(1) The consolidated management report is to present accurately the business development, including the business performance of the group and its position, in keeping with its actual circumstances. It is to include a balanced and comprehensive analysis of the business development of the group and of its position, consistent with the scope and complexity of its business operations. The analysis is to include the key financial performance indicators most relevant to the business operations and is to provide an explanation for them with reference to the amounts shown and particulars provided in the consolidated financial statements. Furthermore, the consolidated management report is to assess the group’s likely future development as well as the material opportunities and risks it faces and is to provide an explanation therefor; any assumptions on which this assessment is based are to be stated. The members of the representative body of a parent enterprise that issues securities (section 2 (1) of the Securities Trading Act as a domestic issuer (section 2 (14) of the Securities Trading Act) and that is not a share capital company within the meaning of section 327a are to give an assurance in a written declaration to be attached to the consolidated management report that, to the best of their knowledge, the consolidated management report accurately presents the group’s business development including its business performance as well as its position in keeping with its actual circumstances and that the material opportunities and risks within the meaning of sentence 4 have been described.
(2) The consolidated management report also is to give an indication of:
1.
a) the group’s risk management objectives and methods, including the methods used for hedging each major type of transaction for which hedge accounting is used, as well as
b) the group’s exposure to price risk, credit risk and liquidity risk as well as cash flow risk,
in each case with regard to the group’s use of financial instruments and where material for the assessment of its position or its likely future development;
2. the group’s activities in the field of research and development; and
3. the branch offices of the enterprises collectively included in the consolidated financial statements that are material for the purpose of gaining an understanding of the group’s position.
Where the parent enterprise is a stock corporation, it is to refer in its consolidated management report to the information to be provided in the notes pursuant to section 160 (1) no. 2 of the Stock Corporation Act.
(3) Subsection (1) sentence 3 applies accordingly to non-financial performance indicators such as information relating to environmental and employee matters, insofar as this is relevant for understanding the group’s development or its position.
(4) Where the parent enterprise or a subsidiary enterprise included in the consolidated financial statements is publicly traded within the meaning of section 264d, the consolidated management report also is to address the principal characteristics of the internal control process and the internal risk management system with regard to the group’s financial reporting process.
(5) Section 298 (2) on the combination of the notes to the consolidated financial statements with the notes applies accordingly.