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Setting of objectives and
risk appetite
The strategy is determined annually by the Board of Directors on
the basis of a proposal of the Executive Committee. It is then trans-
lated into operating, compliance and reporting objectives. These
apply at all of the company’s operating levels, from the most global
level to the implementation in functional units.
A budget, which translates the company’s objectives into figures, is
drawn up annually and checked every quarter. It includes both fore-
cast revenue items such as rents for the year and also costs linked
to the management and development of the property portfolio as
well as financial costs linked to the business financing structure.
The budget is approved by the Executive Committee and then
submitted to the Board of Directors for approval.
Identification, analysis and control
of risks
This point includes the identification of risks, 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 peri-
odically in collaboration with all levels of the organisation, each for
its respective area of competence. This analysis is carried out on
the basis of the strategic choices and of the legal and environmen-
tal constraints within which the company evolves. It begins with
an identification of possible risks, their probability of occurrence
and their impact on objectives viewed from different angles:
financial, legal, operational, counterparty, property 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 new commitments
made, taking into account the lessons of the past. Once a year, it
is also submitted to the Audit Committee, which will use it, among
other things, to decide on what audit assignments 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 a financial level: the difference between the estimated
budget and the realised result are reviewed quarterly by the
Executive Committee, the Audit Committee and the Board of
Directors;
•
at a credit risk level: the solvency of the most important clients
who do not have a financial rating is analysed annually by the
financial department. Similarly, the amounts and validity of
the rental guarantees established by all tenants are checked
quarterly by the operational teams;
•
at a rental level: half-yearly analysis of rental vacancy, lease
terms and risks and opportunities in terms of rental revenue;
•
at an accounting level: the use of an ERP (Enterprise Resource
Planning, an integrated management software), i.e. SAP,
includes a number of automatic checks. SAP includes all the
accounting and financial aspects, as well as all aspects linked
to the real estate business (i.e. monitoring of rental contracts,
rent invoices, statements of charges, orders, purchases, etc.);
•
at a treasury level: the use of various financing sources and
banks and the spreading of maturities limits the refinancing
concentration risk;
•
the interest rate risk 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 cash flow software facilitates the day-to-day
follow-up of cash flow positions and cash-pooling operations;
•
the dual signature principle is applied within the limits of
delegations of power regarding any commitment in respect of
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
letting activity, stepping up controls at the process’ key stages;
•
the register and movements of the COFB, COFP1 and COFP2
registered shares is recorded in a secure IT application (the
Capitrack program), developed and supplied by Belgium’s
central depository Euroclear.
Information and internal
communication
Information and communication between the various levels of the
company is 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 the balance sheet, the key performance
indicators, the acquisitions/sales situation and their impact
on the results. It also includes an inventory of assets,
project progress 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;
Since 06.11.2014, Cofinimmo has adopted
the status of Regulated Real Estate Company.
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