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DESCRIPTION OF THE RISK POTENTIAL IMPACT
MITIGATING FACTORS AND MEASURES
Non-renewal or
termination of financing
contracts
Negative impact on liquidity.
Ten renowned banks.
Different sources of financing: bank debt, issue of convertible and non-
convertible bonds, etc.
Refinancing carried out at least 12 months in advance in order to optimise
conditions and liquidity.
Change in the fair value of
hedging instruments
Positive or negative effect on shareholder’s
equity and intrinsic value per share.
If Cofinimmo had closed its positions at
31.12.2015, the settlement amount would
have stood at zero (vs. -125.16 million EUR at
31.12.2014) given that all CAPs and FLOORs are
cancelled in 2015.
At 31.12.2015, the variation of rates has not
affected the capital, given that all CAPs and
FLOORs are cancelled in 2015.
Cofinimmo uses hedging for its entire portfolio, not for specific credit lines.
Deflation risk
Negative impact on rental income.
The leases usually provide that the new rent may not be lower than either
the previous rent or the rent of the first year of the lease.
Indexation of a minority of technical charges may be higher than that
applied to rents.
Risk of debt
1
Cancellation/termination of loan agreements
or early repayment.
Non-compliance with the RREC legislation and
resulting penalties.
Prudent financial and debt policy and ongoing monitoring.
At 31.12.2015, Cofinimmo’s legal debt stood at 39.62%, in compliance with
the maximum ratio of 65% according to the RREC legislation. This ratio
applies to borrowing agreements and credit lines (max. 60%).
Financial charges (excluding impact of IAS 39) amounted to
-42.31 million EUR at 31.12.2015 (vs. -54.70 million EUR at 31.12.2014).
Exchange risk
Loss of value of the investments and cash
flows.
All investments are denominated in Euros, as are income and expenditure.
Volatility in the share price
More difficult access to new capital.
Monitoring of any in-house factor which may have a negative impact on
the market price.
Frequent communication with shareholders and publication of financial
information forecasts.
Change in the Group’s
public rating
Cost of financing and liquidity.
Close relationship with rating agency which recommendations are taken
into account regarding financial ratios to be reached for the various
rating levels and regarding sources of financing, liquidity and interest rate
hedging.
The company is also in contact with another rating agency, which rating
is private.
1
In accordance with Article 13 of the Royal Decree of 13.07.2014, where the debt ratio exceeds 50%, Cofinimmo must 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 24.
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