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IDENTIFICATION, ANALYSIS AND CONTROL OF RISKS
This point includes the identification of risky events, their analysis and the
measures chosen to respond to them in an efficient manner.
An in-depth overall risk analysis of the company is carried out periodically
in collaboration with all levels of the organisation, each for its respective
area of competence. This analysis is done on the basis of the strategic
choices and of the legal and environmental constraints in which the com-
pany evolves. It includes an identification of possible risky events, their
probability of occurrence and their impact on the objectives viewed from
different angles: financial, legal, operational, counterparty, property assets
and reputation. The analysis is formalised in a document presented and
discussed at an Executive Committee meeting and updated throughout
the year according to the evolution of activities and the new commitments
made taking into account the lessons of the past. Furthermore, once a
year, this document is submitted to the Audit Committee, which will use
it, among other things, to decide what audit tasks are to be assigned to
the Internal Auditor.
Furthermore, each major project undergoes an analysis of specific risks
according to an organised framework, improving the quality of information
in the decision-making process.
CONTROL ACTIVITIES
Controls are carried out in the various departments of Cofinimmo in
response to the risks identified:
•
at financial level, the deviations between the estimated budget
and the realised result are reviewed quarterly by the Executive
Committee, the Audit Committee and the Board of Directors;
•
at credit risk level: the solvency of the most important clients who
do not benefit from a financial rating is analysed twice a year by
the financial department. Moreover, the amounts and validity of the
rental guarantees established by all tenants are checked quarterly
by the operational teams;
•
at rental level: half-year analysis of rental vacancy, lease terms and
risks and opportunities in terms of rental revenues;
•
at accounting level: the use of an ERP (Enterprise Resource Planning,
an integrated management software), this being SAP, includes a
number of automatic checks; SAP includes both all the accounting
and financial aspects, as well as all aspects linked to the real estate
business (i.e. follow-up of rental contracts, rent bills, statement of
charges, orders, purchases, etc.);
•
at treasury level: the use of different sources of financing and banks
and the spreading of maturities limits the refinancing concentration risk;
•
the risk linked to the interest rate is limited by the application of
a hedging policy for a minimum of 50% of the notional amount
borrowed on a sliding scale of minimum three years;
•
the use of a treasury software facilitates the day-to-day follow-up of
cash flow positions and cash-pooling operations;
•
the application of the dual signature principle within the limits of the
delegations of power regarding any commitment towards a third
party, whether this involves asset acquisitions, rental transactions,
orders of any type, approvals of invoices and payments;
•
the use of a workflow software at the different stages of the
commercial activity (renting of spaces), strengthening controls at
the process’ key stages;
•
the recording of the COFP1 and COFP2 registered shares movements
is realised in a secure IT application, developed and made available
by Belgium’s central depository, Euroclear; the registered ordinary
shares are currently recorded in the Capitrack programme of
Euroclear.
INFORMATION AND INTERNAL COMMUNICATION
Information and communication from and to the several levels of the com-
pany are based on work meetings and on reporting:
•
the Management Report, drawn up quarterly by the Consolidation
and Reporting entity, details the situation of the income statement
and balance sheet, the key performance indicators, the acquisitions/
sales situation and their impact on the results and the real estate
portfolio inventory, the state of building works and cash flow
positions. It is distributed to management, heads of department and
key individuals. It is discussed in detail by the Executive Committee,
the Audit Committee and the Board of Directors;
•
similarly, each department periodically draws up specific reports
regarding its own activities;
•
the Extended Executive Committee, composed of the four members
of the Executive Committee and of the heads of the operational
departments, meets every week to discuss property investments
and divestments, constructions and rentals;
•
the Executive Committee also meets every week: it systematically
reviews the important points of the company’s operations and
business (investments/sales, treasury, staff, etc.).
Minutes are drawn up for each meeting with, if necessary, an action plan
for the implementation of the decisions taken during the meeting.
SURVEILLANCE AND MONITORING
A complete accounting closing is carried out quarterly, following the
same procedures as for the end-of-year closing, and consolidated
accounts are drawn up. Key indicators are calculated and analysed.
These data are collected in the above-mentioned Management Report.
They are discussed and analysed by the Executive Committee and the
Board of Directors. Similarly, each department collects pertinent infor-
mation at its own level, which is analysed quarterly and compared to the
objectives set for the year.
During the course of the year, the Executive Committee asks each head
of department to submit a round-up of the evolution of its own activities.
The company also has an Internal Auditor whose assignments cover the
different processes. The results of the audits are submitted to the Audit
Committee, which controls the implementation of recommendations, and
to the Board of Directors.
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Corporate Governance Statement \
Management Report