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1
In accordance with Article 13 of the Royal Decree of 13.07.2014, 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 24.
DEBT STRUCTURE
Consolidated financial debt
The legally authorised limit on debt for RRECs is 65% (financial and
other debts to total assets). In 2015, this limit has been respected. At
31.12.2015, Cofinimmo’s debt ratio reached 38.6% vs. 48.1% at 31.12.2014.
Cofinimmo’s financial policy consists in maintaining a loan-to-value
ratio below 50%
1
.
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 complies
with the legislation regarding RREC and is obtained by dividing finan-
cial and other debts by total assets.
Evolution of the debt ratio (in %)
54
56
52
50
48
46
44
42
40
38
36
34
06/2009
06/2010
06/2011
06/2012
06/2013
06/2014
06/2015
12/2009
12/2010
12/2011
12/2012
12/2013
12/2014
12/2015
in %
Evolution of the average cost of debt (in %)
5
4
3
2
2009
2010
2011
2012
2013
2014
2015
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 liquidity
and counterparty risks as well as the risk associated with changes in
interest rates. The company is not exposed to currency risks.
Liquidity and interest rate risks
Cofinimmo’s financial policy is characterised namely by:
•
the diversification of its financing sources (bank financing 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
counterparty risks. Also, in its general policy, Cofinimmo does not grant
mortgages or give any other form of security to its creditors, with the
exception of those mentioned on page 199. Neither the company’s
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 RREC 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
31.12.2015 and during the entire financial year 2015.
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Management report /
Management of Financial Resources