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Software AG GB 2013. englisch

In the operating business, receivables are continuously mon- itored and default risk is taken into account via specific and portfolio-based bad debt allowances. As of December 31, 2013, there was no indication of the existence of any risk beyond that taken into account through bad debt allowanc- es. There is no concentration of credit risks with respect to single customers as a result of the size of our customer base or due to the distribution of our revenues across various sectors and countries. The theoretical maximum exposure to credit risk is reflected in the carrying amounts of the ­receivables, without taking any collateral into account. e) Liquidity risk A liquidity risk arises from the possibility that the Company may not be able to satisfy existing financial liabilities, for example, arising from loan agreements, lease agreements or trade accounts payable. The risk is limited by active work- ing capital management and Group-wide liquidity control and is, if necessary, balanced by available cash and bilateral lines of credit. Under credit agreements having a total volume of €3.4 mil- lion­(2012: €5.4 million), the Company is required to limit net debt within the Group to a maximum of 3-times EBITDA. Under additional credit agreements having a total volume of €100.0 million, the Company is required to limit net debt within the Group to a maximum of 3.25-times EBITDA and not fall below an interest coverage ratio of 4.25. As of ­year-end 2013, the Company’s net debt in relation to EBITDA was significantly lower than this limit and the interest ­coverage ratio was significantly higher. The following table shows the contractually fixed payments arising from financial liabilities. The following table show the undiscounted liabilities. Variable interest payments are based on the prevailing interest rate on the ­reporting date. Liabilities in foreign currency are calculated at the exchange rate as of December 31, 2013. The sensitivity analysis required by IFRS 7 relates to ­the exchange rate risk arising from monetary financial instru- ments that are denominated in a currency other than the functional currency in which they are measured. Exchange differences arising from the translation of financial state- ments into the Group currency (translation risk) and non-monetary items are not taken into account. Most sig- nificant monetary financial instruments are denominated in the functional currency. For Software AG, significant effects on earnings result ­fundamentally only from the relationship of the euro to the U.S. dollar. Hedging transactions are based on existing ­hedges or estimated cash flows and thus reduce any potential effects on earnings. In the case of designated cash flow hedges, exchange rate changes affect other re- serves ­included in equity. Based on the monetary financial instruments available as of the reporting date, a devaluation of the euro in amount of 10 percent against the U.S. dollar would have increased earnings by €1,565 thousand (2012: €1,213 thousand). ­Other reserves would have remained unchanged as in the past year. This amount only represents a theoretical risk for us as these instruments are hedges of recognized trans­ actions, rather than open trading positions. c) Market risk In line with Group policy, assets are controlled in terms of maturity, interest type and rating such that the Company does not expect any significant fluctuations in value. d) Credit risk Software AG is exposed to default risk in its operating busi- ness and in connection with certain financial transactions if contracting parties fail to meet their obligations. Major cash investments as well as derivative financial instruments are entered into with banks with credit ratings of at least invest- ment grade and whose CDS rates are monitored con­ tinuously. The theoretical maximum default risk exposure is indicated by the carrying amounts. The guidelines defined by management ensure that the credit risk from financial instruments is spread across various banks. Software AG | Annual Report 2013 186 Letter from the Management Board About Software AG Software AG ShareHighlights 2013

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