annual nancial report 2011 This document is precious. It has a limited print-run. It has been realised with respect to the environment: lighter and recycled paper, reduction of the number of copies. It’s a small “green” stone brought to the building. Other “green” stones punctuate this report. But it is not nished, because the building is large and we are conscious of the fact that other stones are yet to be placed. table of contents 02 RISK MANAGEMENT 06 MANAGEMENT REPORT 06 Letter to the Shareholders 08 Key figures 10 Strategy 14 Summary of the consolidated accounts 14 Consolidated income statement - Analytical form 16 Consolidated balance sheet 17 Appropriation of company result 18 Transactions and performances in 2011 18 Global portfolio 24 Offices 32 Nursing homes/clinics 40 Distribution property networks 44 Public-Private Partnerships 46 Management of financial resources 50 Data according to the EPRA principles 56 Quarterly consolidated accounts 58 Events after 31.12.2011 60 Forecasts 2012 64 Corporate Governance Statement 64 Code of reference, Internal audit and risk management 67 Decision-making bodies 74 Management 74 Rules and procedures 78 Remuneration Report 82 Other parties involved 84 Corporate social responsibility 86 Scoreboard 90 Environment 97 Human resources 101 Key performance indicators 106 Cofinimmo in the stock market 106 The ordinary share 108 The preference share 109 The non-convertible bonds 110 The convertible bonds 111 Shareholders structure 111 Shareholders calendar 112 Property report 112 Geographic location 114 Market characteristics 116 Consolidated property portfolio 122 Report by the real estate experts 125 ANNUAL ACCOUNTS 126 Consolidated accounts 132 Notes to the consolidated accounts 176 Statutory auditor’s report 178 Company accounts 182 STANDING DOCUMENT 182 General information 186 Share capital 189 Extracts from the articles of association 196 GLOSSARY The words in italics are explained in more detail in the glossary on pages 196 to 200. Together in real estate From 2005, Conimmo has been engaged in a vast portfolio redeployment plan. This strategy has proven to be sound, as in 2011 the value of the Conimmo share was considerably less volatile than that of other listed companies. Despite the world crisis and thanks to the work of all its teams, Conimmo has been able to sustain a high and regular dividend yield for its investors. The Group has not abandoned its corporate responsibility objectives. A large number of actions, ranging from raising the awareness of customers and subcontractors, to reducing water and electricity consumption, to the selection of “green” materials, which already started in 2010, were taken up again in 2011. Moreover, the award of the ISO 14001:2004 certication for all its ofce buildings managed in-house by the end of 2012 continues to be one of the company’s priorities. You will discover the various “green” projects as you read this Annual Financial Report, which is one of the cornerstones. Its print-run is 3,000 copies, as opposed to 4,000 last year, and it is printed on 100% recycled paper. An electronic version is available at www.conimmo.com. history 2011 Pursuit of the diversification strategy, strengthening of the “Distribution property networks” portfolio via the acquisition of a significant network of insurance agencies in France (Cofinimur I). Placement of a convertible bond. 2011- 2010 -2009 Leading healthcare real estate investor position in Continental Europe. 2008 Establishment in France in the nursing home and healthcare institutions sector. Adoption of the SIIC regime. 2007 Partnership with AB InBev Group concerning the acquisition of a large portfolio of pubs located in Belgium and the Netherlands (Pubstone). 2006 Award of the PPPs relating to the Antwerp Fire Station and the HEKLA Police Station (Antwerp region). 2005 Diversification in the nursing home and healthcare institutions sector. Award of the first Public-Private Partnership (PPP): the Antwerp Court of Justice. 2004 Acquisition of the Egmont office complex. Issue of preference shares. 2003 Inclusion in the BEL20, MSCI World and GPR15 indexes. Acquisition of the North Galaxy towers. 2002-2001-2000 Acquisition of several major office portfolios. 1999 Internalisation of property management. 1996 Adoption of the Sicafi regime. 1994 Listing on the Brussels Stock Exchange. 1983 Establishment. Science 15-17 - Brussels: Laureate of the “Exemplary Building” contest of the Brussels Capital Region. Woluwe 34 - Brussels: P.25 Transformation of ofces into residential apartments. P.29 - 30 Livingstone 1 - Brussels: Transformation into a multifunctional building, use of many sustainable materials and techniques. P.27 Cofinimmo is the foremost listed Belgian Kroonveldlaan 30 - real estate company specialising in rental Dendermonde: property. The company benefits from PPP Federal Police. the Sicafi regime in Belgium and the SIIC P.44 - 45 regime in France. Weverbos - Gentbrugge: Nursing home and service Its core investment segments are ats. Strong isolation K29 (delivered Q2 2011). office property and nursing and care P.33 Résidence du Parc - institutions, representing 48.7% and 33.9% Biez: Nursing home. respectively of the Group’s total portfolio. Installation of a pellets heater The portfolio also includes a “Distribution P.34 property networks” segment, accounting for 16.1%, grouping the Pubstone and Cofinimur I portfolios. The majority of the assets are located within Belgian territory (79.4%). The FPR Leuze - Leuze-en-Hainaut: foreign part consists of nursing homes/ PPP Prison: BREEAM certication “very good”. clinics and the MAAF agencies network in P.44 - 45 France (15.9%) and the Pubstone portfolio in the Netherlands (4.7%). In total, the properties have an area of 1,790,071m² and a fair value of €3,189.4 million. The company’s strategic priorities are the creation of value for its investors, a sound relationship of trust with its clients and sustainable management of its investments. Cofinimmo is an independent company, which manages its properties and clients-tenants in-house. It is listed on Euronext Brussels, where it is included in the BEL20 index. Its shareholders are mainly private individuals and institutional investors from Belgium and abroad, looking for a moderate risk profile combined with a high and regular dividend yield. 2 risk management This chapter covers the main risks faced by Conimmo, their potential effects on its activities and the various factors and actions cushioning the potential negative impact of these risks. The mitigating factors and measures are detailed further on in this Annual Financial Report under the relevant chapters. Conimmo seeks to control the potential impact of the risks it identies Market The markets in which the Cofinimmo Group operates are partly influenced by trends in the general economic climate. The office market is influenced in particular by economic trends, whereas the nursing home sector, the Distribution property networks and the Public-Private Partnerships (PPPs) are characterised by a stable rental environment. Description of the risk Potential impact Mitigating factors and measures1 DETERIORATION IN THE ECONOMIC 1. Negative impact on demand and The nursing homes and clinics and the Public-Private Partnerships CLIMATE IN RELATION TO THE occupancy rate of space and on the rents (together 34.9% of the portfolio under management) are insensitive or CURRENT SITUATION at which the properties can be relet. not very sensitive to variations in the general economic climate. (1,2) 2. Downwards revision of the value of Long weighted average duration of leases (11.3 years at 31.12.2011). (1,2) the real estate portfolio. ± 35% of office tenants belong to the public sector. DETERIORATING ECONOMIC The Distribution property networks The impact occurs at the end of the leases, which are long term leases. CONDITIONS IMPACTING THE portfolio leased to industrial and service The network functions as a contact points for the tenant’s customers DISTRIBUTION PROPERTY companies are subject to the impact and is therefore necessary for its business. NETWORKS PORTFOLIO that general economic conditions may have on these tenant companies. 1 The numbered reference in the mitigating factors and measures establishes the link with the potential impact of each risk. 3 Property portfolio The company’s investment strategy is reflected in a diversified portfolio of assets with limited development activity for own account (construction of new buildings or complete renovation of existing buildings), whereas management of marketable properties is proactive and carried out in-house. The asset diversification corresponds to a distribution of market risks. Description of the risk Potential impact Mitigating factors and measures INAPPROPRIATE CHOICE OF 1. Change in the company’s income Strategic and risk analysis and technical, administrative, legal, accounting INVESTMENTS OR DEVELOPMENTS potential. and taxation due diligence carried out before each acquisition. (1,2,3) risk management 2. Mismatch with market demand, In-house and external valuations (independent experts) carried out consequently resulting in vacancies. for each property to be bought or sold. (1,2,3) 3. Expected returns not achieved. Marketing of development projects before acquisition. (1,2,3) EXCESSIVE OWN ACCOUNT Uncertainty regarding future income. Activity limited to maximum 10% of the fair value of the portfolio. DEVELOPMENT PIPELINE POOR MANAGEMENT OF MAJOR 1. Non-respect of the budget and timing. In-house specialised Project Management