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DES GB2015 Englisch

MANAGEMENT SYSTEM, RESEARCH AND DEVELOPMENT The Executive Board of Deutsche EuroShop manages the Company in accordance with the provisions of German company law and with its rules of procedure. The Executive Board’s duties, responsibilities and business procedures are laid down in its rules of procedure and in its schedule of responsibilities. The management indicators are based on the targets of having shop- ping centers with sustainable and stable value growth and a high liquidity surplus generated by long-term leases. These indicators are revenue, EBIT (earnings before interest and taxes), EBT (earnings before taxes) excluding measurement gains/losses and FFO (funds from operations). The Supervisory Board supervises and advises the Executive Board in its management activities in accordance with the provisions of Ger- man company law and its rules of procedure. It appoints the members of the Executive Board, and significant transactions by the Executive Board are subject to its approval. The Supervisory Board comprises nine members, all of whom are elected by the Annual General Meeting. Members of the Executive Board are appointed and dismissed on the basis of sections 84 and 85 of the Aktiengesetz (AktG – German Public Companies Act). Changes to the Articles of Association are made in accordance with sections 179 and 133 of the AktG,and the Supervisory Board is also authorised, without a resolution of the Annual General Meeting, to adapt the Articles of Association to new legal provisions that become binding on the Company, as well as to resolve changes to the Articles of Association that only relate to the wording. More information about the Executive Board and the Supervisory Board can be found in the declaration on corporate governance. A research and development (R&D) report is not required as part of the Management Report because Deutsche EuroShop does not need or pursue any research and development in connection with its pri- mary business. Economic review MACROECONOMIC AND SECTOR-SPECIFIC CONDITIONS Germany’s gross domestic product (GDP) rose by 1.7% in 2015, ac- cording to the calculations of the German Federal Statistical Office. Positive stimuli came mainly from the domestic market, in the shape of increased consumer spending and higher capital expenditure. Ger- man foreign trade gained further momentum in 2015 (+5.4%) and also made a positive contribution to GDP growth. On the labour market, the positive trend of recent years also continued: on average, 2.8 million people were registered as unemployed during the year, putting the unemployment rate at 6.4%. Consumer prices in Germany rose by just 0.3% versus 2014, mainly caused by the fall in energy prices (-7.0%); taking energy prices out of the equation, the annual rate of increase in 2015 was +1.1%. In 2015, real employee pay rose by 4.0% according to the German Fed- eral Statistical Office. In an environment still marked by high employ- ment and very low interest rates, the propensity to consume rose again. In 2015, the savings rate reversed its long-standing downward trend, increasing slightly to 9.7% of disposable income (2014: 9.4%). Private consumer spending, which accounted for 54.0% of GDP, rose by 1.9% in 2015, adjusted for price changes. According to provisional calculations by the German Federal Statisti- cal Office, German retail sales posted nominal growth of 2.8% and real growth of 2.7% year-on-year. The rising importance of online retailing remains a major focus of at- tention in terms of sales growth in the bricks-and-mortar retail sector. According to figures from the German Retail Federation (HDE), online sales saw further above-average growth to around €41.7 billion, an increase of approximately 12%. The centers’ competitive position in the Deutsche EuroShop portfolio is determined with reference to both the shops in the relevant city centers and other shopping centers in the catchment area. The centers also have to compete with major regional city centers. For example, the city centers of Dortmund, Mannheim and Braunschweig are serious rivals to the Allee-Center in Hamm, the Rhein-Neckar-Zentrum in Viernheim and the City-Galerie in Wolfsburg respectively. There is additional competition for city center retail in the form of grow- ing numbers of factory and designer outlets on greenfield sites outside the city limits. A factory outlet in Brena, close to our center in Dessau, is scheduled to open in early 2016, and we are watching further pro- ject developments in Hamm and Wuppertal. MANAGEMENT REPORT 117

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