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DES - Online Annual Report 2009


Market risks

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Market risks

Liquidity risk

The liquidity of the Deutsche EuroShop Group is continuously monitored and planned. The subsidiaries regularly have sufficient cash to be able to pay for their current commitments. Furthermore, credit lines and bank overdrafts can also be utilised at short notice.

The contractually agreed future interest and principal repayments of the original financial liabilities and derivative financial instruments are as follows as at 31 December 2009:

in € thousands Carrying amount 31 Dec 2009 Cash flows 2010 Cash flows 2011 until 2014 Cash flows from 2015
Bank loans and overdrafts 934,195 55,818 585,666 615,835

The amounts relate to all contractual commitments existing on the balance sheet date. The majority of the trade payables and other financial liabilities reported at the end of the financial year will fall due in 2010.

Credit and default risk

There are no significant credit risks in the Group. The trade receivables reported on the reporting date were predominantly paid up to the date of the preparation of the financial statements. During the reporting year, write-downs of rent receivables of €563 thousand (previous year: €152 thousand) were recognised under property operating costs.

The maximum default risk in relation to trade receivables and other assets totals €8,424 thousand (previous year: €9,454 thousand) as at the reporting date.

Currency and measurement risk

The Group companies operate exclusively in the European Economic Area and conduct the greater part of their business in euros. This does not entail currency risks.

On the basis of the expert appraisals, the property portfolio has a theoretical net initial yield of 5.82% for financial year 2009. An increase of 100 basis points in the net initial yield would result in a profit reduction of €286 million. A reduction of 100 basis points would result in a profit increase of €405 million. Changes in the value of the properties are recognised under measurement gains/losses.

Interest rate risk

A sensitivity analysis was implemented to determine the effect of potential interest rate changes. Based on the financial 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 and the associated interest rate hedges, which are recognised in equity as cash flow hedges at present value. An increase in the market interest rate of 100 basis points would lead to an increase in equity of €16,874 thousand. The majority of the loan liabilities have fixed interest terms. On the balance sheet date, credit of €195,700 thousand (previous year: €157,400 thousand) was 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 financial well-being are maintained in the future. The Group’s financial policies are also based on the annual payment of a dividend.

in € thousands 31.12.2009 31.12.2008
Equity 1,044,360 977,770
Equity ratio (%) 49.5 48.7
Net financial debt -850,681 -856,397

Equity is reported here including the share of the minority shareholders.

Net financial debt is determined from the financial liabilities on the balance sheet date less cash and cash equivalents and other financial investments.

Continue reading: 31. Joint ventures and equity-accounted associates

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