Annual Report • Sep 23, 2015
Annual Report
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2014/2015 ANNUAL FINANCIAL REPORT
| 1. 2. 3. 4. |
RISK FACTORS Market risks Risks related to Aedifica's property portfolio Financial risks Regulatory risks |
2 2 3 6 9 |
|---|---|---|
| KEY FIGURES 2014/2015 | 12 | |
| LETTER TO THE SHAREHOLDERS | 14 | |
| 10 YEARS OF GROWTH | 18 | |
| CONSOLIDATED BOARD OF DIRECTORS' REPORT | 26 | |
| 1. 2. 3. |
Strategy Operations carried out before and after the 30 June 2015 closure Analysis of the 30 June 2015 Consolidated Financial Statements |
29 30 36 |
| 4. 5. 6. |
Appropriation of the result Key risks (excluding those linked to financial instruments) Use of financial instruments |
42 42 42 |
| 7. 8. |
Related party transactions Subsidiaries |
42 42 |
| 9. | Research and development 10. Treasury shares |
43 43 |
| 11. Outlook for 2015/2016 | 43 | |
| 12. Conflicts of interest 13. Capital increases carried out within the framework of the authorised capital |
44 45 |
|
| 14. Environmental, ethical, and social matters 15. In the event of a takeover bid |
45 46 |
|
| 16. Independence and competence with respect to accounting | 49 | |
| and audit of at least one member of the Audit Committee 17. Corporate governance statement |
49 | |
| EPRA | 50 | |
| PROPERTY REPORT | 60 | |
| 1. | The real estate market | 62 |
| 2. 3. |
Growth of the consolidated property portfolio as of 30 June 2015 Portfolio analysis as of 30 June 2015 |
65 66 |
| 4. | Summary table of investment properties as of 30 June 2015 | 70 |
| 5. | Investment property fact sheets 6. Management team |
76 96 |
| 7 | Experts' report | 98 |
| AEDIFICA ON THE STOCK MARKET | 100 | |
| 1. 2. |
Stock price and volume Dividend policy |
103 104 |
| 3. | Shareholding structure | 104 |
| 4. | Shareholders' calendar | 104 |
| 1. | CORPORATE GOVERNANCE STATEMENT 1 Code of reference |
106 108 |
| 2. | Internal audit and risk management | 108 |
| 3. | Shareholding structure | 113 |
| 4. 5. |
Board of Directors and Committees Preventing conflicts of interest |
113 119 |
| 6. | Assessment process | 119 |
| 7. 8. |
Rights to acquire shares Remuneration report |
120 120 |
| FINANCIAL STATEMENTS | 122 | |
| STANDING DOCUMENTS | 174 | |
| GLOSSARY | 191 |
Aedifica aims to position itself as a market leader among listed Belgian residential real estate companies, particularly in terms of senior housing.
Its strategy is based on two demographic trends: population ageing in Western Europe and population growth in Belgium's main cities. The Company aims to create a balanced real estate portfolio that generates recurring revenues and offers potential for capital gains. Aedifica has been quoted on Euronext Brussels (continuous market) since 2006.
Aedifica offers the investor a high-quality alternative to direct investment in residential real estate.
€1billion investment properties portfolio
as of 30 June 2015
Aedifica carries out its activities in a constantly changing environment, which implies certain risks. The occurrence of these risks could have a negative impact on the Company as a whole, or on its operations, outlook, financial position or financial result. Thus, these risks must be duly considered as part of any investment decision.
Aedifica aims to manage these risks to the best of its ability, in order to generate recurring rental income and realise future capital gains.
The Executive Managers and the Board of Directors monitor Aedifica's main risk factors closely. They set conservative policies in this respect, which are updated and adapted as necessary to reflect changing risk factors and circumstances. Please note that completeness in respect of risk factors cannot be ensured, and that the following list is based on information available as of 8 September 2015. It is acknowledged that other risk factors may exist, which are currently unknown, remote or considered as benign for the Company, its operations and/or its financial position.
Given the fact that supply and demand in the real estate market is impacted by general economic conditions, any negative shift in the main macro-economic indicators could hurt Aedifica's activity level and outlook. The Company's operations are indeed subject to economic cycles, since these affect the available income of existing tenants (and hence their ability to respect their financial commitments), new demand, and the availability of funds for new investments. The Company can also be affected by the default of its various partners: building managers, credit providers, hedge providers, contractors, etc. To mitigate these economic risks, Aedifica diversifies its investments across several segments in the residential market, which tend to respond differently to economic changes.
Rent levels, vacancy rates, and property values are highly influenced by supply and demand in the real estate market, both in terms of space for sale and for let. The main risk factors faced by the Company arise from lower occupancy rates, decreases in contractual rents or building values on contract renewal, and capital losses when properties are disposed of.
To mitigate these risks, Aedifica's investment strategy is diversified, both geographically (having extended operations beyond Belgium's borders in 2013) and by sector, within the residential market. Aedifica has been active in the senior housing segment in Germany since 2013.
Each segment of the residential market in which Aedifica invests targets different types of tenants who rent premises under contracts with varying maturities (short-term or medium-term for apartments, and long-term for senior housing and hotels). Given the high proportion of long-term contracts (e.g. irrevocable contracts with a minimum initial maturity of 27 years called "emphytéoses / erfpachten"), which represent 78 % of the fair value of marketable investment properties as of 30 June 2015), the average residual maturity of Aedifica's contracts stands at 20 years. This gives the Company a good view on future revenue streams over the long term.
Aedifica also intends to grow its portfolio in order to reduce the weight of each individual property, improve asset management, and increase the operating margin by realising economies of scale.
Aedifica pursues an investment strategy which, until recently, has been focused on the Belgian market. Starting 2013, Aedifica has also been active in the senior housing segment in Germany.
At constant interest rates, inflation risk is low for Aedifica, since rents are subject to indexation, in general on an annual basis (mainly according to the local full CPI or, in Belgium, the health CPI). The impact of inflation on rental income can be summarised as follows: an increase of the index of 100 bps would generate additional rental income of approximately €0.6 million.
In the context of increasing nominal interest rates, lower inflation implies higher real interest rates, which in turn implies that financial charges are growing faster than indexation of rental income. Aedifica has taken some important steps to mitigate this risk (see 3.3 below).
In case of negative inflation, most contracts set a floor at the level of the initial rent.
Given the dynamism of the large group of professional operators active in the senior housing segment, and the ongoing consolidation of this market, it is highly likely that one or more business combinations will occur among groups related to legal entities with which the Company has entered into lease agreements. This may impact the diversification level of the Company's tenant base. Such business combinations have occurred in the past in Aedifica's portfolio, and served to improve the professionalism of these legal entities (operators). The impact of these consolidations on the diversification of Aedifica's tenant base has been offset by the growth in the portfolio, with addition of new operators. The data concerning these groups are given in the Property Report included in the Annual Financial Report and in Note 3 of the Consolidated Financial Statements.
The Board of Directors and the Executive Managers of Aedifica are aware of the risks linked to the management and quality of the Company's assets and have set clear and strict standards for building improvement, commercial and technical management, and investment and divestment, all with a view to limit vacancy and increase property values.
Up to 31 July 2013, Aedifica's properties were exclusively located in Belgium and consisted mainly of marketable properties used or intended to be used for housing. The composition (number of properties, surface area) and breakdown (by type of property, by segment, geographical) as of 30 June 2015 is provided in section 3.1 of the Consolidated Board of
Service-Residenz Schloss Bensberg Senior housing - Bergisch Gladbach (Germany)
Directors' Report included in this Annual Financial Report. Since summer 2013, Aedifica's portfolio has expanded to include properties located in Germany.
Aedifica is also carrying out works on a portfolio of 22 development projects (see section 4.2. of the Property Report included in this Annual Financial Report). Marketable investment properties and development projects are presented together on the balance sheet, under the heading "I.C. Investment properties" among non-current assets, and real estate offered for sale is recognised under line "II.A. Assets classified as held for sale" among current assets".
Aedifica's turnover is completely made up of rental income generated on properties that are rented out to third parties (natural persons, companies, operators of rest homes or assisted-living apartments, or hotels). Bad debt provisions and vacancy rates could have an adverse impact on the income statement. Moreover, when a rental contract matures and a new tenant is found, the new contract may generate lower rental income, especially in view of the current economic environment. A gloomy economic climate can also lead to renegotiations of current leases, in particular to reduce the rent of current contracts in order to rebalance tenants' rent levels compared to their potential future income, and therefore to maintain the sustainability of the cash flows generated by the building for the benefit of the Company. As property costs cannot always be reduced in line with rental incomes, the Company's income and cash flows could be further affected as a result.
In order to mitigate these risks, Aedifica diversifies its investments in the residential market, in terms of location, market segment, tenant profiles, and contract types. In the senior housing segment for example, Aedifica enters into long leases (mainly under the form of long-term "emphytéoses/erfpachten" in Belgium) with specialised professional operators, which generate high yields. By doing so, Aedifica can offset most risks associated with shorter-term contracts in the other segments (apartment buildings).
The Company is not credit-insured and is, thus, also exposed to the risk of default of its tenants. Procedures have been put in place to monitor the payment pattern of the tenants with whom long leases ("emphytéoses/ erfpachten" or others) have been signed, and to closely follow-up on any doubtful debtors. In addition, Aedifica benefits from rental guarantees set up in accordance with market standards and Belgian law, under the form of warranties issued by banks, cash deposits on bank accounts, or other securities.
Nevertheless, the Company continues to face a risk of lost rental income, and this risk can increase in line with any deterioration of the economic conditions. Charges to provisions for bad debts for the financial year amount to less than €0.1 million on €49.9 million in rental income.
2.2 Asset management
The attractiveness of Aedifica's rental properties, as well as their valuation, depends on the perceived quality of the buildings, the effectiveness of the maintenance programme, and the security level achieved.
For this reason, Aedifica has put in place its own sales and marketing team. By doing so, the Company maintains direct contact with its tenants and strives to remain aware of their needs and wishes.
For the technical management of certain apartment buildings in Belgium, Aedifica employs external service providers who act as asset managers and are permanently monitored by the Company's own building manager. Aedifica employs the same external service providers for the administrative and accounting management of certain apartment buildings. In case of default of any of these service providers, the Company's financial risk exposure is limited, since the tenants pay rents and provisions for charges directly into Aedifica's bank accounts. Asset managers have no access to the bank accounts into which rents are paid; withdrawals from bank accounts into which provisions for charges are paid are strictly restricted. Administrative and accounting management of other apartment buildings was recently internalised; related tasks are now performed internally by Aedifica's property accounting team.
The Company is generally the sole owner of its buildings. However, specific risks could arise from co-ownership or split sales of certain buildings.
Given the limited number of people employed by Aedifica, the organisation could be affected by the departure of key personnel. The unexpected departure of key personnel could also negatively impact the Company's ability to grow.
The Company may be involved in court procedures arising in the normal course of business. Cases currently ongoing present no significant risk, thus no provision had to be raised in relation to these. Given the uncertainties arising from court procedures, however, the Company could face new liabilities in the future.
In the senior housing segment, Aedifica enters into long leases (mainly in the form of longterm "emphytéoses/erfpachten" in Belgium) with specialised professional operators.
In order to sustain and even increase rental income, and to facilitate new lettings and/or building disposals, Aedifica carries out repair and maintenance works on its real estate portfolio on an ongoing basis. Nevertheless, these investments cannot fully eliminate the risk of impairment of the assets.
Aedifica also acquires planned or in-progress development projects and initiates new projects, which positions the Company to oversee the development works and ensure that buildings delivered are of high quality. This approach to property acquisition is consistent with the Company's long-term vision.
An architect manages the development and renovation projects, and ensures that works contracted to third parties are properly carried out. Even as the Company does its best to negotiate contracts that minimise the risks arising from major works (e.g. delays compared to the expected completion date, deviation from budget, organisational issues, etc.), these cannot be totally avoided.
When a building requiring major renovation works is acquired, the fair value of the building at acquisition date generally reflects its state at that time. The cost of the renovation works to be carried out is included in the Company's financial planning.
The risk that buildings may be destroyed by fire or other calamity is insured for a total reconstruction value of €842 million (including the value of furnishings in the furnished apartments, and excluding the value of the lands). This represents 86 % of the fair value of marketable investment properties as of 30 June 2015 (including lands). Insurance contracts are signed by Aedifica, or by the tenants in the case of long leases. The insurance contracts also cover vacancy costs during the reconstruction period, but do not cover other risks, such as voluntary acts of the insured person, the risk of war, nuclear risks, hidden defects, deterioration, decrepitude, asbestos, etc. Insurance premiums paid by Aedifica amount to €81 thousand for the 2014/2015 financial year.
Halmolen Senior housing - Halle-Zoersel (Belgium)
The fair value of investment properties, as assessed quarterly by independent experts, changes over time and is recognised in accordance with IAS 40. A change of 1 % in the fair value of investment properties would have an impact of €10 million on the Company's net income and of approximately €0.71 on the net asset value per share. This would also impact the debt-to-assets ratio by 0.4 %.
At any time, property can be expropriated by Belgian public authorities, in line with applicable laws.
A major part of Aedifica's assets were acquired through mergers, de-mergers, or acquisition of shares in other real estate companies. Aedifica takes all necessary steps to ensure proper due diligence at the time of acquisition (e.g. by carrying out due diligence audits regarding the buildings and/or real estate companies, by obtaining certain warranties and representations, etc.). Nevertheless, it is unavoidable that, as a result of these transactions, hidden liabilities may be transferred to the Company, which are not recoverable from the transferor.
Aedifica's financial management practices aim to ensure permanent access to financing, and to monitor and minimise the interest rate risk.
Aedifica's debt-to-assets ratio (as defined in the Royal Decree of 13 July 2014 on Belgian RRECs) is included in section 3.3 of the Consolidated Board of Director's Report included in this Annual Financial Report. As of 30 June 2015, it amounts to 36.9 % on statutory level and to 37.0 % on consolidated level. This section also discloses the maximum ratio permitted before the Company reaches the maximum debt-to-assets ratio permitted for Belgian REITs (65 % of total assets) or arising due to bank covenants (60 % of total assets). When exceeding the debt-to-assets threshold of 50 %, a financial plan with an implementation schedule must be elaborated, describing the measures taken to prevent the consolidated debt-to-assets ratio from exceeding the maximum permissible threshold of 65 % (Article 24 of the Royal Decree of 13 July 2014).
Aedifica's financial model relies on a structural indebtedness. As a result, cash balances are usually low, amounting to €4 million as of 30 June 2015.
As of 30 June 2015, Aedifica has neither pledged any Belgian building as collateral for its debts, nor has it granted any other securities to debt-holders. Note that in Germany, it is customary that real estate buildings financed by bank credit are linked to a mortgage in favour to the creditor bank. As such, 3 out of the Company's 14 buildings in Germany are linked to a mortgage as of 30 June 2015, respecting the requirements laid down in Article 43 of the Belgian Act of 12 May 2014 (the total amount that is linked to a mortgage cannot exceed 50 % of the total fair value and no mortgage linked to a certain building can exceed 75 % of that building's value). In the context of supplementary financing of assets located in Germany, it is possible that supplementary mortgages will be obtained.
Aedifica enjoys a strong and stable relationship with its banks, which form a diversified pool of multinational institutions. Details of Aedifica's credit facilities are disclosed in Note 40 of the Consolidated Financial Statements included in this Annual Financial Report.
As of 30 June 2015, Aedifica is using credit facilities totalling €367 million (2014: €346 million), out of €550 million in total available credit. The remaining headroom of €183 million is sufficient to cover Aedifica's short-term financial needs (including the development projects in progress) until the end of the 2015/2016 financial year. The investment amount that is budgeted in the Company's financial plan for the existing projects as of 30 June 2015 is estimated at €61 million, to which a hypothetical investment of €50 million should be added. This brings the total investment which is included in the financial plan for the 2015/2016 financial year to €111 million.
Given the regulatory status of Belgian REITs/RRECs, and the type of property in which Aedifica invests, the risk of non-renewal of mature credit facilities is remote even in the context of a credit crunch, except in the event of unforeseen and extreme circumstances. There is a risk of increasing credit €550 credit facilities as of 30 June 2015 M
spreads should market conditions deteriorate as compared to those present at the time the current credit facilities were signed.
The Company would be exposed to a liquidity risk which could arise due to a lack of cash flow in the event of early termination of the credit facilities. Should the Company fail to comply with the provisions of credit facility arrangements, the facilities might indeed be cancelled, re-negotiated, or forced into reimbursement. The covenants in place are in line with market practice, and in particular require that the debt-toassets ratio (as defined by the Royal Decree of 13 July 2014) does not exceed 60 %. Moreover, there is a risk of early termination in the event of a change of control, in case of non-compliance with the Company's obligations, and, more generally speaking, in the event of default as defined in these arrangements. Based on the information available to date, and the prospects for the foreseeable future, there is no indication of a possible early termination of one or more of the existing credit facilities. However, this risk cannot be ignored completely. Moreover, Aedifica does not itself retain control over certain commitments, such as in the event of a change of control, which could lead to the early termination of the credit facilities.
Internally, Aedifica is organised so as to regularly monitor the evolution of the financial markets, optimise the Company's financial structure over both short and long term, and manage financial risks (liquidity risk, interest rate risk). Aedifica aims to further diversify its funding sources, given market conditions.
Almost all of Aedifica's financial debts are floating-rate borrowings. This allows Aedifica to benefit from low interest rates on the non-hedged part of its borrowings. To mitigate the risk of increasing interest rates, Aedifica follows a policy aimed at securing for a period of several years the interest rates related to at least 60 % of its cur-
This policy is supported by the fact that an increase in nominal interest rates, when not coupled with a simultaneous increase in inflation, implies an increase in real interest rates that cannot be offset by increasing rental incomes through indexation alone. Moreover, in case of accelerating inflation, there is a delay between the timing of the increase of the nominal interest rates and the timing of the indexation of rental incomes. When the interest rate curve is sufficiently flat (i.e. when interest does not vary a lot in relation of the maturity date), Aedifica aims to enter into hedges over longer periods, in line with its investment.
For example, assuming that the structure and level of financial debts remain unchanged, and assuming that no hedges have been entered into, simulations show that a 25 bps positive deviation (increase) in the 2015/2016 interest rates over the forecast rates would lead to an additional €1.1 million interest expense for the year ended 30 June 2016.
In order to manage the interest rate risk, Aedifica has put in place hedges (interest rate swaps and caps). All hedges are entered into with leading banks and relate to existing or highly probable risks. Where appropriate, Aedifica applies hedge accounting as defined by IAS 39. An analysis of the Company's hedges is provided in the Consolidated Board of Directors' Report and in Note 33 of the Consolidated Financial Statements included in this Annual Financial Report. The hedges are entered into for long periods; however, hedge agreements include provisions (in line with market practice) that could lead the issuing banks to terminate the hedges early or initiate margin calls (in cash for example) in their own favour in certain circumstances.
Changes in the interest rate curve have a limited impact on the future interest expense, as 60 % of the financial debts are hedged by IRS, caps or collars. Each change in the interest rate curve has an impact on the fair value of hedging instruments against income statement and/ or equity (line "I.C.d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS" and line "I.C.e. Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS"). A sensitivity analysis is provided in Note 33 of the Consolidated Financial Statements included in this Annual Financial Report.
Signing a credit facility or hedging instrument with a bank generates a counterparty risk in the event of counterparty default. In order to mitigate this risk, Aedifica trades with several leading national and international banks to diversify its funding and hedging sources, while remaining cautious about the balance between cost and quality of the services provided. In the context of the current banking crisis, one should bear in mind that one or several counterparties could default.
In line with market practice, the agreements signed with banks include market shock clauses and major adverse change clauses which could lead to, in extreme circumstances, additional costs for the Company or possibly the early termination of the credit facility.
Aedifica has an ongoing relationship with the banks listed in Note 40 of the Consolidated Financial Statements included in this Annual Financial Report. With respect to hedging, the main providers (by order of magnitude) are ING, BNP Paribas Fortis and KBC Bank.
Aedifica earns all rental income and incurs all expenses within the euro-zone (except for certain small suppliers which charge for their services in USD and CAD). The borrowings of the Company are all denominated in euros. Thus, Aedifica is not exposed to significant foreign exchange risk.
The yearly budget and long-term financial plan are important tools used in the decision-making process and in daily management activities. The budget and financial plan are derived from a computerised model that incorporates a number of assumptions; this model can suffer from programming errors, and human errors which may arise when using it. The potential for wrong assumptions, and undetected programming or human errors might put pressure on the Company's performance or threaten its compliance with regulatory (e.g. legal covenants associated to the Belgian RREC status, such as the debtto-assets ratio) and contractual provisions (e.g. bank covenants).
To mitigate the risk of increasing interest rates, Aedifica follows a policy aimed at securing the interest rates related to at least 60 % of its current or highly probable indebtedness over a period of several years.
The Company is aware of applicable regulations and does its best to engage experts to provide supplementary assistance and advice. Nonetheless, it is exposed to the risk of non-compliance with regulations or environmental requirements.
Regulatory changes and new related obligations arising for the Company and/or its service-providers could influence the profitability of the Company or its property values (e.g. through additional obligations at the expense of the Company and/or its tenants).
As of 17 October 2014, the Company is authorised by the FSMA as a "Regulated Real Estate Company" ("RREC") under Belgian law (French: "société immobilière réglementée" or SIR, and Dutch: "gereglementeerde vastgoedvennootschap" or "GVV"). As a Public RREC, and in order to keep this status, the Company is subject (on a consolidated basis or not) to the requirements of the Act of 12 May 2014 and to the Royal Decree of 13 July 2014. These include restrictions on operations, debt-to-assets ratio, appropriation account, con-
Eyckenborch Senior housing - Gooik (Belgium)
flicts of interest, corporate governance, etc. (Continued) compliance with these specific requirements depends, among other things, of the Company's capacity to manage its assets and its indebtedness successfully, and of its compliance with strict internal control procedures. In event of significant changes in its financial or other situation, it is possible that the Company could become unable to comply with these requirements,
As a public RREC, the Company is exposed to the risk of future changes in legislation relating to Regulated Real Estate Companies. Furthermore, there is also the risk that, in the event of violation of the applicable rules, the supervisory authority (the FSMA) imposes sanctions, including the loss of the Company's public RREC status. In this case, the Company would lose its specific tax regime for public RRECS (see also section 4.2. below). Furthermore, the loss of the public RREC status is, pursuant to the Company's credit facilities, generally considered an event of default or acceleration thus triggering the reimbursement of all credit facilities established by the Company. The loss of this status would also have a negative impact on the Company's operations, results, profitability, financial situation and forecast.
As a public RREC, the Company benefits from a specific tax regime under which its annual result (rental income and capital gains on disposals, after deduction of operating costs and financial expenses) is not subject to corporate tax at the level of the public RREC (while subsidiaries remain subject to corporate tax as is any other company).
The exit tax is calculated taking into account the provisions of the circular Ci. RH. 423/567.729 of 23 December 2004; the prescribed interpretation or practical application of this circular is subject to change at the Government's discretion at any time. The "real value" of a property as stated in the circular is calculated after deduction of the registration duties or of the VAT. This "real value" varies from (and can therefore be inferior to) the fair value of the property as listed in the financial statements under IFRS. The group considers itself compliant with the points of the administrative circular concerning the calculation of its exit tax payable.
Moreover, regulatory risks also include the effects of enacted or foreseen provisions, namely in respect of changes in taxation.
The Programme law of 27 December 2012 establishes a 25 % withholding tax on dividends effective as of 1 January 2013. As a public RREC investing directly at least 80 % of its property in housing located in a Member State of the European Economic Area, and in accordance with Articles 171, 3° quater and 269, §1, 3° of the Belgian Income Tax Code, Aedifica benefits from a reduction of the withholding tax to 15 %. The concept of housing includes single-family houses and collective housing such as apartment buildings and rest homes. As of 30 June 2015, Aedifica already exceeded the 80 % investment threshold (87 %). Under this Programme law, public RRECs are also permitted to invest within the European Economic Area.
However, a new risk has arisen (which has been reported in the media since 4 August 2015) in relation to a potential increase in the withholding tax (which could be brought from 15 % to 27 %) for dividends that will be distributed in 2016 and the following years, in the context of the fiscal reform (generally baptised "tax shift" by the media) that is currently under preparation by the Belgian government. The possible disappearance of the reduced withholding tax of 15% for residential REITs could also be an opportunity for Aedifica, by expanding the potential range of its future investments.
Service-Residenz Schloss Bensberg Senior housing - Bergisch Gladbach (Germany)
In the event that the Company's status as a RREC is lost (this would suppose major and re-iterated disregard for the provisions of the Belgian Act of 12 May 2014 and/ or of the Royal Decree of 13 July 2014), the Company would also lose its specific tax status. This risk is considered to be very remote, since the Company undertakes all necessary steps to comply with the legal requirements. Furthermore, the loss of the RREC status is generally considered an event of default, thus triggering the reimbursement of all loans granted to the Company.
Even with RREC status, the Company acts within the broader framework established by the Belgian Companies Code. The reserves available for distribution, computed in accordance with Article 617 of the Belgian Companies Code and with the Royal Decree of 13 July 2014 (i.e. the reserves that the law or the articles of association do not prohibit from being paid-out), amount to €11 million as of 30 June 2015 (see Note 38 of the Consolidated Financial Statements included in this Annual Financial Report).
Oase Tienen Senior housing - Tienen (Belgium)
Residentie Sporenpark Senior housing - Beringen (Belgium)
in fair value1
Gross yield by segment
(%)
Hotels and other Apartment buildings Senior housing 100 80 60 40 20 0 June 2013 June 2014 June 2015 12 27 10 7
Breakdown by segment
in fair value (%)
proposed gross dividend for 2014/2015, representing a statutory pay-out ratio of 86 %
average remaining lease maturity of current contracts, providing an excellent view toward future income streams 20 years
| Investment properties (x €1,000) | 30 June 2015 | 30 June 2014 |
|---|---|---|
| Marketable investment properties in fair value1 | 983,429 | 765,789 |
| Development projects | 21,734 | 19,191 |
| Total of investment properties in fair value | 1,005,163 | 784,980 |
| 1. Including assets classified as held for sale. | ||
| Net asset value per share (in €) | 30 June 2015 | 30 June 2014 |
| Based on fair value of investment properties | ||
| Net asset value after deduction of dividend 2013/2014, excl. IAS 39 | 45.29 | 40.57 |
| IAS 39 impact | -2.70 | -3.73 |
| Net asset value after deduction of dividend 2013/2014 | 42.59 | 36.84 |
| Consolidated income statement - analytical format (x €1,000) | 30 June 2015 | 30 June 2014 |
| Rental income | 49,903 | 40,675 |
| Rental-related charges | -50 | -62 |
| Net rental income | 49,853 | 40,613 |
| Operating charges1 | -10,831 | -9,192 |
| Operating result before result on portfolio | 39,022 | 31,421 |
| EBIT margin2 (%) |
78 % | 77 % |
| Financial result excl. IAS 39 | -13,148 | -10,965 |
| Corporate tax | -376 | -141 |
| Profit excl. IAS 39 and IAS 40 | 25,498 | 20,315 |
| Denominator (IAS 33) | 10,658,981 | 9,917,093 |
| Earnings per share excl. IAS 39 and IAS 40 (€/share) | 2.39 | 2.05 |
| Profit excl. IAS 39 and IAS 40 | 25,498 | 20,315 |
| IAS 39 impact: changes in fair value of financial assets and liabilities | 374 | -2,990 |
| IAS 40 impact: changes in fair value of investment properties | 19,259 | 3,816 |
| IAS 40 impact: gains and losses on disposals of investment properties | 428 | 0 |
| IAS 40 impact: deferred taxes | -395 | 244 |
| Roundings | 1 | 0 |
| Profit (owners of the parent) | 45,165 | 21,385 |
| Denominator (IAS 33) | 10,658,981 | 9,917,093 |
| Earnings per share (owners of the parent - IAS 33 - €/share) | 4.24 | 2.16 |
| 1. Items IV to XV of the income statement. 2. Operating result before result on portfolio divided by the net rental income. | ||
| Consolidated balance sheet (x €1,000) | 30 June 2015 | 30 June 2014 |
| Investment properties (fair value)2 | 1,005,163 | 784,980 |
| Other assets included in debt-to-assets ratio | 14,073 | 9,678 |
| Other assets | 1,048 | 65 |
| Total assets | 1,020,284 | 794,723 |
| Equity | ||
| Excl. IAS 39 impact | 636,193 | 435,278 |
| IAS 39 impact1 | -37,923 | -38,203 |
| Equity | 598,270 | 397,075 |
| Liabilities included in debt-to-assets ratio | 377,216 | 356,820 |
| Other liabilities | 44,798 | 40,828 |
| Total equity and liabilities | 1,020,284 | 794,723 |
| Debt-to-assets ratio (%) | 37.0 % | 44.9 % |
| 1. Fair value of hedging instruments (see Note 33). 2. Including assets classified as held for sale. | ||
| Key performance indicators according to the EPRA principles | 30 June 2015 | 30 June 2014 |
| EPRA Earnings (in €/share) | 2.39 | 2.05 |
| EPRA NAV (in €/share) | 45.46 | 40.55 |
| EPRA NNNAV (in €/share) | 42.44 | 36.61 |
| EPRA Net Initial Yield (NIY) (in %) | 5.1 | 5.2 |
| EPRA Topped-up NIY (in %) | 5.1 | 5.2 |
| EPRA Vacancy Rate (in %) | 2 | 2 |
| EPRA Cost Ratio (including direct vacancy costs) (in %) | 22 | 23 |
| EPRA Cost Ratio (excluding direct vacancy costs) (in %) | 22 | 22 |
"The fair value of investment properties rose well above €1 billion during 2014/2015 to reach €1,005 million by 30 June 2015. This marks an increase of €220 million (or 28 %) in just one year."
Aedifica's investment strategy is built on two underlying demographic trends, namely population ageing in Western Europe and population growth in Belgium's main cities. These trends have contributed to the market's confidence in Aedifica, confidence which has continued to grow over the course of its tenth financial year (2014/2015) as demonstrated by:
Stefaan Gielens, CEO
Aedifica has recently realised an impressive series of new investments, exclusively in the senior housing segment, which has become the Company's principal development pillar. No less than 17 buildings entered into Aedifica's Belgian and German portfolio during the 2014/2015 financial year (not to mention various extensions, redevelopments, etc.). With these acquisitions, the number of senior housing sites has grown to approx. 70. The fair value of investment properties rose well above €1 billion during 2014/2015 to reach €1,005 million by 30 June 2015. This marks an increase of €220 million (or 28 %) in just one year.
Given the low consolidated debt-to-assets ratio (37 %), a result of the successful June 2015 capital increase, the Company is well-positioned to maintain its momentum and continue its growth trajectory at a pace that shareholders come to enjoy over the Company's first ten financial years. New investment opportunities are currently under consideration, both in Belgium and in Germany and preliminary contacts have been established in other neighbouring countries. These potential investments are fully aligned with Aedifica's strategy
Olivier Lippens, Chairman of the Board of Directors
Given the Group's low debt-to-assets ratio (37 %), a result of the June 2015 capital increase, the Company is prepared to maintain its momentum and thus to continue on this growth path at a pace that the shareholders have been appreciating during the Company's first ten financial years.
which is highly favoured by the market. Even before considering new opportunities, future growth is also assured for the Company given its existing commitments to acquire, renovate, extend, and/or redevelop multiple sites. These projects fit perfectly with Aedifica's strategy which, in the senior housing segment, aims to improve existing sites and to develop new projects in partnership with tenants/operators. The current pipeline for these types of projects represents a total committed budget of €138 million, to be invested over a four-year period. This strategy allows Aedifica to maintain a portfolio of high-quality buildings that generate attractive net yields.
Not only interested in investing, Aedifica also strives for optimal management of its real estate portfolio amid today's unstable economic climate. The Company's portfolio consists of:
Aedifica continues to improve its portfolio management, which translates into excellent and increasing rental incomes (+23 %), an increasing EBIT margin (78 %), and well controlled financing costs. Profit (excluding non-cash elements arising from application of accounting standards on financial instruments and investment properties) has reached €25.5 million (30 June 2014: €20.3 million), an increase of 26 %, i.e. €2.39 per share (30 June 2014: €2.05 per share). This result (absolute and per share) is ahead of the initial budget for the 2014/2015 financial year as published in the Annual Financial Report 2013/2014 and is perfectly in line with the forecast for the 2014/2015 financial year as published in the Securities Note regarding the capital increase of June 2015.
Of the items that have had no effect on the level of the proposed dividend, only the change in the fair value of investment properties (as valued by independent experts) can be observed in € million and warrants mention here: it gave rise to unrealised capital gains (non-cash) for which more than €19 million has been recognised in the income statement.
Taking this item into account, Aedifica's total profit amounts to €45 million (30 June 2014: €21 million).
Aedifica owes its strong results for the 2014/2015 financial year to the enthusiasm, competence, and commitment of its staff who have yet again demonstrated their efforts to ensure the Company's continued growth in Belgium and abroad over the course of the year. Again this year, the Board of Directors expresses its sincere congratulations to the Aedifica team. Moreover, in order to support the growth of the Group, Aedifica has added to its Management Committee a new Chief Operating Officer and a new Chief Legal Officer, and has also established a German property management subsidiary.
For 2015/2016, the Board of Directors expects an increased dividend, at €2.05 per share.
The Board of Directors is excited to unveil Aedifica's new logo and corporate slogan in this Annual Financial Report. The skyline of the original logo has been refreshed and the slogan "The urban way to live" has been changed to "Housing with care" to better reflect Aedifica's strategy and strength: the combination of housing and care services.
Given the Company's strong performance during the 1st half of the financial year, recent investments, the Group's forecasts and the prevailing market conditions, the Board of Directors increased its dividend forecast for the current financial year on the occasion of the Half Year Financial Report in February 2015 to set a revised expectation of €2.00 gross per share (initially €1.93 per share). This was subsequently confirmed in the Securities Note regarding the capital increase of June 2015. Consequently, the coupon representing the dividend was detached on 10 June 2015. Taking into account the consistency of the forecast and Aedifica's actual performance over the whole financial year, the Board of Directors will propose to the Annual General Meeting to distribute a gross dividend of €2.00 per share, an increase of 5 % compared to that distributed for previous financial year.
Despite the instable environment that continues to unfold around the world, the Board of Directors expects a higher dividend for 2015/2016, at €2.05 gross per share, as detailed in the abovementioned Securities Note.
To mark the occasion of the Aedifica's 10th anniversary, and highlight the Company's future potential, the Board of Directors is excited to unveil Aedifica's new logo and corporate slogan in this Annual Financial Report. The skyline of the original logo has been refreshed and the slogan "The urban way to live" has been changed to "Housing with care" to better reflect Aedifica's strategy and strength: the combination of housing and care services.
Stefaan Gielens, Chief Executive Officer
Olivier Lippens, Chairman of the Board of Directors
Geographical breakdown in fair value (%)
18 — ANNUAL FINANCIAL REPORT 2014/2015
2nd SPO1 (€100 M), the biggest public capital increase in Belgium that year
EBIT margin > 75 %
New website
Financial communication published in English
1st SPO1 (€67 M)
Aedifica was the most active Belgian REIT (sicafi/ vastgoedbevak) of the year in terms of investments in Belgium
More than 100 buildings in the portfolio
17 new buildings
Investment properties portfolio > €1 billion
Establishment of Aedifica Asset Management GmbH, a German property management subsidiary
3rd SPO1 (€153 M)
Establishment of a Management Committee consisting of 4 members (CEO, CFO, COO, CLO)
"EPRA Gold Award" for the 2013/2014 Annual Financial Report
New logo and new corporate slogan
Approval as RREC (SIR/GVV)
Portfolio > €750 M
More than 60 senior housing sites, representing 70 % of the portfolio as of 31 December
"EPRA Silver Award" and "EPRA Most Improved Award" for the 2012/2013 Annual Financial Report
2013
1st acquisitions in Germany (5 rest homes)
Market capitalisation > €500 M
Inclusion in the EPRA indices
Secondary Public Offering
Property portfolio > €500 M
More than 3,000 beds in the senior housing segment
The senior housing segment accounts for the majority of the portfolio (> 50 % in fair value)
The ageing of the baby-boom generation is progressing at a rapid pace in Belgium as well as in Europe, and will reach a peak by 2050. Professionalisation and consolidation in the senior housing market is evident at a European level. Aedifica participates actively as a real estate investor in Belgium as well as in Germany. Aedifica puts its buildings at the disposal of professional and specialised operators under long-term contracts that generate high net rental yields.
Residentie Sporenpark Beringen (Belgium) The construction of Residentie Sporenpark was completed in spring 2015. The site comprises 110 beds and 17 assisted-living apartments and is part of a broader project, called be-MINE, located on the former mining site in Beringen-Mijn.
Service-Residenz Schloss Bensberg Bergisch Gladbach (Germany) This complex consists of 87 classic and assisted-living apartments. It is situated in a private park measuring approx. 4.5 ha and is part of a larger residential and hotel project developed in 2002/2003.
Oase Tienen Tienen (Belgium) Completed in august 2014, this new construction includes 129 beds and 10 assisted-living apartments and is located in a residential area of the city centre of Tienen.
"The numerous acquisitions carried out during the 2014/2015 financial year demonstrate Aedifica's dynamism. The Company's growth rate has yet again increased within its main strategic segment, senior housing, which now comprises almost 70 sites."
Stefaan Gielens, CEO
of the portfolio located in Germany
Stephanie's Corner Brussels (Belgium) Acquired by Aedifica in 2013, this 27-unit building is ideally located in the heart of the Louise district.
Aedifica possesses apartment buildings situated in lively districts that are centrally located and easily accessible within Belgian major cities, mainly in Brussels. The buildings are primarily residential but may also include office or retail space, given their urban locations which commonly feature mixed-use buildings.
The apartment buildings in Aedifica's portfolio offer good returns given their potential for capital gains, which is further strengthened by the possibility to sell individual units within buildings initially acquired in full.
"Aedifica constantly improves the quality of its apartment portfolio, which comprises 865 units. The thorough renovation of the building located at Rue Haute in Brussels, which has recently been completed, is a good example of this. Other large-scale renovations are ongoing, notably in the Flowers district in Brussels."
Stefaan Gielens, CEO
Résidence Chamaris Brussels (Belgium) Acquired by Aedifica in 2011, this 23-unit building is located in the Leopold district. It was originally an office building in the 1960s and was converted and renovated in 2009/2010.
Ensemble Souveraine Brussels (Belgium) Acquired in 2005, these apartment buildings, located near the centre of Brussels, are currently being renovated and refurbished.
Brussels (Belgium) This building is located in Brussels' city centre, in one of the most lively tourist and shopping districts of Europe's capital city. In addition to its 30 apartments, the building also includes The Mercedes House which features a high-end restaurant run by a star chef.
Aedifica acquired 6 hotels in prior years, all located in Belgium, which are operated by two professional and specialised operators under long-term contracts. Hotels are now considered as a residual nonstrategic segment for Aedifica.
This segment also includes a number of small properties (office buildings and land reserves).
Located in Leuven's historical centre, the Martin's Klooster contains 103 rooms and, following a complete renovation, now constitutes a unique 4-star hotel.
Tongeren (Belgium) The Eburon Hotel is originally the site of an ancient convent. The building has been fully renovated and transformed into a 4-star hotel. It was featured as the set of the TV series "Dag en Nacht" which aired on the Belgian TV channel VTM in 2010, as well as the TV game show "Mijn Restaurant! 2011" which aired on the same channel.
The Carbon hotel is a 4-star design hotel located in the centre of Genk, which won the European prize for best interior restaurant design in 2008. It was nominated as one of the 50 best new hotels in the world by the magazine Forbes Traveler.
high occupancy rate for the unfurnished portion of the portfolio
fair value of investment properties as of 30 June 2015
to 30 June 2014
Source: "Perspectives de Population 2014-2060", Belgian Federal Planning Bureau, 2015
Source: "Bevölkerung Deutschlands bis 2060", Statistisches Bundesamt (Deutschland), 2009
This Board of Directors' report is based on the Consolidated Financial Statements. It includes, however, some data on the statutory accounts and is mentioned when the case. Full statutory financial statements and the statutory Board of Directors' report will be registered at the National Bank of Belgium within the legal deadlines and may be obtained free of charge via the Internet www.aedifica.be) or upon request at the Company's headquarters.
The fair value of investment properties has risen well above €1 billion as of 30 June 2015, given the addition of 17 senior housing sites to the portfolio during the financial year
Aedifica aims to position itself as a market leader among listed Belgian residential real estate companies, in particular with regard to senior housing.
Our objective is to create a balanced portfolio of residential buildings that generates recurring revenues and offers potential for capital gains. We aim to take advantage of two underlying demographic trends, namely population ageing in Western Europe and population growth in Belgium's main cities. As evidence to support these trends, Belgium's Federal Planning Bureau expects the population of Brussels to increase significantly, surpassing 1.2 million inhabitants by 2020. Moreover, it anticipates that population ageing for the baby-boom generation will continue until it reaches its peak, in Belgium and in Europe, by 2060.
These trends underlie long-term needs in terms of specialised real estate infrastructure. With regard to senior housing in particular, two additional factors should be taken into consideration: (i) consolidation of care operators on a European level and (ii) scarcity of public funding to finance such specialised real estate infrastructure.
The long-term effects of these demographic shifts on overall housing needs, and in particular on the specific needs of an ageing population, shape the key themes of Aedifica's strategy.
To attain its objectives, Aedifica has identified two strategic pillars in which it will concentrate activities: senior housing in Western Europe and apartment buildings in Belgium's main cities. The diversification sought by Aedifica centres on these two strategic pillars, which provide for easy adaptation of the Company's policy in response to shifting market opportunities and economic conditions. The two strategic poles are concentrated in two main segments (senior housing and apartment buildings) with a residual non-strategic segment comprising hotels and other types of buildings. The weight of each segment may vary from year to year according to changing circumstances. The Company's current stated policy is to grow further in the senior housing segment.
Aedifica's strategy – to specialise in the residential housing market and diversify into two strategic segments – constitutes its most unique feature and greatest strength. The Company strives to be innovative and constructive in order to provide its shareholders with a safe real estate investment over the long run, one that generates recurring revenues for them.
Aedifica's strategy is mainly a buy and hold type, which is by definition oriented over the long-term. Of course, this does not exclude disposals in accordance with an asset rotation policy, which aims to maintain the quality level of the Company's property portfolio and is standard practice for real estate companies. Disinvestments are also realised within the acquisition policy, when an acquired portfolio contains properties that are considered non-strategic.
Professionalisation and consolidation in the senior housing market is evident at a European level. Aedifica participates actively in Belgium as well as in Germany by acquiring buildings, engaging in sale and rent back arrangements of existing buildings, by intervening in upstream construction of new buildings, or by undertaking upgrades, renovations and/or extensions of existing sites.
The Company puts its buildings at the disposal of professional and specialised operators under long-term contracts that generate high net rental yields.
Considerable growth potential remains in this sector. As a portion of the number of beds approved by social security (INAMI/RIZIV) in Belgium, Aedifica holds approximately 4 % of the market as of 30 June 2015.
Aedifica responds to the needs of its operators, and to the growing demand arising due to shifting demographics, by holding both rest homes and assisted-living buildings.
The ageing of the baby-boom generation is progressing rapidly in Belgium as well as in Europe, and will reach a peak by 2060.
30 — ANNUAL FINANCIAL REPORT 2014/2015
and recurring revenues, which provide for the distribution of dividends to Aedifica shareholders. According to a study published by DTZ Research in May 2013, Aedifica held the 2nd position in terms of private real estate investors in rest homes in Belgium for the period 2005- 2012, representing 27 % of the total amount invested by REITs, insurers, banks and other types of investors.
Since 2013, the Company has also been active in Germany. This expansion into the German market is consistent with the Company's strategy in the senior housing segment. It allows for better diversification of tenants and extends the Company's operations in a market which tends to structure itself at a European level. This first operation abroad also followed changes in Belgian law, which opened the European market to residential Belgian REITs. The Company positions its ambitions regarding senior housing in a Western European context (see section on "Risk Factors" of this
The senior housing market generates stable
Annual Financial Report). Information on the German senior housing market is given in the "Property Report" section of this Annual Financial Report.
b. Apartment buildings
Aedifica holds apartment buildings (preferably without co-owners) situated in lively districts that are centrally located and easily accessible within Belgium's major cities, mainly in Brussels. The buildings are primarily residential but may also include office or retail space, given their urban locations which commonly feature mixed-use buildings.
The apartment buildings in Aedifica's portfolio offer good yield prospects given their potential for capital gains, which is further strengthened by the possibility to sell individual units within buildings initially acquired in full.
Apartments are most often furnished by the occupants under traditional rental contracts. Others are furnished by Aedifica and tend to be let under short-term rental contracts.
In prior years, Aedifica acquired six hotels that are operated by two professional and specialised operators under long-term contracts.
The portfolio contains two large hotels situated in two of the most touristic cities in Flanders (Bruges and Leuven), and four hotels in Limburg (Genk, Tongeren, and in close proximity to Maastricht).
Given regulations relating to the reduced withholding tax applicable to dividends distributed by Aedifica (see "Risk Factors" section of the Annual Financial Report), hotels (which are not strictly speaking residential investments) now represent a residual, non-strategic segment for the Company.
This segment also comprises a number of small properties including office buildings and land reserves.
Service-Residenz Schloss Bensberg Senior housing - Bergisch Gladbach (Germany)
Aedifica follows a growth strategy which, between 31 December 2006 and 31 December 2014, has seen the Company rise successfully from 36th to 8th place in the ranking of Belgium's 100 largest real estate portfolios (according to the "Investors Directory 2015", published by Expertise BVBA in January 2015). The Company intends to continue on this growth trajectory in order to derive benefits linked to its scale, including:
Aedifica is studying the possibility of investing in new sectors of the real estate market and is continually evaluating the needs and opportunities generated by shifting demographics. Potential new sectors should be of a residential nature and combine housing functions with care and/or hospitality services.
Aedifica is also studying the possibility of investing in geographic markets outside of Belgium and Germany, with a focus on the senior housing segment.
The most noteworthy event of 2014/2015 is without a doubt the capital increase carried out at the end of the financial year. On 11 June 2015, Aedifica launched a capital increase, in cash and with priority allocation rights to raise a gross amount of €153 million. The primary aim of this capital increase was to increase the equity in order to raise new financial resources that will enable the Company
to continue to pursue its growth strategy with respect to its property portfolio, while maintaining an appropriate debt-to-assets ratio in the range of 50 to 55 %. On 29 June 2015, the REIT issued 3,121,318 new shares at an issue price of €49.00 per share, for a total of €152,944,582 (including share premium). These new shares were admitted into trading the same day and will share in the result of the 2015/2016 financial year.
After the closing of markets on 30 June 2015, the Company's market capitalisation amounted to approx. €706 million (as compared to €508 million on 30 June 2014).
In the short period following the capital increase, Aedifica has already announced two new investments in the senior housing segment.
Investments carried out during the financial year are detailed in sections 2.1.1., 2.1.2. and 2.1.3. The different operations are also described in the Company's press releases, which are available online at www.aedifica.be. The contractual value of acquisitions disclosed in this section complies with the provisions of article 49 §1 of the Act of 12 May 2014 on Regulated Real Estate Companies.
On 12 June 2014, Aedifica announced an agreement in principle for the acquisition of 5 new rest homes in the Province of Flemish Brabant, including the Binkom site, which was acquired on the same date.
On 10 July 2014 and 29 August 2014, Aedifica acquired the companies Woon & Zorg Vg Aarschot SPRL and Woon & Zorg Vg Tienen SPRL (which have since been absorbed by Aedifica), owners of the Aarschot site (164 units, including a 120-bed rest home and an 44-apartment assisted-living complex) and the Tienen site (178 units, namely a rest home comprising 129 beds and 49 assisted-living apartments). The gross contractual value of the two sites (works completed in July and August 2014) amounts to approx. €44 million (excluding the plot of land in Tienen, which was acquired on 30 June 2014). The rest homes are operated under a 27-year triple net long lease, while the assisted-living apartments are operated under an agreement for the right of use. The initial triple net yield of the two sites amounts to approx. 6 %. These sites contribute to the result, with a reduced rent extended for the first year ("step rent"). The disposal of assisted-living apartments at the Aarschot and Tienen sites (considered in this case as non-strategic by the Company) began during the first quarter of 2014/2015. As of 30 June 2015, all 44 assisted-living apartments have been sold at the Aarschot site as have 39 assisted-living apartments (out of the initial 49) at the Tienen site. The value of the apartments that remain available for sale amounts to less than €2 million.
On 4 December 2014, Aedifica realised the acquisition of two rest homes (through the partial demerger of La Réserve Invest SA and through the acquisition of the companies Krentzen SPRL, which has since been absorbed by Aedifica, and of Overbeke SPRL). De Notelaar is located in Olen (Province of Antwerp) and comprises 94 units. Overbeke is located in Wetteren (Province of East Flanders) and comprises 113 units. The buildings were completed at the end of 2012 and are operated by the Armonea Group on the basis of 27-year triple net long leases. The contractual value of the two sites amounts to approx. €29 million, which provides for an initial triple net yield of approx. 6 %.
On 11 December 2014, Aedifica announced the signing of an agreement in principle for the acquisition of four senior housing sites (existing or under construction), located in three Belgian provinces. Of the four sites, the Halmolen rest home (Halle-Zoersel, Province of Antwerp, 140 units) was acquired on that date and the Villa Temporis site (Hasselt, Province of Limburg, 40 units) and the La Ferme Blanche site (Remicourt, Province of Liège, 61 units) were added to the consolidated portfolio on 18 December 2014 through the acquisition of the companies Villa Temporis SCRL and Michri SA. These sites are operated under 27-year triple net long leases. The contractual value of the three sites amounts to approx. €27 million, which provides for an initial triple net yield estimated at less than 6 %. Extension and renovation projects are planned for the sites Villa Temporis and La Ferme Blanche to bring their capacity to 103 and 90 units, respectively.
The fourth site is the object of an agreement signed on 18 December 2014 (subject to certain conditions which remain outstanding) for the future acquisition (together with its subsidiary, Aedifica Invest SA) of 100 % of the shares of the company RL Invest SA. RL Invest SA is the current owner of the Leopoldspark assisted-living apartment building (under construction) and rest home (Leopoldsburg, Province of Limburg), which will comprise a combined total of 150 units. The total contractual value of the site will amount to approx. €20 million, which provides for an initial triple net yield estimated at less than 6 %.
Overall, this portfolio will comprise 483 residential units upon completion of the planned development projects (current capacity of 241 units).
On 16 December 2014, Aedifica acquired the control of three companies (Aedifica Luxemburg I, II and III SARL), owners of eight rest homes located in North Rhine-Westphalia and in Lower Saxony (Germany) which comprise a total of 642 beds. All rest homes are recent constructions built between 2009 and 2011. The contracts in place for these establishments are irrevocable long-term leases with 25-year lease maturities. These are contracts with double net structure, meaning the repair and maintenance of the roof, structure and facades of the building will remain the responsibility of the owner. Aedifica benefits from a triple net 10-year warranty for the maintenance of the buildings. The contractual value amounts to more than €60 million, which provides for an initial gross rental yield (double net) of approx. 7 %. The eight sites contribute to the result, with a reduced rent extended for the first year ("step rent").
On 17 December 2014, Aedifica announced the signing of the purchase agreement for an assisted-living apartment complex in North Rhine-Westphalia, Germany. This agreement signed in front of the notary was subject to the usual conditions in Germany, mainly of administrative nature. Having met all conditions in 2015, the purchase price was paid and the property and full use of the buildings was auto-
matically acquired effective 1 March 2015. The transaction was financed using Aedifica's credit facilities.
The acquired complex comprises 87 apartments and 8 commercial spaces, as well as a swimming pool and 99 underground parking spaces.
Aedifica entered into two leases for the buildings, namely:
The contractual value of the complex amounts to approx. €14 million, which provides for an initial gross rental yield of approx. 6 %.
Extension and renovation works at the Eyckenborch rest home in Gooik were completed during the first quarter of 2014/2015. The site has now a capacity of 142 residents, compared to 78 before the works began.
Extension works at the Klein Veldeken assisted-living apartment building in Asse were completed during the second quarter of 2014/2015. Operations have been transferred to a specialised operator at the site, which has now a capacity of 58 units, compared to 41 before the works began.
On 28 April 2015, Aedifica announced the completion of the new Residentie Sporenpark rest home, located in Beringen (province of Limburg).
Residentie Sporenpark comprises 110 beds and 17 assisted-living apartments. The site is operated by Senior Living Group (a subsidiary of the Korian – Medica group and major player in the European senior care market) on the basis of a 27-year triple net long lease. The investment amounts to approx. €17 million (including plot of land) and generates an initial triple net rental yield of approx. 6 %.
The construction of Residentie Sporenpark began in 2013, as announced in the press release of 18 December 2012 is part of a broader project, called be-MINE, located on the former mining site in Beringen-Mijn. The objective of this project is to redevelop the touristic and recreational aspects of the site by evenly intertwining urban functions such as living, working and shopping. The Houtpark residential project brings together various accommodations: single-family dwellings, apartments, a rest home and assisted-living apartments. Aedifica is delighted to have played a part in this ambitious project through the development of Residentie Sporenpark.
Extension and renovation works at the 't Hoge rest home in Kortrijk were completed during the last quarter of 2014/2015. The site has now a capacity of 79 residents, compared to 62 before the works began.
The Property Report included in this Annual Financial Report includes a table describing all projects in progress as of 30 June 2015.
As of 30 June 2015, the following development projects are in progress:
In terms of financing, the following transactions took place since the beginning of the 2014/2015 financial year:
Taking into account the abovementioned financing arrangements, the timetable showing the maturity of Aedifica's current credit facilities is as follows (in € million):
| 550 | |
|---|---|
| — > 2022/2023 | 14 |
| — 2021/2022 : | 25 |
| — 2020/2021 : | 2 |
| — 2019/2020 : | 80 |
| — 2018/2019 : | 102 |
| — 2017/2018 : | 92 |
| — 2016/2017 : | 150 |
| — 2015/2016 : | 85 |
Establishment of these credit facilities demonstrates the strong and durable relationship Aedifica maintains with its banks.
On 12 February 2015, the semi-industrial building Bara, presented among the assets classified as "held for sale" as of 31 December 2014, has been disposed of for approx. €0.6 million. This sale generated a net gain on disposal of more than 50 % as compared to its most recent fair value determined by the Company's independent expert.
On 1 September 2014, the FSMA (Financial Services and Markets Authority) authorised Aedifica to become a public Regulated Real Estate Company ("public RREC") in accordance with the Act of 12 May 2014 on Regulated Real Estate Companies ("RREC Act"), subject to certain conditions.
The Extraordinary General Meeting of Aedifica's shareholders held on 17 October 2014 approved, with unanimity, the change of status from a Real Estate Investment Company into a public RREC in accordance with the RREC Act.
As no exit rights were exercised, and given that all conditions to which the modification of the Articles of Association and the authorisation by the FSMA were subject were fulfilled, Aedifica converted to public RREC status as from 17 October 2014.
Aedifica is pleased to take advantage of this new status, which permits the Company to continue to carry out present activities in its own best interests, as well as those of its shareholders and other stakeholders.
In order to support the Company's growth, Aedifica has added the positions of Chief Operating Officer ("COO") and Chief Legal Officer ("CLO") to its team and established a German property management subsidiary.
The new positions of COO and CLO are described in the "Corporate Governance Statement" section of this Annual Financial Report.
As from 1 January 2015, Aedifica holds a German subsidiary: Aedifica Asset Management GmbH. This subsidiary advises and supports Aedifica in the growth and management of its real estate portfolio in Germany.
Mr. Martin Engel (47), MRICS, has taken up the position of "Geschäftsführer" (managing director) of this new subsidiary. Mr. Engel holds a degree in Business Administration from Technische Universität Berlin ("Diplom-Kaufmann") and has extensive experience related to financing and investment. He worked previously for GE Real Estate as Originator and Senior Asset Manager for over 10 years, managing the senior housing portfolio since 2005, among other responsibilities.
Through this new subsidiary Aedifica has expanded both its operational capacity and its corporate presence in the German market.
For the first time, Aedifica's Board of Directors decided to offer shareholders the possibility to contribute their 2013/2014 net dividend entitlement back into the capital of the Company in exchange for new shares. Shareholders were given the option to subscribe for one new share at an issue price of €48.45 per 30 No. 12 coupons (valued at €1.6150 net each) contributed. Aedifica's shareholders opted to contribute approximately 64% of their net dividend entitlement back into the capital of the Company in exchange for new shares (i.e. instead of cash dividend payment). This resulted in a capital increase of approx. €11 million for Aedifica.
On 4 December 2014, the Extraordinary General Meeting approved the partial demerger of SA La Réserve Invest by way of a transfer of part of its net assets to Aedifica. This lead to a capital increase of approx. €23 million and to the addition of two rest homes, located in Olen and in Wetteren, to the Company's portfolio (see section 2.1.1. above).
At the request of their holder, the shares created on this occasion were consequently the object of a quick private placement amongst Belgian and international investors, with a dis-
Directors' report
2.2.1. Acquisitions
On 2 July 2015, Aedifica announced the acquisition (together with its subsidiary, Aedifica Invest SA) of 100 % of the shares of the limited liability company La Croix Huart SA. La Croix Huart is the owner of the plot of land on which the Résidence de la Houssière rest home is located in Braine-le-Comte, Belgium. The Résidence de la Houssière rest home is well located in a green area, near the centre of Braine-le-Comte, a municipality of approx. 20,000 inhabitants, situated approx. 20 kilometres from Mons (Province of Hainaut, Belgium). The rest home currently comprises 94 beds. The initial building, which dates from the late 1990s, was completed in 2006 with the construction of a new wing. The site also includes a land reserve of approx. 1.5 ha, which presents potential for an extension project. The site is operated by the limited liability company Résidence de la Houssière SA, a local player that has been present on the senior care market for more than 20 years. The contractual value of the site (including plot of land) amounts to approx. €10 million. The initial triple net yield amounts to approx. 6 %. The Aedifica Group will receive this yield based on a 27-year triple net long lease which will be granted to Résidence de la Houssière SA. This transaction was structured for execution in two phases:
On 9 July 2015, Aedifica acquired 100 % of the shares of the limited liability companies Senior Hotel Flandria SA and Patrimoniale Flandria SA. Senior Hotel Flandria SA is the owner of the Senior Flandria assisted-living apartment building located in Bruges (Province of West-Flanders, Belgium). Patrimoniale Flandria SA is the owner of the plot of land on which the assisted-living apartment building is located.
The Senior Flandria assisted-living apartment building is well located in a residential area, close to the centre of Bruges. This city of 117,000 inhabitants is the capital city of the province of West Flanders, Belgium. The building, which dates from 1991, currently comprises 108 one-bedroom apartments and common areas (total surface of approx. 6,500 m²). The building is very well maintained and has undergone some renovation works (such as the bathrooms). The building is a recognised assisted-living apartment building intended for senior housing, and offers various facilities (concierge, anti-intruder system, call system, restaurant, fitness, bar,…), services (animation, hairdresser, handyman services, cleaning services) and health-care services (physiotherapy, care, home nursing).
The contractual value of the site (including plot of land) amounts to approx. €10 million. The site is operated by the SPRL Happy Old People (controlled by the Armonea group) on the basis of a triple net long lease for which the remaining maturity is approx. 20 years. The initial triple net yield amounts to approx. 6 %.
The commentary and analysis presented below refer to the Consolidated Financial Statements included in this Annual Financial Report.
During the 2014/2015 financial year (1 July 2014 – 30 June 2015), Aedifica increased its portfolio of marketable investment properties by €218 million, from a fair value of €766 million to €983 million (€1,005 million for the total portfolio, including development projects of €22 million and assets classified as held for sale of €2 million). This 28 % growth comes mainly from net acquisitions (see sections 2.1.1. and 2.1.2. above), completion of development projects (see section 2.1.3. above) and changes in the fair value of marketable investment properties recognised in income (+€14.5 million, or +1.5 %). The fair value of marketable investment properties, as assessed by independent experts, is broken down as follows:
As of 30 June 2015, Aedifica has 153 marketable investment properties, with a total surface area of approx. 479,000 m2 , consisting mainly of:
The breakdown by sector is as follows (in terms of fair value):
The geographical breakdown is as follows (in terms of fair value):
— 88 % in Belgium, of which:
The occupancy rate (see glossary) of the total unfurnished portion of the portfolio (representing 93 % of the fair value of marketable investment properties) amounts to 97.9 % as of 30 June 2015. This is an increase as compared to the record level reached at the end of the previous financial year (30 June 2014: 97.6 %).
The occupancy rate of the furnished portion of the portfolio (representing only 7 % of the fair value of marketable investment properties) reached 78.3 % for the year ended 30 June 2015. This is a slight increase as compared to the occupancy rate realised in the previous financial year (78.0 %) and the last published occupancy rate (76.8 % as of 31 March 2015). The performance of the furnished portion of the portfolio is commented upon in section 3.2 below.
The overall occupancy rate of the total portfolio reached 98 % for the year ending 30 June 2015.
The average remaining lease maturity for all buildings in the Company's portfolio is 20 years, an increase as compared to 30 June 2014 (19 years). According to the "Belgian RREC Overview", published each month by Bank Degroof, Aedifica is significantly ahead of the industry average in terms of its average remaining lease maturity. This impressive aggregate performance is explained by the large proportion of long-term contracts (such as long leases) in the Company's portfolio.
The Consolidated Financial Statements are provided as part of this Annual Financial Report. The following sections of this Con-
Seniorerie La Pairelle Senior housing - Wavre (Belgium)
solidated Board of Directors' Report analyse the financial statements using an analytical framework that is aligned with the Company's internal reporting structure. The consolidated income statement covers the 12 month period from 1 July 2014 to 30 June 2015. Acquisitions are accounted for on the date of the effective transfer of control. Such operations will present different impacts on the income statement, depending on whether they took place at the beginning, during, or end of the period.
The consolidated turnover (consolidated rental income) for the year amounts to €49.9 million, an increase of 23 % compared to the prior year. This is in line with the forecast published in the Securities Note regarding the capital increase of June 2015.
Changes in total consolidated rental income (+ €9.2 million, i.e. +22.7 %, or -0.8 % on a like-for-like basis) are presented below by segment:
— Hotels and other: -€0.1 million, i.e. -3.5 % (or -3.5 % on a like-for-like basis).
The evolution of rental income in the senior housing segment (+38.7 % and +0.5 % on a like-for-like basis) demonstrates the relevance of Aedifica's investment strategy in this segment, which now generates more than 68 % of the Company's turnover and almost 87 % of its operating result before result on portfolio.
The slight negative change in rental income in the apartments segment can be attributed to the furnished apartments, which have experienced amplified seasonality arising from the economic climate (as already noted in previous publications), and to internal factors such as:
In the hotel segment, as mentioned in previous publications, the negative growth can be attributed to rent reductions granted to certain tenants in prior financial years in order to preserve their rent to EBITDAR ratios, and therefore their cash flows and asset values.
After deducting rental-related charges, the net rental income for the year ended 30 June 2015 amounts to €49.9 million (+23 % as compared to 30 June 2014).
The property result is €48.3 million (30 June 2014: €39.1 million). This result, less other direct costs, provides a property operating result of €44.1 million (30 June 2014: €35.6 million), which represents an operating margin of 89 % (30 June 2014: 88 %).
After deducting overheads of €5.4 million (30 June 2014: €4.2 million) and taking into account other operating income and charges, the operating result before result on portfolio has increased by 24 % to reach €39.0 million (30 June 2014: €31.4 million). This result represents an EBIT margin (see glossary) of 78 % (30 June 2014: 77 %). Both the operating result before result on portfolio and the EBIT margin are in line with the forecast which was published in the Securities Note regarding the capital increase of June 2015.
The new IFRIC 21 interpretation "Levies" which entered into force for the Group on 1 July 2014 had an effect in the income statement during the period through recognition of a net non-recurrent charge of €0.4 million (additional charge of €0.2 million under line "VII. Rental charges and taxes normally paid by tenants on let properties", additional income of €0.2 million under line "V. Recovery of rental charges and taxes normally paid by tenants on let properties", additional charge of €0.4 million under line "XIII. Other property charges"). This is the result of the recognition of property taxes which were previously spread over time (i.e. taken pro rata temporis over the financial year) and which are now recognised at once for the full calendar year. Since the Company's financial year straddles two calendar years, the 2014/2015 income statement exceptionally includes the net effect of 18 months property taxes (6 months for the 2014 calendar year and 12 months for 2015 calendar year).
| 30 June 2015 | 30 June 2014 | |
|---|---|---|
| Rental income | 49,903 | 40,675 |
| Rental-related charges | -50 | -62 |
| Net rental income | 49,853 | 40,613 |
| Operating charges1 | -10,831 | -9,192 |
| Operating result before result on portfolio | 39,022 | 31,421 |
| EBIT margin2 (%) |
78% | 77% |
| Financial result excl. IAS 39 | -13,148 | -10,965 |
| Corporate tax | -376 | -141 |
| Profit excl. IAS 39 and IAS 40 | 25,498 | 20,315 |
| Denominator (IAS 33) | 10,658,981 | 9,917,093 |
| Earnings per share excl. IAS 39 and IAS 40 (€/share) | 2.39 | 2.05 |
| Profit excl. IAS 39 and IAS 40 | 25,498 | 20,315 |
| IAS 39 impact3 | 374 | -2,990 |
| IAS 40 impact4 | 19,259 | 3,816 |
| IAS 40 impact5 | 428 | 0 |
| IAS 40 impact6 | -395 | 244 |
| Roundings | 1 | 0 |
| Profit (owners of the parent) | 45,165 | 21,385 |
| Denominator (IAS 33) | 10,658,981 | 9,917,093 |
| Earnings per share (owners of the parent - IAS 33 - €/share) |
4.24 | 2.16 |
After taking into account the cash flows generated by hedging instruments (described below), Aedifica's net interest charges charges amount to €12.8 million (30 June 2014: €11.1 million). The average effective interest rate (3.0 % before capitalising interest on development projects) is well below that reported in 2013/2014 (4.0 %). Taking into account other income and charges of a financial nature (including the non-recurrent income of €0.4 million, detailed in Note 21 of the attached Consolidated Financial Statements), and excluding the net impact of the revaluation of hedging instruments to their fair value (noncash movements accounted for in accordance with IAS 39 are not included in the profit excluding IAS 39 and IAS 40 as explained below), the financial result excluding IAS 39 represents a net charge of €13.1 million (30 June 2014: €11.0 million, including non-recurrent income of €0.6 million, detailed in Note 21 in attachment), in line with the forecast published in the Securities Note regarding the capital increase of June 2015.
Corporate taxes are composed of current taxes and deferred taxes. In conformity with the Company's legal status (i.e. as a RREC), current taxes (charge of €0.4 million; 30 June 2014: charge of €0.1 million) consist primarily of Belgian tax on the Company's non-deductible expenditures, tax on the result generated abroad by Aedifica and tax on the result of consolidated subsidiaries. These taxes are in line with the forecast published in the Securities Note regarding the capital increase of June 2015. Deferred taxes are described below.
Profit excluding IAS 39 and IAS 40 reached €25.5 million (30 June 2014: €20.3 million), or €2.39 per share, based on the weighted average number of shares outstanding (30 June 2014: €2.05 per share). Profit excluding IAS 39 and IAS 40 is in line with the forecast published in the Securities Note regarding the capital increase of June 2015 and exceeds the 2014/2015 budget initially established in the 2013/2014 Consolidated Board of Director's Report by 15 %.
The income statement also includes elements with no monetary impact (that is to say, noncash) which vary as a function of market parameters. These consist of (1) the changes in the fair value of investment properties (accounted for in accordance with IAS 40), (2) changes in the fair value of financial assets and liabilities (accounted for in accordance with IAS 39) and (3) deferred taxes (arising from IAS 40):
solidated Financial Statements. Moreover, the financial instruments also reflect put options granted to non-controlling shareholders (in relation to the subsidiaries that were acquired in December 2014) which are the subject to appraisal at fair value (see Note 56). The impact of IAS 39 (changes in fair value) taken in the income statement as of 30 June 2015 represents an income of €0.4 million (30 June 2014: charge of €3.0 million).
— Deferred taxes (charge of €0.4 million as of 30 June 2015; income of €0.2 million as of 30 June 2014) arose from the recognition at fair value of buildings located abroad in conformity with IAS 40. These deferred taxes (with no monetary impact, that is to say non-cash) are thus excluded from the result excluding IAS 39 and IAS 40.
Given the non-monetary elements described above, the profit (attributable to owners of the parent) amounts to €45.2 million (30 June 2014: €21.4 million). The earnings per share (basic earnings per share, as defined in IAS 33 and calculated in Note 26 to the Consolidated Financial Statements) is €4.24 (30 June 2014: €2.16).
The adjusted statutory result as defined in the annex to the Royal Decree of 13 July 2014 regarding RRECs, is €25.4 million (30 June 2014: €20.4 million), an increase of 25 % (as calculated in Note 50). Taking into account the rights to dividend for the shares issued during the financial year, this represents an amount of €2.33 per share (30 June 2014: €1.99 per share).
| 30 June 2015 | 30 June 2014 |
|---|---|
| 1,005,163 | 784,980 |
| 14,073 | 9,678 |
| 1,048 | 65 |
| 1,020,284 | 794,723 |
| 636,193 | 435,278 |
| -37,923 | -38,203 |
| 598,270 | 397,075 |
| 377,216 | 356,820 |
| 44,798 | 40,828 |
| 1,020,284 | 794,723 |
| 37.0 | 44.9 |
Fair value of hedging instruments (see Note 33).
Including assets classified as held for sale.
As of 30 June 2015, investment properties represent 99 % (30 June 2014: 99 %) of the assets recognised on Aedifica's balance sheet, valued in accordance with IAS 40 (that is to say, accounted for at their fair value as determined by independent real estate experts) at a value of €1,005 million (30 June 2014: €785 million). This heading includes:
"Other assets included in the debt-to-assets ratio" represent 1 % of the total balance sheet (30 June 2014: 1 %).
Since Aedifica's formation, its capital has increased steadily along with its real estate activities (contributions, mergers, etc.) and thanks to capital increases (in cash) in October 2010, December 2012 and June 2015. It has increased to €371 million as of 30 June 2015 (30 June 2014: €270 million). The share premium amounts to €151 million as of 30 June 2015 (30 June 2014: €65 million). Recall that IFRS requires that the costs incurred to raise capital are recognised as a decrease in the statutory capital reserves. Equity (also called net assets), which represents the intrinsic net value of Aedifica and takes into account the fair value of its investment portfolio, amounts to:
As of 30 June 2015, liabilities included in the debt-to-assets ratio (as defined in the Royal Decree of 13 July 2014 regarding RRECs) reached €377 million (30 June 2014: €357 million), of which €367 million (30 June 2014: €346 million) represent amounts drawn on the Company's credit facilities, detailed in Note 40. The debt-to-assets ratio amounts to 37.0 % on a consolidated level (30 June 2014: 44.9 %) and 36.9 % on a statutory level (30 June 2014: 44.6 %). This sharp decrease is due to the capital increase of June 2015. The maximum ratio permitted for Belgian REITs is set at 65 % of total assets, thus, Aedifica maintains an additional consolidated debt capacity of €285 million in constant assets (that is, excluding growth in the real estate portfolio) or €815 million in variable assets (that is, taking into account growth in the real estate portfolio). Conversely, the balance sheet structure permits, other things being equal, the Company to absorb a decrease of up to 43 % in the fair values of its investment properties before reaching the maximum debt-to-assets ratio. Given Aedifica's existing bank commitments, which further limit the maximum debt-to-assets ratio to 60 %, the headroom available amounts to €234 million in constant assets, €585 million in variable assets, and -38 % in the fair value of investment properties.
Other liabilities of €45 million (30 June 2014: €41 million) represent mainly the fair value of hedging instruments (30 June 2015: €38 million; 30 June 2014: €38 million).
The table on the next page presents the change in the net asset value per share.
Recall that IFRS requires the presentation of the annual accounts before appropriation. Net assets in the amount of €38.74 per share as of 30 June 2014 thus included the dividend distributed in November 2014, and should be adjusted by €1.90 per share in order to compare with the value as of 30 June 2015. This amount corresponds to the amount of the total dividend (€19 million) divided by the total number of shares outstanding as of 30 June 2014 (10,249,083).
Excluding the non-monetary impact (that is to say, non-cash) of IAS 39 and after accounting for the payment of the 2013/2014 dividend in November 2014, the net assets per share based on the fair value of investment properties is €45.29 as of 30 June 2015, as compared to €40.57 per share on 30 June 2014.
To compare the net asset value to the share price, one has to take into account the detachment of coupon No. 14, which took place on 10 June 2015 in the context of the capital increase of 29 June 2015.
The cash flow statement included in the attached Consolidated Financial Statements shows total cash flows for the period of +€2.4 million (30 June 2014: +€0.4 million), which is made up of net cash from operating activities of +€36.6 million (30 June 2014: +€34.8 million), net cash from investing activities of -€84.8 million (30 June 2014: -€87.1 million), and net cash from financing activities of +€50.7 million (30 June 2014: +€52.7 million).
Rental income in this segment amounts to €34.1 million (30 June 2014: €24.6 million), or 68 % of Aedifica's total rental income. These buildings are generally operated under triple-net long leases (see glossary) and, as such, the property operating result for this segment is almost equal to the rental income. The fair value of investment properties attributed to this segment under IFRS 8 has been established at €694 million (30 June 2014: €482 million), or 71 % of the fair value of Aedifica's total marketable investment properties.
Rental income in this segment amounts to €11.9 million (30 June 2014: €12.1 million), or 24 % of Aedifica's total rental income. After deducting direct costs related to this activity, the property operating result for apartment buildings amounts to €7.0 million (30 June 2014: €7.1 million). The fair value of investment properties attributed to this segment under IFRS 8 has been established at €214 million (30 June 2014: €210 million), or 22 % of the fair value of Aedifica's total marketable investment properties.
Rental income in this segment amounts to €4.0 million (30 June 2014: €4.1 million), or 8 % of Aedifica's total rental income. After deducting direct costs related to this activity the property operating result for these buildings amounts to €3.9 million (30 June 2014: €4.1 million). The fair value of investment properties attributed to this segment under IFRS 8 has been established at €73 million (30 June 2014: €73 million), or 7 % of the fair value of Aedifica's total marketable investment properties.
| 30 June 2015 | 30 June 2014 | |
|---|---|---|
| Based on fair value of investment properties |
||
| Net asset value after deduction of dividend 2013/2014, excl. IAS 39 |
45.29 | 40.57 |
| IAS 39 impact | -2.70 | -3.73 |
| Net asset value after deduction of dividend 2013/2014 |
42.59 | 36.84 |
| Number of share outstanding (excl. treasury shares) |
14,045,931 | 10,249,083 |
| 30 June 2015 | 30 June 2014 | |
|---|---|---|
| A. Profit (loss) | 39,443,874 | 18,582,056 |
| B. Transfer to/from the reserves | 14,653,035 | -946,941 |
| 1. Transfer to/from the reserve of the (positive or negative) balance of changes in fair value of investment properties (-/+) | ||
| - fiscal year | 13,897,832 | 1,798,704 |
| - previous fiscal years | 0 | 0 |
| - disposals of investment properties | 427,591 | 0 |
| 2. Transfer to/from the reserve of the estimated transaction costs resulting from hypothetical disposal of investment properties (-/+) |
0 | 0 |
| 3. Transfer to the reserve of the balance of the changes in fair value of authorised cash flow hedging instruments qualifying for hedge accounting (-) |
||
| - fiscal year | 0 | -1,375 |
| - previous years | 0 | 0 |
| 4. Transfer to the reserve of the balance of the changes in fair value of authorised cash flow hedging instruments qualifying for hedge accounting (+) |
||
| - fiscal year | 0 | 0 |
| - previous years | 0 | 0 |
| 5. Transfer to the reserve of the balance of the changes in fair value of authorised cash flow hedging instruments not qualifying for hedge accounting (-) |
||
| - fiscal year | 461,498 | -2,988,644 |
| - previous years | 0 | 0 |
| 6. Transfer to the reserve of the balance of the changes in fair value of authorised cash flow hedging instruments not qualifying for hedge accounting (+) |
||
| - fiscal year | 0 | 0 |
| - previous years | 0 | 0 |
| 7. Transfer to/from the reserve of the balance of currency translation differences on monetary assets and liabilities (-/+) | 0 | 0 |
| 8. Transfer to the reserve of the fiscal latencies related to investment properties abroad (-/+) | -133,886 | 244,374 |
| 9. Transfer to the reserve of the received dividends aimed at the reimbursement of financial debts (-/+) | 0 | 0 |
| 10. Transfer to/from other reserves (-/+) | 0 | 0 |
| 11. Transfer to/from the result carried forward of the previous years (-/+) | 0 | 0 |
| C. Remuneration of the capital provided in article 13, § 1, para. 1 | 20,341,185 | 16,322,646 |
| D. Remuneration of the capital - other than C | 1,508,041 | 3,150,612 |
| Result to be carried forward | 2,941,613 | 55,739 |
The Board of Directors proposes to the Annual General Meeting of 23 October 2015 to approve the Aedifica SA Annual Accounts of 30 June 2015 (for which a summary is provided in the chapter "Abridged Statutory Annual Accounts" of this Annual Financial Report) and to distribute a gross dividend of €2.00 per share, which is in in line with the forecast published in the Securities Note regarding the capital increase of June 2015 and which is ahead of the initial budget published in the 2013/2014 Annual Financial Report (€1.93 per share). The statutory pay-out ratio is 86 %.
Effective since 1 January 2013, the withholding tax rate is 15 %. The reader is referred to section 5.2 of the chapter entitled "Standing Documents" of the Annual Financial Report for more information on the tax treatment of dividends, as well as to section 4.2. of the chapter entitled "Risk Factors" for more information on the sustainability of the withholding tax rate.
Based on the number of issued shares as of 30 June 2015, and taking into account the rights attached thereto, the statutory result for the 2014/2015 financial year will be submitted as presented in the table on the previous page.
The proposed dividend respects the requirements laid down in Article 13, § 1, paragraph 1 of the Royal Decree of 13 July 2014 regarding RRECs in that it is greater than the required minimum payout of 80 % of the adjusted statutory result, after deduction of the debt reduction over the financial year.
The proposed dividend will be payable, after approval at the Annual General Meeting, as from 30 October 2015 ("payment date" of coupon 14 related to the 2014/2015 financial year). The dividend will be paid by bank transfer as from the same date. The "ex-date" of coupon No. 14 was 11 June 2015, since the coupon was already detached in the context of the capital increase of June 2015. The net dividend per share after deduction of 15 % withholding tax will amount to €1.70.
Aedifica carries out its activities in a constantly changing environment, which implies certain risks. The occurrence of these risks could have a negative impact on the Company as a whole, or on its operations, outlook, financial position or financial result. Thus, these risks must be duly considered as part of any investment decision.
Aedifica aims to manage these risks to the greatest extent possible in order to generate recurring rental income and maximize the potential for gains on disposals.
The key risk factors are the focus of a specific section of the Annual Financial Report and summarised here in accordance with Article 119 of the Belgian Companies Code. Key risk factors with which Aedifica is confronted are the focus of regular monitoring both by Management and by the Board of Directors, who have developed prudent policies that are continuously reviewed and adapted as necessary.
The following risks are presented in detail in the section "Risk Factors" of this Annual Financial Report: market risks (economic risks, risks related to the real estate market, inflation risk, concentration risk in the senior housing segment); risks related to Aedifica's property portfolio (rents, asset management, quality and valuation of buildings, risk of expropriation, risk arising from mergers, de-mergers and acquisitions), and regulatory risks. Risks related to financial instruments are described in the following section.
Aedifica's financial management activities are aimed at ensuring permanent access to credit and to monitor and minimise the interest rate risk.
The use of financial instruments as described under "financial risks" in the "Risk Factors" section of this Annual Financial Report) is detailed in Note 44 of the attached Consolidated Financial Statements. The following elements are presented: debt structure, liquidity risk, interest rate risk, counterparty risk, foreign exchange risk, and financial planning risks.
Related party transactions, as defined under IAS 24 and in the Belgian Companies Code, are the object of Note 48 of the attached Consolidated Financial Statements. These transactions comprise the remuneration of Aedifica's directors and Executive Managers.
Moreover, certain types of transactions are covered by Article 37 of the Act of 12 May 2014 (with the exception of cases explicitly covered by Article 38 of the same Act). Over the course of the 2014/2015 financial year, no transactions covered by this Article and outside of normal business transactions were executed between Aedifica and its regular service providers.
As of 30 Jun 2015, Aedifica SA holds six stable subsidiaries, of which two are established in Belgium, three in Luxemburg and one in Germany.
Furthermore, as of 30 June 2015, Aedifica (together with Aedifica Invest SA) also holds four subsidiaries located in Belgium holding real estate assets; these subsidiaries will be merged with Aedifica in the following months. These subsidiaries are: De Stichel SA, Overbeke SPRL, Villa Temporis SA and Michri SA.
The organisational chart presented above shows the Group's subsidiaries as well as its share in each subsidiary.
Aedifica is not engaged in research and development activities covered by Articles 96 and 119 of the Belgian Companies Code.
Aedifica applies IFRS both for the preparation of its Consolidated Financial Statements and for its Statutory Accounts. In accordance with IAS 32 and the Annex C of the Royal Decree of 13 July 2014, treasury shares held by Aedifica are presented as a reduction to total equity. As of 30 June 2015, the Aedifica Group held no treasury shares.
In addition, as of 30 June 2015, Aedifica SA benefits from pledges on shares of the Company, constituted in connection with buildings acquisitions. These guarantees are detailed in Note 45.3.2 of the Consolidated Financial Statements.
The projections have been developed by the Board of Directors while establishing the budget for the 2015/2016 financial year. These projections were already published in the Securities Note regarding the capital increase of June 2015, which stated that "barring unforeseen circumstances, the Company aims to pay out a gross dividend of €2.05 per share over the financial year 2015/2016. Of course this estimate remains subject to approval by the general meeting of shareholders which will decide in principle on 28 October 2016 on the dividend that will be paid out in relation to the 2015/2016 financial year."
The Board of Directors continues to pay close attention to the shifting economic and financial context and the associated impacts on the Group's activities.
In the current economic climate, Aedifica's key strengths include the following:
average remaining lease maturity of current contracts
De Notelaar Senior housing - Olen (Belgium)
— Aedifica is in a good solvency position, with a consolidated debt-to-assets ratio of 37.0 % as of 30 June 2015 (far below the maximum legal limit of 65 % imposed for Belgian REITs and the contractual maximum of 60 % imposed by way of bank covenants). This is further supported by the stable fair values that the Company's real estate portfolio has demonstrated since the beginning of the economic and financial crisis. Aedifica enjoys a balance sheet structure that permits executing development projects and renovations (commitments representing approximately €138 million as of 30 June 2015, of which €118 million are to be realised within a four-year period) and to realise new investments.
The dividend expectation for the 2015/2016 financial year, as published in the abovementioned Securities Note, remains unchanged at €2.05 gross per share. This is an increase as compared to the dividend proposed by the Board of Directors for the 2014/2015 financial year.
Seniorerie de Maretak Senior housing -
Halle (Belgium)
A single conflict of interest occurred over the course of the 2014/2015 financial year, as explained below.
"Pursuant to Article 523 of the Belgian Companies Code, Mr. Jean Kotarakos and Mr. Stefaan Gielens announced that they had interests contrary to those of the Company; after informing the Chairman, they left the meeting.
Mr. Pierre Iserbyt, Chairman of the Nomination and Remuneration Committee, made a report to the Board on the deliberation of the aforementioned committee, which proposed to establish the gross variable remuneration of executive management as follows:
(i) The variable remuneration for the 2013/2014 fiscal year consists of an individual amount (gross) equivalent to a maximum of 50 % of gross annual remuneration excluding sundry benefits and pension plan contributions. The proposed amounts were determined based on the committee's overall satisfaction with management performance in accordance with the quantitative and qualitative objectives disclosed in the remuneration report of the Annual 2012/2013 Financial Report and recorded in the amendments to management conventions signed on 2 September 2013. Recall that the remuneration will only be awarded if the actual profit excluding IAS 39 and IAS 40 equals at least 85 % of the budgeted amount. Also recall that the criteria (and their weighting) applied for the appropriation of variable remuneration were the following: profit excluding IAS 39 and IAS 40 per share (25 %), growth of the real estate portfolio (25 %), rents (10%) operating margin (operating result before result on portfolio divided by the net rental income) (10 %), occupancy rate (10 %), and team management (20 %). The committee concluded that executive management had attained the pre-defined objectives and proposed to grant as variable remuneration €147,000 to the CEO and €108,000 to the CFO.
(ii) As regards the 2014/2015 financial year, the committee proposed that the variable remuneration equals a maximum amount equal to 50 % of annual gross remuneration excluding sundry benefits and pension plan contributions. Variable remuneration will only be awarded if the actual profit excluding IAS 39 and IAS 40 equals at least 85 % of the budgeted amount. The amount of variable remuneration will be determined based on quantitative and qualitative objectives established and evaluated by the Board of Directors. The Committee proposes that these objectives be fixed according to criteria that are weighted in terms of their importance. The criteria applied for the appropriation of variable remuneration (and their weighting) will be the following: profit excluding IAS 39 and IAS 40 per share (25 %), growth of the real estate portfolio including the internationalisation of the Group's activities (30 %), operating margin (operating result before result on portfolio divided by the net rental income) (25 %) and team management (20 %).
(iii) Regarding the 2015/2016 financial year, the committee proposed that the variable remuneration be set at a maximum amount equal to 50 % of annual gross remuneration excluding sundry benefits and pension plan contributions, and based on award criteria to be determined at a later stage.
The Board approved the Committee's proposals. Mr. Jean Kotarakos and Mr. Stefaan Gielens re-entered the meeting and heard the Board's decisions concerning executive management remuneration."
In accordance with Article 608 of the Belgian Companies Code, the Board of Directors comments on (i) the capital increases decided by the Board of Directors during the financial year; and (ii) the conditions and the effective impacts of the capital increases for which the Board of Directors limited or cancelled preferential rights (when applicable).
Through execution of the decision of the Board of Directors of 24 October 2014 to increase the capital in the framework of the authorised capital through a contribution in kind and through the optional dividend (refer to section 2 of this Consolidated Board of Directors' Report), the capital was increased by €5,763,329.48 (from €270,451,483.52 to €276,214,813.00) on 24 November 2014. 218,409 new shares without par value were issued. The shares have the same rights as existing shares.
In the framework of capital increases by contribution in kind, shareholders do not have preferential rights.
Following a decision of the Board of Directors of 9 June 2015 for the subscription of shares and after the Directors concluded on 29 June 2015 that the capital increase had indeed been carried out, the capital was increased in the framework of the authorised capital (refer to section 2 of this Consolidated Board of Directors' report) by €82,364,664.56 (from €288,276,325.94 to €370,640,990.50) on 29 June 2015. 3,121,318 new shares without par value were issued in exchange for contribution in cash with cancellation of the preferential subscription right and with granting of priority allocation rights. The shares have the same rights as existing shares. As of 1 July 2015, these shares participate in the Company's results for the 2015/2016 financial year.
Appropriate remarks on the conditions and the real effects of this capital increase, for which the preferential subscription right was cancelled and the priority allocation right was granted, are given in the special report established by the Board of Directors of 9 June 2015 pursuant to Article 596 of the Belgian Companies Code.
Environmental, ethical, and social matters are an integral part of Aedifica's daily management and blend into the Company's continual efforts to achieve and maintain quality standards.
Aedifica follows a pragmatic approach to environmental issues, paying close and constant attention to find the right balance in its use of human and financial resources to generate maximum value-added.
Before each potential building acquisition, Aedifica examines the environmental risks. In the event that risks are identified, plans are put in place to mitigate or eliminate risks entirely. In order to identify and control pollution risks, the Company studies the soil quality for all sites that host risky activities (e.g. fuel tanks, printing industries, etc.) or which have done so in the past.
Aedifica holds environmental permits for operations relating to listed elements of its buildings. It holds urban development permits, the majority of which were obtained by the former owners of buildings under development. Where the responsibility for environmental and urban development permits falls to its tenants, Aedifica endeavors to encourage the tenants to obtain the required permits on a timely basis.
For the buildings managed by Aedifica (directly or indirectly through external service providers), the technical and security installations are periodically inspected for conformity with applicable legislation. Regarding buildings for which the tenants assume responsibility for the property and its technical systems, Aedifica makes every effort to ensure that the required inspections are organised in due time. In addition, a programme is in place to ensure the conformity and compliance of building elevators.
A study is conducted for each new investment to determine the likelihood of asbestos and identify the related risks. All the devices identified as being at risk of containing asbestos and deemed harmful for humans are removed from the buildings. The remaining devices become the object of a management plan which is re-evaluated annually by accredited experts. The Company also uses regular maintenance works and planned upgrades to remove any remaining, insignificant, residues.
The regulation on the energy performance of buildings ("PEB") requires that a study on energy performance is conducted for all new construction projects. For existing buildings, the regulation has introduced a certificate to attest to the energy performance of the buildings, with reference to its energy performance coefficient. For buildings managed by Aedifica (directly or indirectly through external managers), a programme is in place to obtain this certification. Regarding buildings for which the tenant assumes responsibility for the property and its technical systems, Aedifica makes every effort to ensure that the necessary certificates are obtained.
As a priority item for apartment building renovations, Aedifica replaces oil and gas burning heating systems with natural gas systems, and seeks to improve the overall level of thermal insulation in its buildings (level K).
At its head office, Aedifica uses certified paper (including for printing the Annual Financial Report), and encourages its staff to recycle waste to the greatest extent possible.
Aedifica's Board of Directors is composed of 10 directors, comprising 4 women and 6 men. The gender diversity requirement included in the Belgian Act of 28 July 2011 (which modifies among others the Belgian Companies Code) is already met given the current composition of the Company's Board of Directors. The Company's mixed gender ratio of 40 % exceeds the 30 % threshold required by law for financial years beginning on or after 1 July 2017. Aedifica's high percentage of women on the Board has been noted in various studies dealing with gender diversity in governance bodies of Belgian companies (most notably in articles published on 18 October 2012 in De Morgen, 2 March 2011 in L'Echo, 26 July 2010 in De Tijd, and 4 December 2009 in Expertise News).
Aedifica aims to promote personal development of its employees by offering a work environment that is motivating, comfortable, and adapted to their needs. The Company strives to identify and further reinforce the talents of its staff in favour of promoting diversity and equal opportunity in the workplace. As of 30 June 2015, the Aedifica team consists of 34 full-time equivalent positions (FTEs), or 35 individuals (38 individuals on 30 June 2014, including 2 students). Total staff break down by gender is 19 women and 16 men, and by position type is 24 staff and 11 labourers. During the 2014/2015 financial year, Aedifica recorded an average of 19 hours of training per FTE (13 hours as of 30 June 2014). The average age of the Aedifica team is 40 years, a decrease as compared to that observed on 30 June 2014 (41 years).
Aedifica functions in the framework of Joint Committees 100 (labourers) and 200 (staff). The remuneration proposed by Aedifica remains positioned with reference to market remuneration for similar functions. For the 2014/2015 financial year remuneration includes a plan for non-recurring benefits linked to the Company's profitability, as has been the case from 2008/2009 onwards. In addition, other recurring benefits are offered, such as a defined contribution group insurance plan and hospitalisation coverage.
Each member of the team participates in at least one performance review per year with his/ her manager; this review is based on a multi-dimensional template that covers relations between the Company and its employees.
In 2010, Aedifica adopted a Charter of Ethics which formalised the code of conduct already in place. This charter addresses conflicts of interest, confidentiality, share purchase and sales, abuse of company property, business gifts, and respect for others. It is now included in the Corporate Governance Charter.
Aedifica's investments respond to multiple housing needs and the Company contributes to the renewal of certain districts (for example, with the renovation of its building in rue Haute in Brussels, or the construction of a residential building on the Chaussée de Louvain on a former industrial site in Schaerbeek). The Company also offers solutions to the challenges associated with the ageing population through its investments in senior housing. Furthermore, Aedifica contributes to the perseveration of national heritage as the owner of several listed buildings (for example the Résidence Palace and building in rue du Lombard in Brussels, Martin's Brugge hotel, and hotel Martin's Klooster in Leuven).
Aedifica presents a series of semi-annual roadshows in Belgium and abroad (Luxembourg, Amsterdam, London, Paris, Frankfurt), which attract foreign investment to Belgian capital markets.
Aedifica participates in debates related to the Belgian REIT sector (via the REITs workshop organised within the Belgian Association of Asset Managers or BEAMA), and more recently related to the new legislation regarding Regulated Real Estate Companies (SIR/ GVV), and is a member of the Association of Belgian listed companies (via the "Association Belge des Sociétés cotées" or ABSC). The Company is also a member of the "Union Professionnelle du Secteur Immobilier" (UPSI) and sponsors the VFB and FEDINVEST federations and investment associations.
Both members of Aedifica's Executive Management participate personally as speakers for university and post-graduate programmes offered by the University of Leuven (KU Leuven) and the University of Brussels (Université Libre de Bruxelles).
In accordance with Article 34 of the Royal Decree of 14 November 2007, items that can be of influence in the event of a takeover bid are summarised below.
There is one single category of shares without par value: all shares are fully paid-up. As of 30 June 2015, the share capital amounts to €370,640,990.50, consisting of 14,045,931 shares, each representing 1/14,045,931th of the share capital.
All holders of shares have equal rights and obligations, except for the dividend right, which may be modified when new shares are issued. The 3,121,318 new shares that were issued on 29 June 2015 are not entitled to the dividend relating to the 2014/2015 financial year, but will participate in the Company's results for the 2015/2016 financial year.
Please refer to applicable laws, including the Belgian Companies Code, the Act of 12 May 2014 on Regulated Real Estate Companies and the Royal Decree of 13 July 2014 on Regulated Real Estate Companies. Moreover, attention should be paid to the Company's Articles of Association (see section 4 of the chapter "Standing Documents" in the Annual Financial Report).
Ter Venne Senior housing - Sint-Martens-Latem (Belgium)
There are no legal or statutory limits for share transfers.
In order to provide sufficient liquidity to the shareholders, Article 21 of the Act of 12 May 2014 quoted above requires that the shares of Belgian REITs are listed on a regulated stock exchange.
The totality of the 14,045,931 Aedifica shares are listed on the Euronext Brussels continuous market.
There are no shareholders benefitting from specific control rights.
Aedifica has not put in place any mechanism in relation to employee shareholdings.
As of 30 June 2015, Aedifica holds no treasury shares.
Aedifica is not aware of any agreement between shareholders that could limit the transfer of shares and/or voting rights.
Pursuant to Article 11 to the Articles of Association, the members of the Board of Directors are elected for a term of up to 3 years by the shareholders at the Annual General Meeting. They are always revocable. They can be re-elected. During the Extraordinary General Meeting of 23 October 2015 (the attendance quorum will probably not be reached on the Extraordinary General Meeting of 6 October 2015) Aedifica's shareholders are invited to bring the maximum duration of the office to 4 years.
If not re-elected, the office of director ends just after the general meeting that decides on re-elections.
In case of vacancy of one or several director seats, the remaining directors have the power to provisionally elect one or several persons, to act as director(s) until the next general meeting, when shareholders will decide on the re-election. This right of re-election by the remaining directors becomes an obligation when the number of directors falls below the statutory minimum number.
A director elected to replace another director finishes the original term of the replaced director.
Please refer to the regulations applicable to RRECs. In particular, one should bear in mind that any contemplated change to the Articles of Association must be approved by the market authority (FSMA).
Gender balance at Aedifica
Pursuant to Article 6.4 of the Articles of Association, the Board of Directors is authorised to increase the share capital in one or several steps up to €180,000,000.00, at the moment and subject to the conditions set by the Board of Directors (in accordance with Article 603 of Belgian Companies Code, and as set out in Note 38 of the Consolidated Financial Statements). To date, the remaining balance of the authorised capital amounts to €2,981,559.18.
During the Extraordinary General Meeting of 23 October 2015 (the attendance quorum will probably not be reached on the Extraordinary General Meeting of 6 October 2015) Aedifica's shareholders are invited to bring the authorised capital to €370,000,000.00.
Moreover, Aedifica may, in accordance with Article 6.2 of the Articles of Association, repurchase, or receive as security, treasury shares under the conditions set out in the Belgian Companies Code; the Company must also inform the market authority (FSMA) in due time. Treasury shares pledged as of 30 June 2015 are described in section 10 of this Consolidated Board of Directors' Report.
The credit facilities of 26 August 2011, 11 July 2012, 27 June 2013, 5 August 2013 and 10 July 2014 (bilateral credits issued by BNP Paribas Fortis), as well as the credit facilities of 24 October 2011, 25 June 2012, 4 April 2013, 28 April 2014 and 8 October 2014 (bilateral credits issued by ING Belgium) and the credit facility of 7 May 2013 (bilateral credit issued by Bank Degroof), provide for early termination in the event of a change in control (control being defined as the concentration of 50 % plus one share in the hands of a single shareholder, or as the concentration of 50 % plus one voting right in the hands of a single shareholder).
The credit facilities of 23 January 2012 and 19 June 2014 issued by KBC Bank provide for early termination in case of substantial change in the shareholding structure that could result in a change in the composition of the Board of Directors or in the risk assessment carried out by the bank.
The credit facilities of 26 June 2013 issued by Banque LB Lux (for which activities were resumed by its parent company Bayerische Landesbank on 1 July 2014) provide for early termination in the event of a substantial change in control. Control is defined with reference to the capital holdings of Aedifica (more than 50 %) or by reference to the right or possibility to control, either directly or indirectly, the management activities or the majority of the Board of Directors. The credit facility of 30 June 2015 issued by Caisse d'Epargne et de Prévoyance Nord France ("CENFE") that comes into effect as of 23 July 2015 and with which CENFE takes over the credit issued by Bayerische Landesbank, includes an identical clause.
The credit facilities of 6 June 2014 and 13 November 2014 issued by Banque Européenne du Crédit Mutuel provides for early termination in the event of a substantial change in control in favour of one or more investors acting in concert. "Control" and "action in concert" are defined with reference to the Belgian Companies Code.
The credit facility of 27 November 2014 issued by Belfius Banque SA provides for early termination if the administration of the Company is modified or if one of the working partners of a partner with joint and several liability or one of the majority shareholders withdraws or passes away.
Hestia Senior housing - Wemmel (Belgium)
If the management agreement signed with the CEO is terminated by the CEO or by the Company within a period of 6 months after the launch of a takeover bid, the CEO will receive an indemnity amounting to 18 months of benefits (except in case of serious misconduct).
If the management agreement signed with the CFO is terminated by the CFO or by the Company within a period of 6 months after the launch of a takeover bid, the CFO will receive an indemnity amounting to 12 months of benefits (except in case of serious misconduct).
No such clause has been included in contracts signed with Aedifica staff.
The Audit Committee of the Company is made up of 3 non-executive directors; among these, 2 meet the independence criteria set out by Article 526ter of the Belgian Companies Code. Namely, Ms. Brigitte Gouder de Beauregard and Ms. Hilde Laga:
7° Have not been, over the last 3 years, a Partner of or employed by the statutory auditor of Aedifica, or of a related party of Aedifica;
8° Are not executive directors in another entity in which Mr. Stefaan Gielens and/or Mr. Jean Kotarakos act as non-executive directors. Furthermore, they do not have major relationships with Mr. Stefaan Gielens and/ or Mr. Jean Kotarakos through other duties in other entities;
Moreover, all members of the Audit Committee have the necessary competencies with respect to accounting and audit, given their level of education and their broad experience in these matters.
The statement of corporate governance (including the remuneration report and the description of the main features of systems of internal control and risk management) is provided in the chapter "Corporate Governance Statement", on pages 106 to 121 of this Annual Financial Report.
Aedifica's shares were added to the "FTSE EPRA/NAREIT Developed Europe Index" on 18 March 2013. Aedifica passed all eligibility criteria for inclusion in the EPRA indices during the March 2013 quarterly review.
The EPRA ("European Public Real Estate Association") is the voice of Europe's publicly traded real estate sector and the most widely used global benchmark for listed real estate. It represents more than 200 active members and over €350 billion in real estate assets. The European indices include more than 95 constituents, with a free-float market capitalisation of more than €195 billion. The criteria for inclusion in the indices are publicly available on the EPRA website (www.epra.com).
EPRA
Aedifica is registered in the European Index with a weighting of approx. 0.3% and in the Belgian Index with a weighting of approx. 12.5 %.
In August 2011, the Board of Directors of the European Public Real Estate Association ("EPRA") published an update of the report entitled "EPRA Reporting: Best Practices Recommendations" ("EPRA Best Practices"). The report is available on the EPRA website.
This document contains EPRA's recommendations for defining the main financial performance indicators applicable to listed real-estate companies. Aedifica supports this approach to reporting standardisation, which has been designed to improve the quality and comparability of information. The Company supplies its investors with most of the information recommended by EPRA.
On 24 September 2014, Aedifica was rewarded the "EPRA Silver Award" and the "EPRA Most Improved Award" for its 2012/2013 Annual Financial Report.
On 9 September 2015, Aedifica was rewarded the "EPRA Gold Award" for its 2013/2014 Annual Financial Report, bringing the Company in the forefront of the 106 surveyed companies.
"Inclusion in the EPRA index has always been a key milestone for Aedifica, especially following the Company's successful rights issue in 2012. It displays a wider recognition of Aedifica's commitment to best practice, and provides an opportunity for global investors to play a part in the Company's continued success."
Stefaan Gielens, CEO
| 30 June 2015 | 30 June 2014 | |
|---|---|---|
| EPRA Earnings (in €/share) | 2.39 | 2.05 |
| EPRA NAV (in €/share) | 45.46 | 40.55 |
| EPRA NNNAV (in €/share) | 42.44 | 36.61 |
| EPRA Net Initial Yield (NIY) (in %) | 5.1 | 5.2 |
| EPRA Topped-up NIY (in %) | 5.1 | 5.2 |
| EPRA Vacancy Rate (in %) | 2 | 2 |
| EPRA Cost Ratio (including direct vacancy costs) (in %) | 22 | 23 |
| EPRA Cost Ratio (excluding direct vacancy costs) (in %) | 22 | 22 |
| 30 June 2015 | 30 June 2014 | ||
|---|---|---|---|
| EPRA Earnings | x €1,000 | 25,499 | 20,315 |
| Recurring earnings from core operational activities | € / share | 2.39 | 2.05 |
| EPRA NAV Net Asset Value adjusted to include properties and other investment interests |
x €1,000 | 638,518 | 415,561 |
| at fair value and to exclude certain items not expected to crystalise in a long term investment property business model |
€ / share | 45.46 | 40.55 |
| EPRA NNNAV | x €1,000 | 596,052 | 375,220 |
| EPRA NAV adjusted to include the fair values of financial instruments, debt and deferred taxes |
€ / share | 42.44 | 36.61 |
| EPRA Net Initial Yield (NIY) Annualised rental income based on the cash rents passing at the balance sheet date, less non-recoverable property operating expenses, divided by the market value of the property, increased with (estimated) purchaser's costs |
% | 5.1 | 5.2 |
| EPRA Topped-up NIY This measure incorporates an adjustment to the EPRA NIY in respect of the expiration of rent-free periods or other unexpired lease incentives such as discounted rent periods and step rents |
% | 5.1 | 5.2 |
| EPRA Vacancy Rate Estimated Market Rental Value (ERV) of vacant space divided by ERV of the whole portfolio |
% | 2 | 2 |
| EPRA Cost Ratio (including direct vacancy costs) Administrative/operational expenses per IFRS income statement, including the direct costs of vacant buildings, divided by the gross rental income, less ground rent costs |
% | 22 | 23 |
| EPRA Cost Ratio (excluding direct vacancy costs) Administrative/operational expenses per IFRS income statement, less the direct costs of vacant buildings, divided by the gross rental income, less ground rent costs |
% | 22 | 22 |
| 30 June 2015 | 30 June 2014 | |
|---|---|---|
| Earnings for IFRS (owners of the parent) income statement | 45,165 | 21,385 |
| Adjustments to calculate EPRA Earnings, exclude: | ||
| (i) Changes in fair value of investment properties, development properties held for investment and other interests |
-19,259 | -3,816 |
| (ii) Profits or losses on disposal of investment properties, development properties held for investment and other interests |
-428 | 0 |
| (iii) Profits or losses on sales of trading properties including impairment charges in respect of trading properties |
0 | 0 |
| (iv) Tax on profits or losses on disposals | 0 | 0 |
| (v) Negative goodwill / goodwill impairment | 0 | 0 |
| (vi) Changes in fair value of financial instruments and associated close-out costs | -374 | 2,990 |
| (vii) Acquisition costs on share deals and non-controlling joint venture interests (IFRS 3) | 0 | 0 |
| (viii) Deferred taks in respect of EPRA adjustments | 395 | -244 |
| (ix) Adjustments (i) to (viii) above in respect of joint ventures | 0 | 0 |
| (x) Minority interests in respect of the above | 0 | 0 |
| EPRA Earnings (owners of the parent) | 25,499 | 20,315 |
| Number of shares | 10,658,981 | 9,917,093 |
| EPRA Earnings per Share (EPRA EPS in €/share) | 2.39 | 2.05 |
| 30 June 2015 | 30 June 2014 | |
|---|---|---|
| NAV per the financial statements (owners of the parent) | 598,270 | 377,602 |
| NAV per the financial statements (in €/share) (owners of the parent) | 42.59 | 36.84 |
| Effect of exercice of options, convertibles and other equity interests | 0 | 0 |
| Diluted NAV, after the exercice of options, convertibles and other equity interests | 598,270 | 377,602 |
| Include: | ||
| (i) Revaluation to fair value of investment properties | 0 | 0 |
| (ii) Revaluation to fair value of tenant leases held as finance leases | 0 | 0 |
| (iii) Revaluation to fair value of trading properties | 0 | 0 |
| Exclude: | ||
| (iv) Fair value of financial instruments | 37,923 | 38,203 |
| (v.a) Deferred tax | 2,325 | -244 |
| (v.b) Goodwill as a result of deferred tax | 0 | 0 |
| Include/exclude: | ||
| Adjustments (i) to (v) in respect of joint venture interests | 0 | 0 |
| EPRA NAV (owners of the parent) | 638,518 | 415,561 |
| Number of shares | 14,045,931 | 10,249,083 |
| EPRA NAV (in €/share) (owners of the parent) | 45.46 | 40.55 |
| 30 June 2015 | 30 June 2014 | |
|---|---|---|
| EPRA NAV (owners of the parent) | 638,518 | 415,561 |
| Include: | ||
| (i) Fair value of financial instruments | -37,923 | -38,203 |
| (ii) Fair value of debt | -2,218 | -2,382 |
| (iii) Deferred tax | -2,325 | 244 |
| EPRA NNNAV (owners of the parent) | 596,052 | 375,220 |
| Number of shares | 14,045,931 | 10,249,083 |
| EPRA NNNAV (in €/share) (owners of the parent) | 42.44 | 36.61 |
| 30 June 2015 | ||||||
|---|---|---|---|---|---|---|
| Senior housing |
Apartments buildings |
Hotels and other |
Non allocated |
Intersegment items |
Total | |
| Investment properties in fair value | 694,467 | 214,461 | 72,696 | 21,734 | 0 | 1,003,358 |
| Trading properties (+) | 1,805 | 0 | 0 | 0 | 0 | 1,805 |
| Development projects (-) | 0 | 0 | 0 | -21,734 | 0 | -21,734 |
| Marketable investment properties in fair value |
696,272 | 214,461 | 72,696 | 0 | 0 | 983,429 |
| Allowance for estimated purchasers' costs (+) | 23,969 | 5,825 | 2,123 | 0 | 0 | 31,917 |
| Investment value of investment properties available for lease |
720,241 | 220,286 | 74,819 | 0 | 0 | 1,015,346 |
| Annualised cash passing rental income (+) | 41,038 | 11,866 | 4,538 | 0 | 0 | 57,442 |
| Property charges1 (-) |
-306 | -4,441 | -42 | -473 | -115 | -5,377 |
| Annualised net rents | 40,732 | 7,425 | 4,496 | -473 | -115 | 52,065 |
| Notional rent expiration of rent free periods or other lease incentives (+) |
0 | 0 | 0 | 0 | 0 | 0 |
| Topped-up net annualised rent | 40,732 | 7,425 | 4,496 | -473 | -115 | 52,065 |
| EPRA NIY (in %) | 5.7 | 3.4 | 6.0 | 0.0 | - | 5.1 |
| EPRA "Topped-up" NIY (in %) | 5.7 | 3.4 | 6.0 | 0.0 | - | 5.1 |
| 30 June 2014 | ||||||
|---|---|---|---|---|---|---|
| Senior housing |
Apartments buildings |
Hotels and other |
Non allocated |
Intersegment items |
Total | |
| Investment properties in fair value | 482,401 | 210,128 | 73,260 | 19,191 | 0 | 784,980 |
| Trading properties (+) | 0 | 0 | 0 | 0 | 0 | 0 |
| Development projects (-) | 0 | 0 | 0 | -19,191 | 0 | -19,191 |
| Marketable investment properties in fair value |
482,401 | 210,128 | 73,260 | 0 | 0 | 765,789 |
| Allowance for estimated purchasers' costs (+) |
13,584 | 5,707 | 2,191 | 0 | 0 | 21,482 |
| Investment value of investment properties available for lease |
495,985 | 215,835 | 75,451 | 0 | 0 | 787,271 |
| Annualised cash passing rental income (+) | 28,725 | 12,425 | 4,564 | 0 | 0 | 45,714 |
| (-) Property charges1 |
-23 | -4,447 | -39 | -69 | -106 | -4,684 |
| Annualised net rents | 28,702 | 7,978 | 4,525 | -69 | -106 | 41,030 |
| Notional rent expiration of rent free periods or other lease incentives (+) |
0 | 0 | 0 | 0 | 0 | 0 |
| Topped-up net annualised rent | 28,702 | 7,978 | 4,525 | -69 | -106 | 41,030 |
| EPRA NIY (in %) | 5.8 | 3.7 | 6.0 | 0.0 | - | 5.2 |
| EPRA "Topped-up" NIY (in %) | 5.8 | 3.7 | 6.0 | 0.0 | - | 5.2 |
| 30 June 2015 | |||||||
|---|---|---|---|---|---|---|---|
| Gross rental income |
Net rental income |
Lettable space (in m²) |
Contractual rents3 |
Estimated rental value (ERV) on empty spaces |
Estimated rental value (ERV) |
EPRA Vacancy rate (in %) |
|
| Segment | |||||||
| Senior housing | 34,081 | 33,828 | 340,400 | 41,038 | 0 | 45,803 | 0 |
| Apartment buildings | 11,900 | 6,959 | 101,626 | 11,866 | 1,118 | 12,3564 | 9 |
| Hotels and other | 3,986 | 3,949 | 37,377 | 4,538 | 32 | 4,264 | 1 |
| Non-allocated | 0 | -473 | |||||
| Intersegment items | -114 | -115 | |||||
| Total marketable investment properties | 49,853 | 44,148 | 479,403 | 57,442 | 1,150 | 62,423 | 2 |
| Reconciliation to income statement | |||||||
| Properties sold during the 2014/2015 financial year |
0 | 0 | |||||
| Properties held for sale | 0 | 0 | |||||
| Other Ajustments | 0 | 0 | |||||
| Total marketable investment properties | 49,8531 | 44,1482 |
| 30 June 2014 | |||||||
|---|---|---|---|---|---|---|---|
| Gross rental income |
Net rental income |
Lettable space (in m²) |
Contractual rents3 |
Estimated rental value (ERV) on empty spaces |
Estimated rental value (ERV) |
EPRA Vacancy rate (in %) |
|
| Segment | |||||||
| Senior housing | 24,565 | 24,546 | 235,232 | 28,725 | 0 | 32,809 | 0 |
| Apartment buildings | 12,024 | 7,126 | 101,626 | 12,425 | 947 | 12,2384 | 8 |
| Hotels and other | 4,132 | 4,094 | 39,208 | 4,564 | 63 | 4,312 | 1 |
| Non-allocated | 0 | -69 | |||||
| Intersegment items | -108 | -106 | |||||
| Total marketable investment properties | 40,613 | 35,591 | 376,065 | 45,714 | 1,010 | 49,359 | 2 |
| Reconciliation to income statement | |||||||
| Properties sold during the 2013/2014 financial year |
0 | 0 | |||||
| Properties held for sale | 0 | 0 | |||||
| Other Ajustments | 0 | 0 |
Total marketable investment properties 40,6131 35,5912
of the consolidated IFRS accounts.
The total "net rental income" defined in EPRA Best Practices, reconciled with the consolidated IFRS income statement, corresponds to the "property operating result" of the consolidated IFRS accounts.
The current rent at the closing date plus future rent on leases signed as at 30 June 2014 or 30 June 2015.
This ERV does not take into account a furnished occupancy.
| 30 June 2015 | 30 June 2014 | ||||||
|---|---|---|---|---|---|---|---|
| Net rental income on a like-for-like basis |
Acqui sitions |
Disposals | Transfers due to completion |
Net rental income1 |
Net rental income on a like-for-like basis |
Like-for-like net rental income |
|
| Segment | |||||||
| Senior housing | 20,655 | 10,058 | 0 | 3,115 | 33,828 | 20,504 | 1 % |
| Apartment buildings | 6,564 | 395 | 0 | 0 | 6,959 | 6,837 | -4 % |
| Hotels and other | 3,949 | 0 | 0 | 0 | 3,949 | 4,094 | -4 % |
| Non-allocated | -473 | 0 | 0 | 0 | -473 | -69 | - |
| Intersegment items | -115 | 0 | 0 | 0 | -115 | -106 | - |
| Total marketable investment properties |
30,580 | 10,453 | 0 | 3,115 | 44,148 | 31,260 | -2 % |
| Reconciliation to income statement |
|||||||
| Properties sold during the 2014/2015 financial year |
0 | 0 | |||||
| Properties held for sale | 0 | 0 | |||||
| Other Ajustments | 0 | 0 | |||||
| Total marketable investment properties |
44,148 | 31,260 |
| 30 June 2015 | ||||
|---|---|---|---|---|
| Fair value | Changes in fair value |
EPRA NIY (in %) |
Reversion rate (in %) |
|
| Segment | ||||
| Senior housing | 696,272 | 13,343 | 5.7 | 10 |
| Apartment buildings | 214,461 | 1,061 | 6.6 | -51 |
| Hotels and other | 72,696 | 125 | 6.0 | -7 |
| Total marketable investment properties | 983,429 | 14,529 | 5.1 | 6 |
| Reconciliation to the consolidated IFRS balance sheet |
||||
| Development projects | 21,734 | 4,730 | ||
| Total marketable investment properties | 1,005,163 | 19,259 |
| 30 June 2014 | |||||||
|---|---|---|---|---|---|---|---|
| Fair value | Changes in fair value |
EPRA NIY (in %) |
Reversion rate (in %) |
||||
| Segment | |||||||
| Senior housing | 482,401 | 5,896 | 5.8 | 12 | |||
| Apartment buildings | 210,128 | -145 | 7.2 | -91 | |||
| Hotels and other | 73,260 | -99 | 6.0 | -7 | |||
| Total marketable investment properties | 765,789 | 5,562 | 5.2 | 5 | |||
| Reconciliation to the consolidated IFRS balance sheet |
|||||||
| Development projects | 19,191 | -1,836 | |||||
| Total marketable investment properties | 784,980 | 3,816 |
| 30 juin 2015 | |||||
|---|---|---|---|---|---|
| Average | Current rent of leases expiring (x €1,000) | ||||
| remaining maturity1 (in years) |
Not later than one year |
Later than one year and not later than two years |
Later than two years and not later than five years |
Later than five years |
|
| Segment | |||||
| Senior housing | 24 | 0 | 0 | 0 | 41,101 |
| Apartment buildings | 4 | 8,796 | 2,687 | 0 | 600 |
| Hotels and other | 28 | 89 | 54 | 0 | 4,115 |
| Total marketable investment properties |
20 | 8,885 | 2,741 | 0 | 45,816 |
| 30 June 2015 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Cost to date | Costs to completion |
Future interest to be capitalised |
Forecast total cost |
Forecast completion date |
Lettable space (in m²) |
% Pre-let | ERV on completion |
||
| Total | 21 | 118 | 2 | 138 | 2018/2019 | ± 67,000 | 95 | 8 | |
| 30 June 2014 | |||||||||
| Cost to date | Costs to completion |
Future interest to be capitalised |
Forecast total cost |
Forecast completion date |
Lettable space (in m²) |
% Pre-let | ERV on completion |
||
| Total | 19 | 205 | 3 | 228 | 2017/2018 | ±112,000 | 96 | 13 |
The breakdown for these projects is provided in section 4.2. of the property report.
| 30 June 2015 | 30 June 2014 | |
|---|---|---|
| Administrative/operating expense line per IFRS statement | -10,881 | -9,524 |
| Rental-related charges | -50 | -62 |
| Recovery of property charges | 32 | 36 |
| Rental charges and taxes normally paid by tenants on let properties | -1,563 | -1,510 |
| Technical costs | -1,071 | -933 |
| Commercial costs | -492 | -549 |
| Charges and taxes on unlet properties | -131 | -162 |
| Property management costs | -892 | -717 |
| Other property charges | -1,588 | -1,187 |
| Overheads | -5,355 | -4,202 |
| Other operating income and charges | 229 | 32 |
| EPRA Costs (including direct vacancy costs) (A) | -10,881 | -9,254 |
| Charges and taxes on unlet properties | 131 | 162 |
| EPRA Costs (excluding direct vacancy costs) (B) | -10,750 | -9,092 |
| Gross Rental Income (C) | 49,903 | 40,675 |
| EPRA Cost Ratio (including direct vacancy costs) (A/C) | 22 % | 23 % |
| EPRA Cost Ratio (excluding direct vacancy costs) (B/C) | 22 % | 22 % |
| Overhead and operating expenses capitalised (including share of joint ventures) | 20 | 30 |
Aedifica capitalises internal architect costs.
average remaining lease maturity of current contracts
part of the portfolio in Germany
All data presented in sections 1.1 and 1.3.1 of this chapter is based on information publicly available through the Belgian Ministry of Economy as of 31 March 2015.
Turnover on the secondary residential market saw an increase in Flanders at the end of 2014 due to changes announced in relation to mortgage interest tax relief schemes. As a result, the turnover of selling single-family dwellings, apartments and building lands subject to registration rights rose approx. 6 % to reach €31.2 billion. The stricter credit policies imposed by financial institutions as a result of Basel III directives are, however, have an increasing impact on market activity. A second phenomenon that continued over the course of 2014 can be seen in the further increase in real interest rates. These rates are determinants of both activity and price levels. The base rates for mortgage loans fell over the course of 2014, from 3.7 % in the first half to 2.7 % at the end of the year. At the same time inflation saw an even greater drop: starting at 1.14 % in January, it decreased to -0.38 % in December. This means that the real interest rate, the difference between the basis rate for mortgage loans and inflation, rose from 2.56 % in January to 3.08 % in December before reaching 3.4% in early 2015. In contrast, the real interest rate remained under 1 % for almost the entire two-year period from October 2010 to October 2012.
In terms of the number of sales of existing dwellings, 2014 is seen as a peak year. This impression can be misleading, however: during the first three quarters, activity decreased further like it did in 2012 and 2013. We feel that this is the fundamental trend. In the fourth quarter,
the conversion of the mortgage interest tax relief to a new, toned down version in Flanders led to a rush: 6,500 (+30 %) more single-family dwellings and 2,600 (+18 %) more apartments were sold in the fourth quarter of 2014 than in the same quarter of the prior calendar year (2013).
The same picture emerges in terms of the number of housing starts and approved development permits: a significant increase in Flanders (e.g. +22 % in the number of apartment starts) conceals other, weaker figures. In Wallonia, is also notable that in 2014 more development permits were granted for apartments (6.327) than for single-family dwellings (5,711). This is a first for the region, and is largely due to the conversion of former industrial sites into housing in the region of Liège.
For 2014, total sales (per thousand households) of single-family dwellings and apartments (existing and under construction) by region were: 44 in Flanders (2006: 44.5), 28 in Wallonia (2006: 35), and 26 in Brussels (2006: 32). The demand for rented dwellings rose sharply and an increasing number of higher-income households are staying on the rental market for longer periods of time.
Prices continue to show an upward trend: in 2014, we observed an increase of 0.7 % for single-family dwellings, 1.1 % for apartments and 1.9 % for vacant lands. Apartments in Brussels and Wallonia experienced a slight decrease (-1 %), while Flanders saw an increase of 2.6 % in this segment.
Between 1983 and 2014, prices for private dwellings have multiplied by 6.46. This represents an average yearly increase of 6.2 %, compared to an average inflation of 2.15 %. The most important factors reflected during this period include, on one hand, the increase in the consumer price index (+93.21 %) and in the purchasing power (inflation excluded) of households (+57.58 %), and on the other hand, the increase in the borrowing capacity arising due to the reduction in interest rates (+98.60 %) and the change in the duration of loans (+9.83 %). The result obtained by multiplying these four factors (1.9321 x 1.5758 x 1.9860 x 1.0983) shows that the baseline index of 100 (established in 1983) reached 644 in 2014. This is barely 2.8 % more than the change in the selling prices (646). Over a period of 101 years (1913-2014), prices for single-family dwellings have multiplied by a factor of 791, which represents an annual rise of 6.83 %, compared to average inflation of 5.54 %.
In the meantime, we have reached historically low interest rates, which implies that the change in prices will remain limited. It is expected that interest rates will remain relatively low for a long period, and that rate increases driven by inflation and purchasing power will also remain limited.
Given that financial institutions now extend loans covering only approx. 80 % of the purchase price, the initial capital requirement is a fundamental obstacle for acquisition. Taking into account the registration rights and other transaction costs, we can assume that the buyer must have approx. 30 % of the purchase price in starting capital. Parents and grandparents were traditionally an important aid to achieve this. The increased life expectancy of parents and grandparents and the erosion of their capital in meeting their basic needs have an effect on young persons who are forced to postpone their first property acquisition and, as stated above, stay on the rental market for a longer period.
The Belgian market for furnished apartments is characterised by the dispersion of operators and by a very diverse offering (ranging from the simple activity of renting out furnished apartments to providing furnished apartment rentals with additional services, and from very short term (daily) rental contracts to more classic monthly rental contracts, etc.). Moreover, this market is characterised by its lack of transparency. To the best of our knowledge, no independent market study has been carried out on this segment to date.
The business of furnished apartment rentals must not be confused with the hotel industry. The main activity is indeed the renting out of apartments, which include all necessary furnishings such that tenants can immediately move in without having to worry about the interior design. The additional services provided are rather limited, usually consisting of a weekly cleaning service only.
Taking into account short-term rental contracts and the target clientele (expatriates), this rental activity is more sensitive to economic cycles. Current market conditions lead to increased volatility in occupancy rates and prices.
In Flanders, the activity of renting furnished apartments is subject to a specific regulation, the Decree of 10 July 2008 on Touristic Housing. In the Brussels-Capital Region, an Ordinance was also adopted under which the activity of furnished apartment rentals, and their service providers, are in certain cases henceforth regulated by the regulatory framework for touris tic housing (Ordinance of 8 May 2014 on Touristic Housing).
The total number of rest home beds in Belgium increased by 3,000 in units between 1 April 2014 and 29 May 2015 to reach a capacity of 137,299 beds. However, according to several studies, this increase remains below the real annual incremental need. Many of these studies are based on the growth forecasts for the number of persons over 65 years, which will rise from 17 % to 22 % of the population between 2013 and 2030. However, within this category, the portion of seniors who are still autonomous is growing fast and, a result, the number of dependant persons is increasing less sharply. According to a Dutch study (CBS), life expectancies have increased between 1980 and 2010, increasing from 72.5 to 79 years for men and from 79 to 83 years for women. The number of years during which elderly people suffer from health problems has remained stable since 1990 for men (approx. 15 years) and since 1998 for women (approx. 20 years). Increasingly, domestic technologies and homecare also play a more significant role. The average duration of stay remains relatively stable. Over the last 5 years, the number of beds has increased by 7,700 units. Private not-for-profit organisations operate the lion's share of these units, representing 60 % of the market. It is notable as well that the number of rest home beds has consistently decreased between 1997 (93,056 beds) and 2012 (62,545 beds). Since 2012 however, it rose to 65,285 units.
880,000 beds
in rest homes in Germany
3,000 units
increase in the number of rest home beds in Belgium in 2014
As a long-term investment, health care real estate is attracting more and more interest. The investment market has rapidly extended toward insurers and pension funds for whom (very) long-term contracts – which, moreover, are indexed – present attractive features. This also corresponds to operators' desire to pursue a long-term strategy. Financial ratios, such as the debt to turnover, are of greater concern to operators than to real estate investors. For investors, a debt that is eight times the turnover (rental income) is easily acceptable, whereas, for operators, debt generally amounts to only 25 % of the turnover. The separation between operational activities and real estate, which is also found in the hotel segment, is therefore a logical consequence. However, these two aspects remain linked, with profits split between the two parties: they are thus dependent on one another. For the operator, the building represents a "real estate machine" that cannot be defective at any time. Like in the hotel segment, triple net contracts are logically established in the healthcare sector as well. It is essential for operators that the quality of the asset is maintained and that they can intervene quickly if action is needed.
This type of contract is misleading for investors who think they are fully relieved of all matters relating to building management given the long-term contracts in place with the operators. Operational sustainability and technical requirements of the building, as well as compliance with constantly changing regional regulations, are the Achilles heel of relations between investors and operators. What value will remain if a building is not up to code? If the establishment were located in collective community services zone ("blue zone"), what alternative use would be possible? If operations become insufficiently profitable due to a reduction in state/ public subsidies, change in regulation, or excessive rent, a downward rent revision will may be required or the operations risk being discontinued. It is crucial for the investor to monitor all changes and trends of either technical or regulatory nature and as well as those affecting operations.
Various authorities are taking initiatives to limit the possibility to offer individual rooms in a rest home for sale as investment properties. Co-ownership in the health care sector, while permitted in the apartment sector, has fortunately reached an impasse. In addition, it will be impossible to impose significant investments on co-owners at the same time, except for justified social reasons. Hopefully, this legislation will be adopted in other Belgian regions, and also be extended to other types of operational properties. How would it be possible to maintain, under co-ownership, the quality requirements of a hotel, a student residence or even a house transformed into an apartment building?
Given the increasing trend toward professionalisation among rest home operators, the attractiveness to investors, and reduced interest rates, gross rental yields are decreasing. Certain transactions (based on long-term triple net contracts) are already being established at minimal rental yields lower than 5 %. In this context, the necessity of quality and versatility or in general terms the sustainability of the investment, is even more important: which such yields, there is no room for error. Attempts are being made to capitalise on the experience accumulated in the senior care segment by combining these residences to serve other types of dependent persons, such as youth with disabilities. Ancillary services such as welcoming, catering, etc. could also be combined which could improve the complementarity and flexibility of real estate assets. In some cases, target groups are so few that independent establishments are not profitable; the abovementioned initiatives offer new possibilities, including for local projects.
Population ageing and increasing life expectancies especially have an effect on the German market. Germany has approximately 81 million inhabitants, of which approximately 17 million are over 65 (21 %) and an estimated 8 million are more than 75 years of age (10 %).
Population ageing and increasing life expectancies especially have an effect on the German market. Germany has approximately 81 million inhabitants, of which approximately 17 million are over 65 (21 %) and an estimated 8 million are more than 75 years of age (10 %). Population ageing will be further amplified by the generation of baby boomers who will reach age 60 in approximately ten years. Consequently, the need for senior housing will increase over the next decades.
When looking at the population by age cohorts, it is noted that approximately 0.5 % of people below 60 years of age need long-term care. This percentage increases to 10 % for those between 60 and 80 and reaches 20 % after the age of 80. The total rest home capacity in Germany should be expanded, given the number of persons in need of care. It is expected that this number will rise from approximately 2.5 million today to approximately 3 million by 2030.
Currently, there are approximately 880,000 beds in more than 12,000 rest homes in Germany. These are operated by not-for-profit operators (approximately 54.4 %), private operators (approximately 40.5 %) and public operators (approximately 5.1 %), in a very fragmented market. It is estimated that the market share of the five biggest operators is below 10 %.
According to some market studies, the capacity of rest homes should increase by approximately 380,000 units by 2030. Thus, the ageing population offers significant growth potential and consolidation opportunities in the collective senior housing sector in Germany.
The trend towards a bullish market for suitable nursing home investments has continued in 2015. This is evident not only in the increasing demand from investors already active in the market but also in the increasing numbers of international investors entering the market, having discovered this type of property as an asset class that is secured by demographic trends.
The transaction volume for nursing homes was at approximately €811 million in 2014 of which roughly 43% have been portfolio transactions. It is notable that approximately €310 million of the total transaction volume came from foreign investors (38%). It can be assumed that this volume will also be equalled in 2015, not least because of the increasing multipliers, which are ever more frequently exceed 15-times of the rental income.
As well as the new international investors, many local investors are entering the market in order to separate properties into individual sheltered apartments, which are then offered to private investors. In doing so, they generate significant capital gains which leads to reduced yields. New buildings are particularly sought after by this this type of investor. As a consequence, institutional investors (special funds and closed-end funds) are forced to reconsider their acquisition criteria, which tend to be relatively inflexible.
At the end of 2014 the net initial yield for prime properties dropped to 6.25% which is 75 basis points below the figure of 2013. A trend toward steadily increasing demand for many types of property is now evident.
As compared to the same period last year (January – May, 2014), occupancy rates increased slightly in the Belgian hotel market overall, reaching approx. 70.9 %. Thus, the marginal increase observed during the past two years continued in 2015. The RevPar (revenue per available room) increased sharply by 4.5 %, as did average prices, which rose by 2.1 %.
At a regional level, the Flemish art cities continue to perform well. Building on the gains made in 2013, the monthly occupancy rates in 2014 constantly exceeded prior year figures (with the single exception of the month of October). Based on data covering approx. 60 % of the rooms, the occupancy rate of the hotels located in Leuven reached approx. 74 % over this period, with a peak in September of approx. 84 %. In December, the occupancy rate remained clearly below 2013 levels. In Bruges, the occupancy rate was approx. 75 % in 2014, with a summer high of over 90 % in August.
Works continue on the new Het Tafelrond hotel (4 stars, 44 rooms) on the Grote Markt in Leuven. The hotel opening is expected at the end of 2015. In Bruges, no new hotel development projects are expected at present.
The occupancy rate of hotels in Limburg remains almost constantly below the average of the other Flemish provinces, although there are large differences between the various categories of hotels. Three-star and especially four-star hotels have achieved considerably better occupancy rates. Overall, the 2014 occupancy rate was below the 2013 level.
In terms of investments, several transactions were completed during the first half of 2015. The French Eiffage group sold the Sofitel Brussels Europe hotel (5 stars, 150 rooms and 12 suites) to Debron Capital. The Park Inn by Radisson hotel (3 stars, 140 rooms) close to the Brussels-South railway station, owned 20 % by Eiffage, was sold as well. Both transactions represent an estimated investment volume of approx. €36 million. In Antwerp, KKR sold the Radisson Blu and Park Inn hotels, located at the square Astridplein, for €48 million.
Total investment volume in the EMEA reached approx. €14.5 billion in 2014, which is almost 50 % more than 2013 levels.
and reproduced with permission. 2. Written in Dutch on 25 June 2015 by de Crombrugghe & Partners SA,
and reproduced with permission. Translation by Aedifica.
| (x1,000 €) | 30 June 2015 | 31 March 2015 | 31 Dec. 2014 | 30 Sept. 2014 | 30 June 2014 |
|---|---|---|---|---|---|
| Investment properties in fair value | |||||
| Senior housing2 | 696,272 | 671,638 | 656,278 | 530,267 | 482,401 |
| Apartment buildings | 214,461 | 211,731 | 210,886 | 210,340 | 210,128 |
| Hotels and other | 72,696 | 73,075 | 73,439 | 73,387 | 73,260 |
| Total of marketable investment properties in fair value |
983,429 | 956,444 | 940,603 | 813,994 | 765,789 |
| Development projects | 21,734 | 37,209 | 30,114 | 23,831 | 19,191 |
| Total of investments properties in fair value |
1,005,163 | 993,653 | 970,717 | 837,825 | 784,980 |
| Contractual rents1 | 57,442 | 56,219 | 55,287 | 47,694 | 45,714 |
| Contractual rents + ERV on empty spaces | 58,592 | 57,268 | 56,475 | 48,894 | 46,724 |
| Valeur locative estimée (ERV)1 | 62,423 | 61,557 | 59,675 | 51,587 | 49,358 |
| Occupancy rate1 of the investment properties (%) |
|||||
| Total Portfolio (excl. furnished apartments) | 97.9 % | 98.0 % | 97.7 % | 97.3 % | 97.6 % |
| Furnished apartments | 78.3 % | 76.8 % | 73.2 % | 71.3 % | 78.0 % |
See glossary.
Including assets classified as held for sale.
3.3. Breakdown by building (in fair value)
of the buildings represents of total consolidated assets None more than 3% 3.5. Age of buildings by type of contract (based on fair value)
3.6. Breakdown by lease maturity of contracts (based on fair value) Remaining lease maturity
Property report
remaining lease maturity
20 years
buildings 153
overall occupancy rate for the year ended 30 June 2015 98 %
| 30 June 2015 | 30 June 2014 | |
|---|---|---|
| Senior housing | 73 % | 63 % |
| Belgium | 58 % | 57 % |
| Senior Living Group1 | 15 % | 16 % |
| Armonea | 13 % | 13 % |
| Orpea | 11 % | 14 % |
| Soprim@ | 8 % | 10 % |
| Oase | 5 % | 2 % |
| Vulpia | 3 % | 0 % |
| Time for Quality | 1 % | 0 % |
| Other | 2 % | 2 % |
| Germany | 15 % | 6 % |
| Residenz-Gruppe Bremen | 8 % | 0 % |
| AGO | 3 % | 3 % |
| Schloss Bensberg Management | 2 % | 0 % |
| Senator | 1 % | 2 % |
| Volkssolidarität | 1 % | 1 % |
| Hotels and other | 7 % | 9 % |
| Martin's Hotels | 5 % | 6 % |
| Different Hotel Group | 2 % | 3 % |
| Other tenants | 20 % | 28 % |
| Total | 100 % | 100 % |
Korian – Medica group.
Increased by the goodwill and the book value of furnishings (in the furnished apartments).
3.11 Property portfolio in value insured
Aedifica's investment properties are insured for a total value of €842 million (including furniture in the furnished apartments, and excluding lands), i.e. €573 million for senior housing, €192 million for apartment buildings and €77 million for hotels and other.
+28%
compounded annual growth rate of the portfolio since 2006
€120M
fair value of marketable investment properties in Germany
Geographical breakdown
| Totale surface (m²)¹ |
Residential surface (m²) |
Number of residential units |
% Occupancy rate2 |
Contractual rents³ |
Contractual rents + ERV on empty spaces4 |
Estimated rental value (ERV)5 |
|
|---|---|---|---|---|---|---|---|
| Senior housing | |||||||
| 1 Château Chenois (B-1410 Waterloo) |
6,354 | 6,354 | 115 | 100.0 % | 859,500 | 859,500 | 1,080,100 |
| 2 New Philip (B-1190 Brussels) |
3,914 | 3,914 | 111 | 100.0 % | 470,600 | 470,600 | 571,800 |
| 3 Jardins de Provence (B-1070 Brussels) |
2,280 | 2,280 | 72 | 100.0 % | 386,300 | 386,300 | 385,000 |
| 4 Bel Air (B-1030 Brussels) |
5,350 | 5,350 | 161 | 100.0 % | 702,400 | 702,400 | 807,700 |
| 5 Résidence Grange des Champs (B-1420 Braine-l'Alleud) |
3,396 | 3,396 | 75 | 100.0 % | 415,600 | 415,600 | 475,900 |
| 6 Résidence Augustin (B-1190 Brussels) |
4,832 | 4,832 | 94 | 100.0 % | 522,600 | 522,600 | 571,900 |
| 7 Ennea (B-9100 Sint-Niklaas) |
1,848 | 1,848 | 34 | 100.0 % | 188,400 | 188,400 | 173,700 |
| 8 Kasteelhof (B-9200 Dendermonde) |
3,500 | 3,500 | 81 | 100.0 % | 340,800 | 340,800 | 486,100 |
| 9 Wielant (B-8570 Ingooigem) |
4,834 | 4,834 | 104 | 100.0 % | 523,400 | 523,400 | 678,900 |
| 10 Résidence Parc Palace (B-1180 Brussels) |
6,719 | 6,719 | 162 | 100.0 % | 1,215,700 | 1,215,700 | 1,464,200 |
| 11 Résidence Service (B-1180 Brussels) |
8,716 | 8,716 | 175 | 100.0 % | 1,250,500 | 1,250,500 | 1,059,700 |
| 12 Résidence du Golf (B-1070 Brussels) |
6,424 | 6,424 | 194 | 100.0 % | 751,400 | 751,400 | 1,268,500 |
| 13 Résidence Boneput (B-3960 Bree) |
2,993 | 2,993 | 78 | 100.0 % | 443,400 | 443,400 | 554,800 |
| 14 Résidence Aux Deux Parcs (B-1090 Brussels) |
1,618 | 1,618 | 53 | 100.0 % | 257,000 | 257,000 | 305,700 |
| 15 Résidence L'Air du Temps (B-4032 Chênée) |
2,763 | 2,763 | 88 | 100.0 % | 453,900 | 453,900 | 505,900 |
| 16 Au Bon Vieux Temps (B-1435 Mont-Saint-Guibert) |
1,268 | 1,268 | 43 | 100.0 % | 224,700 | 224,700 | 175,700 |
| 17 Op Haanven (B-2431 Veerle-Laakdal) |
4,675 | 4,675 | 89 | 100.0 % | 404,000 | 404,000 | 666,600 |
| 18 Résidence Exclusiv (B-1140 Brussels) |
4,253 | 4,253 | 104 | 100.0 % | 692,400 | 692,400 | 663,400 |
| 19 Séniorie Mélopée (B-1080 Brussels) |
2,967 | 2,967 | 70 | 100.0 % | 481,700 | 481,700 | 389,500 |
| 20 La Boule de Cristal (B-5564 Wanlin) |
1,290 | 1,290 | 41 | 100.0 % | 90,900 | 90,900 | 162,100 |
Surface excluding ground and parkings. The cellars are taken into consideration only in exceptional cases.
See glossary. As a reminder, the occupancy rate of the buildings with furnished apartments can not be compared to the occupancy rate calculated on the rest of the portfolio, as the methodology is different. We also note that the occupancy rate of the residential and mixed buildings includes units in renovation and hence temporarily not rentable.
The amounts related to the buildings with furnished apartments correspond to the annualised rental income excl. VAT.
For the buildings with furnished apartments, no estimated rented value (ERV) were added for vacancy.
See glossary.
| Totale surface (m²)¹ |
Residential surface (m²) |
Number of residential units |
% Occupancy rate2 |
Contractual rents³ |
Contractual rents + ERV on empty spaces4 |
Estimated rental value (ERV)5 |
|
|---|---|---|---|---|---|---|---|
| 21 Les Charmes en Famenne (B-5560 Houyet) |
3,165 | 3,165 | 96 | 100.0 % | 292,200 | 292,200 | 344,000 |
| 22 Seniorerie La Pairelle (B-5100 Wépion) |
6,016 | 6,016 | 118 | 100.0 % | 740,500 | 740,500 | 688,200 |
| 23 Gaerveld (résidence-services) (B-3500 Hasselt) |
1,504 | 1,504 | 20 | 100.0 % | 165,200 | 165,200 | 167,300 |
| 24 Résidence du Plateau (B-1300 Wavre) |
8,069 | 8,069 | 143 | 100.0 % | 1,239,300 | 1,239,300 | 1,212,700 |
| 25 Seniorie de Maretak (B-1500 Halle) |
5,684 | 5,684 | 122 | 100.0 % | 516,100 | 516,100 | 701,600 |
| 26 De Edelweis (B-3130 Begijnendijk) |
6,914 | 6,914 | 122 | 100.0 % | 737,100 | 737,100 | 872,000 |
| 27 Bois de la Pierre (B-1300 Wavre) |
2,272 | 2,272 | 65 | 100.0 % | 433,500 | 433,500 | 422,100 |
| 28 Buitenhof (B-2930 Brasschaat) |
4,386 | 4,386 | 80 | 100.0 % | 533,300 | 533,300 | 729,900 |
| 29 Klein Veldeken (B-1730 Asse) |
5,824 | 5,824 | 58 | 100.0 % | 611,500 | 611,500 | 669,900 |
| 30 Koning Albert I (B-1700 Dilbeek) |
7,775 | 7,775 | 110 | 100.0 % | 897,600 | 897,600 | 911,000 |
| 31 Eyckenborch (B-1755 Gooik) |
8,771 | 8,771 | 141 | 100.0 % | 1,071,800 | 1,071,800 | 858,500 |
| 32 Rietdijk (B-1800 Vilvoorde) |
2,155 | 2,155 | 59 | 100.0 % | 328,000 | 328,000 | 345,500 |
| 33 Marie-Louise (B-1780 Wemmel) |
1,959 | 1,959 | 0 | 100.0 % | 127,100 | 127,100 | 328,400 |
| 34 Gaerveld (rest home) (B-3500 Hasselt) |
6,994 | 6,994 | 115 | 100.0 % | 769,400 | 769,400 | 789,500 |
| 35 Larenshof (B-9270 Laarne) |
6,988 | 6,988 | 117 | 100.0 % | 1,009,700 | 1,009,700 | 951,500 |
| 36 Ter Venne (B-9830 Sint-Martens-Latem) |
6,634 | 6,634 | 102 | 100.0 % | 957,900 | 957,900 | 1,135,600 |
| 37 Pont d'Amour (B-5500 Dinant) |
4,364 | 4,364 | 74 | 100.0 % | 498,800 | 498,800 | 875,300 |
| 38 Résidence Les Cheveux d'Argent (B-4845 Sart-lez-Spa) |
4,177 | 4,177 | 80 | 100.0 % | 240,400 | 240,400 | 317,200 |
| 39 't Hoge (B-8500 Kortrijk) |
4,632 | 4,632 | 79 | 100.0 % | 429,800 | 429,800 | 557,500 |
| 40 Helianthus (B-9090 Melle) |
2,409 | 2,409 | 47 | 100.0 % | 232,300 | 232,300 | 451,300 |
| 41 Hestia (B-1780 Wemmel) |
12,682 | 12,682 | 222 | 100.0 % | 1,300,900 | 1,300,900 | 1,561,200 |
| 42 Plantijn (B-2950 Kapellen) |
5,958 | 5,958 | 110 | 100.0 % | 467,900 | 467,900 | 815,100 |
| 43 Salve (B-2930 Brasschaat) |
6,730 | 6,730 | 117 | 100.0 % | 841,600 | 841,600 | 884,000 |
| 44 SZ AGO Herkenrath (D-51429 Bergisch Gladbach) |
4,000 | 4,000 | 80 | 100.0 % | 575,000 | 575,000 | 613,273 |
| 45 SZ AGO Dresden (D-01159 Dresden) |
5,098 | 5,098 | 116 | 100.0 % | 583,233 | 583,233 | 670,950 |
| 46 De Stichel (B-1800 Vilvoorde) |
6,257 | 6,257 | 116 | 100.0 % | 643,100 | 643,100 | 697,970 |
| 47 Huize Lieve Moenssens (B-3650 Dilsen-Stokkem) |
4,301 | 4,301 | 68 | 100.0 % | 321,650 | 321,650 | 351,575 |
| 48 SZ AGO Kreischa (D-01731 Kreischa) |
3,670 | 3,670 | 84 | 100.0 % | 416,516 | 416,516 | 414,896 |
| 49 Bonn (D-53129 Bonn) |
5,927 | 5,927 | 130 | 100.0 % | 740,000 | 740,000 | 711,240 |
| 50 Goldene Au (D-96515 Sonneberg) |
4,141 | 4,141 | 83 | 100.0 % | 402,240 | 402,240 | 397,531 |
| 51 Oase Binkom (B-3211 Binkom) |
4,076 | 4,076 | 111 | 100.0 % | 724,692 | 724,692 | 754,990 |
| Totale surface (m²)¹ |
Residential surface (m²) |
Number of residential units |
% Occupancy rate2 |
Contractual rents³ |
Contractual rents + ERV on empty spaces4 |
Estimated rental value (ERV)5 |
|
|---|---|---|---|---|---|---|---|
| 52 Oase Tienen7 (B-3300 Tienen) |
9,245 | 9,245 | 139 | 100.0 % | 962,389 | 962,389 | 968,208 |
| 53 Oase Aarschot Wissenstraat (B-3200 Aarschot) |
10,657 | 10,657 | 120 | 100.0 % | 923,543 | 923,543 | 853,200 |
| 54 De Notelaar (B-2250 Olen) |
8,651 | 8,651 | 94 | 100.0 % | 927,800 | 927,800 | 1,037,000 |
| 55 Overbeke (B-9230 Wetteren) |
6,917 | 6,917 | 113 | 100.0 % | 773,500 | 773,500 | 825,800 |
| 56 Halmolen (B-2980 Halle-Zoersel) |
9,200 | 9,200 | 140 | 100.0 % | 996,000 | 996,000 | 1,091,900 |
| 57 Seniorenresidenz Mathilde (D-32130 Enger) |
3,448 | 3,448 | 75 | 100.0 % | 554,695 | 554,695 | 579,264 |
| 58 Die Rose im Kalletal (D-32689 Kalletal) |
2,789 | 2,789 | 68 | 100.0 % | 489,910 | 489,910 | 518,754 |
| 59 Seniorenresidenz Klosterbauerschaft (D-32278 Kirchlengern) |
3,497 | 3,497 | 80 | 100.0 % | 590,341 | 590,341 | 608,478 |
| 60 Senioreneinrichtung Haus Matthäus (D-57462 Olpe-Rüblinghausen) |
2,391 | 2,391 | 50 | 100.0 % | 354,666 | 354,666 | 365,823 |
| 61 Bonifatius Seniorenzentrum (D-53359 Rheinbach) |
3,967 | 3,967 | 80 | 100.0 % | 598,714 | 598,714 | 606,951 |
| 62 Senioreneinrichtung Haus Elisabeth (D-57482 Wenden-Rothemühle) |
3,380 | 3,380 | 80 | 100.0 % | 567,466 | 567,466 | 577,980 |
| 63 Seniorenresidenz Am Stübchenbach (D-38667 Bad Harzburg) |
5,874 | 5,874 | 130 | 100.0 % | 782,925 | 782,925 | 828,234 |
| 64 Seniorenresidenz Kierspe (D-58566 Kierspe) |
3,721 | 3,721 | 79 | 100.0 % | 548,395 | 548,395 | 200,000 |
| 65 La Ferme Blanche (B-4350 Remicourt) |
1,697 | 1,697 | 61 | 100.0 % | 200,000 | 200,000 | 556,800 |
| 66 Villa Temporis (B-3500 Hasselt) |
3,964 | 3,964 | 40 | 100.0 % | 284,000 | 284,000 | 353,800 |
| 67 Service-Residenz Schloss Bensberg (D-51429 Bergisch Gladbach) |
8,215 | 6,478 | 87 | 100.0 % | 929,240 | 929,240 | 1,157,696 |
| 68 Residentie Sporenpark (B-3582 Beringen) |
9,261 | 9,261 | 127 | 100.0 % | 1,031,100 | 1,031,100 | 1,033,900 |
| Total senior housing in Belgium |
280,282 | 280,282 | 5,270 | 100.0 % | 32,904,874 | 32,904,874 | 37,204,843 |
| Total senior housing in Belgium |
60,118 | 58,381 | 1,222 | 100.0 % | 8,133,341 | 8,133,341 | 8,598,057 |
| Total of the segment "Senior housing" |
340,400 | 338,663 | 6,492 | 100.0 % | 41,038,215 | 41,038,215 | 45,802,900 |
Surface excluding ground and parkings. The cellars are taken into consideration only in exceptional cases.
See glossary. As reminder, the occupancy rate of the buildings with furnished apartments can not be compared to the occupancy rate calculated on the rest of the portfolio, as the methodology is different. We also note that the occupancy rate of the residential and mixed buildings includes units in renovation and hence temporarily not rentable.
The amounts related to the buildings with furnished apartments correspond to the annualised rental income excl. VAT.
For the buildings with furnished apartments, no estimated rented value (ERV) were added for vacancy.
See glossary.
This ERV is not comparable to the contractual rents because (for the buildings with furnished apartments) it does not take into account the fact that the apartments are furnished.
Partially presented on the balance sheet among the assets classified as held for sale.
| Totale surface (m²)¹ |
Residential surface (m²) |
Number of residential units |
% Occupancy rate2 |
Contractual rents³ |
Contractual rents + ERV on empty spaces4 |
Estimated rental value (ERV)5 |
|
|---|---|---|---|---|---|---|---|
| Apartment buildings | |||||||
| 1 Tervueren 13 A/B (B-1040 Brussels) |
4,628 | 621 | 3 | 65.7 % | 345,808 | 526,073 | 627,633 |
| 2 Sablon (B-1000 Brussels) |
4,655 | 3,342 | 30 | 81.1 % | 778,954 | 960,894 | 934,560 |
| 3 Complexe Laeken - Pont Neuf (B-1000 Brussels) |
5,720 | 4,637 | 42 | 85.8 % | 563,637 | 657,092 | 677,578 |
| 4 Le Bon 24-28 (B-1000 Brussels) |
1,666 | 1,666 | 15 | 100.0 % | 177,752 | 177,752 | 214,253 |
| 5 Lombard 32 (B-1000 Brussels) |
1,431 | 1,095 | 13 | 96.6 % | 209,508 | 216,908 | 181,081 |
| 6 Complexe Louise 331-333 (B-1050 Brussels) |
4,871 | 1,509 | 8 | 87.4 % | 547,000 | 626,200 | 674,000 |
| 7 Place du Samedi 6-10 (B-1000 Brussels) |
3,769 | 2,365 | 24 | 86.7 % | 283,241 | 326,604 | 311,340 |
| 8 Broqueville 8 (B-1150 Brussels) |
638 | 638 | 6 | 29.3 % | 20,073 | 68,600 | 70,308 |
| 9 Bataves 71 (B-1040 Brussels) |
552 | 312 | 3 | 100.0 % | 60,192 | 60,192 | 57,480 |
| 10 Tervueren 103 (B-1040 Brussels) |
881 | 410 | 6 | 95.4 % | 117,269 | 122,869 | 120,605 |
| 11 Louis Hap 128 (B-1040 Brussels) |
688 | 688 | 7 | 97.8 % | 78,602 | 80,402 | 79,268 |
| 12 Rue Haute (B-1000 Brussels) |
2,630 | 1,380 | 20 | 91.2 % | 247,129 | 270,932 | 317,523 |
| 13 Résidence Palace (B-1040 Brussels) |
6,388 | 6,189 | 57 | 73.7 % | 431,900 | 586,100 | 711,800 |
| 14 Churchill 157 (B-1180 Brussels) |
2,210 | 1,955 | 22 | 89.5 % | 238,040 | 265,965 | 267,838 |
| 15 Auderghem 237-239-241-266-272 (B-1040 Brussels) |
1,739 | 1,739 | 22 | 93.7 % | 181,356 | 193,506 | 221,643 |
| 16 Edison (B-5000 Namur) |
2,029 | 758 | 7 | 85.9 % | 104,425 | 121,512 | 138,265 |
| 17 Verlaine/Rimbaud/Baudelaire (B-5000 Namur) |
2,795 | 1,518 | 21 | 94.4 % | 247,776 | 262,381 | 271,333 |
| 18 Ionesco (B-5100 Jambes) |
930 | 930 | 10 | 98.3 % | 94,087 | 95,707 | 98,895 |
| 19 Musset (B-5000 Namur) |
562 | 472 | 6 | 100.0 % | 50,970 | 50,970 | 50,200 |
| 20 Giono & Hugo (B-5100 Jambes) |
1,412 | 1,412 | 15 | 89.0 % | 114,743 | 128,973 | 135,140 |
| 21 Antares (B-5100 Jambes) |
439 | 439 | 7 | 83.7 % | 34,601 | 41,351 | 39,323 |
| 22 Ring (B-2018 Antwerp) |
11,381 | 7,227 | 88 | 100.0 % | 728,500 | 728,500 | 860,100 |
| 23 Résidence Gauguin et Manet (B-6700 Arlon) |
2,885 | 2,885 | 35 | 92.5 % | 293,702 | 317,602 | 306,825 |
| 24 Résidence de Gerlache (B-1030 Brussels) |
6,794 | 6,174 | 75 | 84.4 % | 682,447 | 808,972 | 818,850 |
| 25 Ensemble Souveraine (B-1050 Brussels) |
11,847 | 11,354 | 116 | 76.4 % | 1,993,839 | 1,993,839 | 1,517,0786 |
| 26 Louise 130 (B-1050 Brussels) |
1,110 | 694 | 9 | 65.4 % | 172,716 | 172,716 | 164,9006 |
| 27 Louise 135 (+ 2 parkings Louise 137) (B-1050 Brussels) |
1,978 | 1,930 | 31 | 84.0 % | 527,939 | 527,939 | 346,8006 |
| Totale surface (m²)¹ |
Residential surface (m²) |
Number of residential units |
% Occupancy rate2 |
Contractual rents³ |
Contractual rents + ERV on empty spaces4 |
Estimated rental value (ERV)5 |
|
|---|---|---|---|---|---|---|---|
| 28 Louise 270 (B-1050 Brussels) |
1,043 | 958 | 14 | 85.1 % | 226,720 | 226,720 | 148,1006 |
| 29 Vallée 48 (B-1050 Brussels) |
623 | 623 | 6 | 90.3 % | 116,928 | 116,928 | 89,1006 |
| 30 Livourne 16-18 (+ 24 parkings Livourne 7-11) (B-1050 Brussels) |
1,567 | 1,567 | 16 | 84.9 % | 364,829 | 364,829 | 263,8006 |
| 31 Freesias (B-1030 Brussels) |
3,635 | 3,138 | 38 | 60.5 % | 318,572 | 318,572 | 361,6006 |
| 32 Héliotropes (B-1030 Brussels) |
1,493 | 1,223 | 25 | 81.7 % | 229,275 | 229,275 | 175,3006 |
| 33 Livourne 20-22 (B-1050 Brussels) |
1,326 | 1,326 | 12 | 91.4 % | 288,996 | 288,996 | 187,7006 |
| 34 Livourne 14 (B-1050 Brussels) |
324 | 324 | 6 | 86.3 % | 48,792 | 48,792 | 34,1006 |
| 35 Résidence Chamaris (B-1000 Brussels) |
1,838 | 1,702 | 23 | 89.9 % | 476,262 | 476,262 | 359,5456 |
| 36 Stephanie's Corner (B-1060 Brussels) |
3,150 | 2,617 | 27 | 89.9 % | 469,458 | 522,338 | 522,568 |
| Total of the segment "Apartment buildings" |
101,626 | 77,816 | 865 | n.a. | 11,866,038 | 12,983,263 | 12,356,432 |
| Hotels and other | |||||||
|---|---|---|---|---|---|---|---|
| 1 Hotel Martin's Brugge (B-8000 Brugge) |
11,369 | 0 | 0 | 100.0 % | 1,603,413 | 1,603,413 | 1,199,220 |
| 2 Royale 35 (B-1000 Brussels) |
1,813 | 0 | 0 | 82.6 % | 154,965 | 187,620 | 174,405 |
| 3 Martin's Klooster (B-3000 Leuven) |
6,935 | 0 | 0 | 100.0 % | 1,385,484 | 1,385,484 | 1,141,080 |
| 4 Carbon (B-3600 Genk) |
5,715 | 0 | 0 | 100.0 % | 461,100 | 461,100 | 565,300 |
| 5 Eburon (B-3700 Tongeren) |
4,016 | 0 | 0 | 100.0 % | 337,100 | 337,100 | 462,800 |
| 6 Ecu (B-3600 Genk) |
1,960 | 0 | 0 | 100.0 % | 176,200 | 176,200 | 232,200 |
| 7 Eurotel (B-3620 Lanaken) |
4,779 | 0 | 0 | 100.0 % | 294,700 | 294,700 | 377,700 |
| 8 Villa Bois de la Pierre (B-1300 Wavre) |
320 | 160 | 4 | 100.0 % | 31,000 | 31,000 | 40,100 |
| 9 Duysburgh (B-1090 Brussels) |
470 | 470 | 5 | 100.0 % | 63,100 | 63,100 | 40,300 |
| 10 Résidence du Lac (B-1050 Brussels) |
0 | 0 | 0 | 100.0 % | 30,700 | 30,700 | 30,700 |
| Total of the segment "Hotels and other" |
37,377 | 630 | 9 | 99.3 % | 4,537,762 | 4,570,417 | 4,263,805 |
| Total marketable investment properties |
479,403 | 417,109 | 7,366 | n.a. | 57,442,015 | 58,591,895 | 62,423,1376 |
Surface excluding ground and parkings. The cellars are taken into consideration only in exceptional cases.
See glossary. As reminder, the occupancy rate of the buildings with furnished apartments can not be compared to the occupancy rate calculated on the rest of the portfolio, as the methodology is different. We also note that the occupancy rate of the residential and mixed buildings includes units in renovation and hence temporarily not rentable.
The amounts related to the buildings with furnished apartments correspond to the annualised rental income excl. VAT.
For the buildings with furnished apartments, no estimated rented value (ERV) were added for vacancy.
See glossary.
This ERV is not comparable to the contractual rents because (for the buildings with furnished apartments) it does not take into account the fact that the apartments are furnished.
| Project or renovation | Esti | Inv. as of | Future | Date of | Comments | |
|---|---|---|---|---|---|---|
| mated inv. |
30 June 2015 |
inv. | completion | |||
| I. Projects in progress | ||||||
| Other | Sundry | 2 | 2 | 0 | 2015/2016 | Renovation of 2 residential buildings |
| Salve | Brasschaat | 2 | 2 | 0 | 2015/2016 | Renovation and redevelopment of a rest home |
| 't Hoge | Kortrijk | 2 | 0 | 2 | 2015/2016 | Extension and renovation of a rest home |
| Helianthus | Melle | 4 | 1 | 3 | 2015/2016 | Extension of a rest home |
| Pont d'Amour | Dinant | 8 | 7 | 1 | 2015/2016 | Extension of a rest home |
| Marie-Louise | Wemmel | 4 | 1 | 3 | 2015/2016 | Renovation and conversion into assisted-living apartments |
| Villa Temporis | Hasselt | 10 | 2 | 8 | 2016/2017 | Construction of a rest home |
| Au Bon Vieux Temps | Mont-Saint Guibert |
10 | 2 | 8 | 2016/2017 | Construction of a rest home |
| Op Haanven | Veerle-Laakdal | 4 | 1 | 4 | 2016/2017 | Extension and renovation of a rest home |
| La Ferme Blanche | Remicourt | 6 | 0 | 6 | 2016/2017 | Extension and renovation of a rest home |
| Huize Lieve Moenssens | Dilsen-Stokkem | 7 | 0 | 7 | 2016/2017 | Extension and renovation of a rest home |
| Aux Deux Parcs | Jette | 2 | 0 | 2 | 2017/2018 | Extension of a rest home |
| Air du Temps | Chênée | 6 | 0 | 6 | 2017/2018 | Extension and renovation of a rest home |
| Plantijn | Kapellen | 8 | 0 | 7 | 2018/2019 | Extension and renovation of a rest home |
| II. Projects subject to outstanding conditions | ||||||
| Résidence du Lac | Brussels | 5 | 0 | 5 | 2017/2018 | Construction of an apartment building |
| De Stichel | Vilvoorde | 4 | 0 | 4 | 2017/2018 | Extension of a rest home |
| Oase Binkom | Binkom | 2 | 0 | 2 | 2017/2018 | Extension of a rest home |
| Résidence Cheveux d'Argent |
Sart-lez-Spa | 3 | 0 | 3 | 2017/2018 | Extension of a rest home |
| III. Land reserves | ||||||
| Plot of land Bois de la Pierre |
Wavre | 2 | 2 | 0 | - | Land reserve |
| Platanes | Brussels | 0 | 0 | 0 | - | Land reserve |
| IV. Acquisitions subject to outstanding conditions | ||||||
| Leopoldspark | Leopoldsburg | 20 | 0 | 20 | 2015/2016 | Construction of a new rest home |
| Oase projects | Aarschot & Glabbeek |
28 | 0 | 28 | 2016-2017 | Construction of 2 new rest homes |
| Total | 138 | 21 | 118 | |||
| Changes in fair value | - | 1 | - |
Of these projects, 95 % are pre-let. It is expected that the total investment budget of €118 million will be paid in cash.
On balance sheet 22
SENIOR HOUSING
Location: Résidence Grange des Champs is located in a residential area, in a street perpendicular to the chaussée d'Alsemberg and near to the chaussée Bara.
Operator: An entity of the Orpea group (30-year long lease).
Boneputstraat 5 - 3960 Bree
Year of construction / renovation: 1994 - 1999
Rue des Haisses 60 - 4032 Chênée
Year of construction / renovation: 1997 - 2008
Location: Résidence l'Air du Temps is perched on a hill, surrounded by nature despite its proximity to the city of Liège.
Operator: An entity of the group Senior Living group (27-year long lease).
Oude Geelsebaan 33 -
2431 Veerle-Laakdal - Year of construction / renovation:
Location: Op Haanven is located in the centre of the municipality of Veerle-Laakdal.
Operator: An entity of the group Senior Living group (27-year long lease).
Location: Résidence Exclusiv is located near the Square S. Hoedemaekers in Evere.
Operator: An entity of the group Senior Living group (27-year long lease).
5560 Houyet (Mesnil-Saint-Blaise) - Year of construction / renovation: 1982
Property report
Kramerslaan -
3500 Hasselt
Location: Résidence Gaerveld is a new building located near the city centre of Hasselt.
Operator: An entity of the Armonea group (27-year long lease).
Ziekenhuis 10 - 1500 Halle
Year of construction / renovation: 2007
Location: Hestia is located in a residential area in Wemmel (Flemish Brabant).
Operator: An entity of the Soprim@ group (27-year long lease).
Dresdner Strasse 4-6 -
01731 Kreischa Germany - Year of construction / renovation:
Location: Oase Tienen is located in a residential area of the city centre, close to a variety of shops, public transport and the RZ Tienen hospital. The construction of a rest home and assisted-living apartments is currently under way.
Operator: An entity of the Oase group (27-year long lease).
Location: Oase Aarschot Wissenstraat is located in a residential area close to Aarschot's city centre, approx. 20 kilometres from Leuven.
Operator: An entity of the Oase group(27-year long lease).
Operator: Medeor Seniorenresidenz (25-year long lease).
59 Seniorenresidenz Klosterbauerschaft
Operator: Senioren Wohnpark Weser (25-year long lease).
60 Senioreneinrichtung Haus Matthäus
Property report
Seniorenzentrum
Schweitzerstraße 2 - 53359 Rheinbach - Germany
Year of construction / renovation: 2009
Location: Bonifatius Seniorenzentrum is located in Rheinbach (North Rhine-Westphalia).
Stübchentalstraße 10 - 38667 Bad Harzburg - Germany - Year of construction / renovation: 2010
Location: Seniorenresidenz Am Stübchenbach is located in Bad Harzburg (Lower Saxony).
Operator: Senioren Wohnpark Weser (25-year long lease).
Rue Modeste Rigo 10 - 4350 Remicourt
Year of construction / renovation: different periods: only the section built in 2004 will be retained as part of the site redevelopment.
Location: La Ferme Blanche is located in a residential area, next to the centre of Pousset (in the municipality of Remicourt) approx. 20 kilometres from Liège.
Operator: An entity of the Vulpia group (27-year long lease).
Excelsiorlaan 6 -
3500 Hasselt
Im Schlosspark 10 -
51429 Bergisch Gladbach Germany - Year of construction / renovation: 2002/2003
Management GmbH (25-year fixed lease) and AachenMünchener Lebensversicherung (7-year fixed lease).
Year of construction / renovation: 1990 - 1995
Location: Building located close to the European district of Brussels, at the corner of avenue de Tervueren and avenue des Celtes.
Description: The building comprises 3 apartments and commercial spaces spread over 9 levels, and a commercial level with the possibility to transform the commercial spaces into residential space.
Rue de Laeken 89-117-119-123-125 Rue du Cirque 25-29 - Rue du Pont Neuf 3-3A - 1000 Brussels
Year of construction / renovation: 1993 - 2015
Location: Benefitting from an impressive view of the Pont-Neuf gardens, the complex is located in Brussels' city centre, close to the place de Brouckère, the Flemish Royal Theatre, the Grand Place, and the business centres located on boulevard Albert II.
Description: The complex consists of buildings designed by European architects and comprising 42 apartments, offices, and a commercial space.
Rue du Lombard 32 - 1000 Brussels
Year of construction / renovation: 1995
Location: Building located close to Brussels' Grand Place, on the corner of rue du Lombard and rue de l'Etuve, a lively tourist district in the capital.
Description: The building comprises 13 apartments spread over 7 levels and a commercial level. The building's facade is classified by the city of Brussels as from the 1st level.
Location: Complex located between avenue Louise and rue Jordaens.
Description: Mixed-use complex, which includes a building fronting on avenue Louise and comprising 5 apartments and office spaces spread over 9 levels, a central block (former stables) comprising offices, as well as a single-family home located in the rear on rue Jordaens.
Property report
Chaussée d'Etterbeek 62 - 1040 Brussels
Year of construction / renovation: 2006
Location: Building located at the heart of the Leopold district, near to the European institutions and the Schuman train station.
Description: This prestigious building comprises 57 apartments spread over 7 floors, as well as a ground-floor commercial space.
Avenue d'Auderghem - 237-239- 241-266-272 - 1040 Brussels
Year of construction / renovation: End of 19th century – several renovations between 1999 and 2004
Location: Building located near to La Chasse, the European district and the Cinquantenaire esplanade.
Description: Houses in 19thcentury Brussels' style divided into apartments (partially in coownership).
Location: Building located in the municipality of Salzinnes, near to the centre of Namur.
Description: Mixed-use building, which comprises 21 apartments and an office space, spread over 5 levels.
spread over 4 levels.
Rue Champêtre 46 - 5100 Jambes
Year of construction / renovation: 1956 - 1994
Location: Building located in a new subdivision, less than a kilometre from the centre of Arlon.
Description: The building comprises 35 residential apartments spread over 2 blocks, each with 4 levels above ground.
27 - Louise 135
commercial space.
Rue de la Vallée 48 - 1000 Brussels
Year of construction / renovation: 1993
Rue de Livourne 16-18 - 1000 Brussels
Year of construction / renovation: 2004
Location: Building located at the heart of the Leopold Quarter, Brussels' premier business district, next to the main European Union institutions.
Description: The building comprises 23 furnished apartments and 1 ground-floor commercial space.
Location: Building located in a highly ranked district, close to the shops of avenue Louise.
Description: The building comprises 27 apartments, 3 commercial spaces and a 27-space underground parking lot.
Oude Burg 5 - 8000 Bruges - Year of construction / renovation: 2005 - 2009
Location: Three-star hotel located in the heart of Old Brugge, near to the Belfry and the historical city.
Description: The hotel comprises 178 rooms (after integration of De Tassche Hotel, acquired in 2008), 8 seminar rooms, a central body and 3 annexed buildings equipped for the hotel industry. The entire complex has been transferred to the Martin's Hotels group which manages the hotel under a 36-year long lease (with an option to extend for both the lessor and the lessee).
Onze-Lieve-Vrouwstraat 18 - 3000 Leuven
Year of construction / renovation: 2003 - 2012
Location: Four-star hotel located at the heart of the historic centre of Leuven ("island of the Dijle").
Description: The hotel comprises 103 rooms and suites and also includes a new conference centre, a lounge bar, a new reception lobby, and an orangery for events. The entire complex has been transferred to the Martin's Hotels group which manages the hotel (under a 36-year long lease).
De Schiervelstraat 10 - 3700 Tongeren
Year of construction / renovation: 2008
Location: Four-star design hotel located at the heart of the historical city of Tongeren.
Description: The hotel comprises 52 rooms and suites. The entire complex has been transferred to the operator Different Hotel Group which manages the hotel (under a 27-year long lease).
Location: Four-star hotel located in Lanaken, near to the centre of Maastricht.
Description: The hotel comprises 79 rooms, all recently renovated, a restaurant, a spa and a sport centre. The entire complex has been transferred to the operator Different Hotel Group which manages the hotel (under a 27-year long lease).
Rue Duysburgh 19 - 1090 Brussels
Year of construction / renovation: -
Location: Adjacent building to the Aux Deux Parcs rest home.
Description: Duysburgh is a building located in a residential and green zone, between Parc de la Jeunesse and Square Léopold, and not far from the Brugmann hospital. The building is intended to be incorporated into the Aux Deux Parcs rest home.
The Company is structured as shown by the organisational chart below:
Each component of the organisational chart is described in the following paragraphs. The "Operations Belgium" component, to which approx. 30 people are assigned, represents most of the Company's staff.
Aedifica's daily activities in Belgium mainly involve managing of its apartment buildings and of senior housing sites.
For commercial management of its apartment buildings, Aedifica employs a Sales and Marketing Manager who secures rentals through direct contact with tenants and real estate agents. He is assisted by an internal commercial team.
Technical management of Aedifica's apartment buildings ("technical property management") includes the diligent management of the buildings' common areas, implementation and follow-up of maintenance and technical control contracts, management of insurance claims, and assistance to tenants at the time of arrival and departure. Technical management is carried out by both Aedifica's own team and by external service providers who are continuously monitored by Aedifica's Building Manager. The Building Manager ensures that the required duties are performed and quality standards maintained.
Administrative and accounting management ("administrative property management") includes managing the calls for rent payments and indexations, provisions for charges, quarterly closing of common area expenses, tax recoveries, budgeting for common area expenses, and tracking of tenant payments. Administrative management is also carried out by both Aedifica's own team and external service providers, under the supervision of Aedifica's Property Accounting Manager.
External property managers are selected based on a competitive bidding process and given their reputation in the Belgian market. Contracts generally cover a period of 1 year and include the possibility for renewal. In terms of risk management, Aedifica has divided it portfolio across several external property managers, depending, primarily based on their specialities and their geographic location. These intermediaries are assigned with either the full responsibility for day-to-day management of the buildings on both the technical and administrative levels or for day-to-day technical management only, in cases where Aedifica performs administrative and accounting management internally. Aedifica monitors external service providers through periodic reporting and by conducting spot checks. The remuneration of external managers is proportional to the rental incomes generated. Overall, remuneration of external service providers amounted to €0.1 million (VAT included) during the 2014/2015 financial year, or less than 2 % of the net rental income for the concerned buildings. External building managers currently appointed by Aedifica in Belgium are the following:
Boulevard Louis Schmidt 2 box 3 1040 Brussels For the Louise 331-333 Complex.
Avenue Emile De Mot 19 1000 Brussels
For the Laeken - Pont Neuf Complex and the buildings Lebon 24-28, Place du Samedi 6-10, Royale 35, Churchill 157, Tervueren 13 A/B and Résidence Palace.
Chaussée de la Hulpe 150
For the buildings Lombard 32, Broqueville 8, Bataves 71, Tervueren 103, Louis Hap 128, Auderghem 237-239- 241-266-272, rue Haute and Stephanie's Corner.
Rue du Trou Perdu 7 5300 Thon For the buildings Edison, Verlaine/Rimbaud/Baudelaire, Ionesco, Musset, Giono & Hugo, Antares.
Rue des Fabriques 1 6747 Saint-Leger For Résidence Gauguin et Manet.
Aedifica employs an architect for "Project Management" tasks in Belgium, for both apartment buildings and senior housing. He is responsible for managing construction and major renovation projects (generally as from the time that the development permit is obtained). He is also responsible for ensuring satisfactory completion of the projects entrusted to specialised companies. In addition, the Project Manager conducts technical due diligence audits in Belgium, employing external specialists as necessary and based on the characteristics of the individual case.
Regarding senior housing in Belgium, Aedifica has established long-term contracts (mainly in the form of long leases) with specialised and professional operators who assume responsibility for building maintenance (triple net contracts). Thus, Aedifica is not responsible for the daily management of these buildings. However, it monitors overall quality via ad hoc visits (in particular in the framework of periodic portfolio evaluations and with the follow-up of extension and renovation projects in progress). Although the rental contracts are triple net, the Company insists on improving existing sites as well as developing new projects in partnership with its tenants/operators. This practice allows the Company to maintain a portfolio of high-quality buildings that generate attractive net yields over the long term. This kind of partnership includes all aspects of the development of real estate projects, whether they are of technical, legal, organisational or other kinds of nature. Such projects are presented in the table "projects and renovations in progress". The main actors involved in this management aspect act under the supervision of the COO.
The management principles applicable for senior housing are also applied to hotels. Other buildings follow the management principles applicable for apartment buildings.
The buildings located in Germany follow the same management principles as those described above for senior housing in Belgium. The contracts in place with the operators are also irrevocable long-term leases, but are of a double net structure (vs. triple net structure in Belgium). This means that the repair and maintenance of the roof, structure and facades of the buildings remains the responsibility of the owner.
As from 1 January 2015, Aedifica holds a German subsidiary: Aedifica Asset Management GmbH. This subsidiary advises and supports Aedifica in the growth and management of its real estate portfolio in Germany, under the CEO's supervision.
Aedifica assigns the "investment" aspects of its operational activities to the Company's Investment Manager, who acts as the key contact point for new investment opportunities in Belgium and abroad. The Investment Manager filters the cases and undertakes preliminary studies before presenting them to the Management Committee and, if accepted, to the Investment Committee and Board of Directors. The Investment Manager also organises various aspects of the due diligence audits in close cooperation with other members of the Company's internal team and by engaging external specialists, depending on the characteristics of individual cases.
Aedifica assigns the "Development" aspects of its operational activities to an internal Architect-Engineer, who is in general responsible for development projects, both in Belgium and abroad, from the preliminary study phase until the development permit is obtained. Furthermore, Architect-Engineer organises the technical due diligence audits abroad, by engaging external specialists as needed.
The "Investment & Development" aspects are carried out under the CEO's supervision.
Aedifica assigns the "Legal" aspects of its operational activities to a team led by the CLO, whose mission includes the day-to-day management of the legal affairs of the Company and its subsidiaries ("corporate housekeeping") as well as assistance in other aspects of operational activities ("legal support"). Its mission mainly involves conducting legal due diligence audits, carried out with assistance of external specialists depending on the cases' individual characteristics, drafting conventions and, occasionally, dispute management. Insurance coverage is also centralised here.
The "Finance" aspects of Aedifica's operational activities cover many disciplines placed under the CFO's supervision, such as the financing of day-to-day activities and investments, accounting, taxation, cash management, internal reporting, controlling, external financial communication and investor relations, and credit control. Management of human resources, IT and the vehicle fleet is also centralised here.
We are pleased to send you our estimate of the fair value of investment properties held by the Aedifica group as of 30 June 2015.
Aedifica assigned to each of the three independent external valuers the task of determining the fair value (from which the investment value is derived2 ) of one part of its portfolio of investment properties. Assessments are established taking into account the remarks and definitions contained in the reports and following the guidelines of the International Valuation Standards issued by the "IVSC".
We have acted individually as independent external valuers and have a relevant and recognised qualification, as well as an ongoing experience for the location and the type of buildings assessed. The valuer's opinion of fair value was primarily derived using comparable recent market transactions at arm's length terms.
Properties are considered in the context of current leases and of all rights and obligations that these commitments entail. We have evaluated each entity individually. Assessments do not take into account a potential value that can be generated by offering the whole portfolio on the market. Assessments do not take into account selling costs applicable to a specific transaction, such as brokerage fees or advertising. Assessments are based on the inspection of real estate properties and information provided by Aedifica (i.e. rental status and surface area, sketches or plans, rental charges and property taxes related to the property, and compliance and pollution matters). The information provided was assumed to be accurate and complete. Assessments are made under the assumption that no non-communicated piece of information is likely to affect the value of the property.
Based on the three assessments, the consolidated fair value of the portfolio amounted to €1,005,163,3703 as of 30 June 2015, including €983,428,880 for marketable investment properties4 . Contractual rents amounted to €57,442,015 which corresponds to an initial rental yield of 5.84 %5 compared to the fair value of marketable investment properties. Assuming that the marketable investment properties, except for furnished apartments, are 100 % rented and that the currently vacant spaces are rented at market prices, contractual rents would amount to €58,591,895, i.e. an initial rental yield of 5.96 %6 compared to the fair value of marketable investment properties.
In the context of a reporting in compliance with the International Financial Reporting Standards, our evaluations reflect the fair value. The fair value is defined by IAS 40 and IFRS 13 as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date". The IVSC considers that the definition of fair value under IAS 40 and IFRS 13 is generally consistent with market value.
The fair value of the part of Aedifica's portfolio valued by de Crombrugghe & Partners SA is estimated as of 30 June 2015 at €279,305,000 and the investment value (before deduction of the transfer costs7 ) is estimated at €286,920,000.
31 August 2015
The fair value of the part of Aedifica's portfolio valued by Stadim CVBA is estimated as of 30 June 2015 at €606,058,100 and the investment value (before deduction of the transfer costs8 ) is estimated at €621,617,600.
The fair value of the part of Aedifica's portfolio valued by CBRE GmbH is estimated as of 30 June 2015 at €119,800,000 and the investment value (before deduction of the transfer costs9 ) is estimated at €129,099,660.
31 August 2015
Property report
Martin's Klooster Hotels and other - Leuven (Belgium)
Stephanie's Corner Apartment buildings - Brussels (Belgium)
Aedifica provides the investor an attractive alternative to direct investment in residential real estate.
Aedifica's diversified investment policy (see section "Strategy" in the Consolidated Board of Directors' Report) offers the shareholder a unique investment that generates optimal rental incomes with a limited risk profile. The structure of Aedifica's portfolio generates attractive returns, opportunities for growth and capital gains, and recurrent dividends.
According to the "Belgian RREC Overview", published each month by Bank Degroof, Aedifica is currently the 4th Belgian REIT in terms of the fair value of its investment property portfolio (4th as of 30 June 2014). In addition, Aedifica holds the 4th place in terms of the average volume traded on the stock market, with an average daily volume of €750 thousand over the last 12 months; this is a considerable improvement as compared to the trading level prior to the December 2012 capital increase (in cash) when the average daily volume was €230 thousand.
Aedifica's shares (AED) have been quoted on Euronext Brussels continuous market since 23 October 2006. Since that date, Aedifica has completed three capital increases, in cash and with preferential rights or priority allocation rights.
Aedifica was first registered in the Bel Real Inv. Trusts index (with a weighting of 8.07 %) and in the Bel Mid Index (with a weighting of 2.74 %) on 30 June 2015.
Taking the stock price on 30 June 2015 (€50.30) as a baseline, Aedifica shares show:
To compare the net asset value to the share price, one has to take into account the detachment of coupon No. 14, which took place on 10 June 2015 in the context of the capital increase of 29 June 2015. Given this, the net asset value can be estimated at an adjusted amount of €40.59 after IAS 39 impact (a 24 % premium) or of €43.29 before IAS 39 impact (a 16 % premium).
Between the date of the IPO (after deduction of the coupons which represented the preferential rights or the prior-
| 30 June 2015 | 30 June 2014 | |
|---|---|---|
| Share price at closing (in €) | 50.30 | 50.00 |
| Net asset value per share (based on fair value) after deduction of the dividend 2013/2014 excl. IAS 39 (in €) |
45.29 | 40.57 |
| Premium (+)/(-) Discount (based on fair value) excl. impact IAS 39 |
11.1 % | 23.2 % |
| Net asset value per share (based on fair value) before deduction of the dividend 2013/2014 incl. IAS 39 (in €) |
42.59 | 36.84 |
| Premium (+)/(-) Discount (based on fair value) inlc. impact IAS 39 |
18.1 % | 35.7 % |
| Market capitalisation | 706,510,329 | 508,108,250 |
| Free float1 | 94.54 % | 88.17 % |
| Total number of shares listed | 14,045,931 | 10,162,165 |
| Denominator for the calculation of the net asset value per share |
14,045,931 | 10,249,083 |
| Average daily volume | 9,809 | 7,581 |
| Velocity2 | 28.8 % | 19.5 % |
| Gross dividend per share (in €)3 | 2.00 | 1.90 |
| Dividend gross yield4 | 4.0 % | 3.8 % |
according to the definition of Euronext.
2014/2015: Proposed dividend at the Annual General Meeting.
Gross dividend per share divided by the closing share price.
| 30 June 2015 | 30 June 2014 | |
|---|---|---|
| Number of shares outstanding1 | 14,045,931 | 10,249,083 |
| Total number of shares | 14,045,931 | 10,249,117 |
| Total number of shares on the stock market | 14,045,931 | 10,162,165 |
| Weighted average number of shares outstanding (IAS 33) |
10,658,981 | 9,917,093 |
| Number of dividend rights2 | 10,924,613 | 10,249,083 |
After deduction of the treasury shares.
Based on the rights to the dividend for the shares issued during the year.
For additional information on the EPRA indice, refer to EPRA's web site (www.EPRA.com).
1. The Bel Mid index is composed of values which do not belong to the BEL20 index, with a floating market capitalisation above the BEL20 index level multiplied by €50,000, and a turnover of at least 10%. In addition, no value can represent more than 10% of the Bel Mid index.
ity allocation rights issued as part of the 15 October 2010, 7 December 2012 and 29 June 2015 capital increases) and 30 June 2015, Aedifica's stock price increased by 38.6 %. This increase shows a very favourable contrast when compared to the Bel Mid Index, which increased by 20.4 % and when compared to the EPRA Europe index, which fell by 21.0 %, over the same period.
Aedifica has the obligation to distribute the majority of its profits in the form of dividends (see "income to distribute" in the glossary). The proposed gross dividend for 2014/2015 financial year amounts to €2.00 per share (2006/2007: €1.48 per share; 2007/2008: €1.71 per share; 2008/2009: €1.80 per share; 2009/2010: €1.82 per share; 2010/2011: €1.82 per share; 2011/2012: €1.86 per share; 2012/2013: €1.86; 2013/2014: €1.90 per share) as detailed in Note 38 of the Consolidated Financial Statements. The coupon is payable 5 working days after the date of the ordinary general shareholder's meeting, which is fixed in the Articles of Association to be held annually on the 4th Friday of October. The coupon related to the 2014/2015 financial year will be paid as from 30 October 2015.
As residential RREC, the withholding tax for Aedifica investors amounts to 15%. For the tax treatment of the dividend, readers, in particular shareholders who are Belgian tax payers (natural persons), are referred to section 4 of the chapter entitled "Standing Documents" included in this Annual Financial Report. The net dividend per share after deduction of the withholding tax of 15 % will amount to €1.70. However, a new risk has arisen (which has been reported in the media since 4 August 2015) in relation to a potential increase in the withholding tax (which could be brought from 15 % to 27 %) for dividends that will be distributed in 2016 and the following years, in the context of the fiscal reform (generally baptised "tax shift" by the media) that is currently under preparation by the Belgian government. Moreover, the possible disappearance of the reduced withholding tax of 15% for residential RRECs could also be an opportunity for Aedifica, by expanding the potential range of its future investments. The reader is referred to section 4.2 of the chapter entitled "Risk Factors" of the Annual Financial Report for more information on the tax treatment of dividends.
Aedifica shareholders holding more than 5 % of the Company's total number of shares are listed in the table below (as of 30 June 2015, based on the number of shares held by the shareholders concerned as of 17 March 2015). Declarations of transparency are available on Aedifica's website. As of the date of this report (8 September 2015), the Company has not received any additional declarations of transparency since 17 March 2015.
| In % of the capital | |
|---|---|
| Wulfsdonck Investment SA (via Finasucre SA) |
5.46 % |
| Free Float | 94.54 % |
| Annual General Meeting 2015 | 23 October 2015 |
|---|---|
| Dividend payment date – Coupon related to the 2014/2015 financial year | |
| — Ex-date | 11 June 2015 |
| — Record date | 12 June 2015 |
| — Payment date | As from 30 October 2015 |
| Interim statement | 17 November 2015 |
| Half-Year Financial Report 31 December 2015 | 23 February 2016 |
| Interim statement | 18 May 2016 |
| Annual press release | 5 September 2016 |
| Annual Financial Report 2015/2016 | 23 September 2016 |
| Annual General Meeting 2016 | 28 October 2016 |
| Dividend – Coupon related to the 2015/2016 financial year ("ex-date") | 2 November 2016 |
Financial service for the coupon payment: Degroof Bank (main paying agent) or any other financial institutions
1. These dates are subject to change.
Résidence Chamaris Apartment buildings - Brussels (Belgium)
Edison Apartment buildings - Namur (Belgium)
Senioreneinrichtung Haus Matthäus Senior housing - Olpe-Rüblinghausen (Germany)
This chapter on corporate governance is part of the Consolidated Board of Directors' report. The Corporate Governance Statement is issued in accordance with the provisions of the Belgian Corporate Governance Code 2009 (the "2009 Code") and the Belgian Act of 6 April 2010 amending the Belgian Companies Code.
Aedifica acts in accordance with the principles of the 2009 Code published on 12 March 2009, while taking into consideration the Company's unique features and characteristics. Aedifica considers itself compliant with all provisions of the aforementioned Code.
The Royal Decree of 6 June 2010 specifies that the 2009 Code is the only applicable code. The 2009 Code is available on the website of the Belgian State Gazette, as well as on www.corporategovernancecommittee.be
The Corporate Governance Charter was set out by the Board of Directors of Aedifica and aims to provide full disclosure regarding the governance rules in place at Aedifica. It is available on the Company's website (www.aedifica.be) and was last updated on 11 May 2015.
This section aims to provide a description of the main features of the Company's internal control system and risk management practices.
The Board of Directors is responsible for the Company's identification and assessment of risks, as well as for monitoring the effectiveness of internal controls. Aedifica's Executive Managers are responsible for setting up an effective internal control environment and putting in place effective risk management practices.
In these respects, the Belgian legal framework is made up of the following regulations:
As of 30 June 2015, this framework is further enhanced by:
Pursuant to Article 17 of the Belgian Act of 12 May 2014, the Company has the following internal control functions:
The Risk Management function aims to implement measures and procedures to identify and monitor the risks to which the Company is confronted, and to avoid risks becoming reality and/or to limit the impact of these risks (if applicable) and to estimate, control and follow up as much as possible their effects.
The Board of Directors designated Mr. Jean Kotarakos, CFO, Executive Manager and member of the Management Committee, as Risk Manager. Mr. Jean Kotarakos' office of Risk Manager is of indefinite duration. He has the required professional reliability and appropriate experience to perform these duties.
The Independent Compliance function aims to ensure that the Company, its Directors, its Executive Managers, its personnel or proxy holders respect the legal rules regarding the integrity of the Company's activity.
The Board of Directors appointed Ms. Sarah Everaerts, CLO/Secretary-General, Executive Manager and member of the Management Committee, as Compliance Officer. The Compliance Officer is appointed for an indefinite period and has the required professional reliability and appropriate experience to perform these duties.
The person in charge of the Independent Internal Audit function is appointed to independently and permanently judge the Company's activities and to examine the quality and the efficiency of the existing internal control procedures and methods.
The internal audit function is performed by an external consultant, namely Quiévreux Audit Services SPRL, represented by Mr. Christophe Quiévreux. The Internal Audit function (which is thus outsourced to an external legal person, represented by a natural person) is performed under the supervision and responsibility of Mr. Olivier Lippens, President of the Board of Directors. Mr. Olivier Lippens has the required professional reliability and appropriate experience to perform these duties.
Carbon Hotels and other - Genk (Belgium)
Aedifica has moreover put in place risk management procedures and an internal control system that are consistent with the Company's way of operating and with the environment in which it evolves. This system is based on the internal control model called "COSO" ("Committee of Sponsoring Organisations of the Threadway Commission"). COSO is a wellknown international organisation that stems from the private sector. Its purpose is to promote the improvement in the quality of corporate governance rules, internal control, risk management and financial reporting.
The COSO model has 5 components:
The latest version of the COSO (2013) defines 17 principles underlying these five components which clarify the requirements of an efficient internal control system.
The underlying principles of the component "internal control environment" are the following:
conduct. This charter includes matters such as conflicts of interests, confidentiality, dealing codes, misappropriation of corporate assets, business gifts, and respect for others. It has been attached to the Corporate Governance Charter.
The Board of Directors comprises 10 members, 5 of whom are independent, as defined by Article 526ter of the Belgian Companies Code and Appendix A of the 2009 Code (see below). Given their experience (see below), the Directors are sufficiently qualified for their positions, particularly in respect of accounting, finance and remuneration policy. Aedifica's Board of Directors supervises the effectiveness of the risk management practices and of the internal control implemented by the Executive Managers.
mittee and a Management Committee whose tasks are described below.
The Company's recruitment processes ensure the qualification of the Executive Managers and personnel. For each position, there is a defined profile and a suitable training programme. Aedifica endeavours to support the personal development of its staff and associates by offering them a motivating and comfortable working environment that is adapted to their needs, by identifying their talents, and by further reinforcing these individual strengths. Succession plans are elaborated according to the evolution of the career plans and according to chances of personnel leaving temporarily (maternity leave, parental leave…) or permanently (such as retirements).
— Principle 5: The organisation holds individuals accountable, in particular for their internal control responsibilities in the pursuit of objectives:
Each member of the Aedifica team has at least one evaluation interview per year with his or her responsible, based on a framework that considers the relationships between Company and employee in a very broad way. Furthermore, the remuneration and assessment policy of Executive Managers and personnel is based on achievable and measurable targets. It was thoroughly analysed in 2009 by specialised consultants, with a follow-up performed in 2010 and in 2011. A further study of remuneration of the Executive Managers was carried out at the end of 2011.
The underlying principles of the component "risk analysis" are the following:
— Principle 6: The organisation specifies objectives with sufficient clarity to enable the identification and assessment of risks relating to objectives:
"The Company aims to position itself as a market leader among listed Belgian residential real estate companies, in particular with regard to senior housing. The Company's objective is to create a balanced portfolio of real estate that generates recurring revenues and offers potential for capital gains. Therefore, Aedifica acts in a conservative way as regards to risk culture. The strategy is based on underlying demographic trends, in particular population ageing in Western Europe and population growth in Belgium's main cities".
— Principle 7: The organisation identifies risks to the achievement of its objectives across the entity and analyses risks to determine how the risks should be managed:
The Company has a risk map. The main risks are monitored by the Board of Directors every 3 months and disclosed in the Annual and Half-year Financial Reports, as well as in interim statements. The risks are also followed up during the regular meetings of the Board of Directors. Mitigating actions are undertaken as and when required. For a detailed list of the risks identified, please refer to the section "Risks Factors" of the Annual Financial Report.
— Principle 8: The organisation considers the potential for fraud in assessing risks to the achievement of objectives: Any attempt to fraud is properly analysed to mitigate the potential effects on the Com-
pany and to avoid any new attempt.
— Principle 9: The organisation identifies and assesses changes that could significantly impact the system of internal control: Significant changes are continuously identified and analysed, both at the level of the Executive Managers as of that of the Board of Directors. This analysis enriches the section "Risk Factors" of the Annual Financial Report.
The underlying principles of the component "control activities" are the following:
contribution in kind, merger, de-merger or partial de-merger). Furthermore, each transaction is tested upfront to ensure conformity with the Company's Articles of Association and with applicable regulations;
Carbon Hotels and other -
Overbeke Senior housing - Wetteren (Belgium)
Residentie Sporenpark Senior housing - Beringen (Belgium)
— Principle 11: The organisation selects and develops general control activities over technology to support the achievement of objectives:
Technologies employed the Company are selected using a "best of breed" approach (as opposed to an integrated system approach). Every technological application is under the responsibility of a pilot, while the management of the infrastructure (hardware and network), the security of the access and the storage of computerised data are ensured by an external service provider, working with Aedifica on the basis of a service-level agreement ("SLA"). All rental agreements are registered. Contracts and other important documents, including notarial deeds, are stored in a suitable way outside the Company's headquarters.
— Principle 12: The organisation deploys control activities through policies that establish what is expected and in procedures that put policies into action:
Formal documentation is carried out as with an objective aimed at continual improvement, which also takes into account the balance between the level of formalisation and the size of the Company.
The underlying principles of the component "information and communication" are the following:
— Principle 13: The organisation obtains or generates and uses relevant, quality information to support the functioning of internal control:
The Company's information management system provides relevant and complete information in a timely manner, responding to both internal control as well as external reporting needs.
— Principle 14: The organisation communicates information internally other necessary for the good functioning of other internal control components, including in relation to objectives and responsibilities for internal control:
The internal information elements regarding internal control are disseminated in a transparent manner within the Company to make clear to all the Company's policies, procedures, objectives, and roles and responsibilities. The communication procedures are aligned to fit with the size of the Company. They mainly consist of general communications targeted at personnel, physical meetings and e-mail correspondence.
— Principle 15: The organisation communicates with external parties regarding matters affecting the functioning of internal control:
In the broad sense, external communication (aimed at the shareholders – publication of occasional and periodic information – but also general communication towards other stakeholders) is essential for a listed company. Aedifica devotes attention to its external communication duty on a daily basis.
External communication related to internal control follows a process for the elaboration and publication of periodical information (editing by the Executive Managers, revision by the Audit Committee, approval by the Board of Directors).
The underlying principles of the component "surveillance and monitoring" are the following:
— Principle 16: The organisation selects, develops, and performs ongoing and/or separate evaluations to ascertain whether the components of internal control are present and functioning:
To ensure the effectiveness of the above components of COSO, Aedifica has put in place (since the 2010/2011 financial year) an internal audit function to review the Company's main processes. The internal audit is organised over a 3-year cycle. The specific scope of the internal audit is determined on a yearly basis in consultation with the Audit Committee and the responsible of the internal audit as defined by the Belgian Act of 12 May 2014 on Regulated Real Estate Companies (who is the President of the Board of Directors – see above) and the person responsible for carrying out the internal audit (see above). Given the independence requirements and taking the principle of proportionality into consideration, Aedifica has indeed chosen to outsource the internal audit by entrusting this function to a specialised consultant, placed under the supervision and the responsibility of the responsible of the internal audit as defined by the abovementionned Act.
— Principle 17: The organisation evaluates and communicates internal control deficiencies in a timely manner to those parties responsible for taking corrective action, including the Management Committee and the Board of Directors, as appropriate:
The recommendations developed by the internal audit are communicated to the Audit Committee. This ensures that the Executive Managers put in place the anticipated corrective actions.
The shareholding structure, as derived from the transparency declarations received, is provided in the section "Aedifica in the Stock Market" in this Annual Financial Report.
The Company's directors are currently elected for a term of up to 3 years at the Annual General Meeting. They are revocable, and can be re-elected. During the Extraordinary General Meeting of 23 October 2015 (the attendance quorum will probably not be reached on the Extraordinary General Meeting of 6 October 2015), Aedifica's shareholders will be invited to prolong the maximum duration of the Directors' office, to bring it from 3 to 4 years.
At the Annual General Meeting of 24 October 2014, the following Directors were appointed for a 3-year term ending after the Annual General Meeting of 2017:
As of 30 June 2015, Aedifica was directed by a Board of 10 members, which includes the 5 independent directors (required under Article 526ter of the Belgian Companies Code and Appendix A of the 2009 Code) as listed below.
Moreover, a significant level of gender diversity (required by the Belgian Act of 28 July 2011) has already been achieved. The Board includes 4 women and 6 men, a gender diversity ratio of 40 %, which is higher than the minimum ratio of one third set by law for financial years beginning on or after 1 July 2017.
The Company's information management system provides relevant and complete information in a timely manner, responding to both internal control as well as external reporting needs.
Belgian – 6.05.1962
Belgian – 20.02.1973
Belgian – 26.04.1956
Belgian – 29.04.1957 Moutstraat 9 – 9000 Ghent
R.P.M. 0436.020.344
Independent Director
Director Belgian - 16.01.1960
Corporate governance
The Board of Directors once again expresses its appreciation to its out going Directors - Mr. Jean-Louis Duplat (Chairman, who reached the end of his third term as independent Director on 24 October 2014 and thus, in accordance with the provisions of Article 526ter of the Belgian Com panies Code, lost the status of independent Director, which he held since the creation of Aedifica), Mr. Jacques Blanpain (permanent representative of Services et Promotion de Lasne SA) and Ms. Galila Barzilaï Hollander for their significant contribution to Aedifica's development since the Com pany was established in 2005.
The Board of Directors is saddened by the loss of Mr. Jacques Blanpain on 2 June 2015. Mr. Jacquies Blanpais was a member of the Board of Directors from 2005 (the year in which Aedifica was created) until 2014.
The terms of Mr. Stefaan Gielens, of Serdiser SCA represented by Mr. Pierre Iserbyt and of Re-Invest SA represented by Ms. Brigitte Gouder de Beauregard as members of the Board of Directors will expire at the upcoming Annual General Meeting of 23 October 2015.
Serdiser SCA and Re-Invest SA, independent Directors since Aedifica was created, reached the end of the second renewal of their term as independent directors and, in accordance with the provisions of Article 526ter of the Belgian Companies Code, lose their status of inde pendent Directors on 23 October 2015.
Moreover, Ms. Hilde Laga has asked to be discharged of its Office as Director with effect the Annual General Meeting that will be held on 23 October 2015.
At the Annual General Meeting, the following will be proposed:
In case of election and after approval by the market authority (FSMA), they will act as direc tor for a new term ending in October 2019 (subject to the approval by the Extraordinary General Meeting of 23 October 2015 on the extension of the maximum duration of the offices – see above).
During the 2014/2015 financial year, the Board of Directors met 15 times and covered the fol lowing items:
Composition of the Board of Directors and of the Management Committee;
Review and approval of the trading updates and of the Annual and Half-Year Financial Reports;
The Board of Directors has established three specialised committees: the Audit Committee, the Nomination and Remuneration Committee and the Investment Committee. They are meant to assist and provide guidance to the Board in their respective domains. The committees have no decision power and are hence consultative bodies only. They report to the Board of Directors, which takes the decisions.
Legally speaking, there is no obligation for Aedifica to set up an Audit Committee, since the tasks devoted by law to the Audit Committee1 could alternatively be carried out by the Board of Directors. Nonetheless, the Board decided several years ago to establish an Audit Committee to act as an advisory body reporting to the Board of Directors.
The 2009 Code recommends that the majority of the members of the Audit Committee are independent directors, which is the case since the 24 October 2014 Annual General Meeting.
The current composition of the Audit Committee, as well as the tasks entrusted to it, meet the criteria set out in the Belgian Act of 17 December 2008 on Audit Committees of listed companies. All members of the Audit Committee hold the qualifications required by law. The independent directors meet the criteria of Article 526ter of the Belgian Companies Code and Appendix A of the 2009 Code.
As of 30 June 2015, the Audit Committee consists of 3 Directors, including 2 independent directors, namely:
During the 2014/2015 financial year, the audit committee met 4 times. The statutory auditor attended committee meetings on 1 occasion.
In the context of its mission (i.e. to ensure the accuracy and fair presentation of the annual and semi-annual reports, the quality of internal and external reporting, and the quality of the published information), the Audit Committee covered the following items:
Legally speaking, there is no obligation for Aedifica to set up a Nomination and Remuneration Committee, since the tasks devoted by law to the Nomination and Remuneration Committee could alternatively be carried out by the Board of Directors. Nonetheless, the Board decided several years ago to establish a Nomination and Remuneration Committee. The current composition of the Nomination and Remuneration Committee, and as well as the tasks entrusted to it, meet the criteria set out in the Belgian Act of 6 April 2010 inserting Article 526quater in the Belgian Companies Code. The Nomination and Remuneration Committee is made up of a majority of independent directors, as defined by Article 526ter of the Belgian Companies Code, who are sufficiently qualified with regard remuneration policy.
As of 30 June 2015, the Nomination and Remuneration Committee consists of 3 Directors, namely:
During the 2014/2015 financial year, the Committee met 6 times, to cover the following items:
As of 30 June 2015, the Investment Committee consists of the Executive Managers and of 4 other directors, all independent, namely:
During the 2014/2015 financial year, the Investment Committee met 6 times to assess investment opportunities. Many cases were analysed. In addition, a number of communications were organised (by phone or by electronic means) when formal meetings were deemed unnecessary.
Attendance at the Board of Directors and the committees and the related remuneration
| Nom | Board of Directors |
Audit Committee | Nomination and Remuneration Committee |
Investment Committee |
Remuneration of the office (€) |
Attendance fees (€) |
|---|---|---|---|---|---|---|
| Jean-Louis Duplat | 3/6 | 1/1 | - | - | 4,322 | 3,350 |
| Jean Franken | 14/15 | - | - | 6/6 | 11,330 | 16,700 |
| Stefaan Gielens | 15/15 | - | - | 6/6 | - | - |
| Eric Hohl | 9/9 | - | - | - | 7,729 | 7,650 |
| Galila Barzilaï Hollander | 2/6 | - | - | - | 3,601 | 1,700 |
| Jean Kotarakos | 15/15 | - | - | 6/6 | - | - |
| Hilde Laga | 8/9 | 1/3 | - | - | 7,729 | 7,600 |
| Olivier Lippens | 13/15 | 1/1 | - | 2/2 | 12,879 | 13,450 |
| Sophie Maes | 10/15 | - | - | 5/6 | 11,330 | 12,500 |
| RE-Invest represented by Brigitte Gouder de Beauregard |
8/15 | 3/4 | 6/6 | 5/6 | 11,330 | 18,000 |
| Serdiser SCA represented by Pierre Iserbyt |
13/15 | - | 6/6 | 6/6 | 11,330 | 20,650 |
| Services et Promotion de Lasne represented by Jacques Blanpain |
0/6 | - | - | 0/2 | 3,601 | 0 |
| Adeline Simont | 12/15 | 4/4 | 5/6 | - | 11,330 | 17,400 |
| Total | - | - | - | - | 96,511 | 119,000 |
First row: Adeline Simont, Brigitte Gouder de Beauregard, Sophie Maes and Hilde Laga
Second row: Pierre Iserbyt, Eric Hohl, Stefaan Gielens,
Management Committee (From left to right) Stefaan Gielens, Sarah Everaert, Laurence Gacoin and Jean Kotarakos
The Board of Directors decided to set up a Management Committee as defined by Article 524bis of the Belgian Companies Code, effective 12 May 2015. The Management Committee consists of the following persons, who are all Executive Managers in accordance with the Belgian Act of 12 May 2014:
| Name | Function |
|---|---|
| Stefaan Gielens | Chief Executive Officer (CEO) |
| Jean Kotarakos | Chief Financial Officer (CFO) |
| Laurence Gacoin |
Chief Operating Officer (COO) |
| Sarah Everaert | Chief Legal Officer (CLO) / Secretary-General |
Mr. Stefaan Gielens and Mr. Jean Kotarakos were already Executive Managers of the Company before the establishment of the Management Committee. Moreover, they are Executive Directors (see above).
Ms. Laurence Gacoin has performed the duties of Chief Operating Officer within the Company since 1 January 2015 and is also a member of the Management Committee as Executive Manager since 12 May 2015. Her office is of indefinite duration.
Ms. Sarah Everaert performs the duties of Chief Legal Officer/Secretary-General since 12 May 2015 and in that capacity she is member of the Management Committee as Executive Manager. She is also the Company's Compliance Officer. Previously, she performed the duties of Legal Counsel within Aedifica for more than 5 years. Her office is of indefinite duration.
The division of tasks between the Management Committee and the Board of Directors, along with other aspects of the Management Committee's functioning is available in the Company's Corporate Governance Charter (version of 11 May 2015), published on its website (www.aedifica.be).
331-333, avenue Louise - 1050 Brussels
Belgian – 14.06.1977
331-333, avenue Louise - 1050 Brussels
Please refer to the Remuneration Report presented in section 8 below.
The directors, the persons in charge of daily management and any other corporate officers cannot act as counterparties in transactions with the Company or entities controlled by the Company. They cannot earn any benefit from transactions carried out with the Company, except when the transaction is undertaken in the best interest of the Company, in accordance with the Company's investment policy, and in line with market practice. The Company must inform the market authority (FSMA) in advance of any such transaction.
The market authority need not be informed of the transactions listed in Article 38 of the Belgian Act of 12 May 2014 on Regulated Real Estate Companies. Articles 523 and 524 of the Belgian Companies Code are always applicable, as is Article 37 of the abovementioned Belgian Act.
No conflict of interest on real estate transactions occurred during the course of the 2014/2015 financial year. The only occurrence of conflict of interest was the Executive Managers' remuneration, as detailed in section 12 of the Consolidated Board of Directors' Report included in this Annual Financial Report.
The independent compliance function is carried out in accordance with Article 17 of the Belgian Act of 12 May 2014 on Regulated Real Estate Companies (see above) and with Appendix B of the 2009 Code. Ms. Sarah Everaert, CLO, acts as the Company's Compliance Officer. In this regard, she must ensure that the Deal Code is properly applied and that any insider trading is properly reported, in order to reduce the risk of abuse of insider trading.
The compliance officer updates the list of persons having access to privileged information. He ensures that the persons on this list are aware of what this implies.
Furthermore, he oversees of the definition of closed periods by the Board of Directors. During these periods, trading of Aedifica shares is prohibited for the Company leaders, for the persons listed and for their relatives. The closed periods are as follows:
Leaders who contemplate any transaction on equity instruments or derivative instruments linked to Aedifica must give notice to the Compliance Officer at least 48 hours in advance (by fax or e-mail). The Compliance Officer, who contemplates any transaction on equity instruments or derivatives instruments linked to the Company, must give notice to the Chairman of the Board of Directors at least 48 hours in advance (by fax or e-mail). The leaders must then confirm completion of the transaction within 5 working days.
The leaders must notify the FSMA of transactions realised on their account in relation to shares of the Company. Notification must be given within 5 working days following the completion of the transactions.
Under the scrutiny of the Chairman, the Board of Directors regularly performs a self-assessment of its size, composition, way of functioning (as well as those of the committees), and interaction with the Executive Managers. This should be done at least every 2 to 3 years.
This assessment aims to perform 4 tasks:
In this respect, the Board of Directors is supported by the Nomination and Remuneration Committee, and, if needed, by external experts.
The non-executive directors regularly review their own interaction with the Executive Managers. To this end, they meet at least once per year in the absence of the CEO and of any other executive director.
A regular review of the input of each director is organised in order to adapt the composition of the Board as needed and take into account any changes in circumstances. When the re-election of a director is approaching, the input and effectiveness of the director is reviewed based on a transparent and well defined procedure.
The Board of Directors ensures that adequate succession planning is in place. It monitors the balance of skills and experience in the Board (for both executive and non-executive directors).
The "long-term incentive plan" granted to the CEO and the CFO (as announced in the 2008/2009 Annual Financial Report for subsequent financial years) was approved at the 24 October 2014 Annual General Meeting of the Shareholders. Within this plan, the CEO and the CFO have the right to definitively purchase Aedifica shares, thanks to a gross payment of €80,000 in favour of the CEO and CFO. The net payment of €37,125.00 (after deduction of personal withholding taxes) was used by them to acquire 810 shares each at a unit price of €45.8333 (being the last known closing share price multiplied by a factor amounting to 100/120th, in accordance with comment 36/16 of the Belgian Income Tax Code). The CEO and the CFO irrevocably committed to hold these shares for a period of 2 years. The shares sold by Aedifica were part of the treasury shares held by the Company that were acquired on the stock exchange.
For the upcoming financial year, the Board of Directors will once again propose to the shareholders to approve a "long-term incentive plan" for the CEO and the CFO under the same form previously used, with a gross value of €90,000 for each Executive Managers, in accordance with principle 7.13 of the 2009 Code and with Article 14 of the Belgian Act of 6 April 2010.
The Remuneration Report is provided in accordance with the 2009 Code and with the Belgian Act of 6 April 2010; it has been applicable to Aedifica since the beginning of the 2010/2011 financial year.
During the 2014/2015 financial year, the remuneration policy for non-executive directors and Executive Managers were set out as follows:
During the same period, the actual remuneration of the non-executive directors and Executive Managers was determined as follows:
— Non-executive directors: in accordance with the decisions taken by the shareholders during the Annual General Meeting of 11 October 2011, the actual remuneration of the non-executive directors amounted to: a fixed remuneration of €13,600 excl. VAT for the Chairman and of €11,330 excl. VAT for the other non-executive directors, and attendance fees of €850 excl. VAT for each meeting of the Board or of €800 excl. VAT for each committee meeting. For the 2014/2015 financial year, the Board of Directors will collectively receive €215,511.
— Executive Managers: the actual level of remuneration was determined based on the Executive Managers' agreements signed in 2006 (CEO) and 2007 (CFO), and on the additional abovementioned agreements, in accordance with the criteria for the variable remuneration set out in section 12 of the Consolidated Board of Directors' Report. These remuneration packages were reviewed in 2009 and 2011 by specialised consultants. For the COO and the CLO, the recently signed Management Agreements were observed. These have not yet led to any variable remuneration being awarded.
The remuneration package of the Executive Managers consists of: fixed remuneration (arising from the Management Agreements), variable remuneration (for which no clawback in favour of the Company is applicable), post-retirement benefits (defined contribution plan and associated benefits), and other components (medical insurance, benefits-in-kind linked to the usage of a company car). Moreover, in the case of the CEO and the CFO, the fixed remuneration also consists of amounts resulting from the long-term incentive plan. The amounts are shown in the adjoining table.
The Executive Managers carry out their office as director of Aedifica and its subsidiaries for free. They are not remunerated by Aedifica's subsidiaries.
The gross variable remuneration of the Executive Managers was determined as follows:
— The variable remuneration for the 2014/2015 financial year is a (gross) amount which does not exceed a certain percentage of the annual remuneration excluding sundry benefits and post-retirement benefits (CEO and CFO: 50 %, COO and CLO: 30 % prorata temporis). The effective amount was determined by the Board of Directors, based on quantitative and qualitative criteria listed in the 2013/2014 Annual Financial Report as well as in the aforementioned additional agreements signed on 25 August 2014 for the CEO and the CFO. They are determined in the recent Management Agreements for the COO and the CLO. Recall that the variable remuneration can only be paid if the actual profit excl. IAS 39 and IAS 40 per share is at least 85 % of the budgeted amount. The criteria (and their weight) were as follows: consolidated profit excl. IAS 39 and IAS 40 per share (25 %), growth of the consolidated property portfolio (including the internationalisation of the Group's activities) (30 %), consolidated operating margin (25 %) and management of the Group's teams (20 %). The Board of Directors concluded on 2 September 2015 that the Executive Managers met the objectives and decided to grant as variable remuneration €166,000 to the CEO, €125,000 to the CFO, €30,000 to the COO and €3,750 to the CLO.
The Nomination and Remuneration Committee has established a "long-term incentive plan" for the CEO and the CFO (see section 7 above).
| Stefaan Gielens - CEO |
Others1 | Total | |
|---|---|---|---|
| Fixed remuneration (management agreements) |
351,313 | 365,282 | 716,595 |
| Fixed remuneration ("long term incentive plan") |
80,000 | 80,000 | 160,000 |
| Variable remuneration | 166,000 | 158,750 | 324,750 |
| Pension scheme | 55,388 | 49,542 | 104,930 |
| Insurance premiums | 5,766 | 6,394 | 12,160 |
| Benefits in kind | 7,091 | 8,843 | 15,934 |
| Total | 665,558 | 668,811 | 1,334,369 |
For information purposes, note that the ratio between the total remuneration of the CEO for 2014/2015 and the average remuneration of personnel amounts to 9 times.
Each Executive Manager benefits from a company car as from the time of entering the Company. In 2014/2015, the cost to the Company (rental charge and petrol) was €20,000 excl. VAT for the CEO and a combined total (prorate temporis) of €22,000 excl. VAT for the three other Executive Managers. Each Executive Manager also uses a Company PC and mobile phone. Moreover, the Company reimburses the Executive Managers' actual professional expenses, and grants the CEO and the CFO a fixed allowance for representation expenses of €300 per month (as from 1 July 2008).
During the 2015/2016 financial year, Executive Managers' remunerations will be indexed, as specified in the Management Agreements.
The Management Agreements signed with the Executive Managers may be terminated in the following circumstances:
— Immediately if the Executive Manager cannot act as Executive Manager during a period of 6 months, in case of illness or accident.
The Management Agreements provide for specific events of termination in the event of a change in control of the Company, as disclosed in section 15.10 of the Consolidated Board of Directors' Report.
The only case in which an indemnity granted to an Executive Manager could exceed 12 months of remuneration is in the event of a change in control of the Company; in this case, the CEO is eligible to obtain 18 months' remuneration. The Nomination and Remuneration Committee highlights the fact that this clause is included in the Management Agreement signed with the CEO in 2006 and that it is consistent with market practice. The approval of the shareholders is not required, as specified in Article 9 of the Belgian Act of 6 April 2010.
The Board of Directors expects to keep its remuneration policy unchanged for the non-executive directors. This policy is described in section 8.1 above.
| 1. CONSOLIDATED FINANCIAL STATEMENTS 2014/2015 | 125 | |
|---|---|---|
| 1.1 Consolidated income statement | 125 | |
| 1.2 Consolidated statement of comprehensive income | 126 | |
| 1.3 Consolidated balance sheet | 126 | |
| 1.4 Consolidated cash flow statement | 128 | |
| 1.5 Consolidated statement of changes in equity | 129 | |
| 1.6 Notes to the consolidated financial statements | 131 | |
| Note 1: | General information | 131 |
| Note 2: | Accounting policies | 131 |
| Note 3: | Operating segments | 137 |
| Note 4: | Rental income | 140 |
| Note 5: | Rental-related charges | 140 |
| Note 6: | Recovery of property charges | 140 |
| Note 7: | Recovery of rental charges and taxes normally paid | 140 |
| by tenants on let properties | ||
| Note 8: Costs payable by the tenant and borne by the landlord | 141 | |
| on rental damage and repair of lease | ||
| Note 9: | Rental charges and taxes normally paid by tenants | 141 |
| on let properties | ||
| Note 10: Other rental-related income and charges | 141 | |
| Note 11: Technical costs | 141 | |
| Note 12: Commercial costs | 141 | |
| Note 13: Charges and taxes on unlet properties | 142 | |
| Note 14: Property management costs | 142 | |
| Note 15: Other property charges | 142 | |
| Note 16: Overheads | 142 | |
| Note 17: Other operating income and charges | 142 | |
| Note 18: Gains and losses on disposals of investment properties | 143 | |
| Note 19: Gains and losses on disposals of other non-financial assets | 143 | |
| Note 20: Changes in fair value of investment properties | 143 | |
| Note 21: Financial income | 143 | |
| Note 22: Net interest charges | 144 | |
| Note 23: Other financial charges | 144 | |
| Note 24: Corporate tax | 144 | |
| Note 25: Exit tax | 145 | |
| Note 26: Earnings per share | 145 | |
| Note 27: Goodwill | 145 | |
| Note 28: Intangible assets | 146 | |
| Note 29: Investment properties | 147 |
| Note 30: Development projects | 149 | |
|---|---|---|
| Note 31: Other tangible assets | 149 | |
| Note 32: Non-current financial assets and other non-current | 150 | |
| financial liabilities | ||
| Note 33: Hedges | 150 | |
| Note 34: Trade receivables | 153 | |
| Note 35: Tax receivables and other current assets | 153 | |
| Note 36: Cash and cash equivalents | 154 | |
| Note 37: Deferred charges and accrued income | 154 | |
| Note 38: Equity | 154 | |
| Note 39: Provisions | 155 | |
| Note 40: Borrowings | 156 | |
| Note 41: Trade payables and other current debts | 157 | |
| Note 42: Accrued charges and deferred income | 157 | |
| Note 43: Employee benefits expense | 157 | |
| Note 44: Financial risk management | 158 | |
| Note 45: Contingencies and commitments | 160 | |
| Note 46: Acquisitions and disposals of investment properties | 163 | |
| Note 47: Changes in fair value of financial assets and liabilities | 163 | |
| Note 48: Related party transactions | 163 | |
| Note 49: Subsequent events | 164 | |
| Note 50: Corrected profit as defined in the Royal Decree | 164 | |
| of 13 July 2014 | ||
| Note 51: List of subsidiaries, associates and joint ventures | 165 | |
| Note 52: Belgian RREC status | 165 | |
| Note 53: Audit fees | 166 | |
| Note 54: Deferred taxes | 166 | |
| Note 55: Fair value | 167 | |
| Note 56: Put options granted to non-controlling shareholders | 167 | |
| 1.7 Auditor's report | 168 | |
| 2. ABRIDGED STATUTORY FINANCIAL | ||
| STATEMENTS 2014/2015 | 169 | |
| Abridged statutory income statement | 169 | |
| Abridged statutory statement of comprehensive income | 170 | |
| Abridged statutory balance sheet | 170 | |
| Abridged statutory statement of changes in equity | 172 |
Abridged statutory appropriation account 173
Financial statements
| Year ending on 30 June (x €1,000) | Notes | 2015 | 2014 | |
|---|---|---|---|---|
| I. | Rental income | 4 | 49,903 | 40,675 |
| II. | Writeback of lease payments sold and discounted | 0 | 0 | |
| III. | Rental-related charges | 5 | -50 | -62 |
| Net rental income | 49,853 | 40,613 | ||
| IV. | Recovery of property charges | 6 | 32 | 36 |
| V. | Recovery of rental charges and taxes normally paid by tenants on let properties | 7 | 1,811 | 1,096 |
| VI. | Costs payable by the tenant and borne by the landlord on rental damage and repair at end of lease |
8 | 0 | 0 |
| VII. | Rental charges and taxes normally paid by tenants on let properties | 9 | -1,811 | -1,096 |
| VIII. | Other rental-related income and charges | 10 | -1,563 | -1,510 |
| Property result | 48,322 | 39,139 | ||
| IX. | Technical costs | 11 | -1,071 | -933 |
| X. | Commercial costs | 12 | -492 | -549 |
| XI. | Charges and taxes on unlet properties | 13 | -131 | -162 |
| XII. | Property management costs | 14 | -892 | -717 |
| XIII. | Other property charges | 15 | -1,588 | -1,187 |
| Property charges | -4,174 | -3,548 | ||
| Property operating result | 44,148 | 35,591 | ||
| XIV. | Overheads | 16 | -5,355 | -4,202 |
| XV. | Other operating income and charges | 17 | 229 | 32 |
| Operating result before result on portfolio | 39,022 | 31,421 | ||
| XVI. | Gains and losses on disposals of investment properties | 18 | 428 | 0 |
| XVII. | Gains and losses on disposals of other non-financial assets | 19 | 0 | 0 |
| XVIII. | Changes in fair value of investment properties | 20 | 19,259 | 3,816 |
| Operating result | 58,709 | 35,237 | ||
| XX. | Financial income | 21 | 478 | 894 |
| XXI. | Net interest charges | 22 | -12,833 | -11,128 |
| XXII. | Other financial charges | 23 | -792 | -731 |
| XXIII. | Changes in fair value of financial assets and liabilities | 47 | 374 | -2,990 |
| Net finance costs | -12,773 | -13,955 | ||
| XXIV. | Share in the profit or loss of associates and joint ventures accounted for using the equity method |
0 | 0 | |
| Profit before tax (loss) | 45,936 | 21,282 | ||
| XXV. | Corporate tax | 24 | -771 | 103 |
| XXVI. | Exit tax | 25 | 0 | 0 |
| Tax expense | -771 | 103 | ||
| Profit (loss) | 45,165 | 21,385 | ||
| Attributable to: | ||||
| Non-controlling interests | 0 | 0 | ||
| Owners of the parent | 45,165 | 21,385 | ||
| Basic earnings per share (€) | 26 | 4.24 | 2.16 | |
| Diluted earnings per share (€) | 26 | 4.24 | 2.16 |
| Year ending on 30 June (x €1,000) | 2015 | 2014 | ||
|---|---|---|---|---|
| I. | Profit (loss) | 45,165 | 21,385 | |
| II. | Other comprehensive income recyclable under the income statement | |||
| A. | Impact on fair value of estimated transaction costs resulting from hypothetical disposal of investment properties |
-7,432 | -3,736 | |
| B. | Changes in the effective part of the fair value of authorised cash flow hedge instruments as defined under IFRS |
-181 | -2,710 | |
| H. | Other comprehensive income, net of taxes | 0 | 0 | |
| Comprehensive income | 37,552 | 14,939 | ||
| Attributable to: | ||||
| Non-controlling interests | 0 | 0 | ||
| Owners of the parent | 37,552 | 14,939 |
| ASSETS | Notes | 2015 | 2014 |
|---|---|---|---|
| Year ending on 30 June (x €1,000) | |||
| I. Non-current assets |
|||
| A. Goodwill |
27 | 1,856 | 1,856 |
| B. Intangible assets |
28 | 102 | 21 |
| C. Investment properties |
29 | 1,003,358 | 784,980 |
| D. Other tangible assets |
31 | 1,834 | 1,911 |
| E. Non-current financial assets |
32 | 1,397 | 461 |
| F. Finance lease receivables |
0 | 0 | |
| G. Trade receivables and other non-current assets |
0 | 0 | |
| H. Deferred tax assets |
54 | 110 | 244 |
| I. Equity-accounted investments |
0 | 0 | |
| Total non-current assets | 1,008,657 | 789,473 | |
| II. Current assets |
|||
| A. Assets classified as held for sale |
29 | 1,805 | 0 |
| B. Current financial assets |
0 | 0 | |
| C. Finance lease receivables |
0 | 0 | |
| D. Trade receivables and other non-current assets | 34 | 4,352 | 2,938 |
| E. Tax receivables and other current assets |
35 | 962 | 495 |
| F. Cash and cash equivalents |
36 | 3,598 | 1,156 |
| G. Deferred charges and accrued income |
37 | 910 | 661 |
| Total current assets | 11,627 | 5,250 | |
| TOTAL ASSETS | 1,020,284 | 794,723 |
| EQUITY AND LIABILITIES | Notes | 2015 | 2014 | |
|---|---|---|---|---|
| Year ending on 30 June (x €1,000) | 38 | |||
| EQUITY I. |
Issued capital and reserves attribuable to owners of the parent | |||
| A. | Capital | 360,633 | 264,231 | |
| B. | Share premium account | 151,388 | 64,729 | |
| C. | Reserves | 41,084 | 46,730 | |
| a. Legal reserve | 0 | 0 | ||
| b. Reserve for the balance of changes in fair value of investment properties | 95,679 | 91,863 | ||
| c. Reserve for estimated transaction costs resulting from hypothetical disposal of investment properties |
-25,015 | -17,582 | ||
| d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS |
-19,667 | -19,484 | ||
| e. Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS |
-18,717 | -15,729 | ||
| h. Reserve for treasury shares | 0 | -56 | ||
| k. Reserve for deferred taxes on investment properties located abroad | 244 | 0 | ||
| m. Other reserves | 0 | 0 | ||
| n. Result brought forward from previous years | 8,560 | 7,718 | ||
| D. | Profit (loss) of the year | 45,165 | 21,385 | |
| Equity attribuable to owners of the parent | 598,270 | 397,075 | ||
| II. | Non-controlling interests | 0 | 0 | |
| TOTAL EQUITY | 598,270 | 397,075 | ||
| LIABILITIES | ||||
| I. | Non-current liabilities | |||
| A. | Provisions | 39 | 0 | 0 |
| B. | Non-current financial debts | |||
| a. Borrowings | 40 | 340,752 | 274,955 | |
| C. | Other non-current financial liabilities | 32 | 39,320 | 37,774 |
| a. Authorised hedges | 38,050 | 37,774 | ||
| b. Other | 1,270 | 0 | ||
| D. | Trade debts and other non-current debts | 0 | 0 | |
| E. | Other non-current liabilities | 0 | 0 | |
| F. | Deferred taxes liabilities | 54 | 2,435 | 0 |
| Non-current liabilities | 382,507 | 312,729 | ||
| II. | Current liabilities | |||
| A. | Provisions | 39 | 0 | 0 |
| B. | Current financial debts | |||
| a. Borrowings | 40 | 25,897 | 70,945 | |
| C. | Other current financial liabilities | 0 | 0 | |
| D. | Trade debts and other current debts | |||
| a. Exit tax | 41 | 813 | 615 | |
| b. Other | 41 | 8,484 | 10,305 | |
| E. | Other current liabilities | 0 | 0 | |
| F. | Accrued charges and deferred income | 42 | 4,313 | 3,054 |
| Total current liabilities | 39,507 | 84,919 | ||
| TOTAL LIABILITIES | 422,014 | 397,648 | ||
| TOTAL EQUITY AND LIABILITIES | 1,020,284 | 794,723 |
| Year ending on 30 June (x €1,000) | Notes | 2015 | 2014 |
|---|---|---|---|
| CASH FLOW FROM OPERATING ACTIVITIES | |||
| Profit (loss) | 45,165 | 21,385 | |
| Non-controlling interests | 0 | 0 | |
| Tax expense | 24 | 771 | -103 |
| Amortisation and depreciation | 670 | 599 | |
| Write-downs | 5 | 33 | 43 |
| Change in fair value of investment properties (+/-) | 20 | -19,259 | -3,816 |
| Gains and losses on disposals of investment properties | 18 | -428 | 0 |
| Net finance costs | 12,773 | 13,955 | |
| Changes in trade receivables (+/-) | -1,446 | -467 | |
| Changes in tax receivables and other current assets (+/-) | -467 | 397 | |
| Changes in deferred charges and accrued income (+/-) | -250 | -133 | |
| Changes in trade payables and other current debts (excl. exit tax) (+/-) | -2,100 | 2,773 | |
| Changes in accrued charges and deferred income (+/-) | 1,253 | 212 | |
| Cash generated from operations | 36,715 | 34,845 | |
| Taxes paid | -141 | -70 | |
| Net cash from operating activities | 36,574 | 34,775 | |
| CASH FLOW RESULTING FROM INVESTING ACTIVITIES | |||
| Purchase of intangible assets | -96 | -11 | |
| Purchase of real estate companies and marketable investment properties | -66,675 | -49,714 | |
| Purchase of tangible assets | -577 | -651 | |
| Purchase of development projects | -33,435 | -36,727 | |
| Disposals of investment properties | 15,943 | 0 | |
| Net changes in non-current receivables | 49 | 46 | |
| Net investments in other assets | 0 | 0 | |
| Net cash from investing activities | -84,791 | -87,057 | |
| CASH FLOW FROM FINANCING ACTIVITIES | |||
| Capital increase, net of costs * | 149,158 | 0 | |
| Disposals of treasury shares | 56 | 28 | |
| Dividend for previous fiscal year | -8,891 | -16,211 | |
| Net changes in borrowings | 20,749 | 98,444 | |
| Net changes in other loans | 0 | 0 | |
| Net finance costs paid | -13,574 | -10,802 | |
| Repayment of financial debts of acquired or merged companies | -36,258 | -10,461 | |
| Repayment of working capital of acquired or merged companies | -60,581 | -8,285 | |
| Net cash from financing activities | 50,659 | 52,713 | |
| TOTAL CASH FLOW FOR THE PERIOD | |||
| Total cash flow for the period | 2,442 | 431 | |
| RECONCILIATION WITH BALANCE SHEET | |||
| Cash and cash equivalents at beginning of period | 1,156 | 725 | |
| Total cash flow for the period | 2,442 | 431 | |
| Cash and cash equivalents at end of period | 36 | 3,598 | 1,156 |
* Some types of capital increases (contributions in kind, partial demergers) do not result in any cash flow.
| Year ending on 30 June (x €1,000) |
2013 | Capital increase in cash |
Capital increase in kind |
Acquisitions / disposals of treasury shares |
Consolidated comprehensive income |
Appropriation of the result |
Roundings | 2014 |
|---|---|---|---|---|---|---|---|---|
| Capital | 248,072 | 0 | 16,159 | 0 | 0 | 0 | 0 | 264,231 |
| Share premium account | 64,730 | 0 | 0 | 0 | 0 | 0 | -1 | 64,729 |
| Reserves | 41,686 | 0 | 0 | 28 | -6,446 | 11,460 | 2 | 46,730 |
| a. Legal reserve | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| b. Reserve for the balance of changes in fair value of investment properties |
82,798 | 0 | 0 | 0 | 0 | 9,067 | -2 | 91,863 |
| c. Reserve for estimated transaction costs resulting from hypothetical disposal of investment properties |
-13,848 | 0 | 0 | 0 | -3,736 | 0 | 2 | -17,582 |
| d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS |
-16,637 | 0 | 0 | 0 | -2,710 | -137 | 0 | -19,484 |
| e. Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS |
-17,467 | 0 | 0 | 0 | 0 | 1,737 | 1 | -15,729 |
| h. Reserve for treasury | -84 | 0 | 0 | 28 | 0 | 0 | 0 | -56 |
| shares k. Reserve for deferred taxes on investment properties located abroad |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| m. Other reserves | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| n. Result brought forward from previous years |
6,924 | 0 | 0 | 0 | 0 | 793 | 1 | 7,718 |
| Profit (loss) | 27,671 | 0 | 0 | 0 | 21,385 | -27,671 | 0 | 21,385 |
| Equity attribuable to owners of the parent |
382,159 | 0 | 16,159 | 28 | 14,939 | -16,211 | 1 | 397,075 |
| Non-controlling interests | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| TOTAL EQUITY | 382,159 | 0 | 16,159 | 28 | 14,939 | -16,211 | 1 | 397,075 |
| Year ending on 30 June (x €1,000) |
2014 | Capital increase in cash |
Capital increase in kind |
Acquisitions / disposals of treasury shares |
Consolidated comprehensive income |
Appropriation of the result |
Roundings | 2015 |
|---|---|---|---|---|---|---|---|---|
| Capital | 264,231 | 78,812 | 17,591 | 0 | 0 | 0 | -1 | 360,633 |
| Share premium account | 64,729 | 70,580 | 16,079 | 0 | 0 | 0 | 0 | 151,388 |
| Reserves | 46,730 | 0 | 0 | 56 | -7,613 | 1,912 | -1 | 41,084 |
| a. Legal reserve | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| b. Reserve for the balance of changes in fair value of investment properties |
91,863 | 0 | 0 | 0 | 0 | 3,816 | 0 | 95,679 |
| c. Reserve for estimated transaction costs resulting from hypothetical disposal of investment properties |
-17,582 | 0 | 0 | 0 | -7,432 | 0 | -1 | -25,015 |
| d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS |
-19,484 | 0 | 0 | 0 | -181 | -1 | -1 | -19,667 |
| e. Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS |
-15,729 | 0 | 0 | 0 | 0 | -2,989 | 1 | -18,717 |
| h. Reserve for treasury | -56 | 0 | 0 | 56 | 0 | 0 | 0 | 0 |
| shares k. Reserve for deferred taxes on investment properties located abroad |
0 | 0 | 0 | 0 | 0 | 244 | 0 | 244 |
| m. Other reserves | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| n. Result brought forward from previous years |
7,718 | 0 | 0 | 0 | 0 | 842 | 0 | 8,560 |
| Profit (loss) | 21,385 | 0 | 0 | 0 | 45,165 | -21,385 | 0 | 45,165 |
| Equity attribuable to owners of the parent |
397,075 | 149,392 | 33,670 | 56 | 37,552 | -19,473 | -2 | 598,270 |
| Non-controlling interests | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| TOTAL EQUITY | 397,075 | 149,392 | 33,670 | 56 | 37,552 | -19,473 | -2 | 598,270 |
Europe and population growth in Belgium's main cities.
Aedifica SA (referred to in the financial statements as "the Company", "the Parent" or "the Group") is a limited liability company having opted for public Regulated Real Estate Company (RREC) status under Belgian law. Its primary shareholders are listed in Note 38. The address of its registered office is the following: Avenue Louise 331-333, B-1050 Brussels (telephone: +32 (0)2 626 07 70)
Aedifica aims to position itself as a market leader among listed Belgian residential real estate companies, in particular with regard to senior housing. Our objective is to create a balanced portfolio of residential buildings that generates recurring revenues and offers potential for capital gains. We aim to take advantage of two underlying demographic trends, namely population ageing in Western
To attain its objectives, Aedifica has identified two strategic pillars in which it will concentrate activities: senior housing in Western Europe and apartment buildings in Belgium's main cities. The diversification sought by Aedifica centres on these two strategic pillars, which provide for easy adaptation of the Company's policy in response to shifting market opportunities and economic conditions. The two strategic poles are concentrated in two main segments (senior housing and apartment buildings) with a residual non-strategic segment comprising hotels and other types of buildings.
The Company's shares are listed on the Euronext Brussels (continuous market), as they have been since October 2006.
Publication of the Consolidated Financial Statements was approved by the Board of Directors on 2 September 2015. The Company's shareholders have the power to amend the Consolidated Financial Statements after issue at the Annual General Meeting, to be held on 23 October 2015.
The Consolidated Financial Statements cover the 12-month period ending 30 June 2015. They have been prepared in conformity with "International Financial Reporting Standards" ("IFRS") and the interpretations of the "International Financial Reporting Interpretations Committee" ("IFRIC"), issued as of 30 June 2015 and approved by the European Union ("EU").
These are fully in line with the standards and interpretations published by the "International Accounting Standards Board" ("IASB") applicable as of 30 June 2015. Elements of IAS 39 that were rejected by the EU are not applicable for the Aedifica group. The Consolidated Financial Statements have also been prepared in accordance with the spirit and provisions of the Royal Decree of 13 July 2014 on Regulated Real Estate Companies.
The Consolidated Financial Statements are prepared in Euros, and presented in thousands of Euros.
The Consolidated Financial Statements have been prepared with application of the historical cost convention, except for the following assets and liabilities, which are measured at fair value: investment properties, investment properties held for sale, and financial assets and liabilities held for hedging or held for trading (mainly derivatives), put options granted to non-controlling shareholders.
The Consolidated Financial Statements have been prepared in accordance with accrual accounting principles on a going concern basis.
The preparation of the Consolidated Financial Statements in conformity with IFRS requires significant judgment in the application of accounting policies (including the classification of lease contracts, identification of business combinations, and calculation of deferred taxes) and the use of certain accounting estimates (such as impairment tests involving goodwill). Underlying assumptions are based on prior experience, input from third parties (notably real estate experts), and on other relevant factors. Actual results may vary on the basis of these estimations. Consequently, the assumptions and estimates are regularly revisited and modified as necessary.
A summary of significant accounting policies is provided in Note 2.2. The new and amended standards and interpretations listed below are obligatory and have been applied by the Group since 1 July 2014 and have no impact on the Consolidated Financial Statements presented for the 2014/2015 financial year:
The new IFRIC 21 interpretation "Levies" which entered into force for the Group on 1 July 2014 had an effect in the income statement during the period through recognition of a net non-recurrent charge of €0.4 million (additional charge of €0.2 million under line "VII. Rental charges and taxes normally paid by tenants on let properties", additional income of €0.2 million under line "V. Recovery of rental charges and taxes normally paid by tenants on let properties", additional charge of €0.4 million under line "XIII. Other property charges"). This is the result of the recognition of property taxes which were previously spread over time (i.e. taken pro rata temporis over the financial year) and which are now recognised at once for the full calendar year. Since the Company's financial year straddles two calendar years, the 2014/2015 income statement exceptionally includes the net effect of 18 months property taxes (6 months for the 2014 calendar year and 12 months for 2015 calendar year).
Several new standards, as well as amendments and interpretations related to existing standards have been issued and will become mandatory for application in financial years beginning on or after 1 July 2015. These changes, which the Aedifica group has not adopted anticipatively, include the following (as of 30 June 205):
The Group is currently evaluating the impacts of the above-listed changes.
The main significant accounting policies applied during the preparation of the Consolidated Financial Statements are presented below. These methods were applied consistently to all previous financial years.
The numbering of the paragraphs below refers to the lines presented on the balance sheet and income statement.
All entities for which Aedifica directly or indirectly holds more than half of the voting rights or has the power to control operations are considered subsidiaries and included in the scope of consolidation. In accordance with IAS 27, subsidiaries are fully consolidated as from the date on which control is transferred to the Group; they are de-consolidated as from the date that control ceases. All intercompany transactions, balances, and unrealised gains and losses on transactions between the Group's companies are eliminated.
Business combinations are recognized using the purchase method in accordance with IFRS 3. The excess of the acquisition cost over the fair value of the Group's share of the net identifiable assets of the acquired business at the date of acquisition is recognized as goodwill (an asset). In the event that this value is negative, it is recognized immediately in profit. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.
Intangible assets are capitalised as assets at their acquisition cost and are amortised using the straight-line method at annual rates between 25 % and 30 %.
If the acquisition of a building takes place by cash payment, through the acquisition of shares of a real estate company, through the non-monetary contribution of a building against the issuance of new shares, by merger through takeover of a property, or by a partial de-merger, the deed costs, audit and consultancy costs, reinvestment bank fees, costs of lifting security on the financing of the absorbed company, and other costs relating to the merger are also considered part of the acquisition cost and capitalised in the asset accounts on the balance sheet.
Properties in the Group's portfolio or which enter into its portfolio, either with payment in cash or in kind, are valued by independent experts at their fair value.
The fair value of investment properties located in Belgium is calculated as follows:
The average transaction cost defined by BEAMA is revised annually and adjusted as necessary in increments of 0.5 %. Experts attest to the percentage deducted and retained in regular reports to shareholders; it currently amounts to 2.5 %.
The fair value of investment properties located abroad take into account locally applicable legal costs.
If, for acquisitions such as those defined in section IC 1.1 ("Acquisition value") above, the investment value determined by the independent expert is different than the acquisition value defined in section IC 1.1, the difference (after subtracting the exit tax) is recognised as follows:
Costs incurred by Aedifica for works carried out on investment properties are accounted for using one of two distinct methods, depending on the nature of the costs. The cost of repairs and maintenance, which neither add new functionality nor constitute a significant enhancement or upgrade to the building, are recognised as expenses as incurred and, thus, deducted from profit for the year. Subsequent expenditures related to two types of works projects are capitalised as assets on the Company's balance sheet:
a) Major renovations and extensions: these usually take place every 25 to 35 years and represent an almost complete renovation of the building, often reusing parts of the original building and applying the most up-to-date building techniques. Upon completion of these major renovation projects, the buildings are considered as new and are presented as such in the real estate portfolio.
b) Upgrades: these consist of occasional works that add new functionality, increase capacity, or significantly enhance or upgrade the building, making it possible to raise rents, and thus increasing the building's estimated rental income.
The appreciation in building values as a result of these projects is generally recognised by experts, which validates the probability that future benefits will flow to the Group as a result of the investment. Thus, all costs directly attributable to these types of works projects are capitalised in assets on the balance sheet. Attributable costs include but are not limited to: direct materials, contractor fees, technical studies, and architectural fees (up to 30 June 2006, only the cost of external architects were deemed eligible; since that time, both the cost of both internal and external architects are included). Any excess of these costs over fair value is recognised in the income statement (expense).
Borrowing costs are capitalised for all qualifying works projects with duration of more than one year.
In accordance with IAS 40, Aedifica applies the fair value model and does not recognise depreciation on its properties, the rights in rem on properties, or on properties rented to the Company under finance leases.
Real estate properties held by Aedifica and by the subsidiaries under its control are valued by experts each time the Company proceeds to issue new shares, list shares on the stock exchange, or repurchase shares other than through the stock exchange. While Aedifica is not bound by this valuation, any issue or repurchase price set below this level must be justified (in the form of a special report).
A new valuation is not required when a share issuance falls within four months of the last valuation of the property concerned, so long as the experts confirm that neither the economic situation nor the physical state of the property make a new valuation necessary.
Real estate experts perform a calculation of fair value at the end of the first three quarters of the financial year based on the conditions of the properties and on fluctuations observed in the real estate market. This valuation is carried out on a building-bybuilding basis and covers Aedifica's entire real estate portfolio, including properties held by its subsidiaries.
At the end of each financial year, an expert conducts a precise valuation of the following items:
These valuations are binding for Aedifica and must be reflected in the accounts. Thus, the carrying amount of the properties in the accounts corresponds to the fair value at which they are assessed by Aedifica's independent experts.
Changes in the fair value of real estate properties, as determined by independent experts, arise each time the value is assessed. They are accounted for in the income statement.
Upon disposal of an investment property, the gain or loss on disposal is recognised in the income statement, in line "XVI. Gains and losses on disposals of investment properties".
Any investment property occupied by Aedifica is transferred to the line "other tangible assets" of the balance sheet. Its fair value at the time of the transfer becomes its so-called acquisition cost. If the Company only occupies a small part of the building, the whole building is recognised as "investment property" in the balance sheet and continues to be carried at fair value.
Buildings under construction, renovation, or extension, which are considered development projects are recognised on the balance sheet at historical cost, including transfer taxes, non-recoverable VAT and indirect expenses (capitalised interest, insurance, legal fees, architectural fees, consulting fees, etc.). If the historical cost deviates from the fair value appraised by the independent expert, the deviation is recognised in the income statement in order to bring the carrying amount in line with the fair value. Costs incurred in the preliminary phase of development projects are recognised at their historical value.
Tangible assets with definite useful lives, which fall outside the scope of investment property, are initially recognised at their acquisition cost. The components approach is not applied (based on materiality criteria). Depreciation is charged on a linear basis using the pro rata temporis method. Thus, if the financial year does not cover 12 months (i.e. in case of a change in the Company's year-end), the depreciation charge is adjusted accordingly. As residual values are considered marginal, accumulated depreciation is expected to cover the total acquisition cost of each item included in other tangible assets.
The following depreciation rates are applied:
When a derivative provides cash flow hedges to cover a specific risk arising from a financial asset or a firm commitment or a highly probable transaction liability and meets the criteria for hedge accounting under IAS 39, the effective portion of the income or the charge is recognised directly in equity (line "I.C.d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS"). The ineffective portion is recognised in the income statement.
When a derivative does not meet the criteria for hedge accounting under IAS 39, it is recognised on the balance sheet at its fair value, and changes in fair value are recognised in the income statement as they occur. The same treatment is applied for hedging instruments showing a negative fair value.
Financial assets available for sale are valued at fair value (market value if available, otherwise acquisition value). Changes in fair value are recognised in equity (under "I.C.i. Reserve for the balance of changes in fair value of financial assets available for sale"). Receivables are valued at amortised cost.
When a building is acquired outside of Belgium, the net income generated is subject to a foreign income tax. Deferred taxes are recognised on the balance sheet in relation to any unrealised gains (temporary difference between the fair value and the assessed value used for tax purposes of the building in question).
Properties that are considered non-strategic and which are intended to be sold are included in line II.A. They are recognised at fair value.
Receivables are measured at amortised cost. Impairments are recognised when the insolvency of the debtor is confirmed.
Costs incurred during the year, which relate partially or in full to the following year, are recognised on a proportional basis as deferred charges. Revenues and portions of revenues earned over the course of one or several subsequent financial years, but which are also related to the current year, are recognised in income for the amount earned in the current year.
A provision is recognized on the balance sheet when the Group has an implicit or explicit legal obligation as a result of a past event, and for which it is probable the resources will be used to extinguish this obligation. Provisions are measured by calculating the present value of expected cash flows using a market interest rate. They are reflected as a liability on the balance sheet.
The Company can commit itself to acquire the non-controlling shareholdings owned by third parties in subsidiaries, should these third parties wish to exercise their put options. The exercise price of such options granted to non-controlling interest is reflected on the balance sheet on line "I.C.b. Other non-current financial liabilities – Other".
When a building is acquired outside of Belgium, the net income generated is subject to a foreign income tax. Deferred taxes are recognised on the balance sheet in relation to any unrealised gains (temporary difference between the fair value and the assessed value used for tax purposes of the building in question).
Debts are recognized at amortised cost at the year-end date. Debts denominated in foreign currencies are converted into Euros using the spot rate on the year-end date.
Damages and interests paid by a lessee for breach of contract are booked in the income statement at the time of receipt.
The objective of lines I through XV is to reflect the operating profit generated by the Company's rental property portfolio, including general operating costs.
The objective of lines XVI through XVIII is to reflect in the income statement all transactions and accounting adjustments related to the value of the Company's portfolio:
The Board of Directors values commitments and contingencies at the nominal value of the legal obligation as stated in the contract; in the absence of a nominal value or in exceptional cases, these values are disclosed for information purposes.
Aedifica's insurance contracts are considered defined contribution plans, which imply no additional future obligations.
The following operating segments have been identified with application of IFRS 8:
These three operating segments are consistent with the internal reports provided to the Group's chief operating decisionmakers, as required under IFRS 8. The accounting policies presented in Note 2 are used for internal reporting purposes, including segment reporting.
All revenues are earned from external clients located in the Company's country of residence (Belgium: €45,008 thousand) and abroad (Germany: €4,895 thousand), and all non-current assets are located in the Company's country of residence, with the exception of €119,800 thousand located in Germany. In 2013/2014, all revenues were earned from external clients located in the Company's country of residence (Belgium: €39,559 thousand) and abroad (Germany: €1,116 thousand), and all non-current assets were located in the Company's country of residence, with the exception of €37,350 thousand located in Germany.
Each group of entities that falls under common control is considered as a single customer under IFRS 8. Revenues generated through transactions with a single customer representing more than 10 % of the Company's total revenues must be disclosed. This requirement applies to:
Rents mentioned here represent the turnover realised by the Company over the duration of the financial year, which differ from the contractual rents (representing the agreements in place at the time of the year-end closure) on which the analyses included in the Property Report of this Annual Financial Report are based (refer to sections 3.7 and 3.8 of the Property Report).
| Year ending on 30 June (x €1,000) | 2014 | ||||||
|---|---|---|---|---|---|---|---|
| Senior housing |
Apartment buildings |
Hotels and other |
Non-allocated | Inter segment items* |
TOTAL | ||
| SEGMENT RESULT | |||||||
| I. | Rental income | 24,566 | 12,084 | 4,132 | 0 | -107 | 40,675 |
| II. | Writeback of lease payments sold and discounted |
0 | 0 | 0 | 0 | 0 | 0 |
| III. | Rental-related charges | -1 | -60 | 0 | 0 | -1 | -62 |
| Net rental income | 24,565 | 12,024 | 4,132 | 0 | -108 | 40,613 | |
| IV. | Recovery of property charges | 0 | 36 | 0 | 0 | 0 | 36 |
| V. | Recovery of rental charges and taxes normally paid by tenants on let properties |
135 | 916 | 45 | 0 | 0 | 1,096 |
| VI. | Costs payable by the tenant and borne by the landlord on rental damage and repair at end of lease |
0 | 0 | 0 | 0 | 0 | 0 |
| VII. | Rental charges and taxes normally paid by tenants on let properties |
-135 | -916 | -45 | 0 | 0 | -1,096 |
| VIII. | Other rental-related income and charges | 0 | -1,512 | 2 | 0 | 0 | -1,510 |
| Property result | 24,565 | 10,548 | 4,134 | 0 | -108 | 39,139 | |
| IX. | Technical costs | -3 | -846 | -15 | -68 | -1 | -933 |
| X. | Commercial costs | 0 | -546 | -3 | 0 | 0 | -549 |
| XI. | Charges and taxes on unlet properties | 0 | -159 | -4 | 0 | 1 | -162 |
| XII. | Property management costs | -16 | -703 | 0 | 0 | 2 | -717 |
| XIII. | Other property charges | 0 | -1,168 | -18 | -1 | 0 | -1,187 |
| Property charges | -19 | -3,422 | -40 | -69 | 2 | -3,548 | |
| Property operating result | 24,546 | 7,126 | 4,094 | -69 | -106 | 35,591 | |
| XIV. | Overheads | -1 | -50 | -2 | -4,256 | 107 | -4,202 |
| XV. | Other operating income and charges | 1 | 60 | 0 | -28 | -1 | 32 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO |
24,546 | 7,136 | 4,092 | -4,353 | 0 | 31,421 | |
| SEGMENT ASSETS | |||||||
| Marketable investment properties | 482,401 | 210,128 | 73,260 | - | - | 765,789 | |
| Development projects | - | - | - | 19,191 | - | 19,191 | |
| Investment properties | 784,980 | ||||||
| Assets classified as held for sale | - | - | - | - | - | 0 | |
| Other assets | - | - | - | 9,743 | - | 9,743 | |
| Total assets | 794,723 | ||||||
| SEGMENT DEPRECIATION | 0 | -516 | 0 | -83 | 0 | -599 | |
| SEGMENT INVESTMENTS | |||||||
| Marketable investment properties | 86,010 | 9,965 | 0 | - | - | 95,975 | |
| Development projects | - | - | - | 0 | - | 0 | |
| Investment properties | 86,010 | 9,965 | 0 | 0 | 0 | 95,975 | |
| VALUE | INVESTMENT PROPERTIES IN ACQUISITION | 441,721 | 199,288 | 71,344 | - | - | 712,353 |
| CHANGES IN FAIR VALUE OF INVESTMENT PROPERTIES |
5,896 | -145 | -99 | -1,836 | - | 3,816 | |
| VALUE INSURED | 361,884 | 191,941 | 77,105 | - | - | 630,930 | |
| GROSS YIELD IN FAIR VALUE | 6.0% | 5.8% | 6.2% | - | - | 5.9% |
* Mainly elimination of the internal rent for the administrative offices of the Company.
| Year ending on 30 June (x €1,000) | 2015 | ||||||
|---|---|---|---|---|---|---|---|
| Senior housing | Apartment buildings |
Hotels and other |
Non allocated |
Inter segment |
TOTAL | ||
| items* | |||||||
| SEGMENT RESULT | |||||||
| I. | Rental income | 34,082 | 11,949 | 3,986 | 0 | -114 | 49,903 |
| II. | Writeback of lease payments sold and discounted |
0 | 0 | 0 | 0 | 0 | 0 |
| III. | Rental-related charges | -1 | -49 | 0 | 0 | 0 | -50 |
| Net rental income | 34,081 | 11,900 | 3,986 | 0 | -114 | 49,853 | |
| IV. | Recovery of property charges | 0 | 30 | 2 | 0 | 0 | 32 |
| V. | Recovery of rental charges and taxes normally paid by tenants on let properties |
547 | 884 | 145 | 235 | 0 | 1,811 |
| VI. | Costs payable by the tenant and borne by the landlord on rental damage and repair at end of lease |
0 | 0 | 0 | 0 | 0 | 0 |
| VII. | Rental charges and taxes normally paid by tenants on let properties |
-547 | -884 | -145 | -235 | 0 | -1,811 |
| VIII. | Other rental-related income and charges | -74 | -1,494 | 5 | 0 | 0 | -1,563 |
| Property result | 34,007 | 10,436 | 3,993 | 0 | -114 | 48,322 | |
| IX. | Technical costs | -35 | -916 | -18 | -101 | -1 | -1,071 |
| X. | Commercial costs | 0 | -492 | 0 | 0 | 0 | -492 |
| XI. | Charges and taxes on unlet properties | 0 | -124 | -7 | 0 | 0 | -131 |
| XII. XIII. |
Property management costs Other property charges |
-133 -11 |
-760 -1,185 |
0 -19 |
0 -372 |
1 -1 |
-892 -1,588 |
| Property charges | -179 | -3,477 | -44 | -473 | -1 | -4,174 | |
| Property operating result | 33,828 | 6,959 | 3,949 | -473 | -115 | 44,148 | |
| XIV. | Overheads | -92 | -81 | 0 | -5,296 | 114 | -5,355 |
| XV. | Other operating income and charges | 134 | 66 | 0 | 29 | 0 | 229 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO |
33,870 | 6,944 | 3,949 | -5,740 | -1 | 39,022 | |
| SEGMENT ASSETS | |||||||
| Marketable investment properties | 694,467 | 214,461 | 72,696 | - | - | 981,624 | |
| Development projects | - | - | - | 21,734 | - | 21,734 | |
| Investment properties | 1,003,358 | ||||||
| Assets classified as held for sale | 1,805 | 0 | 0 | - | - | 1,805 | |
| Other assets | - | - | - | 15,121 | - | 15,121 | |
| Total assets | 1,020,284 | ||||||
| SEGMENT DEPRECIATION | 0 | -578 | 0 | -92 | 0 | -670 | |
| SEGMENT INVESTMENTS | |||||||
| Marketable investment properties | 184,871 | 0 | 0 | - | - | 184,871 | |
| Development projects | - | - | - | 1,526 | - | 1,526 | |
| Investment properties | 184,871 | 0 | 0 | 1,526 | 0 | 186,397 | |
| VALUE | INVESTMENT PROPERTIES IN ACQUISITION | 640,638 | 201,688 | 70,978 | - | - | 913,304 |
| CHANGES IN FAIR VALUE OF INVESTMENT PROPERTIES |
13,343 | 1,061 | 125 | 4,730 | - | 19,259 | |
| VALUE INSURED | 572,643 | 191,941 | 77,105 | - | - | 841,689 | |
| GROSS YIELD IN FAIR VALUE | 5.9% | 5.4% | 6.2% | - | - | 5.8% |
* Mainly elimination of the internal rent for the administrative offices of the Company.
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Rents earned | 49,844 | 40,640 |
| Guaranteed income | 0 | 0 |
| Cost of rent free periods | -23 | -24 |
| Indemnities for early termination of rental contracts | 82 | 59 |
| TOTAL | 49,903 | 40,675 |
The Group exclusively rents its buildings under operating leases.
The schedule of future minimum lease payments to be collected under non-cancellable operating leases required by IAS 17 is based on the following assumptions, which are extremely cautious:
Future minimum lease payments to be collected under non-cancellable operating leases are presented as follow:
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Not later than one year | 49,573 | 37,188 |
| Later than one year and not later than five years | 185,327 | 136,040 |
| Later than five years | 883,244 | 703,843 |
| TOTAL | 1,118,144 | 877,071 |
Rental income includes contingent rents amounting to €41 thousand, with no comparative figure applicable for 30 June 2014.
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Rents payable as lessee | -17 | -19 |
| Write-downs on trade receivables | -33 | -43 |
| TOTAL | -50 | -62 |
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Indemnities on rental damage | 32 | 36 |
| TOTAL | 32 | 36 |
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Rebilling of rental charges invoiced to the landlord | 785 | 628 |
| Rebilling of property taxes and other taxes on let properties | 1,026 | 468 |
| TOTAL | 1,811 | 1,096 |
Aedifica has not paid any amounts justifying particular mention in relation to costs payable by tenants and borne by the landlord on rental damage and/or repairs at the end of the lease term.
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Rental charges invoiced to the landlord | -785 | -628 |
| Property taxes and other taxes on let properties | -1,026 | -468 |
| TOTAL | -1,811 | -1,096 |
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Cleaning | -332 | -367 |
| Energy | -318 | -365 |
| Depreciation of furniture | -569 | -512 |
| Employee benefits | -260 | -236 |
| Other | -84 | -30 |
| TOTAL | -1,563 | -1,510 |
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Recurring technical costs | ||
| Repair | -369 | -341 |
| Insurance | -81 | -57 |
| Employee benefits | -383 | -298 |
| Maintenance | -110 | -134 |
| Expert fees | -128 | -103 |
| TOTAL | -1,071 | -933 |
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Letting fees paid to real estate brokers | -244 | -323 |
| Marketing | -227 | -204 |
| Fees paid to lawyers and other legal costs | -14 | -17 |
| Other | -7 | -5 |
| TOTAL | -492 | -549 |
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Charges | -131 | -162 |
| TOTAL | -131 | -162 |
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Fees paid to external property managers | -118 | -85 |
| Internal property management expenses | -774 | -632 |
| TOTAL | -892 | -717 |
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Property taxes and other taxes | -1,588 | -1,187 |
| TOTAL | -1,588 | -1,187 |
A number of disputes are ongoing with respect to local taxes; Aedifica continues to defend its position in these cases.
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Lawyers/notaries | -337 | -209 |
| Auditors | -72 | -44 |
| Real estate experts | -599 | -522 |
| IT | -139 | -119 |
| Insurance | -56 | -57 |
| Public relations, communication, marketing, publicity | -258 | -180 |
| Directors and executive management | -1,577 | -1,238 |
| Employee benefits | -1,038 | -807 |
| Depreciation and amortisation of other assets | -101 | -88 |
| Tax expense | -418 | -358 |
| Other | -760 | -580 |
| TOTAL | -5,355 | -4,202 |
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Recovery of damage expenses | 6 | 14 |
| Other | 223 | 18 |
| TOTAL | 229 | 32 |
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Net sale of properties (selling price - transaction costs) | 15,943 | 0 |
| Carrying amount of properties sold | -15,515 | 0 |
| TOTAL | 428 | 0 |
Over the course of the current and previous financial years, Aedifica has not recognised any gains or losses from the sale of other non-financial assets.
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Positive changes | 34,209 | 15,094 |
| Negative changes | -14,950 | -11,278 |
| TOTAL | 19,259 | 3,816 |
| of which: marketable investment properties | 14,529 | 5,652 |
| development projects | 4,730 | -1,836 |
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Interests earned | 31 | 100 |
| Other | 447 | 794 |
| TOTAL | 478 | 894 |
The 2014/2015 financial income includes €0.4 million of non-recurrent income. This amount represents the fee paid to Aedifica at the time of the partial demerger on 4 December 2014 as compensation for the allocation of full dividend rights for the 2014/2015 financial year to the new shares issued that day.
The 2013/2014 financial income included €0.6 million of non-recurrent income resulting from two contributions-in-kind on 12 and 30 June 2014, which were paid to Aedifica when the contributor assumed the expected dividend which accrued over the period 1 July 2013 up to the day before the date of contributions.
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Nominal interest on borrowings | -6,753 | -5,039 |
| Charges arising from authorised hedging instruments | ||
| Authorised hedging instruments qualifying for hedge accounting as defined under IFRS | -3,566 | -3,980 |
| Authorised hedging instruments not qualifying for hedge accounting as defined under IFRS | -3,186 | -2,891 |
| Subtotal | -6,752 | -6,871 |
| Income arising from authorised hedging instruments | ||
| Authorised hedging instruments qualifying for hedge accounting as defined under IFRS | 0 | 0 |
| Authorised hedging instruments not qualifying for hedge accounting as defined under IFRS | 1 | 0 |
| Subtotal | 1 | 0 |
| Capitalised borrowings costs | 675 | 783 |
| Other interest charges | -4 | -1 |
| TOTAL | -12,833 | -11,128 |
Charges and income arising from hedging instruments represents Aedifica's cash interest receipts or payments related to derivatives presented in Note 32 and detailed in Note 33. Changes in the fair value of these derivatives are listed in Note 47 and recognised in the income statement.
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Bank charges and other commissions | -746 | -665 |
| Other | -46 | -66 |
| TOTAL | -792 | -731 |
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Parent | ||
| Profit before tax (loss) | -11,572 | 18,422 |
| Effect of the Belgian REIT tax regime | 11,572 | -18,422 |
| Taxable result in Belgium based on non-deductible costs | 264 | 233 |
| Belgian current tax at rate of 33,99% | -90 | -79 |
| Belgian current tax regularisation for the previous year | 0 | 13 |
| Foreign current tax | -180 | -18 |
| Foreign deferred taxes: originations | 142 | 388 |
| Foreign deferred taxes: reversals | -276 | -144 |
| Subtotal | -404 | 160 |
| Subsidiaries | ||
| Belgian current tax | -100 | -57 |
| Foreign current tax | -6 | 0 |
| Foreign deferred taxes: reversals | -261 | 0 |
| Subtotal | -367 | -57 |
| TOTAL | -771 | 103 |
The corporate taxes are composed of current taxes and deferred taxes.
Current taxes consist primarily of Belgian tax on Aedifica's non-deductible expenditures (since Belgian REITs benefit from a specific tax regime, inducing only the taxation of non-deductible costs, such as regional taxes, car costs, representation costs, social costs, donations, etc.), tax generated abroad and tax on the result of the consolidated subsidiaries.
Deferred taxes arose from the recognition at fair value of buildings located abroad in conformity with IAS 40. This deferred tax (with no monetary impact, that is to say, non-cash) is thus excluded from the result excluding IAS 39 and IAS 40 (see Note 54).
Aedifica has not recognised any exit tax in the income statement.
The earnings per share ("EPS" as defined by IAS 33) is calculated as follows:
| 2015 | 2014 | |
|---|---|---|
| Profit (loss) (Owners of the parent) (x €1,000) | 45,165 | 21,385 |
| Weighted average number of shares outstanding during the period | 10,658,981 | 9,917,093 |
| Basic EPS (in €) | 4.24 | 2.16 |
| Diluted EPS (in €) | 4.24 | 2.16 |
Aedifica uses profit excluding IAS 39 and 40 to measure its operational and financial performance; however, this performance measure is not defined under IFRS. Profit excluding IAS 39 and IAS 40 represents the profit (attributable to owners of the Parent) after removing changes in fair value of investment properties (and the movements of deferred taxes related to these) and hedging instruments. The definition of profit excluding IAS 39 and 40 as applied to Aedifica's financial statements may differ from that used in the financial statements of other companies.
Profit excluding IAS 39 and IAS 40 is calculated as follows:
| 2015 | 2014 |
|---|---|
| 45,165 | 21,385 |
| -19,259 | -3,816 |
| -428 | 0 |
| 395 | -244 |
| -374 | 2,990 |
| -1 | 0 |
| 25,498 | 20,315 |
| Weighted average number of shares outstanding during the period | 10,658,981 | 9,917,093 |
|---|---|---|
| EPS excl. IAS 39 and IAS 40 (before gains and losses on disposals of investment properties - in €) | 2.39 | 2.05 |
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Gross value at the beginning of the year | 1,856 | 1,856 |
| Cumulative impairment losses at the beginning of the year | 0 | 0 |
| Carrying amount at the beginning of the year | 1,856 | 1,856 |
| Movements of the year | 0 | 0 |
| CARRYING AMOUNT AT THE END OF THE YEAR | 1,856 | 1,856 |
| of which: gross value | 1,856 | 1,856 |
| cumulative impairment losses | 0 | 0 |
Goodwill relates to the acquisition of a company that was active in furnished apartment rentals.
In applying IAS 36 – Impairment of Assets, the Group performed an analysis of the carrying amount, principally of goodwill. Goodwill arose from the acquisition of Ixelinvest SA, the original owner of a residential complex that is rented out as furnished apartments on rue Souveraine in Brussels. This complex constitutes the cash-generating unit for the purposes of the goodwill impairment test.
An impairment review, performed by calculating value in use, was carried out to ensure that the carrying value of the cashgenerating unit's assets (fair value of properties of €28 million, carrying amount of furniture of less than €1 million and carrying amount of goodwill for less than €2 million, i.e. €30 million in total) does not exceed their recoverable amount, defined as the higher of (i) the fair value less costs to sell and (ii) the value in use (estimated at €49 million).
In determining the value in use, the Group calculated the present value of the estimated future cash flows expected to arise from the continued use of the assets using a pre-tax discount rate of 4 %. The discount rate applied is based upon the weighted average cost of capital with appropriate adjustment for the relevant risks associated with the businesses, and can vary one year to another depending on market indicators. Estimated future cash flows are based on long-term plans (i.e. over 5 years) for each cash-generating unit, with extrapolation thereafter based on long-term average growth rates for the individual cashgenerating units. This growth rate is set at 1.8 %, in line with expected inflation.
Future cash flows are estimates and may be revised in future periods as underlying assumptions change. Key assumptions in supporting the value of goodwill include long-term interest rates and other market data, captured in the abovementioned pre-tax discount. Should the assumptions vary adversely in the future, the value in use of goodwill may fall below the carrying amount. Based on current valuations, the headroom (estimated at €18 million) appears sufficient to absorb a normal variation of approx. 1 % in the pre-tax discount. An impairment on goodwill would be booked for any excess over this headroom.
All intangible assets (consisting mainly of computer software) have a fixed useful life. Amortisation is recognised in income under the line "overheads".
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Gross value at the beginning of the year | 305 | 295 |
| Depreciation and cumulative impairment losses at the beginning of the year | -284 | -274 |
| Carrying amount at the beginning of the year | 21 | 21 |
| Entries: items acquired separately | 97 | 10 |
| Amortisations | -16 | -10 |
| CARRYING AMOUNT AT THE END OF THE YEAR | 102 | 21 |
| of which: gross value | 402 | 305 |
| amortisations and cumulative impairment losses | -300 | -284 |
| (x €1,000) | Marketable investment properties |
Development projects |
TOTAL |
|---|---|---|---|
| CARRYING AMOUNT AS OF 1/07/2013 | 614,211 | 28,633 | 642,844 |
| Acquisitions | 95,975 | 0 | 95,975 |
| Disposals | 0 | 0 | 0 |
| Capitalised interest charges | 0 | 782 | 782 |
| Capitalised employee benefits | 0 | 30 | 30 |
| Other capitalised expenses | 2,786 | 38,747 | 41,533 |
| Transfers due to completion | 47,165 | -47,165 | 0 |
| Changes in fair value (see Note 20) | 5,652 | -1,836 | 3,816 |
| Other expenses booked in the income statement | 0 | 0 | 0 |
| Transfers to equity | 0 | 0 | 0 |
| Assets classified as held for sale | 0 | 0 | 0 |
| CARRYING AMOUNT AS OF 30/06/2014 | 765,789 | 19,191 | 784,980 |
| CARRYING AMOUNT AS OF 1/07/2014 | 765,789 | 19,191 | 784,980 |
| Acquisitions | 184,871 | 1,526 | 186,397 |
| Disposals | -15,139 | 0 | -15,139 |
| Capitalised interest charges | 0 | 675 | 675 |
| Capitalised employee benefits | 0 | 20 | 20 |
| Other capitalised expenses | 3,353 | 25,618 | 28,971 |
| Transfers due to completion | 30,026 | -30,026 | 0 |
| Changes in fair value (see Note 20) | 14,529 | 4,730 | 19,259 |
| Other expenses booked in the income statement | 0 | 0 | 0 |
| Transfers to equity | 0 | 0 | 0 |
| Assets classified as held for sale | -1,805 | 0 | -1,805 |
| CARRYING AMOUNT AS OF 30/06/2015 | 981,624 | 21,734 | 1,003,358 |
Determination of fair values depends on market factors and is based on valuations provided by independent experts who hold relevant and recognised professional qualifications and recent experience in the geographic areas and property types included in the Group's portfolio. All investment properties are located in Belgium and Germany.
The fair value of the Group's portfolio of marketable investment properties assessed by independent experts as of 30 June 2015. The average capitalisation rate applied to contractual rents is 5.84 % (in accordance with the valuation methodology – presented in the first bullet of section 1.12 of the Standing Documents included in the 2014/2015 Annual Financial Report). A positive 0.10 % change in the capitalisation rate would lead to a negative change of €17 million in the portfolio's fair value.
Development projects are described in detail in the Property Report included in the 2014/2015 Annual Financial Report.
Acquisitions made during the year are described in detail in the Consolidated Board of Directors' Report included in the 2014/2015 Annual Financial Report.
All investment properties are considered to be at "level 3" on the fair value scale defined under IFRS 13. This scale includes three levels: Level 1: observable listed prices in active markets; Level 2: observable data other than the listed prices included in level 1; Level 3: unobservable data. During the 2014/2015 financial year, there were no transfers between level 1, level 2 and level 3.
The valuation methodologies (approach under which a capitalisation rate is applied to the estimated rental value and another based on the present value of future cash flows) are described in section 1.12 of the "Standing Documents" of the 2014/2015 Annual Financial Report.
The quantitative information presented below in relation to the determination of the fair value of investment properties based on unobservable data (level 3) is taken from various reports produced by the independent real estate experts:
| Type of asset | Fair value as of 30 June 2015 (x €1,000) |
Assessment method |
Unobservable inputs | Min | Max | Weighted average |
|---|---|---|---|---|---|---|
| Senior housing | 696,272 | DCF | ERV / m² | 76 | 218 | 193 |
| Inflation | 1.0% | 1.6% | 1.1% | |||
| Discount rate | 4.7% | 6.9% | 5.6% | |||
| Residual maturity (year) | 4 | 28 | 24 | |||
| Apartment buildings | 214,461 | Capitalisation | ERV / m² | 68 | 201 | 132 |
| Capitalisation rate | 4.6% | 8.8% | 5.6% | |||
| Hotels and other | 72,696 | DCF | ERV / m² | 79 | 125 | 98 |
| Inflation | 1.1% | 2.0% | 1.7% | |||
| Discount rate | 5.7% | 8.1% | 7.1% | |||
| Residual maturity (year) | 22 | 33 | 28 | |||
| Capitalisation | ERV / m² | 86 | 165 | 131 | ||
| Capitalisation rate | 3.3% | 7.4% | 5.2% | |||
| Development projects | 21,734 | DCF | ERV / m² | 89 | 201 | 163 |
| Inflation | 1.0% | 1.0% | 1.0% | |||
| Discount rate | 4.7% | 6.2% | 5.5% | |||
| Residual maturity (year) | 27 | 27 | 27 | |||
| Total | 1,005,163 |
| Type of asset | Fair value as of 30 June 2014 (x €1,000) |
Assessment method |
Unobservable inputs | Min | Max | Weighted average |
|---|---|---|---|---|---|---|
| Senior housing | 482,401 | DCF | ERV / m² | 76 | 222 | 143 |
| Inflation | 1.1% | 1.9% | 1.4% | |||
| Discount rate | 5.4% | 7.5% | 6.1% | |||
| Residual maturity (year) | 5 | 29 | 24 | |||
| Apartment buildings | 210,128 | Capitalisation | ERV / m² | 68 | 201 | 131 |
| Capitalisation rate | 4.6% | 8.9% | 5.7% | |||
| Hotels and other | 73,260 | DCF | ERV / m² | 42 | 125 | 97 |
| Inflation | 1.1% | 2.0% | 1.7% | |||
| Discount rate | 6.2% | 8.1% | 7.3% | |||
| Residual maturity (year) | 23 | 34 | 29 | |||
| Capitalisation | ERV / m² | 41 | 165 | 129 | ||
| Capitalisation rate | 3.4% | 15.2% | 5.2% | |||
| Development projects | 19,191 | DCF | ERV / m² | 97 | 222 | 136 |
| Inflation | 1.4% | 1.6% | 1.4% | |||
| Discount rate | 5.9% | 6.7% | 6.0% | |||
| Residual maturity (year) | 27 | 27 | 27 | |||
| Total | 784,980 |
In accordance with legal provisions, properties are revalued four times per year based on valuation reports prepared by the three independent experts appointed by the Company. These valuations are based on:
information provided by the Company such as contractual rents, rental contracts, investment budgets, etc. These data are extracted from the Company's information system and are thus subject to the Company's internal control environment.
assumptions and valuation models used by the independent experts, based on their professional judgment and market knowledge.
Reports provided by the independent experts are reviewed by the Company's Investment Manager, the Control Manager and the Executive Managers. This includes a review of the changes in fair value over the period. When the Executive Managers consider that the valuation reports of the independent experts are coherent, the valuation report is submitted to the Audit Committee. Following a favourable opinion of the Audit Committee, these reports are submitted to the Board of Directors.
The sensitivity of the fair value measurement to a change of the abovementioned unobservable data is generally as follows (all else being equal):
| Unobservable inputs | Effect on the fair value | ||||||
|---|---|---|---|---|---|---|---|
| in case of decrease of the unobservable input value |
in case of increase of the unobservable input value | ||||||
| ERV / m² | negative | positive | |||||
| Capitalisation rate | positive | negative | |||||
| Inflation | negative | positive | |||||
| Discount rate | positive | negative | |||||
| Residual maturity (year) | negative | positive |
Interrelations between unobservable data are possible, as they are determined in part by market conditions.
This Note became redundant with the introduction of the revised IAS 40 "Investment Property" on 1 July 2009. Changes in development projects are now covered in Note 29. Development projects are also described in detail in section 4.2. of the Property Report included in the 2014/2015 Annual Financial Report.
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Gross value at beginning of the period | 5,080 | 4,441 |
| Depreciation and cumulative impairment losses at beginning of period | -3,169 | -2,592 |
| Carrying amount at beginning of period | 1,911 | 1,849 |
| Additions | 577 | 651 |
| Disposals | 0 | 0 |
| Depreciation | -654 | -589 |
| CARRYING AMOUNT AT END OF PERIOD | 1,834 | 1,911 |
| of which: gross value | 5,531 | 5,080 |
| depreciations and cumulative impairment losses | -3,697 | -3,169 |
Other tangible assets consist of capital employed in operations (mainly furniture in the furnished apartments).
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Receivables | ||
| Collateral | 0 | 0 |
| Other non-current receivables | 349 | 396 |
| Available-for-sale financial assets | ||
| Investments in related entities (Note 51) | 0 | 0 |
| Assets at fair value through profit or loss | ||
| Hedging instruments (see Note 33) | 1,048 | 65 |
| Other non-current financial assets | ||
| Hedging instruments (see Note 33) | 0 | 0 |
| TOTAL NON-CURRENT FINANCIAL ASSETS | 1,397 | 461 |
| Liabilities at fair value through profit or loss | ||
| Hedging instruments (see Note 33) | -18,383 | -18,289 |
| Other | -1,270 | 0 |
| Total non-current financial liabilities | ||
| Hedging instruments (see Note 33) | -19,667 | -19,485 |
| TOTAL OTHER NON-CURRENT FINANCIAL LIABILITIES | -39,320 | -37,774 |
Other non-current receivables (included in "loans and receivables" under IAS 39) generate interest and will be recovered over the course of subsequent fiscal years.
Assets and liabilities recognised at fair value through profit or loss consist principally of hedging instruments for which hedge accounting in the sense of IAS 39 is not applied. However, they serve to hedge against interest rate risks. Other hedging instruments, whether assets or liabilities, meet the criteria set out in IAS 39 for application of hedge accounting. Cash flows generated by all hedges, and/or changes in the fair value recognised in income are covered in Notes 22 and 47.
The other liabilities recognised at fair value through profit or loss (€1,270 thousand) include the put options granted to noncontrolling shareholders (see Notes 47 and 56).
In order to limit the interest rate risk, Aedifica has put in place hedges that turn floating rate debts into fixed rate debt or cappedrate debt (cash flow hedges). All hedges (interest rate swaps or "IRS", caps and collars) relate to existing or highly probable risks. Hedging instruments are either derivatives that meet the strict criteria set by IAS 39 to allow hedge accounting or derivatives which do not meet these criteria but which nonetheless provide economic hedging against interest rate risk. All hedges are entered into in accordance with the hedging policy set out in Note 44. The fair value of hedges is computed by banks based on the present value of expected cash flows and is adapted in accordance with IFRS 13 to reflect the own credit risk ("DVA" or "Debit Valuation Adjustment") and the counterparty credit risk ("CVA" or "Credit Valuation Adjustment"). The table below lists the hedging instruments.
| INSTRUMENT | Notional | Beginning | Periodicity | Duration | First date | Max. interest | Fair value |
|---|---|---|---|---|---|---|---|
| Analysis as at 30 June 2014 |
amount (x €1,000) |
(months) | (years) | possible for the call |
rate (in %) | (x €1,000) | |
| IRS* | 10,528 | 1/04/2011 | 3 | 32 | - | 4.89 | -4,842 |
| Multi-callable IRS* | 28,763 | 31/07/2007 | 3 | 36 | 31/07/2017 | 4.39 | -10,168 |
| IRS | 15,000 | 2/04/2013 | 3 | 9 | - | 3.50 | -2,930 |
| IRS | 12,000 | 3/06/2013 | 3 | 9 | - | 3.64 | -2,461 |
| IRS | 8,000 | 3/06/2013 | 3 | 9 | - | 3.67 | -1,676 |
| IRS | 25,000 | 2/08/2013 | 3 | 5 | - | 3.23 | -2,920 |
| IRS | 25,000 | 2/01/2015 | 3 | 5 | - | 2.99 | -2,918 |
| IRS | 25,000 | 2/08/2013 | 3 | 5 | - | 2.97 | -2,652 |
| Collar | 25,000 | 1/10/2013 | 3 | 3 | - | 3.00 | -458 |
| Cap | 25,000 | 1/11/2013 | 1 | 1 | - | 0.75 | 0 |
| IRS | 25,000 | 2/08/2013 | 3 | 5 | - | 2.70 | -2,371 |
| Cap | 25,000 | 1/10/2013 | 3 | 1 | - | 1.25 | 0 |
| Cap | 25,000 | 1/11/2014 | 3 | 1 | - | 1.00 | 0 |
| Cap | 25,000 | 1/10/2013 | 3 | 2 | - | 1.00 | 0 |
| Cap | 25,000 | 1/10/2014 | 3 | 1 | - | 1.25 | 0 |
| Cap | 25,000 | 1/11/2015 | 3 | 2 | - | 2.50 | 32 |
| IRS | 25,000 | 3/01/2014 | 3 | 7 | - | 3.10 | -3,782 |
| Collar | 25,000 | 1/10/2013 | 3 | 3 | - | 3.00 | -595 |
| Cap | 25,000 | 1/11/2014 | 3 | 3 | - | 2.50 | 32 |
| TOTAL | 424,291 | -37,709 |
* Notional amount depreciable over the duration of the swap. Aedifica and the bank may liquidate in advance these contracts every 10 years.
| INSTRUMENT | Notional | Beginning | Periodicity | Duration | First date | Max. interest | Fair value |
|---|---|---|---|---|---|---|---|
| Analysis as at 30 June 2015 |
amount (x €1,000) |
(months) | (years) | possible for the call |
rate (in %) | (x €1,000) | |
| IRS* | 10,356 | 1/04/2011 | 3 | 32 | - | 4.89 | -5,398 |
| IRS* | 27,779 | 31/07/2014 | 3 | 29 | - | 4.39 | -10,520 |
| IRS | 15,000 | 2/04/2013 | 3 | 9 | - | 3.50 | -2,925 |
| IRS | 12,000 | 3/06/2013 | 3 | 9 | - | 3.64 | -2,438 |
| IRS | 8,000 | 3/06/2013 | 3 | 9 | - | 3.67 | -1,667 |
| IRS | 25,000 | 2/01/2015 | 3 | 5 | - | 2.99 | -3,015 |
| Cap | 25,000 | 3/11/2014 | 3 | 1 | - | 1.00 | 0 |
| Cap | 25,000 | 1/10/2013 | 3 | 2 | - | 1.00 | 0 |
| Cap | 25,000 | 1/10/2014 | 3 | 1 | - | 1.25 | 0 |
| Cap | 25,000 | 1/11/2015 | 3 | 2 | - | 2.50 | 8 |
| IRS | 25,000 | 3/01/2014 | 3 | 7 | - | 3.10 | -3,631 |
| Cap | 25,000 | 1/11/2014 | 3 | 3 | - | 2.50 | 8 |
| IRS | 25,000 | 2/02/2015 | 3 | 6 | - | 1.94 | -1,946 |
| IRS | 25,000 | 3/11/2014 | 3 | 6 | - | 2.51 | -2,674 |
| IRS | 25,000 | 1/01/2015 | 3 | 3 | - | 0.70 | -362 |
| Cap | 50,000 | 1/10/2015 | 3 | 3 | - | 0.50 | 284 |
| Cap | 50,000 | 1/10/2015 | 3 | 4 | - | 0.35 | 748 |
| IRS | 25,000 | 3/11/2014 | 3 | 6 | - | 2.76 | -3,003 |
| IRS | 25,000 | 1/01/2015 | 3 | 3 | - | 0.89 | -470 |
| Cap | 40,000 | 1/09/2014 | 1 | 1 | - | 0.05 | 0 |
| TOTAL | 513,135 | -37,001 |
* Notional amount depreciable over the duration of the swap. Aedifica and the bank may liquidate in advance these contracts every 10 years.
The total notional amount of €513 million presented in the table above is broken down as follows: - operational and active instruments: €248 million;
The total fair value of the hedging instruments presented in the table above (-€37,001 thousand) can be broken down as follows: €1.048 thousand on line I.E. of the asset side of the consolidated balance sheet (see Note 32) and €38,050 thousand on line I.C.a. of the liability side of the consolidated balance sheet. Taking into account the carrying amount of the upfront premiums paid for the caps (€921 thousand), the IAS 39 impact on equity amounts to -€37,923 thousand.
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Changes in fair of the derivatives | ||
| Beginning of the year | -19,484 | -16,637 |
| Changes in the effective portion of the fair value of hedging instruments (accrued interests) | -6,454 | -9,581 |
| Transfer to the income statement of interests paid on hedging instruments | 6,271 | 6,734 |
| Transfer to the income statement regarding revoked designation | 0 | 0 |
| AT YEAR-END | -19,667 | -19,484 |
The amounts recorded in equity will be transferred to net finance costs, in line with the payment of interest on the hedged financial debt, between 1 July 2015 and 31 July 2043.
The year-end equity value includes the effective part (as defined in IAS 39) of the change in fair value (-€181 thousand) of derivatives for which hedge accounting is applied, and the ineffective portion of the 2013/2014 financial year (charge of €1 thousand) that was appropriated in 2014/2015 by decision of the Annual General Meeting held in October 2014. These financial instruments are "level 2" derivatives (according to IFRS 13p81). The ineffective part is nil in 2014/2015. Cash flows arising from interest on the hedges are shown in Note 22.
The financial result includes an income of €461 thousand (30 June 2014: a charge of €2,989 thousand), arising from the change in the fair value of derivatives for which hedge accounting is not applied (in line with IAS 39, as listed in the aforementioned framework) (see Note 47). These financial instruments are "level 2" derivatives (as defined in IFRS 13p81). The financial result also includes the amortisation of the premiums paid at the time of the subscription to the caps and collars, which amounts to €291 thousand (30 June 2014: €163 thousand).
The interest cash flows arising from the hedges are shown in Note 22 and the change in fair value recognised in the income statement is shown in Note 47.
The fair value of hedging instruments is a function of the interest rates on the financial markets. Changes in market interest rates explain most of the change in the fair value of hedging instruments between 1 July 2014 and 30 June 2015, which led to the recognition of an income of €461 thousand in the income statement and a charge of €181 thousand directly in equity.
A change in the interest rate curve would impact the fair value of instruments for which hedge accounting is applied (in accordance with IAS 39), and recognised in equity (line "I.C.d. Reserve for the balance of changes in the fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS"). All else being equal, a positive change of 10 bps in the interest rate curve at the balance sheet date would have had a positive impact on equity in the amount of €856 thousand (30 June 2014: €812 thousand). A negative change of 10 bps in the interest rate curve at the balance sheet date would have had a negative impact on equity in the same amount. The impact of a change in the interest rate curve on the fair value (instruments for which hedge accounting under IAS 39 is not applied, cannot be determined as precisely, since options are embedded within these instruments. The fair value of these options will change in a non-symmetric and non-linear pattern, and is a function of other parameters (e.g. volatility of interest rates). The sensitivity of the "mark-to-market" value of these instruments to an increase of 10 bps in the interest rate curve is estimated at approx. +€1,134 thousand (30 June 2014: +€857 thousand) in the income statement. A decrease of 10 bps in the interest rate curve would have a negative impact on the income statement in the same range.
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| TRADE RECEIVABLES - NET VALUE | 4,352 | 2,938 |
It is anticipated that the carrying amount of trade receivables will be recovered within 12 months. This carrying amount represents an estimate of the fair value of assets which do not generate interest.
The credit risk associated with trade receivables is limited thanks to the diversity of the client base and rental guarantees (2015: €20.0 million; 2014: €15.5 million) received from tenants to cover their commitments. The carrying amount on the balance sheet is presented net of the provision for doubtful debts. Thus, the risk of exposure to credit risk is reflected in the carrying amount of receivables recognised on the balance sheet.
Trade receivables are analysed as follows:
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| under 90 days | 206 | 10 |
| over 90 days | 130 | 424 |
| Subtotal | 336 | 434 |
| Not due | 4,128 | 2,731 |
| Write-downs | -112 | -227 |
| CARRYING AMOUNT | 4,352 | 2,938 |
Write-downs have evolved as follows:
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| At beginning of period | -227 | -207 |
| Addition | -58 | -101 |
| Utilisation | 137 | 24 |
| Reversal | 38 | 57 |
| Mergers | -2 | 0 |
| AT END OF PERIOD | -112 | -227 |
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Tax | 608 | 0 |
| Other | 354 | 495 |
| TOTAL | 962 | 495 |
Tax receivables are composed mainly of prepayments.
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Short-term deposits | 0 | 0 |
| Cash at bank and in hands | 3,598 | 1,156 |
| TOTAL | 3,598 | 1,156 |
Cash and cash equivalents are assets which generate interest at varying rates. The amounts presented above were available as of 30 June 2015 and 30 June 2014. Short-term investments may be held during the year, normally for periods of one week to one month.
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Accrued rental income | 563 | 290 |
| Deferred property charges | 347 | 371 |
| Other | 0 | 0 |
| TOTAL | 910 | 661 |
Aedifica shareholders holding more than 5 % of the Company's outstanding shares are disclosed below (based on declarations received as of 30 June 2015 – see also section 3 of the chapter "Aedifica in the Stock Market" chapter included in the 2014/2015 Annual Financial Report:
| SHAREHOLDERS | Share in capital (in %) |
|---|---|
| Wulfsdonck Investment (via Finasucre) | 5.46 |
The capital has evolved as follows:
| Number of shares | ||
|---|---|---|
| Situation at the beginning of the previous year | 9,903,690 | 254,293 |
| Capital increase | 345,427 | 16,159 |
| Situation at the end of the previous year | 10,249,117 | 270,451 |
| Capital increase | 3,796,814 | 100,190 |
| Situation at the end of the year | 14,045,931 | 370,641 |
Equity is presented above before subtracting the costs of raising capital; the equity value presented on the balance sheet in accordance with IFRS is shown net of these costs.
The totality of the 14,045,931 shares issued as of 30 June 2015 are listed on the Euronext Brussels continuous market.
Capital increases are detailed in the "Standing Documents" included in the 2014/2015 Annual Financial Report. All subscribed shares are fully paid- up, with no par value. The shares are registered, bearer, or dematerialised shares and grant one vote.
Aedifica SA holds no treasury shares.
The Board of Directors is authorised to raise share capital through one or a series of issuances up to a maximum amount of €180 million on the dates and following the procedures established by the Board, in accordance with Article 603 of the Belgian Companies Code. This authorisation is granted to the Board of Directors for a period of 5 years from the publication date in the annexes of the Belgian State Gazette (Moniteur belge/Belgisch Staatsblad) of the minutes of the Extraordinary General Meeting of 29 June 2011. Each time new shares are issued, the Board of Directors determines the price, the possible issue premium and the terms of issue for the new shares (unless such decisions are made by shareholders at the Annual General Meeting). Increases in share capital decided upon by the Board of Directors may also be realised through subscriptions paid in cash or by way of in-kind incorporation of premiums, reserves, or profits, with or without the issuance of new shares. These capital increases can equally be realised through the issuance of convertible debt securities or subscription rights. The remaining balance of the authorised capital amounts to €3 million as of 30 June 2015.
The Board of Directors has proposed a dividend distribution of €2.00 gross per share for the year ended 30 June 2015, i.e. a total dividend of €21,849 thousand.
Calculated in accordance with Article 617 of the Belgian Companies Code and given the Royal Decree of 13 July 2014, reserves available for distribution (statutory) amount to €10,801 thousand as of 30 June 2015, after taking into account the dividend proposed above (2014: €7,803 thousand). Detailed calculations are provided in the notes to the attached Abridged Statutory Accounts.
Aedifica defines capital in accordance with of IAS 1p134 as the sum of all equity accounts. The equity level is monitored using a consolidated debt-to-assets ratio calculated in accordance with the provisions of the Royal Decree of 13 July 2014 (see Note 52), which cannot exceed 60 % and according to the credit agreements in place with the Company's banks (see Notes 40 and 44). Equity is managed so as to permit the Group to continue as a going concern and to finance its future growth.
Aedifica contributes to a number of defined contribution plans, open to newcomers. It concerns pension schemes per capitalisation for all beneficiaries, i.e. labourers, staff members and members of the Management Committee (Executive Managers). These schemes are managed through group insurances with a guaranteed return. No personal contributions from the beneficiaries are required.
The Belgian legislation currently provides that the employer needs to guarantee a return of 3.25% on his contribution, and this could generate a liability in his balance sheet. This guarantee is not applicable to the scheme of the members of the Management Committee.
The obligations for defined benefit plans correspond to the maximum amount between the current accounts and the account calculated with the minimum guaranteed return, assessed for each individual (intrinsic value approach). Under these schemes, Aedifica had externalized assets for the amount of €200 thousand as of 30 June 2015. During the 2015/2016 financial year, the expected contribution for the schemes will amount to €80 thousand. An actuarial valuation (intrinsic value approach) showed that as of 30 June 2015 no net asset or liability had to be recognised in the balance sheet for these schemes.
Given that the interest rates that are guaranteed by the insurers have decreased below the level of 3.25 % since 2013, there is a risk for future underfunding, which is however limited in view of the externalised assets.
The amounts recognised as an expense for the long-term benefits granted the members of the Management Committee are detailed in the Remuneration Report included in the 2014/2015 Annual Financial Report.
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Non-current financial debts | ||
| Borrowings | 340,752 | 274,955 |
| Current financial debts | ||
| Borrowings | 25,897 | 70,945 |
| TOTAL | 366,649 | 345,900 |
As of 30 June 2015, Aedifica benefits from credit facilities (financial liabilities carried at amortised cost according to IAS 39 and presented as current and non-current financial debts on the balance sheet) issued by eight banks (Bank für Sozialwirtschaft, Bank Degroof, Banque Européenne du Crédit Mutuel, Bayerische Landesbank, Belfius Bank, BNP Paribas Fortis, ING and KBC Bank) totalling €550 million.
The average interest rate, including the spread charged by the banks and the effect of hedging instruments, was 2.8 % after deduction of capitalised interest (3.8 % in 2013/2014) and 3.0 % before deduction of capitalised interest (4.0 % in 2013/2014). Given the short duration of the withdrawals, the carrying amount of the variable-rate financial debts is an approximation for their fair value (€351 million). The hedges in place as of 30 June 2015 are detailed in Note 33. The fair value of the fixed-rate financial debts (€16 million) is estimated at €18 million.
As of 30 June 2015, the Group has neither pledged any Belgian buildings as collateral for its debts, nor has it granted any other securities to debt-holders. Note that in Germany, it is customary that real estate buildings financed by bank credit are linked to a mortgage in favour to the creditor bank. As such, 3 of the Company's 14 German buildings are linked to a mortgage, respecting the requirements laid down in Article 43 of the Belgian Act of 12 May 2014 on Regulated Real Estate Companies.
The classification between current financial debts and non-current financial debts is made based on the maturity dates of the underlying credit facilities on which the drawings are made, rather than on the maturity date of the individual drawings.
The timetable showing the maturity of Aedifica's credit facilities is as follows (in € million):
| - 2015/2016 : |
85 |
|---|---|
| - 2016/2017 : |
150 |
| - 2017/2018 : |
92 |
| - 2018/2019 : |
102 |
| - 2019/2020 : |
80 |
| - 2020/2021 : |
2 |
| - 2021/2022 : |
25 |
| - > 2022/2023 : |
14 |
| Credit facilities on 30 June 2015: | 550 |
Net financial debt is a non-GAAP measure, i.e. its definition is not included in IFRS. Aedifica uses the concept of net financial debt to reflect its indebtedness. It is measured as current and non-current financial debts less cash and cash equivalents. It excludes the fair value of hedging derivatives. The definition of financial debt may differ from that used in the financial statements of other companies. Net financial debt is not taken into account in the computation of debt-to-assets ratio as defined by the Royal Decree of 13 July 2014.
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Borrowings | 366,649 | 345,900 |
| Less: Cash and cash equivalents | -3,598 | -1,156 |
| NET FINANCIAL DEBT | 363,051 | 344,744 |
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Exit tax | 813 | 615 |
| Other | ||
| Suppliers | 4,661 | 7,422 |
| Tenants | 1,408 | 871 |
| Tax | 1,513 | 1,242 |
| Salaries and social charges | 880 | 748 |
| Dividends of previous years | 22 | 22 |
| TOTAL | 9,297 | 10,920 |
The majority of trade payables and other current debts (recognised as "financial liabilities at amortised cost" under IAS 39, excluding taxes covered by IAS 12 and remuneration and contributions to social security plans covered by IAS 19). It is anticipated that these debts will be settled within 12 months. The carrying amount constitutes an approximation of their fair value.
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Property income received in advance | 424 | 77 |
| Financial charges accrued | 1,912 | 1,752 |
| Other accrued charges | 1,977 | 1,225 |
| TOTAL | 4,313 | 3,054 |
Total employee benefits (excluding Executive Managers and Directors presented in Note 16) are broken down in the income statement as follows:
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Cleaning costs (see Note 10) | -260 | -236 |
| Technical costs (see Note 11) | -383 | -298 |
| Commercial costs | -51 | -38 |
| Overheads (see Note 16) | -1,038 | -807 |
| Property management costs (see Note 14) | -774 | -632 |
| Capitalised costs | -20 | -30 |
| TOTAL | -2,526 | -2,041 |
Headcount at the year-end (excluding Executive Managers and Directors):
| 2015 | 2014 | |
|---|---|---|
| Total excluding students | 35 | 36 |
| Students | 0 | 2 |
| TOTAL | 35 | 38 |
Aedifica's financial risk management aims to ensure permanent access to borrowings, and to closely follow and minimize interest risk rate.
The debt-to-assets ratio (as defined in the Royal Decree of 13 July 2014) is provided in section 3.3 of the Consolidated Board of Directors' Report included in this Annual Financial Report. As of 30 June 2015, it amounts to 36.9 % on statutory level and to 37.0 % on consolidated level. This section also discloses the maximum ratio permitted before the Company reaches the maximum debt-to-assets ratio permitted for Belgian REITs (65 % of total assets) or arising due to bank covenants (60 % of total assets). When exceeding the debt-to-assets threshold of 50 %, a financial plan with an implementation schedule must be elaborated, describing the measures taken to prevent the consolidated debt-to-assets ratio from exceeding the maximum permissible threshold of 65 % (Article 24 of the Royal Decree of 13 July 2014).
Aedifica's financial model relies on a structural indebtedness. As a result, cash balances are usually low, amounting to €4 million as of 30 June 2015.
As of 30 June 2015, Aedifica has neither pledged any Belgian building as collateral for its debts, nor has it granted any other securities to debt-holders. Note that in Germany, it is customary that real estate buildings financed by bank credit are linked to a mortgage in favour to the creditor bank. As such, 3 out of the Company's 14 buildings in Germany are linked to a mortgage as of 30 June 2015, respecting the requirements laid down in Article 43 of the Act of 12 May 2014.
Aedifica enjoys a strong and stable relationship with its banks, which form a diversified pool of multinational institutions. Details of Aedifica's credit facilities are disclosed in Note 40.
As of 30 June 2015, Aedifica is using credit facilities totalling €367 million (2014: €346 million), out of €550 million in total available credit. This provides a headroom of €183 million is sufficient to cover Aedifica's short-term financial needs (including the development projects in progress) until the end of the 2015/2016 financial year. The investment amount that is budgeted in the Company's financial plan for the existing projects as of 30 June 2015 is estimated at €61 million, to which a hypothetical investment of €50 million should be added. This brings the total investment which is included in the financial plan for the 2015/2016 financial year to €111 million.
Given the regulatory status of Belgian REITs/RRECs, and the type of property in which Aedifica invests, the risk of non-renewal of mature credit facilities is remote, even in the context of a credit crunch, except in unforeseen and extreme circumstances. There is a risk of increasing credit spreads should market conditions deteriorate as compared to those present at the time of the current credit facilities were signed.
The Company would be exposed to a liquidity risk which would arise due to a lack of cash flow in the event of early termination of the credit facilities. Should the Company fail to comply with the provisions of credit facility arrangements, the facilities might indeed be cancelled, re-negotiated, or forced into reimbursement. The covenants in place are in line with market practice, and in particular require that the debt-to-assets ratio (as defined by the Royal Decree of 13 July 2014) does not exceed 60 %. Moreover, there is a risk of early termination in the event of a change of control, in case of non-compliance with the Company's obligations, and, more generally speaking, in the event of default as defined in these arrangements. Based on the information available to date, and the prospects for the foreseeable future, there is no indication of a possible early termination of one or more of the existing credit facilities. However, this risk cannot be ignored completely. Moreover, Aedifica does not itself retain control over certain commitments, such as in the event of a change of control, which could lead to the early termination of the credit facilities.
Internally, Aedifica is organised so as to regularly monitor the evolution of financial markets, optimise the Company's financial structure over both the short and long terms, and manage financial risks (liquidity risk, interest rate risk). Aedifica aims to further diversify its funding sources, given market conditions.
As of 30 June 2015, the undiscounted future cash flows related to the credit facilities include €352 million maturing within 1 year, €4 million maturing within 1 to 5 years, and €11 million maturing in more than 5 years (2014: €330 million within 1 year). The credit facilities also give rise to an interest expense of €0.9 million that is due within 1 year (2014: €1.0 million interest within 1 year).
The undiscounted contractual future cash flows related to hedging instruments are analysed as follows:
| As at 30 June 2015 (x €1,000) | Due within the year |
Due between one to five years |
Due after more than five years |
TOTAL |
|---|---|---|---|---|
| Derivatives for which hedge accounting is applied | -3,214 | -13,542 | -4,632 | -21,388 |
| Derivatives for which hedge accounting is not applied | -2,890 | -8,969 | -8,156 | -20,015 |
| As at 30 June 2014 (x €1,000) | Due within the year |
Due between one to five years |
Due after more than five years |
TOTAL |
| Derivatives for which hedge accounting is applied | -3,167 | -16,282 | -4,383 | -23,832 |
| Derivatives for which hedge accounting is not applied | -1,831 | -4,528 | -1,341 | -7,700 |
Almost all of Aedifica's financial debts are floating-rate borrowings. This allows Aedifica to benefit from low interest rates on the non-hedged part of its borrowings. To mitigate the risk of increasing interest rates, Aedifica follows a policy aimed at securing the interest rates related to at least 60 % of its current or highly probable indebtedness over several years.
This policy is supported by the fact that an increase in nominal interest rates, when not coupled with a simultaneous increase in inflation, implies an increase in real interest rates that cannot be offset by increasing rental incomes through indexation alone. Moreover, in case of accelerating inflation, there is a delay between the moment of the increase of the nominal interest rates and the timing of the indexation of rental incomes. When the interest rate curve is sufficiently flat (i.e. when interest does not vary a lot in relation of the maturity date), Aedifica aims to enter into hedges over longer periods, in line with its horizon of investment.
For example, assuming that the structure and level of financial debts remain unchanged, and assuming that no hedges have been entered into, simulations show that a 25 bps positive deviation (increase) in the 2015/2016 interest rates over the forecast rates would lead to an additional €1.1 million interest expense for the year ended 30 June 2016.
In order to manage the interest rate risk, Aedifica has put in place hedges (interest rate swaps and caps). All hedges are entered into with leading banks and relate to existing or highly probable risks. Where appropriate, Aedifica applies hedge accounting as defined by IAS 39. An analysis of the Company's hedges is provided in the Consolidated Board of Directors' Report and in Note 33 of the Consolidated Financial Statements included in this Annual Financial Report. The hedges are entered into for long periods; however, hedge agreements include provisions (in line with market practice) that could lead the issuing banks to terminate the hedges early or initiate margin calls (in cash for example) in their own favour in certain circumstances.
Changes in the interest rate curve have a limited impact on the future interest expense, as 60 % of the financial debts are hedged by IRS or caps. Each change in the interest rate curve has an impact on the fair value of hedging instruments against income statement and/or equity (line "I.C.d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS" and line "I.C.e. Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS"). A sensitivity analysis is provided in Note 33 of the Consolidated Financial Statements included in this Annual Financial Report.
The signing of a credit facility or a hedging instrument with a bank generates a counterparty risk in terms of counterparty default. In order to mitigate this risk, Aedifica trades with several leading national and international banks to diversify its funding and hedging sources, while remaining cautious about the balance between cost and quality of the services provided. In the context of the current banking crisis, one should bear in mind that one or several counterparties could default.
In line with market practice, the agreements signed with banks include market shock clauses and major adverse change clauses which could lead to, in extreme circumstances, additional costs for the Company or possibly the early termination of the credit facility.
Aedifica is in an on-going relationship with the banks listed Note 40 of the Consolidated Financial Statements included in the Annual Financial Report. What regards to hedging, the main providers (by order of magnitude) are ING, BNP Paribas Fortis and KBC Bank.
Aedifica earns all its rental income and incurs all expenses within the euro-zone (except for certain small suppliers which charge for their services in USD and CAD). The borrowings of the Company are all denominated in Euros. Thus, Aedifica is not exposed to significant foreign exchange risk.
The yearly budget and long-term financial plan are important tools used in the decision-making process and in daily management activities. The budget and financial plan are derived from a computerised model that incorporates a number of assumptions; this model can suffer from programming errors, and human errors which may arise when using it. The potential for wrong assumptions, and undetected programming or human errors might put pressure on the Company's performance or threaten its compliance with regulatory (e.g. legal covenants associated to the public RREC status, such as the debt-to-assets ratio) and contractual provisions (e.g. bank covenants).
The acquisition values mentioned below respect the requirements laid down in Article 49 § 1 of the Belgian Act of 12 May 2014 on Regulated Real Estate Companies (at the time of the signing of the agreements which generated the commitment).
Aedifica committed to finance the extension of the existing rest home for a maximum budget of €1.9 million. Works are expected to begin shortly.
Under the long lease with Senior Living Group, Aedifica committed to finance the renovation and extension of the L'Air du Temps rest home in Chênée for a maximum budget of €6.2 million. Works are expected to begin shortly.
Under the long lease with the operator of the Au Bon Vieux Temps rest home (being part of Senior Living Group), Aedifica committed to finance the construction of a new rest home and assisted-living apartments next to the existing rest home in Mont-Saint-Guibert, for a maximum budget of €10.3 million. Works are currently in progress.
Under the long lease with Senior Living Group, Aedifica committed to finance the renovation and extension of the rest home in Veerle-Laakdal for a maximum budget of €4.4 million. Works are currently in progress.
Under the long lease with the operator of the Pont d'Amour rest home (being part of the Armonea group), Aedifica committed to finance the extension of the rest home for a maximum budget of €7.9 million. Works are currently in progress.
Under the long lease with Soprim@, Aedifica committed to finance the renovation of this building and its conversion into a rehabilitation centre for seniors, for a maximum budget of €4.0 million. Works are currently in progress.
Under the long lease with the operator of the Cheveux d'Argent rest home (being part of Senior Living Group), Aedifica committed to finance the construction of a new assisted-living apartment building next to the existing rest home in Sart-lez-Spa for a maximum budget of €3.0 million. This commitment remains subject to outstanding conditions.
Under the long lease with the operator of the 't Hoge rest home (which includes a guarantee from Senior Living Group), Aedifica committed to finance the renovation and extension of the existing building in Kortrijk for a maximum budget of €5.6 million. The first phase is already operational (€3.9 million). Works for the second phase are currently in progress (budget of €1.7 million).
Under the long lease with the operator of the Helianthus rest home (that benefits the guarantee of Senior Living Group), Aedifica committed to finance the extension of the site for the construction of 22 assisted-living apartments in Melle for a maximum budget of €3.8 million. Works are currently in progress.
Under the long lease with Armonea, Aedifica committed to finance the renovation and extension of the Plantijn rest home for a maximum budget of €7.6 million. The development permit has been obtained.
Under the long lease with Armonea, Aedifica committed to finance the renovation and redevelopment of the Salve rest home for a maximum budget of €8.4 million. The construction is currently underway (budget of €2.4 million), with the first phase (€6.0 million) already completed.
Under the long lease with the operator of the Huize Lieve Moenssens rest home, Aedifica committed to finance the renovation and the extension of the site for a maximum budget of €7.0 million. Works are expected to begin shortly.
Under the long lease with the operator of the De Stichel rest home, Aedifica committed to finance the extension of the site for a maximum budget of €3.5 million. The commitment is subject to outstanding conditions.
Under the long lease with Oase, Aedifica committed to finance the extension of the rest home for a maximum budget of €2.2 million. The commitment is subject to outstanding conditions.
Aedifica committed to finance the extension and the renovation of the existing La Ferme Blanche rest home, located in Remicourt, for a budget of €6.0 million. Works are expected to begin shortly.
Aedifica committed to finance the construction of a new rest home and renovation of the existing assisted-living apartment complex for a budget of €9.6 million (including plot of land). Works are currently under progress.
On 12 June 2014, Aedifica announced an agreement in principle (subject to outstanding conditions) which allows the Company to acquire two new rest homes, one under construction in Aarschot (Poortvelden) and another in the planning phase in Glabbeek for a total budget of €27.8 million.
On 18 December 2014, Aedifica signed an agreement (subject to outstanding conditions) under which the Company has committed to acquire the shares of the company RL Invest SA. This company is the owner of a rest home under construction, which, upon completion, will comprise 128 beds and 22 assisted-living apartments. The contractual value of these properties will amount to approx. €20 million upon completion.
For some acquisition deals, a portion of the acquisition price has been set based on future contingent events, such as (in the case of one rest home) the increase of rent after an extension. These events could trigger earn-outs.
A security has been pledged in relation to the Company's credit agreements, within the limits authorised by the regulation on following buildings: SZ AGO Herkenrath, SZ AGO Dresden and SZ AGO Kreischa.
Aedifica benefits from warranties provided by the sellers of shares in property companies acquired.
Aedifica benefits from rental guarantees (in line with market practice and applicable regulations), in the form of bank guarantees, restricted bank deposits or guarantor backings.
Moreover, in certain cases, Aedifica benefits from other securities:
In case of acquisitions, contributions in kind, mergers and de-mergers, Aedifica benefits from the following securities:
The main investment property acquisitions of the financial year are the following:
| ACQUISITIONS NAME |
Business segment | Properties valuation* (in € million) |
Register of corporations |
Acquisition date** |
Acquisition method |
|---|---|---|---|---|---|
| Woon & Zorg VG Aarschot SPRL | Senior housing | 24 | 0836.667.164 | 10/07/2014 | Acquisition of shares and subsequent merger |
| Woon & Zorg VG Tienen SPRL | Senior housing | 20 | 0836.667.956 | 29/08/2014 | Acquisition of shares and subsequent merger |
| Halmolen | Senior housing | 18 | - | 11/12/2014 | Acquisition of a building |
| La Réserve Invest SA Krentzen SPRL Overbeke SPRL |
Senior housing | 29 | 0472.563.511 0831.847.551 0816.956.665 |
4/12/2014 | Partial demerger, acquisitions of shares and subsequent merger |
| Aedifica Luxemburg I SARL | Senior housing | 24 | B128048 | 16/12/2014 | Acquisition of shares |
| Aedifica Luxemburg II SARL | Senior housing | 22 | B139725 | 16/12/2014 | Acquisition of shares |
| Aedifica Luxemburg III SARL | Senior housing | 20 | B143704 | 16/12/2014 | Acquisition of shares |
| Michri SA | Senior housing | 4 | 0862.001.188 | 18/12/2014 | Acquisition of shares |
| Villa Temporis SA | Senior housing | 5 | 0442.682.066 | 18/12/2014 | Acquisition of shares |
| Schloss Bensberg | Senior housing | 14 | - | 1/03/2015 | Acquisition of a building |
| TOTAL | 180 |
* in order to determine the number of shares issued, the exchange ratio and/or the value of the acquired shares.
** and consolidation date in the financial statements.
All these operations are detailed in the Board of Directors' Report.
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Authorised hedging instruments | ||
| Authorised hedging instruments qualifying for hedge accounting as defined under IFRS | 0 | -1 |
| Authorised hedging instruments not qualifying for hedge accounting as defined under IFRS | 461 | -2,989 |
| Subtotal | 461 | -2,990 |
| Other | -87 | 0 |
| TOTAL | 374 | -2,990 |
The Line "Other" represents the changes in fair value of the put options granted to non-controlling shareholders (see Notes 32 and 56).
Related party transactions (as defined under IAS 24 and the Belgian Companies Code) relate exclusively to the remuneration of the Company's Directors and Executive Managers (€1,577 thousand in 2014/2015; €1,238 thousand in 2013/2014). Remuneration details are provided in the Corporate Governance Statement included in the 2014/2015 Annual Financial Report.
On 2 July 2015, Aedifica announced the acquisition (together with its subsidiary, Aedifica Invest SA) of 100 % of the shares of the limited liability company La Croix Huart SA. La Croix Huart is the owner of the plot of land on which the Résidence de la Houssière rest home is located in Braine-le-Comte, Belgium.
The Résidence de la Houssière rest home is well located in a green area, near the centre of Braine-le-Comte, a municipality of approx. 20,000 inhabitants, situated approx. 20 kilometres from Mons (Province of Hainaut, Belgium). The rest home currently comprises 94 beds. The initial building, which dates from the late 1990s, was completed in 2006 with the construction of a new wing. The site also includes a land reserve of approx. 1.5 ha, which presents potential for an extension project. The site is operated by the limited liability company Résidence de la Houssière SA, a local player that has been present on the senior care market for more than 20 years.
The contractual value of the site (including plot of land) amounts to approx. €10 million. The initial triple net yield amounts to approx. 6 %. The Aedifica Group will receive this yield based on a 27-year triple net long lease which will be granted to Résidence de la Houssière SA.
This transaction was structured for execution in two phases:
Transfer of the ownership of the building to SA La Croix Huart upon expiration of the surface rights (31 December 2015).
9 July 2015 : Senior Flandria assisted-living apartment building (Bruges, Province of West-Flanders, Belgium) On 9 July 2015, Aedifica acquired 100 % of the shares of the limited liability companies Senior Hotel Flandria SA and Patrimoniale Flandria SA. Senior Hotel Flandria SA is the owner of the Senior Flandria assisted-living apartment building located in Bruges (Province of West-Flanders, Belgium). Patrimoniale Flandria SA is the owner of the plot of land on which the assisted-living apartment building is located.
The Senior Flandria assisted-living apartment building is well located in a residential area, close to the centre of Bruges. This city of 117,000 inhabitants is the capital city of the province of West Flanders, Belgium. The building, which dates from 1991, currently comprises 108 one-bedroom apartments and common areas (total surface of approx. 6,500 m²). The building is very well maintained and has undergone some renovation works (such as the bathrooms). The building is a recognised assistedliving apartment building intended for senior housing, and offers various facilities (concierge, anti-intruder system, call system, restaurant, fitness, bar, etc.), services (animation, hairdresser, handyman services, cleaning services) and health-care services (physiotherapy, care, home nursing).
The contractual value of the site (including plot of land) amounts to approx. €10 million. The site is operated by the SPRL Happy Old People (controlled by the Armonea group) on the basis of a triple net long lease for which the remaining maturity is approx. 20 years. The initial triple net yield amounts to approx. 6 %.
The corrected profit as defined in the Royal Decree of 13 July 2014 is calculated based on the Statutory Accounts as follows:
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Profit (loss) | 39,444 | 18,582 |
| Depreciation | 670 | 599 |
| Write-downs | 33 | 98 |
| Other non-cash items | -2,187 | 2,922 |
| Gains and losses on disposals of investment properties | -428 | 0 |
| Changes in fair value of investment properties | -12,105 | -1,799 |
| Roundings | -1 | 1 |
| Corrected profit | 25,426 | 20,403 |
| Denominator* (in shares) | 10,924,613 | 10,249,083 |
| CORRECTED PROFIT PER SHARE* (in € per share) | 2.33 | 1.99 |
* Based on the rights to the dividend for the shares issued during the year.
The table below presents a full list of the companies covered by Articles 114 and 165 of the Royal Decree of 30 January 2001 pertaining to the execution of the Belgian Companies Code. For the subsidiaries already present in the prior year (Aedifica Invest SA, Aedifica Invest Brugge SA and De Stichel SA), the percentage of equity held by Aedifica is unchanged as compared to 30 June 2014.
| NAME | Country | Category | Register of corporations |
Capital held (in %) |
|---|---|---|---|---|
| Aedifica Invest SA | Belgium | Subsidiary | 0879.109.317 | 100.00 |
| Aedifica Invest Brugge SA | Belgium | Subsidiary | 0899.665.397 | 100.00 |
| Aedifica Asset Management GmbH | Germany | Subsidiary | DE297302957 | 100.00 |
| De Stichel SA | Belgium | Subsidiary | 0466.259.105 | 100.00 |
| Overbeke SPRL | Belgium | Subsidiary | 0816.956.665 | 100.00 |
| Villa Temporis SA | Belgium | Subsidiary | 0442.682.066 | 100.00 |
| Michri SA | Belgium | Subsidiary | 0862.001.188 | 100.00 |
| Aedifica Luxemburg I SARL | Luxembourg | Subsidiary | B128048 | 94.00 |
| Aedifica Luxemburg II SARL | Luxembourg | Subsidiary | B139725 | 94.00 |
| Aedifica Luxemburg III SARL | Luxembourg | Subsidiary | B143704 | 94.00 |
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Consolidated debt-to-assets ratio (max. 65%) | ||
| Total liabilities | 422,014 | 397,648 |
| Corrections | -44,798 | -40,828 |
| Total liabilities according to the Royal Decree of 13 July 2014 | 377,216 | 356,820 |
| Total assets | 1,020,284 | 794,723 |
| Corrections | -1,048 | -65 |
| Total assets according to the Royal Decree of 13 July 2014 | 1,019,236 | 794,658 |
| Debt-to-assets ratio (in %) | 37.0% | 44.9% |
| STATUTORY PAY-OUT RATIO | ||
| Statutory corrected profit | 25,426 | 20,403 |
| Proposed dividend | 21,849 | 19,473 |
| PAY-OUT RATIO (MIN. 80%) | 86% | 95% |
As of 30 June 2015, no single property represents more than 20 % of the Company's assets (see "Risk Factors", section 1.4).
Aedifica's properties are valued quarterly by independent experts, Stadim CVBA, de Crombrugghe & Partners SA and CBRE GmbH.
| (x €1,000) | 2015 | 2014 |
|---|---|---|
| Statutory (audit Aedifica SA) | 29 | 29 |
| Statutory audit (subsidiaries) | 46 | 23 |
| Opinion reports foreseen in the Belgian Companies Code (Aedifica SA) | 20 | 5 |
| Other opinion reports (comfort letter, etc.) (Aedifica SA) | 36 | 2 |
| Tax advice missions | 0 | 0 |
| Other missions unconnected with the statutory audit | 0 | 0 |
| TOTAL | 131 | 59 |
Deferred taxes recognised on the balance sheet arise from the acquisition of investment properties located outside of Belgium.
They arise from the temporal difference between the buildings' fair value and the assessed value used for tax purposes.
Changes in deferred taxes are presented as follows (see also Note 24):
| (x €1,000) | Assets | Liabilities |
|---|---|---|
| CARRYING AMOUNT AS OF 1/07/2013 | 0 | 0 |
| Originations | 388 | 0 |
| Reversals | -144 | 0 |
| Scope changes | 0 | 0 |
| CARRYING AMOUNT AS OF 30/06/2014 | 244 | 0 |
| (x €1,000) | Assets | Liabilities |
|---|---|---|
| CARRYING AMOUNT AS OF 1/07/2014 | 244 | 0 |
| Originations | 142 | 0 |
| Reversals | -276 | -261 |
| Scope changes | 0 | -2,174 |
| CARRYING AMOUNT AS OF 30/06/2015 | 110 | -2,435 |
In accordance with IFRS 13, balance sheet elements for which the fair value can be computed are presented below and broken down according to the levels defined by IFRS 13:
| (x €1,000) | Level 1 | Level 2 | Level 3 | Carrying amounts of the balance sheet 2015 |
|---|---|---|---|---|
| Investment properties | - | - | 1,003,358 | 1,003,358 |
| Assets classified as held for sale | - | - | 1,805 | 1,805 |
| Non-current financial assets | - | 1,397 | - | 1,397 |
| Trade receivables and other non-current assets | - | 4,352 | - | 4,352 |
| Tax receivables and other current assets | - | 962 | - | 962 |
| Cash and cash equivalents | 3,598 | - | - | 3,598 |
| Non-current financial debts (a. Borrowings) | - | -342,970 | - | -340,752 |
| Other non-current financial liabilities | - | -39,320 | - | -39,320 |
| Current financial debts (a. Borrowings) | - | -25,897 | - | -25,897 |
| Trade debts and other current debts (b. Other) | - | -8,484 | - | -8,484 |
| (x €1,000) | Level 1 | Level 2 | Level 3 | Carrying amounts of the balance sheet 2014 |
| Investment properties | - | - | 784,980 | 784,980 |
| Non-current financial assets | - | 461 | - | 461 |
| Trade receivables and other non-current assets | - | 2,938 | - | 2,938 |
| Tax receivables and other current assets | - | 495 | - | 495 |
| Cash and cash equivalents | 1,156 | - | - | 1,156 |
| Non-current financial debts (a. Borrowings) | - | -277,337 | - | -274,955 |
| Other non-current financial liabilities | - | -37,774 | - | -37,774 |
| Current financial debts (a. Borrowings) | - | -70,945 | - | -70,945 |
| Trade debts and other current debts (b. Other) | - | -10,305 | - | -10,305 |
In the table above, the fair value of hedging instruments is included under lines "non-current financial assets" and "other noncurrent financial liabilities", as broken down in Note 32.
The Company has committed to acquire the non-controlling shareholdings (6 % of the share capital) owned by third parties in Aedifica Luxemburg I SARL, Aedifica Luxemburg II SARL and Aedifica Luxemburg III SARL, should these third parties wish to exercise their put options. The exercise price of such options granted to non-controlling interest is reflected on the liability side of balance sheet on line "I.C.b. Other non-current financial liabilities – Other" (see Notes 32 and 47).
This auditor's report has been faithfully reproduced and, to Aedifica's knowledge, no facts have been omitted which would render the information reproduced inexact or misleading.
In accordance with the legal requirements, we report to you in the context of our statutory auditor's mandate. This report includes our opinion on the consolidated balance sheet as at 30 June 2015, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in capital and reserves and the consolidated cash flow statement for the year ended 30 June 2015 and the notes (all elements together "the Consolidated Financial Statements"), and includes as well our report on other legal and regulatory requirements.
We have audited the Consolidated Financial Statements of Aedifica SA ("the Company") and its subsidiaries (together "the Group") as of and for the year ended 30 June 2015, prepared in accordance with the International Financial Reporting Standards as adopted by the European Union, which show a consolidated balance sheet total of €1.020.284 thousand and of which the consolidated income statement shows a profit for the year of €45.165 thousand.
The Board of Directors is responsible for the preparation of Consolidated Financial Statements that give a true and fair view in accordance with the International Financial Reporting Standards as adopted by the European Union. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation of Consolidated Financial Statements that give a true and fair view and that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the given circumstances.
Our responsibility is to express an opinion on these Consolidated Financial Statements based on our audit. We conducted our audit in accordance with International Standards on Auditing ("ISAs"). Those standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Consolidated Financial Statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Consolidated Financial Statements. The procedures selected depend on the statutory auditor's judgment, including the assessment of the risks of material misstatement of the Consolidated Financial Statements, whether due to fraud or error. In making those risk assessments, the statutory auditor considers internal control relevant to the Group's preparation and presentation of the Consolidated Financial Statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control. An audit also includes evaluating the appropriateness of accounting policies used, the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overall presentation of the Consolidated Financial Statements.
We have obtained from the Board of Directors and the Company's officials the explanations and information necessary for performing our audit and we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In our opinion, the Consolidated Financial Statements of the Group as at 30 June 2015 give a true and fair view of the consolidated net equity and financial position, as well as its consolidated results and its consolidated cash flows for the year then ended in accordance with the International Financial Reporting Standards as adopted by the European Union.
The Board of Directors is responsible for the preparation and the content of the Board of Director's report on the Consolidated Financial Statements, in accordance with article 119 of the Belgian Company Code.
In the context of our mandate and in accordance with the additional standard issued by the 'Instituut van de Bedrijfsrevisoren/Institut des Réviseurs d'Entreprises' as published in the Belgian Gazette on 28 August 2013 (the "Additional Standard"), it is our responsibility to perform certain procedures to verify, in all material respects, compliance with certain legal and regulatory requirements, as defined in the Additional Standard. On this basis, we make the following additional statement, which does not modify the scope of our opinion on the Consolidated Financial Statements.
Brussels, 2 September 2015 Ernst & Young Réviseurs d'Entreprises sccrl Statutory auditor represented by Jean-François Hubin*, Partner
* Acting on behalf of a BVBA/SPRL
The Abridged Statutory Financial Statements of Aedifica SA, prepared under IFRS, are summarised below in accordance with Article 105 of Belgian Companies Code.
The unabridged Statutory Financial Statements of Aedifica SA, its Board of Directors' Report and its Auditors' Report will be registered at the National Bank of Belgium within the legal deadlines. They will also be available for free on the Company's website (www.aedifica.be) or on request at the Company's headquarters.
The statutory auditor released an unqualified opinion on the Statutory Financial Statements of Aedifica SA.
| Year ending on 30 June (x €1,000) | 2015 | 2014 | |
|---|---|---|---|
| I. | Rental income | 47,178 | 38,855 |
| II. | Writeback of lease payments sold and discounted | 0 | 0 |
| III. | Rental-related charges | -84 | -67 |
| Net rental income | 47,094 | 38,788 | |
| IV. | Recovery of property charges | 32 | 35 |
| V. | Recovery of rental charges and taxes normally paid by tenants on let properties | 1,687 | 1,086 |
| VI. | Costs payable by the tenant and borne by the landlord on rental damage and repair at end of lease | 0 | 0 |
| VII. | Rental charges and taxes normally paid by tenants on let properties | -1,687 | -1,086 |
| VIII. | Other rental-related income and charges | -1,563 | -1,509 |
| Property result | 45,563 | 37,314 | |
| IX. | Technical costs | -1,071 | -908 |
| X. | Commercial costs | -492 | -549 |
| XI. | Charges and taxes on unlet properties | -131 | -148 |
| XII. | Property management costs | -892 | -707 |
| XIII. | Other property charges | -1,567 | -1,166 |
| Property charges | -4,153 | -3,478 | |
| Property operating result | 41,410 | 33,836 | |
| XIV. | Overheads | -5,230 | -4,190 |
| XV. | Other operating income and charges | 915 | 242 |
| Operating result before result on portfolio | 37,095 | 29,888 | |
| XVI. | Gains and losses on disposals of investment properties | 428 | 0 |
| XVII. | Gains and losses on disposals of other non-financial assets | 0 | 0 |
| XVIII. | Changes in fair value of investment properties | 12,105 | 1,799 |
| XIX. | Other result on portfolio | 1,792 | 0 |
| Operating result | 51,420 | 31,687 | |
| XX. | Financial income | 1,474 | 1,504 |
| XXI. | Net interest charges | -12,720 | -11,048 |
| XXII. | Other financial charges | -787 | -731 |
| XXIII. | Changes in fair value of financial assets and liabilities | 461 | -2,990 |
| Net finance costs | -11,572 | -13,265 | |
| Profit before tax (loss) | 39,848 | 18,422 | |
| XXIV. | Corporate tax | -404 | 160 |
| XXV. | Exit tax | 0 | 0 |
| Tax expense | -404 | 160 | |
| Profit (loss) | 39,444 | 18,582 | |
| Basic earnings per share (€) | 3.70 | 1.87 | |
| Diluted earnings per share (€) | 3.70 | 1.87 |
| Year ending on 30 June (x €1,000) | 2015 | 2014 | ||
|---|---|---|---|---|
| I. | Profit (loss) | 39,444 | 18,582 | |
| II. | Other comprehensive income recyclable under the income statement | |||
| A. | Impact on fair value of estimated transaction costs resulting from hypothetical disposal of investment properties |
-3,517 | -2,668 | |
| B. | Changes in the effective part of the fair value of authorised cash flow hedge instruments as defined under IFRS |
-181 | -2,710 | |
| H. | Other comprehensive income, net of taxes | 0 | 0 | |
| Comprehensive income | 35,746 | 13,204 |
| ASSETS | 2014 | ||
|---|---|---|---|
| I. | Year ending on 30 June (x €1,000) Non-current assets |
||
| A. | Goodwill | 1,856 | 1,856 |
| B. | Intangible assets | 102 | 21 |
| C. | Investment properties | 909,048 | 736,065 |
| D. | Other tangible assets | 1,833 | 1,911 |
| E. | Non-current financial assets | 80,252 | 25,068 |
| F. | Finance lease receivables | 0 | 0 |
| G. | Trade receivables and other non-current assets | 0 | 0 |
| H. | Deferred tax assets | 110 | 244 |
| Total non-current assets | 993,201 | 765,165 | |
| II. | Current assets | ||
| A. | Assets classified as held for sale | 1,805 | 0 |
| B. | Current financial assets | 0 | 0 |
| C. | Finance lease receivables | 0 | 0 |
| D. Trade receivables and other non-current assets | 4,222 | 2,608 | |
| E. | Tax receivables and other current assets | 6,049 | 17,078 |
| F. | Cash and cash equivalents | 2,639 | 1,120 |
| G. | Deferred charges and accrued income | 897 | 635 |
| Total current assets | 15,612 | 21,441 | |
| TOTAL ASSETS | 1,008,813 | 786,606 |
| EQUITY AND LIABILITIES | 2015 | 2014 |
|---|---|---|
| Year ending on 30 June (x €1,000) | ||
| EQUITY | ||
| A. Capital |
360,633 | 264,231 |
| B. Share premium account |
151,388 | 64,729 |
| C. Reserves |
43,285 | 47,818 |
| a. Legal reserve | 0 | 0 |
| b. Reserve for the balance of changes in fair value of investment properties | 93,599 | 91,800 |
| c. Reserve for estimated transaction costs resulting from hypothetical disposal of investment properties | -20,032 | -16,516 |
| d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS |
-19,667 | -19,484 |
| e. Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS |
-18,718 | -15,729 |
| h. Reserve for treasury shares | 0 | -56 |
| k. Reserve for deferred taxes on investment properties located abroad | 244 | 0 |
| m. Other reserves | 0 | 0 |
| n. Result brought forward from previous years | 7,859 | 7,803 |
| D. Profit (loss) of the year |
39,444 | 18,582 |
| TOTAL EQUITY | 594,750 | 395,360 |
| LIABILITIES | ||
| I. Non-current liabilities |
||
| A. Provisions |
0 | 0 |
| B. Non-current financial debts |
||
| a. Borrowings | 337,913 | 269,395 |
| C. Other non-current financial liabilities |
38,049 | 37,775 |
| a. Authorised hedges | 38,049 | 37,775 |
| b. Other | 0 | 0 |
| D. Trade debts and other non-current debts |
0 | 0 |
| E. Other non-current liabilities |
0 | 0 |
| F. Deferred taxes liabilities |
0 | 0 |
| Non-current liabilities | 375,962 | 307,170 |
| II. Current liabilities |
||
| A. Provisions |
0 | 0 |
| B. Current financial debts |
||
| a. Borrowings | 25,663 | 70,559 |
| C. Other current financial liabilities |
0 | 0 |
| D. Trade debts and other current debts |
||
| a. Exit tax | 114 | 158 |
| b. Other | 8,057 | 10,360 |
| E. Other current liabilities |
0 | 0 |
| F. Accrued charges and deferred income |
4,267 | 2,999 |
| Total current liabilities | 38,101 | 84,076 |
| TOTAL LIABILITIES | 414,063 | 391,246 |
| TOTAL EQUITY AND LIABILITIES | 1,008,813 | 786,606 |
| Year ending on 30 June (x €1,000) | 2013 | Capital increase in cash |
Capital increase in kind |
Acquisitions / disposals of treasury shares |
Consolidated comprehensive income |
Appropriation of the result |
Roundings | 2014 |
|---|---|---|---|---|---|---|---|---|
| Capital | 248,072 | 0 | 16,159 | 0 | 0 | 0 | 0 | 264,231 |
| Share premium account | 64,729 | 0 | 0 | 0 | 0 | 0 | 0 | 64,729 |
| Reserves | 41,841 | 0 | 0 | 28 | -5,378 | 11,328 | -1 | 47,818 |
| a. Legal reserve | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| b. Reserve for the balance of changes in fair value of investment properties |
82,732 | 0 | 0 | 0 | 0 | 9,067 | 1 | 91,800 |
| c. Reserve for estimated transaction costs resulting from hypothetical disposal of investment properties |
-13,848 | 0 | 0 | 0 | -2,668 | 0 | 0 | -16,516 |
| d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS |
-16,637 | 0 | 0 | 0 | -2,710 | -137 | 0 | -19,484 |
| e. Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS |
-17,466 | 0 | 0 | 0 | 0 | 1,737 | 0 | -15,729 |
| h. Reserve for treasury shares | -83 | 0 | 0 | 28 | 0 | 0 | -1 | -56 |
| k. Reserve for deferred taxes on investment properties located abroad |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| m. Other reserves | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| n. Result brought forward from previous years |
7,143 | 0 | 0 | 0 | 0 | 661 | -1 | 7,803 |
| Profit (loss) | 27,538 | 0 | 0 | 0 | 18,582 | -27,538 | 0 | 18,582 |
| TOTAL EQUITY | 382,180 | 0 | 16,159 | 28 | 13,204 | -16,210 | -1 | 395,360 |
| Year ending on 30 June (x €1,000) | 2014 | Capital increase in cash |
Capital increase in kind |
Acquisitions / disposals of treasury shares |
Consolidated comprehensive income |
Appropriation of the result |
Roundings | 2015 |
|---|---|---|---|---|---|---|---|---|
| Capital | 264,231 | 78,812 | 17,591 | 0 | 0 | 0 | -1 | 360,633 |
| Share premium account | 64,729 | 70,580 | 16,079 | 0 | 0 | 0 | 0 | 151,388 |
| Reserves | 47,818 | 0 | 0 | 56 | -3,698 | -891 | 0 | 43,285 |
| a. Legal reserve | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| b. Reserve for the balance of changes in fair value of investment properties |
91,800 | 0 | 0 | 0 | 0 | 1,799 | 0 | 93,599 |
| c. Reserve for estimated transaction costs resulting from hypothetical disposal of investment properties |
-16,516 | 0 | 0 | 0 | -3,517 | 0 | 1 | -20,032 |
| d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS |
-19,484 | 0 | 0 | 0 | -181 | -1 | -1 | -19,667 |
| e. Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS |
-15,729 | 0 | 0 | 0 | 0 | -2,989 | 0 | -18,718 |
| h. Reserve for treasury shares | -56 | 0 | 0 | 56 | 0 | 0 | 0 | 0 |
| k. Reserve for deferred taxes on investment properties located abroad |
0 | 0 | 0 | 0 | 0 | 244 | 0 | 244 |
| m. Other reserves | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| n. Result brought forward from previous years |
7,803 | 0 | 0 | 0 | 0 | 56 | 0 | 7,859 |
| Profit (loss) | 18,582 | 0 | 0 | 0 | 39,444 | -18,582 | 0 | 39,444 |
| TOTAL EQUITY | 395,360 | 149,392 | 33,670 | 56 | 35,746 | -19,473 | -1 | 594,750 |
| PROPOSED APPROPRIATION | 2015 | 2014 |
|---|---|---|
| Year ending on 30 June (x €1,000) | ||
| A. Profit (loss) | 39,444 | 18,582 |
| B. Transfer to/from the reserves | 14,653 | -947 |
| 1. Transfer to/from the reserve of the (positive or negative) balance of changes in fair value of investment properties (-/+) |
||
| - fiscal year | 13,898 | 1,799 |
| - previous fiscal years | 0 | 0 |
| - disposals of investment properties | 428 | 0 |
| 2. Transfer to/from the reserve of the estimated transaction costs resulting from hypothetical disposal of investment properties (-/+) |
0 | 0 |
| 3. Transfer to the reserve of the balance of the changes in fair value of authorised cash flow hedging instruments qualifying for hedge accounting (-) |
||
| - fiscal year | 0 | -1 |
| - previous years | 0 | 0 |
| 4. Transfer to the reserve of the balance of the changes in fair value of authorised cash flow hedging instruments qualifying for hedge accounting (+) |
||
| - fiscal year | 0 | 0 |
| - previous years | 0 | 0 |
| 5. Transfer to the reserve of the balance of the changes in fair value of authorised cash flow hedging instruments not qualifying for hedge accounting (-) |
||
| - fiscal year | 461 | -2,989 |
| - previous years | 0 | 0 |
| 6. Transfer to the reserve of the balance of the changes in fair value of authorised cash flow hedging instruments not qualifying for hedge accounting (+) |
||
| - fiscal year | 0 | 0 |
| - previous years | 0 | 0 |
| 7. Transfer to/from the reserve of the balance of currency translation differences on monetary assets and liabilities (-/+) |
0 | 0 |
| 8. Transfer to the reserve of the fiscal latencies related to investment properties abroad (-/+) | -134 | 244 |
| 9. Transfer to the reserve of the received dividends aimed at the reimbursement of financial debts (-/+) | 0 | 0 |
| 10. Transfer to/from other reserves (-/+) | 0 | 0 |
| 11. Transfer to/from the result carried forward of the previous years (-/+) | 0 | 0 |
| C. Remuneration of the capital provided in article 13, § 1, para. 1 | 20,341 | 16,323 |
| D. Remuneration of the capital - other than C | 1,508 | 3,151 |
| Result to be carried forward | 2,942 | 56 |
| SHAREHOLDERS' EQUITY THAT CAN NOT BE DISTRIBUTED ACCORDING TO ARTICLE | 2015 | 2014 |
|---|---|---|
| 617 OF THE COMPANY CODE | ||
| (x €1,000) | ||
| Paid-up capital or, if greater, subscribed capital (+) | 360,633 | 264,231 |
| Share premium account unavailable for distribution according to the Articles of Association (+) | 151,388 | 64,729 |
| Reserve for positive balance of changes in fair value of investment properties (+) | 107,924 | 93,599 |
| Reserve for the estimated transaction costs resulting from hypothetical disposal of investment properties (-) | -20,032 | -16,516 |
| Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS (+/-) |
-19,667 | -19,485 |
| Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS (+/-) |
-18,256 | -18,718 |
| Reserve of the balance of currency translation differences on monetary assets and liabilities (+) | 0 | 0 |
| Reserve for foreign exchange differences linked to conversion of foreign operations (+/-) | 0 | 0 |
| Reserve for the balance of changes in fair value of financial assets available for sale (+/-) | 0 | 0 |
| Reserve for actuarial differences of defined benefits pension plans (+) | 0 | 0 |
| Reserve of the fiscal latencies related to investment properties abroad (+) | 110 | 244 |
| Reserve of the received dividends aimed at the reimbursement of financial debts (+) | 0 | 0 |
| Other reserves declared as non-distributable by the general meeting (+) | 0 | 0 |
| Legal reserve (+) | 0 | 0 |
| Shareholders' equity that cannot be distributed according to Article 617 of the Company Code | 562,100 | 368,083 |
| Net asset | 594,750 | 395,360 |
| Dividend to be paid out | -21,849 | -19,473 |
| Net asset after distribution | 572,901 | 375,887 |
| Headroom after distribution | 10,801 | 7,803 |
The legal form of the Company is that of a public limited liability company with the name "Aedifica".
The Company is a Public Regulated Real Estate Company ("PRREC"), subject to the Belgian Act of 12 May 2014 on Regulated Real Estate Companies (the "Act") as well as the Royal Decree of 13 July 2014 on Regulated Real Estate Companies (the "Royal Decree") (hereafter together "the RREC legislation").
The name of the Company and all documents that it issues must include a reference to it being a Regulated Real Estate Company under Belgian law, either written out in full as "openbare gereglementeerde vastgoedvennootschap naar Belgisch recht" / "société immobilière réglementée publique de droit belge" ("public regulated real estate company under Belgian law") or abbreviated as "openbare GVV naar Belgisch recht" or "OGGV naar Belgisch recht" / "SIR publique de droit belge" or "SIRP de droit belge" ("public RREC under Belgian law"), or be immediately followed by these words.
The Company has made a public call on savings within the meaning of Article 438 of the Belgian Companies Code.
The registered and administrative office is located at Avenue Louise/Louizalaan 331-333, 1050 Brussels.
The registered office may be moved to any other place in Belgium, subject to compliance with the language legislation in administrative affairs, by means of a simple resolution of the Board of Directors, which is authorised to have the ensuing amendment to the Articles of Association recorded in an officially certified deed.
Aedifica was set up as a limited liability company incorporated under Belgian law (Société Anonyme/Naamloze Vennootschap) by Degroof Bank SA and GVA Finance SCA, by deed enacted on 7 November 2005 by Notary Bertrand Nerincx, Notary in Brussels, published in the annexes to the Belgian State Gazette (Moniteur belge/Belgisch Staatsblad) of 23 November 2005, under number 20051123/05168061.
Aedifica was recognised as a Belgian REIT by the Commission Bancaire, Financière et des Assurances (CBFA), which became the FSMA, on 8 December 2005. Aedifica was recognised as a RREC by the FSMA on 17 October 2014.
The Company is entered in the Brussels Registry of Legal Entities (R.L.E., or "R.P.M." in French / "R.P.R." in Dutch) under No. 0877.248.501.
The Company is incorporated for an indefinite duration.
The Company's sole purpose is:
The notion real estate is to be understood as "real estate" within the meaning of the RREC legislation.
In the context of making available immovable property, the company can carry out all activities relating to the construction, conversion, renovation, development, acquisition, disposal, administration and exploitation of immovable property.
As an additional or temporary activity, the company may invest in securities that are not real estate within the meaning of the RREC legislation, insofar as these securities may be traded on a regulated market. These investments will be made in accordance with the risk management policy adopted by the company and will be diversified so as to ensure an appropriate risk diversification. It may also hold non-allocated liquid assets in all currencies, in the form of a call or term deposit or in the form of any monetary instrument that can be traded easily.
The Company may moreover carry out hedging transactions, insofar as the latter's exclusive purpose is to cover interest rate and exchange rate risks within the context of the financing and administration of the real estate of the company, to the exclusion of any speculative transactions.
The Company may lease out or take a lease on (under finance leases) one or more immovable properties. Leasing out (under finance leases) immovable property with an option to purchase may only be carried out as an additional activity, unless the immovable properties are intended for purposes of public interest, including social housing and education (in this case, the activity may be carried out as main activity).
The Company may carry out all transactions and studies relating to all immovable property as described above, and may perform all acts relating to immovable property, such as purchase, refurbishment, laying out, letting, furnished letting, subletting, management, exchange, sale, parcelling, placing under a system of co-ownership, and have dealings with all enterprises with a corporate purpose that is similar to or complements its own by way of merger or otherwise, insofar as these acts are permitted under the RREC legislation and, generally, perform all acts that are directly or indirectly related to its purpose.
The Company may not:
The financial year commences on the 1st July of each year and ends on the 30th June of the following year. At the end of each financial year, the Board of Directors draws up an inventory and the annual accounts.
The annual and semi-annual financial reports of the Company, which contain its consolidated accounts and the statutory auditor's report, are made available to the shareholders, in accordance with the provisions that apply to issuers of financial instruments that are admitted to trading on a regulated market. The annual and semi-annual financial reports of the Company and the annual accounts are published on the Company's website. The shareholders are entitled to obtain a free copy of the annual and semi-annual financial reports at the registered office.
The Board of Directors then prepares a report, called "Board of Directors' Report", in which it reports its management. The statutory auditor writes, for the ordinary general meeting, a detailed report called "Auditor's Report".
The ordinary general meeting will be held at 3pm on the fourth Friday of October.
If this day is a public holiday, the meeting will be held at the same time on the next business day, except if the next day is a Saturday or Sunday. Ordinary or extraordinary general meetings are held at the venue specified in the meeting notice. A general meeting must be convened by the Board of Directors whenever shareholders representing one-fifth of the capital request it to do so. One or more shareholders who jointly hold at least 3 % of the share capital may, subject to the conditions laid down by the Belgian Companies Code, also ask to add items to the agenda of general meetings and submit proposals for resolutions relating to items included or to be included on the agenda. Meeting notices are drawn up and distributed in accordance with the applicable provisions of the Belgian Companies Code.
The statutory auditor of the Company, who is accredited by the Financial Services and Markets Authority (FSMA), is Ernst & Young Réviseurs d'Entreprises SCCRL, represented by Jean-François Hubin, Partner, located at 2 De Kleetlaan in 1831 Diegem.
The statutory auditor has an unlimited right of supervision over the operations of the Company.
The accredited statutory auditor was appointed for a 3-year period by the Ordinary General Meeting on 24 October 2014, and receives an indexed audit fee of €29,100 excluding VAT per year for auditing the consolidated and statutory annual accounts.
Since the entry into force of the Royal Decree of 7 December 2010, the mission of Bank Degroof SA as depositary bank is complete.
To avoid conflicts of interest, Aedifica's real estate portfolio is assessed by three independent real estate experts, namely:
According to the RREC legislation, the experts assess the entire portfolio every quarter and their assessment is recognised as the carrying amount ("fair value") of the buildings on the balance sheet.
Since 1 January 2011, the expert fee excluding VAT is determined as a fixed amount per type of property appraised.
The valuations are established on the basis of several widely used methodologies:
Aedifica has established financial service conventions with the two following banks:
The remuneration of the financial service is almost entirely based on the amount of the distributed dividend. It amounted to €64 thousand for the 2014/2015 financial year (€31 thousand for the 2013/2014 financial year).
The Company's Articles of Association are available at the Commercial Court of Brussels and on the Company's website (www.aedifica.be).
The statutory and consolidated accounts of the Aedifica Group are registered at the National Bank of Belgium, in accordance with the related legal provisions. The decisions regarding the nomination and the dismissal of the members of the Board of Directors are published in the annexes to the Belgian State Gazette (Moniteur belge/Belgisch Staatsblad). The convening of general meetings is published in the annexes to the Belgian State Gazette (Moniteur belge/Belgisch Staatsblad) and in two financial dailies.
These meeting notices and all documents related to the general meetings are simultaneously available on the Company's website (www.aedifica.be). All press releases, annual and semi-annual reports, as well as all financial information published by the Aedifica Group are available on the Company's website (www.aedifica.be).
The Auditor's Report and the real estate experts' report are available in the Annual Financial Reports provided on the Company's website (www.aedifica.be).
During the period of validity of the registration document, the following documents are available in print at the Company's headquarters, or electronically at www.aedifica.be:
Given the specific legal regime of RRECs, and in particular residential RRECs, the Aedifica shares can present an interesting investment for both private investors and institutional investors.
The Annual Financial Reports (which include the Consolidated Financial Statements -with an abridged version of the Statutory Accounts-, the Consolidated Board of Directors' Report, the Auditor's Report, the Property Report), the interim statements, the semi-annual reports, the description of the financial situation, the information regarding the related-parties, and the historical information regarding the subsidiaries of Aedifica, for the 2011/2012, 2012/2013 and 2013/2014 financial years are included by reference in this Annual Financial Report and are available at the headquarters of Aedifica. These can also be downloaded from the Company's website (www.aedifica.be).
No significant change in the Group's financial or trading situation has occurred since the end of last financial year for which audited financial statements or semi-annual statements have been published.
The modification of shareholders' rights can only be done within the framework of an extraordinary general meeting, in accordance with Articles 558 and 560 of the Belgian Companies Code. The document containing the information on the rights of the shareholders referred to in Articles 533ter and 540 of the Belgian Companies Code can be downloaded from the Company's website (www.aedifica.be).
Refer to the section "Risks factors" of this Annual Financial Report.
In addition to paragraph 1.3 above, the history of Aedifica was marked by its IPO on 23 October 2006 (see the section "Aedifica in the stock market"), and by numerous acquisitions of real estate assets that have occurred since its creation (detailed in the occasional press releases, in the periodic press releases and in the annual and semi-annual financial reports available on the Company's website) and that led to the formation of an investment properties portfolio of more than €1 billion.
The main shareholders of Aedifica SA do not have voting rights different from those that arise from their share in the share capital (as defined in item 18.2 of Annex I of Regulation (EC) No 809/2004).
Mr. Olivier Lippens, Chairman of the Board of Directors of Aedifica SA, and Mr. Stefaan Gielens, CEO of Aedifica SA, declare for and on behalf of Aedifica SA, that to the best of their knowledge:
Mr. Olivier Lippens, Chairman of the Board of Directors of Aedifica SA, and Mr. Stefaan Gielens, CEO of Aedifica SA, attest that, after having taken all reasonable measures for this matter, the information contained in the registration document is, to their knowledge, in accordance with reality and contains no omission likely to affect its scope.
Aedifica SA declares that the information provided by the real estate experts and by the accredited statutory auditor have been faithfully reproduced and included with their consent. As far as Aedifica SA knows and is able to assure, in the light of data published by these third parties, no facts have been omitted that might render the information reproduced incorrect or misleading.
This report contains forecast information. This information is based on Company's estimates and projections and is, by its nature, subject to risks, uncertainties and other factors. Consequently, the results, financial situation, performance and figures, expressed or implicitly communicated, may differ substantially from those mentioned or suggested by the forecast information. Taking into account these uncertain factors, statements regarding future developments cannot be interpreted as a guarantee in any way.
The Board of Directors of Aedifica SA declares that there exists no government intervention, proceeding or arbitration procedure that may have a significant influence, or may have had such an influence in the recent past, on the financial position or profitability of Aedifica SA and that, as far as is known, there are no situations or facts that could give rise to such government intervention, proceeding or arbitration procedure.
The Board of Directors declares that, to the best of its knowledge:
| Date | Description | Amount of capital (€) |
1 Number of shares |
|---|---|---|---|
| 7 November 2005 | Initial capital paid up by Degroof Bank and GVA Finance | 2,500,000.00 | 2,500 |
| 2,500,000.00 | 2,500 | ||
| 29 December 2005 | Contribution in cash | 4,750,000.00 | 4,750 |
| Merger of "Jacobs Hotel Company SA" | 100,000.00 | 278 | |
| Merger of "Oude Burg Company SA" | 3,599,587.51 | 4,473 | |
| Transfer of reserves to capital | 4,119,260.93 | ||
| Capital decrease | -4,891,134.08 | ||
| 10,177,714.56 | 12,001 | ||
| 23 March 2006 | Merger of "Sablon-Résidence de l'Europe SA" | 1,487,361.15 | 11,491 |
| Merger of "Bertimo SA" | 1,415,000.00 | 3,694 | |
| Merger of "Le Manoir SA" | 1,630,000.00 | 3,474 | |
| Merger of "Olphi SA" | 800,000.00 | 2,314 | |
| Merger of "Services et Promotion de la Vallée (SPV) SA" | 65,000.00 | 1,028 | |
| Merger of "Emmane SA" | 2,035,000.00 | 5,105 | |
| Merger of "Ixelinvest SA" | 219.06 | 72 | |
| Merger of "Imfina SA" | 1,860.95 | 8 | |
| Contribution in kind of the business of "Immobe SA" | 908,000.00 | 908 | |
| Contribution in kind (Lombard 32) | 2,500,000.00 | 2,500 | |
| Contribution in kind (Laeken complex - Pont Neuf and Lebon 24-28) | 109,115,000.00 | 10,915 | |
| 31,935,155.52 | 53,510 | ||
| 24 May 2006 | Contribution in kind (Louise 331-333 complex) | 8,500,000.00 | 8,500 |
| 40,435,155.52 | 62,010 | ||
| 17 August 2006 | Contribution in kind (Laeken 119 and 123-125) | 1,285,000.00 | 1,285 |
| Partial demerger of "Financière Wavrienne SA" | 5,400,000.00 | 5,400 | |
| Mixed demerger of "Château Chenois SA" | 123,743.15 | 14,377 | |
| Merger of "Medimmo SA" | 1,000,000.00 | 2,301 | |
| Merger of "Cledixa SA" | 74,417.64 | 199 | |
| Merger of "Société de Transport et du Commerce en Afrique SA" | 62,000.00 | 1,247 | |
| Mixed merger of "Hôtel Central & Café Central SA" | 175,825.75 | 6,294 | |
| 48,556,142.06 | 93,113 | ||
| 26 September 2006 | Split by 25 of the number of shares | 48,556,142.06 | 2,327,825 |
| Contribution in kind (Rue Haute and Klooster Hotel) | 11,350,000.00 | 283,750 | |
| 59,906,142.06 | 2,611,575 | ||
| 3 October 2006 | Contribution in cash | 23,962,454.18 | 1,044,630 |
| 27 March 2007 | Contribution in kind (Auderghem 237, 239-241, 266 et 272, Platanes 6 and Winston | 83,868,596.24 4,911,972.00 |
3,656,205 105,248 |
| Churchill 157) | |||
| 88,780,568.24 | 3,761,453 | ||
| 17 April 2007 | Merger of "Legrand CPI SA" | 337,092.73 | 57,879 |
| Contribution in kind (Livourne 14, 20-24) | 2,100,000.00 | 44,996 | |
| 91,217,660.97 | 3,846,328 | ||
| 28 June 2007 | Partial demerger of "Alcasena SA" | 2,704,128.00 | 342,832 |
| Contribution in kind (Plantin Moretus) | 3,000,000.00 | 68,566 | |
| 96,921,788.97 | 4,275,726 | ||
| 30 November 2007 | Partial demerger of "Feninvest SA" | 1,862,497.95 | 44,229 |
| Partial demerger of "Résidence du Golf SA" | 5,009,531.00 | 118,963 | |
| 103,793,817.92 | 4,438,918 | ||
| 30 July 2008 | Partial demerger of "Famifamenne SA" | 2,215,000.00 | 50,387 |
| Partial demerger of "Rouimmo SA" | 1,185,000.00 | 26,956 | |
| 107,193,817.92 | 4,516,261 | ||
| 30 June 2009 | Contribution in kind (Gaerveld service flats) | 2,200,000.00 | 62,786 |
| 109,393,817.92 | 4,579,047 | ||
| 30 December 2009 | Contribution in kind (Freesias) | 4,950,000.00 | 129,110 |
| 114,343,817.92 | 4,708,157 |
| 30 June 2010 | Partial demerger of "Carbon SA", "Eburon SA", "Hotel Ecu SA" and "Eurotel SA" | 11,239,125.00 | 273,831 |
|---|---|---|---|
| Partial demerger of "Carlinvest SA" | 2,200,000.00 | 51,350 | |
| 127,782,942.92 | 5,033,338 | ||
| 15 October 2010 | Contribution in cash | 51,113,114.26 | 2,013,334 |
| 178,896,057.18 | 7,046,672 | ||
| 8 April 2011 | Contribution in kind (Project Group Hermibouw) | 1,827,014.06 | 43,651 |
| 180,723,071.24 | 7,090,323 | ||
| 29 June 2011 | Merger of "IDM A SA" | 24,383.89 | 592 |
| 180,747,455.13 | 7,090,915 | ||
| 5 October 2011 | Contribution in kind of the shares of "SIRACAM SA" | 3,382,709.00 | 86,293 |
| 184,130,164.13 | 7,177,208 | ||
| 12 July 2012 | Mixed demerger of "S.I.F.I. LOUISE SA" | 800,000.00 | 16,868 |
| 184,930,164.13 | 7,194,076 | ||
| 7 December 2012 | Capital increase through contribution in cash | 69,348,785.78 | 2,697,777 |
| 254,278,949.91 | 9,891,853 | ||
| 24 June 2013 | Merger of limited liability company "Terinvest" | 10,398.81 | 8,622 |
| Merger of limited partnership "Kasteelhof-Futuro" | 3,182.80 | 3,215 | |
| 254,292,531.52 | 9,903,690 | ||
| 12 June 2014 | Contribution in kind (Binkom) | 12,158,952.00 | 258,475 |
| 266,451,483.52 | 10,162,165 | ||
| 30 June 2014 | Contribution in kind (plot of land in Tienen) | 4,000,000.00 | 86,952 |
| 270,451,483.52 | 10,249,117 | ||
| 24 November 2014 | Optional dividend | 5,763,329.48 | 218,409 |
| 276,214,813.00 | 10,467,526 | ||
| 4 December 2014 | Partial demerger of "La Réserve Invest SA" | 12,061,512.94 | 457,087 |
| 288,276,325.94 | 10,924,613 | ||
| 29 June 2015 | Capital increase through contribution in cash | 82,364,664.56 | 3,121,318 |
| 370,640,990.50 | 14,045,931 |
1 Shares without par value.
2 These shares are quoted on the stock market as from 24 November 2014 and give dividend rights for the 2014/2015 financial year. They enjoy the same rights and benefits as listed shares and participate in the result of Aedifica.
3 These shares are quoted on the stock market as from 4 December 2014 and give dividend rights for the 2014/2015 financial year. They enjoy the same rights and benefits as listed shares and participate in the result of Aedifica.
4 These shares are quoted on the stock market as from 29 June 2015 and give dividend rights for the 2015/2016 financial year. They enjoy the same rights and benefits as listed shares and participate in the result of Aedifica.
The capital amounts to €370,640,990.50 (three hundred seventy million, six hundred forty thousand, nine hundred ninety euro and fifty cents). It is represented by 14,045,931 (fourteen million, forty-five thousand and nine hundred and thirty-one) shares without nominal value, which each represent 1/14,045,931st (fourteen million, forty-five thousand and nine hundred and thirtyone) of the capital. These shares are fully subscribed and paid up.
The Company may acquire its own shares by purchasing them or may accept them in pledge in accordance with the conditions set out in the Belgian Companies Code, provided that notice of the transaction is given to the Financial Services and Markets Authority (FSMA). In accordance with the general meeting resolution of 24 June 2013, two thousand and nine, the Board of Directors is authorised to acquire own shares (which are then called treasury shares), subject to a maximum of 20 % (twenty per cent) of the total number of issued shares, at a unit price that may not be lower than 90 % (ninety per cent) of the average price quoted for the last thirty days of listing of the share on NYSE Euronext Brussels, or higher than 110 % (one hundred and ten per cent) of the average price quoted for the last thirty days of listing of the share on NYSE Euronext Brussels, i.e. a maximum increase or decrease of 10 % (ten per cent) compared to that average price. This authorisation is granted for a renewable period of five years, calculated from the publication of the minutes of the extraordinary general meeting of 24 June 2013, two thousand and nine, in the Annexes to the Belgian State Gazette.
The company may dispose of its treasury shares, on or outside of the stock exchange, under the conditions determined by the Board of Directors and without the prior consent of the general meeting, provided that it observes the applicable market regulations.
The authorisations referred to above also apply to the acquisition and disposal of shares in the company by one or more of its direct subsidiaries, within the meaning of the statutory provisions on the acquisition of shares of a parent company by its subsidiaries.
Every capital increase must take place in accordance with the applicable regulations, i.e. the Belgian Companies Code and the Royal Decree.
In case of a capital increase by means of a cash contribution pursuant to a general meeting resolution or in the context of the authorised capital as provided for in Article 6.4. and without prejudice to the application of Sections 592 to 598 of the Belgian Companies Code, the preferential subscription right of the shareholders may only be restricted or cancelled if existing shareholders are granted an irreducible right of allocation when new securities are allocated. This irreducible right of allocation must comply with the following conditions as set out in the RREC legislation:
Without prejudice to the application of Sections 595 to 599 of the Belgian Companies Code, the irreducible right of allocation does not have to be granted in case of a cash contribution with restriction or cancellation of the preferential subscription right which is made to supplement a contribution in kind for the purpose of distributing an optional dividend, insofar as this is actually made payable to all shareholders.
Without prejudice to Sections 601 and 602 of the Belgian Companies Code, the following conditions must be complied with, in accordance with the RREC legislation, in case of a contribution in kind:
It is permitted to deduct an amount from the amount referred to in item 2(b) that corresponds to the portion of the undistributed gross dividend to which the new shares would potentially not confer any right, provided that the Board of Directors specifically accounts for the amount of the accumulated dividend to be deducted in its special report and the financial conditions of the transaction are explained in its Annual Financial Report.
This last paragraph will not apply to the contribution of the right to a dividend for the purpose of distributing an optional dividend, insofar as this will actually be made payable to all shareholders.
The Board of Directors is authorised to increase the share capital in one or more transactions by a maximum amount of €180,000,000.00 (one hundred and eighty million euro) on such dates and in accordance with such terms and conditions as will be determined by the Board of Directors, in accordance with Section 603 of the Belgian Companies Code.
This authorisation is granted for a renewable period of five years, calculated from the publication of the minutes of the extraordinary general meeting of 29 June 2011, in the Annexes to the Belgian State Gazette.
For each capital increase, the Board of Directors will determine the price, the issue premium (if any) and the terms and conditions of issue of the new securities.
The capital increases that are thus decided on by the Board of Directors may be subscribed to in cash, in kind, or by means of a mixed contribution, or by the incorporation of reserves or by issue premiums, with or without the creation of new securities. These capital increases can also be achieved through the issue of convertible bonds or warrants.
If the capital increases realized within the framework of these authorisations include an issue premium, the amount of this premium, after deduction of any costs, will be allocated to a non-disposable account («share premium account»), which will provide a guarantee for third parties in the same manner as the share capital and which, subject to its incorporation in the capital, can only be reduced or abolished by means of a resolution of the general meeting of shareholders deliberating in accordance with the quorum and majority requirements for capital reductions.
If the capital increase is accompanied by an issue premium, only the amount of the capital increase will be deducted from the remaining available amount of the authorised capital.
The Board of Directors is authorised to restrict or cancel the preferential subscription right of shareholders, including in favour of specific persons who are not employees of the company or one of its subsidiaries, provided that an irreducible right of allocation is granted to the existing shareholders when the new securities are allocated. This irreducible right of allocation must comply with the conditions that are laid down in the RREC legislation and Article 6.3(a) of the Articles of Association. It does not have to be granted in case of a cash contribution for the purpose of distributing an optional dividend, in accordance with Article 6.3(a) of the Articles of Association. Capital increases by means of contributions in kind are carried out in accordance with the conditions of the RREC legislation and the conditions provided for in Article 6.3(a) of the Articles of Association. These contributions may also be based on the dividend right in the context of the distribution of an optional dividend.
The Board of Directors is authorised to record the ensuing amendments to the Articles of Association in an officially certified deed.
Pursuant to the RREC legislation, the provisions of Article 6.3(b) apply mutatis mutandis to mergers, de-mergers and equivalent transactions as referred to in Sections 671 to 677, 681 to 758 and 772/1 of the Belgian Companies Code.
Pursuant to the RREC legislation, if there is a capital increase in a subsidiary that has the status of an institutional RREC by means of a cash contribution at a price that is 10 % higher or lower than the lowest of (a) a net asset value that dates from no more than four months before the launch of the issue and (b) the average closing price during the thirty calendar day period before the launch date of the issue, the Board of Directors of Aedifica will draw up a report in which it explains the economic justification of the applied discount, the financial consequences of the transaction for the shareholders of Aedifica and the importance of that capital increase for Aedifica. This report and the applied valuation criteria and methods will be explained by the statutory auditor in a separate report. The reports of the Board of Directors and of the statutory auditor will be publicly disclosed no later than the launch date of the issue and, in any event, as soon as the price is established if this occurs earlier, in accordance with Sections 35 et seq. of the Royal Decree of 14 November 2007 on the obligations of issuers of financial instruments that are admitted to trading on a regulated market.
It is permitted to deduct from the amount referred to in item (b) of the previous paragraph an amount that corresponds to the portion of the undistributed gross dividend to which the new shares would potentially not confer any right, provided that the Board of Directors of Aedifica specifically accounts for the amount of the accumulated dividend to be deducted and explains the financial conditions of the transaction in Aedifica's Annual Financial Report.
If the relevant subsidiary is not listed, the discount referred to in the first paragraph will be calculated solely on the basis of a net value per share that is not more than four months old.
This Article 6.6 does not apply to capital increases that are fully subscribed to by Aedifica or subsidiaries of which the entire capital is held either directly or indirectly by Aedifica.
The Company may reduce its capital subject to compliance with the relevant statutory provisions.
The shares are registered or dematerialised shares, at the option of the shareholder and within the limits set by law.
Every dematerialised share is represented by an accounting entry in the name of the owner or holder at a recognised account holder or settlement institution.
A register of registered shares is held at the Company's registered office, and may be in electronic form. Every shareholder may consult the register in relation to his shares.
In accordance with the act of 14 December 2005 on the abolition of bearer securities, the shares which were not converted into dematerialised shares or for which no conversion into registered shares has been requested by 1 January 2014 will be automatically converted into dematerialised shares. These shares will be entered into a securities account which is registered to the Company, without the Company thus gaining ownership of these shares. The exercise of the rights attached to these shares is suspended until the shareholder has requested the conversion of the shares and the shares have been registered in his name in the registered shareholders' register or in a securities account held by the Company, a recognised account holder or by a settlement institution.
As of 1 January 2015, the shares of which the owner has not been identified will be offered for sale in accordance with the applicable legislation.
The Company may issue the securities referred to in Section 460 of the Belgian Companies Code, with the exception of profit sharing certificates and similar securities, in compliance with the Belgian Companies Code and the RREC legislation.
Every shareholder must notify the Company and the Financial Services and Markets Authority (FSMA) that he possesses voting securities, voting rights or similar financial instruments of the Company, in accordance with the legislation on the disclosure of major shareholdings (the "Transparency Legislation").
The thresholds, which if exceeded (both upwards and downwards) give rise to a notification obligation under the Transparency Legislation, are set at five per cent and multiples of five per cent of the total number of existing voting rights.
Without prejudice to Section 545 of the Belgian Companies Code, nobody may participate in voting at the general meeting of the Company with more voting rights than those associated with the securities that he has given notice of holding at least 20 (twenty) days prior to the date of the general meeting.
The right to participate in and vote at a general meeting is only granted on the basis of the registration for accounting purposes of the shares in the shareholder's name by midnight (Belgian time) on the fourteenth day prior to the general meeting (hereinafter: the "record date"), either by their entry in the Company's share register, their entry in the accounts of a recognised account holder or settlement institution, regardless of the number of shares that the shareholder holds on the day of the general meeting.
Owners of registered shares who wish to participate in the meeting must communicate their intention to the Company by means of an ordinary letter, fax or e-mail, to be sent no later than the sixth day prior to the date of the meeting.
Owners of dematerialised shares who wish to participate in the meeting must submit a certificate issued by a financial intermediary or a recognised account holder which indicates with how many dematerialised shares, as entered in the name of the shareholder in his accounts on the record date, the shareholder has indicated that he wishes to participate in the general meeting. This certificate must be filed at the locations mentioned in the meeting notices, no later than the sixth day prior to the date of the general meeting.
Every owner of securities may be represented at the general meeting by a proxy holder who may or may not be a shareholder. The shareholder may only designate one person as his proxy holder for any specific general meeting, save for the exceptions
set out in the Belgian Companies Code.
The Board of Directors draws up a proxy form.
The proxy must be signed by the shareholder. Notice of the proxy must be given to the Company by means of an ordinary letter, fax or e-mail, in accordance with the terms and conditions laid down by the Board of Directors in the meeting notice. The proxy must reach the Company or the venue indicated in the meeting notice no later than the sixth day prior to the meeting. The person granting the proxy and the proxy holder must comply with the provisions of the Belgian Companies Code in all other respects.
Minors, persons declared incompetent and legal entities must be represented by their statutory representatives or representatives under the Articles of Association.
Co-owners, usufructuaries and bare owners, pledgees and pledgors must in each respective case be represented by one and the same person.
Shareholders will be able to vote by letter using a form drawn up by the Company, if the Board of Directors has allowed for this in its meeting notice.
The form must reach the Company no later than the sixth day prior to the date of the meeting.
All general meetings are chaired by the chairman of the Board of Directors or, in his absence, by the managing director or one of the managing directors or, in their absence, by the person designated by the directors in attendance. The chairman designates the secretary.
The meeting elects two vote tellers.
The other members of the Board of Directors complete the bureau.
Every share confers the right to one vote, subject to the suspension of the right to vote provided for by the Belgian Companies Code.
No meeting can validly deliberate on items that do not appear on the agenda.
The general meeting can validly deliberate and vote, regardless of the portion of the share capital that is present or represented, except in those cases for which the Belgian Companies Code requires an attendance quorum.
The general meeting can only validly deliberate on amendments to the Articles of Association if at least half of the share capital is present or represented. If this condition is not met, a new meeting must be convened. The second meeting will validly deliberate and decide regardless of the portion of the capital that is represented by the shareholders who are present or represented.
Unless a statutory provision requires otherwise, all resolutions of the general meeting will be adopted by a simple majority of votes.
Resolutions relating to the approval of the Company's annual accounts and the discharge of directors and statutory auditor(s) from liability are adopted by a majority of votes.
Notwithstanding the exceptions provided for in the Belgian Companies Code, an amendment to the Articles of Association requires a majority of three-quarters of the votes cast.
Voting takes place by a show of hands or roll call, unless the general meeting decides otherwise by means of a simple majority of the votes cast.
Copies or extracts from the minutes for use in court or otherwise will be signed by the chairman, the secretary and the two vote tellers or, in their absence, by two directors.
Within the limits set out by the Belgian Companies Code and the RECC legislation, the Company distributes a dividend to its shareholders, the minimum amount of which is determined in accordance with article 13 of the Royal Decree.
The Board of Directors may adopt a resolution, under its responsibility and insofar as the results allow for it, to pay advances on dividends, in such cases and within such periods as permitted by the Belgian Companies Code.
If the capital has been reduced by half or three-quarters, the directors must put the question of dissolution to the general meeting, pursuant to and in accordance with the formalities set out in Section 633 of the Belgian Companies Code.
If the Company is dissolved, for any reason and at any time, it will be wound up by liquidators who are appointed for this purpose by the general meeting or, in the absence of such an appointment, by the Board of Directors that is in office at that time, acting as the liquidator.
Insofar as required by law, the liquidators will only take office after their appointment has been confirmed by the Commercial Court.
The liquidators have the most extensive powers for that purpose, granted by the provisions of Section 186 et seq. of the Belgian Companies Code.
Where applicable, the general meeting determines the remuneration of the liquidators.
After all debts, charges and costs of liquidation have been paid, the net assets will preferably be used to refund the fully paid-up, unredeemed amount of the shares, in cash or in securities.
The balance will be distributed among all shareholders in proportion to their shareholding.
The provisions on the members of administrative, management and supervisory bodies contained in the Articles of Association are presented below; the surplus is available in the Corporate Governance charter on www.aedifica.be and we refer you to the section "Corporate Governance Statement" in this Annual Financial Report.
The Company is managed by a Board of Directors. This board consists of at least five members who are appointed for a maximum term of three years by the general meeting of shareholders, which can also dismiss them at any time. The directors are eligible for re-election.
The majority of the directors do not perform any executive duties in the Company. At least three directors must be independent. Directors who comply with the conditions for independence as set out in Section 526ter of the Belgian Companies Code are considered to be independent directors.
The mandate of outgoing directors who are not re-elected ends immediately after the general meeting that has made the new appointments.
If one or more mandates become vacant, the remaining directors, convening as a board, may provide for temporary replacement(s) until the next general meeting, which will then make the final appointment(s). The directors must ensure in this case that a sufficient number of independent directors remain as set forth in this article and the applicable regulations. This right will become an obligation each time the number of directors actually in office or the number of independent directors no longer amounts to the minimum number under the Articles of Association.
Notwithstanding the transitional provisions of the RREC legislation, only natural persons can be directors.
A director who is appointed to replace another director will complete the mandate of the director whom he replaces.
Directors must possess the professional reliability and the appropriate competence which is required for the performance of their duties and may not be in a situation as referred to in article 15 of the Act. Their appointment is subject to the prior approval of the Financial Services and Markets Authority (FSMA).
Unless the general meeting decides otherwise, the mandate of directors is unpaid.
Any remuneration the directors do receive, may not be determined on the basis of the activities and transactions carried out by the Company or its subsidiaries.
The Board of Directors chooses a chairman from among its members and meets at the venue specified in the meeting notice or, as appropriate, by video conferencing, telephone or internet conferencing as often as is required by the interests of the Company. The Board of Directors must also be convened when two directors make a request to that effect.
The Board of Directors can only validly deliberate and pass resolutions if the majority of its members are present or represented. Meeting notices are given by ordinary letter, by fax or by e-mail. Meetings are held at the venue specified in the meeting notices. Any director who is unable to attend or absent, may even delegate another member of the board by letter, fax or e-mail to represent him at a specific board meeting and vote in his place. The director granting the proxy is deemed to be present in that case.
However, a director may not represent more than one of his colleagues in this manner.
Resolutions are adopted by a majority of votes. If the votes are tied, the chairman of the board has the casting vote. If the chairman is absent, the oldest director will have the casting vote.
The resolutions of the Board of Directors are recorded in the minutes. The minutes are kept in a special register for that purpose at the Company's registered office and signed by the chairman of the meeting or, in his absence, by two directors.
The proxies are attached to the minutes.
The members of the Board of Directors may arrange to have their comments and remarks entered on these minutes if they are of the opinion they need to relieve themselves of their responsibility, notwithstanding the application of Sections 527 and 528 of the Belgian Companies Code.
Copies or extracts of those minutes will be signed by the chairman of the Board of Directors or, in his absence, by two directors. Pursuant to Section 521, paragraph 1 of the Belgian Companies Code, resolutions of the Board of Directors may be adopted by means of the unanimous written consent of the directors in exceptional cases, when required by urgent necessity and the interests of the Company. However, this procedure cannot be used to prepare the annual accounts or to make use of the authorised capital.
The Board of Directors has the most extensive powers to perform all acts that are necessary or useful to achieve the corporate purpose, with the exception of the acts that are reserved for the general meeting by the Belgian Companies Code or the Articles of Association.
The Board of Directors may delegate all or part of its powers to any authorised representative, who need not be a shareholder or director, with a view to achieving specific and well-defined objectives. Pursuant to the Act and the Royal Decree, the board may determine the remuneration of authorised representatives to whom special powers are delegated.
The Board of Directors draws up semi-annual financial reports as well as a draft Annual Financial Report. The board appoints the real estate expert(s) in accordance with the Royal Decree.
Pursuant to Sections 522 and 526bis of the Belgian Companies Code, the Board of Directors may establish advisory committees, from among its members and under its responsibility, such as an audit committee, a nomination and remuneration committee or an investment and divestment committee.
The Board of Directors determines the composition and powers of these committees, taking into account the applicable regulations.
The Board of Directors may establish a management committee or an executive committee, comprised of several people, who may or may not be directors. The Board of Directors determines the procedures of the committee, the conditions for the appointment of its members, their dismissal, their remuneration and the duration of their mandate.
Without prejudice to the transitional provisions of the RREC legislation, the members of the management or executive committee are all natural persons. They must possess the professional reliability and the appropriate competence which is required for the performance of their duties and may not be in a situation as referred to in article 15 of the Act. Their appointment is subject to the prior approval of the Financial Services and Markets Authority (FSMA).
Notwithstanding the right of the Board of Directors to designate special representatives for the duties that it specifies, with the exception of those powers which, according to the Belgian Companies Code, the Act and its implementing decrees, are reserved for the Board of Directors, the Board of Directors will entrust the effective management of the Company to at least two natural persons.
These natural persons must have the required professional reliability and appropriate competence to perform these duties and may not be in a situation as referred to in article 15 of the Act. Their appointment is subject to the prior approval of the Financial Services and Markets Authority (FSMA).
These delegates are entrusted with the day-to-day management of the Company and may be given the title of managing director.
They report to the Board of Directors with regard to their management.
They can assign special powers to proxy-holders.
These delegates designate the financial institution that is entrusted with providing financial services and distributing the dividend and the surplus after liquidation, with settling the securities issued by the Company and with providing the information that must be disclosed by the Company pursuant to laws and regulations. The delegates to whom the day-to-day management has been delegated may at any time suspend, withdraw or replace the institution entrusted with providing financial services. The decisions relating thereto will be published according to the statutory rules on the Company's website and via press releases. The Company must satisfy itself that such a suspension/withdrawal will not adversely affect the provision of the financial services.
The Company is validly and legally represented in all its acts either by two directors acting jointly, or within the limitations of the day-to-day management, by two persons who have been entrusted with the day-to-day management acting jointly.
The Company is moreover validly represented by special representatives of the Company, within the limits of the power of attorney granted to them by the Board of Directors, or by the delegates entrusted with the day-to-day management.
The audit of the Company is entrusted to one or more statutory auditors who are accredited by the Financial Services and Markets Authority (FSMA).
They perform the duties that are assigned to them under the Belgian Companies Code and the RREC legislation.
Every shareholder who is domiciled abroad and every director, statutory auditor, manager and liquidator must elect domicile in Belgium for the implementation of the Articles of Association. If no election is made, these parties will be deemed to have chosen their domicile at the registered office, where all communications, demands, summonses and notifications can be validly served.
Unless expressly waived by the Company, exclusive jurisdiction is granted to the courts of the Company's registered office for the purpose of all disputes among the Company, its shareholders, bondholders, directors, statutory auditors and liquidators relating to the Company's affairs and the implementation of these Articles of Association.
The Company is moreover governed by the Belgian Companies Code, the Act, the Royal Decree, as well as all other regulatory provisions that apply to it. Provisions that are inconsistent with the mandatory provisions of these laws and decrees will be regarded as null and void. The invalidity of one article, or part of an article, of these Articles of Association will not affect the validity of any of the other articles.
Aedifica is a limited liability Company ("SA/NV") having opted for a public Regulated Real Estate Company (RREC) status.
A Regulated Real Estate Company (RREC) is:
(a) to make property available to users, directly or through a Company in which it holds a participation in accordance with the provisions of the RREC legislation; and
(b) within the limits set out in the RREC legislation, to possess real estate as specified in article 2, 5°, vi to x of the Act;
The notion real estate is to be understood as "real estate" within the meaning of the RREC legislation;
In the context of making available property, the Company can carry out all activities relating to the construction, conversion, renovation, development, acquisition, disposal, management and use of property.
RRECs are regulated by the Financial Services and Markets Authority (FSMA) and have to follow extremely strict rules governing conflicts of interest.
Until 17 October 2014, "REIT" or "Belgian REIT" referred to the status legally known in Belgium as "sicafi" (French) or "vastgoedbevak" (Dutch). As from 17 October 2014, "REIT", "Belgian REIT" or "RREC" refers to "société immobilière réglementée" (SIR, in French) or "gereglementeerde vastgoedvennootschap" (GVV, in Dutch), also translated as "regulated real estate Company" (RREC).
Article 30 of the Act of 12 May 2014 specifies that a public RREC may invest a maximum of 20 % of its consolidated assets in real estate properties which form a single real estate complex. The FSMA can give an exemption under certain circumstances.
European legislation specifies that RRECs, along with all listed companies, must prepare their consolidated annual accounts in accordance with the IAS/IFRS international standards. Given that investment properties constitute their main assets, RRECs must pay particular attention to appraising the fair value of their properties, i.e., in technical terms, to applying IAS 40. This is also applied to the statutory accounts, also prepared under IFRS. In addition, IAS 39 (valuation of financial instruments) is likely to generate significant movements from one year to another in the income statement or balance sheet (statutory and consolidated) of RRECs. Aedifica uses the accounting scheme shown in Annex C of the Royal Decree of 13 July 2014.
Real estate properties are assessed at their fair value on a quarterly basis by independent experts and recorded in the balance sheet at this value. Depreciation is not recognised on investment properties.
As return on capital, the Company is required to distribute a sum corresponding to at least the positive difference between the following amounts:
The debt-to-assets ratio of the public RREC and its subsidiaries, and the statutory debt-to-assets ratio of public RRECs, may not exceed 65 % (other than by the change in the fair value of assets) of total consolidated or statutory assets, after deduction of authorised hedging instruments. When exceeding the threshold of 50 %, a financial plan with an implementation schedule must be elaborated, describing the measures taken to prevent the consolidated debt-to-assets ratio from exceeding the threshold of 65 %.
A RREC may not provide financing, except to its subsidiaries.
A RREC is not subject to corporate tax (except on non-recoverable expenses and abnormal or benevolent benefits), provided that at least 80 % of corrected profit is distributed in the form of dividends. Refer to section 4 of chapter "Risks factors" of this Annual Financial Report.
Effective 1 January 2013, the withholding tax on dividends amounts in principle to 25 %. As a RREC investing directly at least 60 % of its property in housing, and in accordance with Articles 171, 3° quater and 269, 3° of the Belgian Income Tax Code, Aedifica benefits from a reduction of the withholding tax to 15 %. The concept of housing includes single-family houses and collective housing such as apartment buildings and rest homes. The investment threshold of 60 % was increased from 60 % to 80 % effective 1 January 2015. In addition, residential Belgian RRECs are now permitted to invest within the European Economic Area.
A new risk has arisen (which has been reported in the media since 4 August 2015) in relation to a potential increase in the withholding tax (which could be brought from 15 % to 27 %) for dividends that will be distributed in 2016 and the following years, in the context of the fiscal reform (generally baptised "tax shift" by the media) that is currently under preparation by the Belgian government. The possible disappearance of the reduced withholding tax of 15% for residential RRECs could also be an opportunity for Aedifica, by expanding the potential range of its future investments.
Companies applying for approved RREC status, or which merge with a RREC, are subject to a reduced rate of taxation, which currently stands at 16.995 % (i.e. 16.5 % plus the crisis tax uplift of 3 %), referred to as the exit tax (i.e. the rate of corporate tax which has to be paid in order to leave the common law system).
Belgian RRECs (SIR/GVV) are investment instruments which can be compared to the Dutch FBI (Fiscale BeleggingsInstellingen), the French SIIC (Société d'Investissement Cotée en Immobilier) and the REIT (Real Estate Investment Trust) which exist in a number of countries, including the United States.
The acquisition value is the agreed value between parties on the basis of which the transaction is performed. If the acquisition of a building takes place by cash payment, through the acquisition of shares of a real estate Company, through the non-monetary contribution of a building against the issue of new shares, by merger through takeover of a property, or by a partial de-merger, the deed costs, audit and consultancy costs, reinvestment bank fees and costs of lifting security on the financing of the absorbed Company and other costs of the merger are also considered as part of the acquisition cost and capitalised in the asset accounts on the balance sheet. Transfer taxes are included if they were paid at the acquisition of the building.
One or more buildings forming a functional unit and including special housing for the elderly, allowing them to lead independent lives and with additional services available on demand.
Period during which any officer or any person covered on the lists established by the Company in accordance with Article 6.5 of the Corporate Governance Charter, as well as any person who is closely related to them, may not carry out any trading of Aedifica shares. Closed periods are shown in the corporate governance statement.
Indexed rents, including rental guarantees, but excluding cost of rent-free periods for occupied surface area.
II. Current liabilities C. Other current financial liabilities Hedges
II. Current liabilities – Accrued charges and deferred income as provided in the annexes of the Royal Decree of 13 July 2014 on RRECs.
/ Total assets less authorised hedging instruments ≤ 65 %
Type of contract under which the repair and maintenance of the roof, structure and facades of the building remain the responsibility of the owner while other costs and risks are borne by the operator. This type of contract is common for senior housing in Germany.
Operating result before result on portfolio divided by net rental income.
European Public Real Estate Association is an association, founded in 1999 in order to promote, develop and regroup listed European real estate companies. EPRA establishes standards of conduct in accounting, reporting and corporate governance matters, and harmonises these rules to different countries in order to provide quality and comparable information to investors. EPRA also organises discussion forums on issues that are shaping the future of the sector. Finally, EPRA has created indices that serve as benchmarks for the real estate sector. All this information is available on the website www.epra.com.
The estimated rental value (ERV) is the rental value as determined by independent experts. For furnished apartment buildings, experts' assumptions take into account a hypothetical lease period of 3/6/9 years at the market rent with a single operator, and overlooking furnished occupancy, in order to avoid double assessment of furnishings and goodwill, which are excluded from property values. The rents actually received for furnished apartments are significantly higher than these estimated rental values.
Companies applying for approved RREC status, or which merge with a RREC, are subject to an exit tax. This tax, equivalent to a liquidation tax on net unrealised gains and on tax-exempt reserves, is charged at 16.5 % (increased by a supplementary crisis tax uplift of 3 % for a total of 16.995 %).
The fair value of the Belgian investment properties is calculated as following:
Fair value = investment value / (1+ average transaction cost rate defined by BEAMA)
The average transaction cost rate defined by BEAMA is reviewed annually and adjusted as necessary in 0.5 % increments.
The Belgian experts attest the deduction percentage retained in their periodic reports.
Percentage of shares held by the public, according to the Euronext definition.
Gross dividend per share divided by the stock market price as of closure.
For the total portfolio (excluding furnished apartments): (contractual rents + guaranteed income) / investment value, acquisition value or fair value of the concerned buildings.
For the furnished apartments: (Turnover of the financial year) / (Investment value, acquisition value or fair value of the concerned buildings + goodwill + furnishments).
The international accounting standards (IFRS, or International Financial Reporting Standards, previously called IAS, or International Accounting Standards) are drawn up by the International Accounting Standards Board (IASB). European listed companies have been obliged to apply these standards in their consolidated accounts since the financial year commencing on or after 1 January 2005. Since 2007, RRECs have also been required to apply IFRS in their statutory accounts.
Investment properties including buildings intended for sale and development projects.
Value assessed by the expert, of which transfer taxes are not deducted.
Contract with an initial duration of at least 27 years and less than 99 years, giving a temporary right in rem to the tenant. The tenant has full use of the property during this period and pays an annual fee (rent) in return.
Closing stock market price multiplied by the total number of shares.
Investment properties including buildings intended for sale and excluding development projects.
Total equity and liabilities divided by the number of shares outstanding (after deduction of the treasury shares).
Rental income
For the total portfolio (excluding the furnished apartments): (contractual rents + guaranteed income) / (contractual rents + estimated rental value (ERV) on vacant areas of the property portfolio). We note that this occupancy rate includes the investment properties for which units are in renovation and hence temporarily not rentable. For the furnished apartments: % rented days during the financial year. This occupancy rate can thus not be compared to the one calculated on the rest of the portfolio, as the methodology is specific to this segment.
Property operating result divided by net rental income.
Property operating result
Dividend per share divided by the corrected profit per share.
The Company must distribute, as return on capital, an amount corresponding at least to the positive difference between the following amounts:
Corrected profit (A)
Net capital gains on realisation of investment properties not exempt from the obligation of distribution (B)
± Gains and losses on disposals of investment properties during the financial year (gains and losses compared to the acquisition value plus capital expenditures)
± Gains and losses on disposals of investment properties earlier exempted from the obligation of distribution and not reinvested within 4 years (gains and losses compared to the acquisition value plus capital expenditures)
= Net capital gains on realisation of investment properties not exempt from the obligation of distribution (B)
Profit (attributable to owners of the parent)
Property result
Net rental income
Gains and losses on disposals of investment properties
The transfer of ownership of a property is subject to the payment of transfer taxes. The amount of these taxes depends on the method of transfer, the type of purchaser and the location of the property. The first two elements, and therefore the total amount of taxes to be paid, are only known once the transfer has been completed.
The range of taxes for the major types of property transfer includes:
The effective rate of the transfer tax therefore varies from 0 to 12.5 %, whereby it is not possible to predict which rate would apply to the transfer of a given property before that transfer has effectively taken place.
N.B. We note that, following the interpretations of IFRS by the Belgian Asset Managers Association (BEAMA), the book value of the investment properties under IFRS on the balance sheet is calculated by the expert by deducting a fixed percentage of transfer tax (currently 2.5 %) from the investment value. However, for investment properties with a value of less than €2.5 million, the transfer taxes to be deducted vary depending on the rates applicable given the building's location.
Type of contract under which operating charges, maintenance costs and rents on empty spaces related to the operations are borne by the operator.
Total volume of shares exchanged over the year divided by the total number of listed shares, following the definition of Euronext.
BEAMA: Belgian Asset Managers Association CEO: Chief Executive Officer CFO: Chief Financial Officer CLO: Chief Legal Officer COO: Chief Operating Officer DCF: Discounted Cash Flow EBIT: Earnings Before Interests and Taxes ECB: European Central Bank EPRA: European Public Real Estate Association ERV: Estimated Rental Value FSMA: Financial Services and Markets Authority IAS: International Accounting Standards IFRS: International Financial Reporting Standards IPO: Initial Public Offering IRS: Interest Rate Swap REIT: Real Estate Investment Trust RREC: Regulated Real Estate Company
The 2014/2015 Annual Financial Report constitutes a registration document in accordance with Article 28 of the Belgian Act of 16 June 2006 on the public offering of investment instruments and the admission of investments instruments to trading on a regulated market. It has been approved by the FSMA on 8 September 2015 in accordance with article 32 of the abovementioned Act.
Public Regulated Real Estate Company under Belgian law Avenue Louise 331 box 8 in 1050 Brussels Tel: +32 (02) 626 07 70 – Fax: +32 (02) 626 07 71 VAT – BE 0877 248 501 – Registry of Legal Entities of Brussels
Louizalaan 331 avenue Louise — Brussel 1050 Bruxelles tel +32 (0)2 626 07 70 — fax +32 (0)2 626 07 71 Openbare gereglementeerde vastgoedvennootschap naar Belgisch recht Société immobilière réglementée publique de droit belge BTW BE 0877.248.501 - R.P.R. Brussel — TVA BE 0877.248.501 - R.P.M. Bruxelles
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