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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 translated
into operating, compliance and reporting objectives. These apply at all
of the company’s operating levels, from the most global level to imple-
mentation in functional units.
A budget, which constitutes the figures for the company’s objectives,
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 real estate assets 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, which then approves it.
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 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 the legal and environmental
constraints under which the company operates. It begins with an iden-
tification of possible risk events, their probability of occurrence and
their impact on objectives viewed from different angles: financial, legal,
operational, counterparty, property assets and reputation. The analy-
sis 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, i.e.
those that do not have a financial rating, is analysed annually 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 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, financial follow-up of
works, 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 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 acquisition, rental transactions, orders
of any type, approvals of invoices and payments;
•
the use of a workflow software in the different stages of the sales
business (rental activity), stepping up controls at the process’ key
stages;
•
the register and movements of COFB, COFP1 and COFP2 registered
shares is recorded in a secure IT application (the Capitrack
programme), developed and supplied by Belgium’s central
depository Euroclear.
Information and internal
communication
Information and communication between the various levels of the
company are based on work meetings and on reporting:
•
the Management Report, drawn up quarterly by the Consolidation
& Reporting entity, details the situation of the income statement,
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;
•
the Executive Committee, composed of the four members of the
Executive Committee and the heads of the operational departments,
meets every week to discuss property investments and
divestments, constructions and rentals;
•
the Executive Committee also meets weekly. It systematically
reviews the important points of the company’s operations and
business (investments/divestments, cash flow, staff, etc.).
Minutes are drawn up for each meeting with, if necessary, an action
plan for the implementation of the decisions taken at the meeting.
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Corporate governance statement /
INTERNAL AUDIT AND RISK MANAGEMENT