 years at an interest rate of 2.99%. As a result, we have again significantly improved the maturity and interest rate structure of our loan portfolio. The net financial liabilities existing at the end of the year are used exclusively to finance non-current assets. As a result, 43% of non- current assets were financed by loans in the year under review. The Group has access to a credit line in the amount of €150 million until end-2016. As at the balance sheet date, €77.0 million had been drawn down. Net debt finance terms (including the convertible bond) as at 31 December 2013 remained fixed at 3.88% p.a. (2012: 4.25% p.a.) for an average residual maturity of 7.0  years (6.4  years). Deutsche EuroShop maintains credit facilities with 21 banks, all of which are German banks. FINANCIAL LIABILITIES IN € THOUSAND

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