Annual financial report 2013

FINANCIAL RISKS

MARKET RISKS

The market risks which could give rise to fluctuations in the financial result

are confined in the particular case of Cofinimmo to the liquidity and coun-

terparty risk, as well as the risk associated with changes in interest rates.

The company is not exposed to exchange risks.

LIQUIDITY AND INTEREST RATE RISK

Cofinimmo’s financial policy is characterised namely by:

•

the diversification of its financing sources (banks and equity

markets);

•

the sound and enduring relationship forged with banking partners

which have good financial ratings;

•

a broad spread of loan maturities;

•

the refinancing of maturing loans a year in advance at the latest;

•

the arrangement of long-term hedging instruments against the

interest rate fluctuation risk;

•

the full hedging of short-term commercial papers by credit lines

available over the long term.

This policy optimises the financing cost and limits the liquidity and counter-

party risk. Cofinimmo also has a general policy of not mortgaging its prop-

erties or giving any other form of security to its creditors, with the exception

of those mentioned on page 181. Neither its debt nor the confirmed credit

lines are subject to early repayment or margin fluctuation clauses linked

to the financial rating of the company. They are generally associated with

conditions concerning (i) compliance with the rules governing Sicafi/Bevak

entities, (ii) compliance with debt ratios and cover of financial charges by

cash flow and (iii) the fair value of the property portfolio.

These ratios were observed on 31.12.2013 and during the entire financial

year.

DEBT STRUCTURE

CONSOLIDATED FINANCIAL DEBT

The legally authorised limit on debt for a Sicafi/Bevak is 65% (financial and

other debts on total assets). On 31.12.2013, Cofinimmo was in full compli-

ance with this limit, the debt ratio standing at 48.87%

1,2

. The loan-to-value

ratio (net financial debts on fair value of investment properties and finance

lease receivables), amounted to 49.61% at 31.12.2013. Cofinimmo’s financial

policy consists in maintaining a financial debt ratio below 50%.

Furthermore, the terms and conditions of some of the bank credit lines

allow the Group to take its debt ratio up to 60% maximum. This ratio is

calculated in compliance with the Sicafi/Bevak legislation by dividing the

financial and other debts by the total assets.

At 31.12.2013, the Cofinimmo Group’s consolidated financial debts, both

non-current and current, amounted to €1,722.2 million, made up of (also

see the repayment schedule on page 55):

CAPITAL MARKETS

Cofinimmo regurlaly has access to capital markets to finance its invest-

ment projects. At 31.12.2013, the funds raised on the capital markets were

made up of:

•

€394.4 million in the form of four bond loans; the first bond was

issued by Cofinimmo Luxembourg SA in 2004 and the second by

Cofinimmo SA/NV in 2009; these two bond loans are redeemable

in 2014 for a nominal amount of €100.0 million each; the third

bond loan is a private placement for an amount of €140.0 million

redeemable in 2020; the fourth is a private placement for an amount

of €50.0 million redeemable in 2017;

•

€373.1 million in the form of two bonds convertible into Cofinimmo

shares; this first loan was issued in April 2011 at a nominal value of

€173.3 million; the second was issued in June 2013 at a nominal value

of €190.8 million; the convertible bonds are marked to market in the

balance sheet;

•

€118.2 million of commercial papers, including €103.2 million for an

initial period of under one year and €15.0 million for an initial period of

over three years;

•

€4.2 million corresponding to the discounted value of the minimum

coupon on bonds issued by Cofinimur I in December 2011 and

convertible into shares.

The bonds maturing in 2014 (€200.0 million) are 100% refinanced.

MANAGEMENT OF

FINANCIAL RESOURCES

In accordance with Article54 of the Royal Decree of 07.12.2010, once the debt ratio exceeds 50%, Cofinimmo shall draw up a financial plan accompanied by an execution schedule,

detailing the measures taken to prevent this debt ratio from exceeding 65% of the consolidated assets. See Note 23, section D.

Versus 49.90% at 31.12.2012.

Management Report /

Management of Financial Resources