Immobel NV

Quarterly Report • Mar 24, 2016

Directors' Report IMMOBEL

Ladies and Gentlemen,

We have great pleasure in presenting our report on the activities of the ltvruoerl Group during 2015.

ln a still difficult economic environment, particularly in the office property segment in Brussels, ll4r4os¡t- ended 2015 with an operating income of 7.08 MEUR, compared to 27 .6 MEUR in 2014.

This income generated a net consolidated profit of 0.70 MEUR, compared to 20.04 MEUR in 2014

l. BUSINESS DEVELOPMENT (art. 96 S 1 , 1" and 1 19, 1" Companies Code)

A. lMluoeeL Gnoup BUSTNESS

Sales for the year ended came to 53.93 MEUR (before |FRS11: 96.64) compared to 31.61 MEUR (before IFRSl 1: 173.03) in 2014.

During the year 2015, ltr,ln,loerl pursued its development plan in its various spheres of activity, Offices, Residential and Landbanking, in Belgium, the Grand Duchy of Luxembourg and Poland. lt has therefore carried out several important sales, acquisitions and leases, in accordance with its objectives, as described below:

a) BELGIUM

Landbankinq

The book value of the Landbanking inventory was 90.7 MEUR; part of the stock in use (subdivision permit and/or building permit issued) represents 843 plots for houses and 32 plots for a total of 444 apartments (being 36.8 MEUR). Furthermore 54 ha are subject to suspensive conditions, which allows the Company to limit its risks.

Sales

• . llr¡tr¡oseL (in partnership, 50%) finalised the sale of the Gateway project to Befimmo. As the actual transfer of the right of emphyteusis relates to the land and the current constructions, a first part of the purchase price was paid on 27 April 2015. Constructions that have not yet been built will be transferred as the building works progress. Provisional delivery, and the transfer, are scheduled for September 2016.
• ¡ ln this year 2015, lMMoBEl- sold 130 houses and apartments in the following projects: Belair 3, Clos de la Charmeraie, Clos Bourgeois and Devroye in Brussels, Duinenzicht in Bredene, Grands Prés and Trois Ruisseaux in Chastre, George Grard in Oostduinkerke, Lindepark in Tervuren and Bella Vita in Waterloo.

o Within Landbanking operations, sales consisted of 16 ha of land including ¹⁵⁰ plots of building land at sites in Braine l'Alleud, Eupen, Geel, Middelkerke, Soumagne, Uccle, Waterloo and Waremme.

Permits and works

• ¡ Planning permission for the construction of 140 homes in lxelles as part of the Universalis Park project (in partnership, 50%) was issued on 18 June 2015.
• o Remediation works have begun at the Sainte-Anne project in Auderghem.
• o Building works have begun for the Résidence George Grard in Oostduinkerke (which will consist of 23 apartments).
• . The first apartments at Clos Bourgeois in Berchem-Sainte-Agathe (project with 78 apartments) were accepted.
• o The building site of the project Verger de Fayenbois (which consists of ¹¹⁵ houses and 36 apartments, allocated on two buildings) in Grivegnée started in June.
• o The construction works of "Domaine des Vallées" (this public private partnership, realised in partnership, will consist of 158 single family homes,45 apartments and 7 retail spaces) in Grez-Doiceau have started.
• . Road works are under way at the developments in Andenne, Eghezée, Gastuche, Grivegnée, Montzen, Soumagne, Stembert and Waremme.
• . The important project of Gastuche (in partnership, 50%) has started end 2015.

Litiqation

llr,llrlosrl has received a compensation of 690 KEUR following a decision of the French-speaking Tribunal of first instance ("Tribunal de première instance francophoneJ in Brussels.

b) GRAND DUCHY OF LUXEMBOURG

Sales

• . The deed for the last apartment in the Green Hill project (in partnership, 50%) was signed during the first half of 2015.
• . Discussions regarding the sale of the WestSide Offices project (consisting of 11,600 m2) are ongoing. This building is for sale since 7 years.

Acquisitions

llr¿lr¡osel acquired (in partnership, 33%) the following properties

• a Luxembourg City - 242-248 Route d'Esch (with a Special Develo 16,255 m2 plot of land (and buildings to demolish) which, subject to ad hoc permits, will enable the development of a Residential, Commercial and Office project of around 26,900 m2 above ground.
• a Municipality of Differdange - 4-10 Place des Alliés, a 5,700 m2 plot of land with planning permission authorising the construction of 50 apartments and about 2,100 m2 of commercial premises.

Leases

• o The occupancy rate for the WestSide project was 82 % as at 31 December 2015. Additional leases were recorded at this date (which will become effective in 2016), bringing the occupancy rate at92o/o.
• ¡ ln the Galerie Kons project, ING has leased additional 2,600 m2 offices and additional 33 parking plots; a retail space of 471 m2 was also leased. The occupancy rate was 83% at 31 December 2015.

Permits and works

Works on the Galerie Kons project have continued, despite considerable delays incurred during the demolitions; the goal of completion by the end of 2016 remains feasible.

c) POLAND

Acquisitions

At the end of March 2015,|MMoBEL (in partnership, 90%) signed a contract with the City of Gdansk for the development of 1.8 ha on Granary lsland. This project, known as 'Granaria', aims to develop around 50,000 m2 of residential and commercial spaces as well as a hotel and car parks in four phases.

Leases

• . The occupancy rate for the Okraglak project in Poznan was 98,12 % as at ³¹ December 2015.
• . The pre-lease rate for the Cedet project in Warsaw is 24,95 %. Discussions continue regarding additional pre-leases.

Permits and works

• o Works on the Cedet project began during the first half of 2015 and are running according to latest schedule. Completion is planned for the second half of 2017.
• o Planning permission was obtained in March 2015 for the first phase (45 houses) of the Eko Natolin residential project. The road works were completed in May 2015.
• o Planning permission for the CBD One project was obtained on 14 September 2015 for the development of 18,700 m2 of office and retails spaces.

d-N

Finance

During 2015,|¡¡lvloa¡l obtained or renewed, either alone or with its partners, credit lines for around 233 MEUR (100 % participation) relating to 9 projects. The Company also negotiated a renewal of its Landbanking Credit line, for a total of 50 MEUR, for a period of 3 years.

¿

B. COUUeTTSONTHEATTuRuACCOUNTS

1. Key indicators

ln accordance w¡th the IFRS standards, the Company appl¡es from ]-lanuary 2o],4t|].e IFRS 11 standard "Partnerships"- This standard amends strong read¡ng financ¡al statements of the Company without changing the net ¡ncome and shareholders' equity The Board cons¡ders that the financial data before IFRS 11 g¡ve a better picture of the activ¡ties and financial statements. The table below shows the f¡gures relating to the act¡vities of IMMOBEL Group IFRS 11and IFRS 11 before,

Year 2015	IFRS11				Before IFRS11
	Offices		Residential Landbanking	Total	Offices		Residential Landbanking	Total
Per activities sector whose:	13,57	22,86	17,51	53,93	23,68	55,45	17,51	96,
Belgium Grand-Duchy of Luxembourg	13,57	22,85	17,51	53,93	23,68	51,23 4,22	17,51	92, 4,
Poland
Year 2014	IFRS11			Before IFRS11
	Offices		Residential Landbanking	Total	Offices		Residential Landbanking	Total
Per activities sector whose:	1,79	16,95	12,87	31,61	116,74	43,43	12,87	173,
Belgium	1,79	16,95	12,87	31,61	116,74	27,36	12,87	156,
Grand-Duchy of Luxembourg Poland						12,45 3,62		12, 3,

CONSOLIDATED TURN-OVER PER SECTOR AND PER COUNTRY IMEURI

	IFRS11				Before IFRS11
Year 2015	Offices		Residential Landbanking	Total	Offices		Residential Landbanking	Total
Per activities sector	3,59	$-2,06$	5,55	7,08	5,35	$-0.44$	5,55	10,4
whose:
Belgium	4,87	$-2,05$	5,55	8,37	5,84	$-0,93$	5,55	10,4
Grand-Duchy of Luxembourg	$-1, 12$	0,45		$-0,67$	$-0.66$	0.67		O, I
Poland	$-0,16$	$-0,46$		$-0,62$	0,16	$-0,18$		$-0,0$
Year 2014	IFRS11			Before IFRS11
	Offices		Residential Landbanking	Total	Offices		Residential Landbanking	Total
Per activities sector	19, 12	5,33	3,20	27,65	20,94	7,10	3,20	31,
whose:
Belgium	20,47	2,24	3,20	25,91	21,49	3,20	3,20	27,1
Grand-Duchy of Luxembourg	0,15	1,55		1,70	0,59	2,00		2,!
Poland	$-1,50$	1,54		0.04	$-1, 14$	1,90		0,

EVOLUTION DU STOCK CONSOLIDE PAR SECTEURS et PAYS IMEURI

Year 2015	IFRS11				Before IFRS11
	Offices		Residential Landbanking	Total	Offices		Residential Landbanking	Total
Per activities sector	189,72	54,11	90,71	334,54	241,23	124,90	90,71	456,
whose:
Belgium	93,17	51,96	90,71	235,84	108,35	106,24	90,71	305.
Grand-Duchy of Luxembourg	34,50			34,50	60,91	16,51		77,4
Poland	62,05	2.15		64,20	71,97	2,15		74.
Year 2014	IFRS11			Before IFRS11
	Offices		Residential Landbanking	Total	Offices		Residential Landbanking	Total
Per activities sector	167,75	50,42	92,80	310,97	227,45	103,23	92,80	423,4
whose:
Belgium	74,46	50,42	92,80	217.68	104.11	102,08	92,80	298,
Grand-Duchy of Luxembourg	35,00			35,00	55,83	1,15		56,
Poland	58,29			58,29	67,51			67,

2. Consolidated accounts

(MEUR with IFRS 11)	31/12/2015	31/12/2014
INCOME STATEMENT
Operating income	7.08	27.65
Financial result	$-6.43$	$-7.00$
Result before tax	0.65	20.65
Taxes	0.05	$-0.61$
Income from ongoing business	0.70	20.04
Income for the year	0.70	20.04
IMMOBEL share of income	0.74	20.04

Consolidated statement of financial position

(MEUR with IFRS11)	31-12-2015	31-12-2014
Inventories	334.5	311.0
Investments in associates and available for sale	63.4	73.4
Trade receivables and other assets	32.3	34.7
Cash	16.9	25.4
TOTAL ASSETS	447.1	444.5
Shareholder equity	194.4	196.7
Provisions	4.0	3.9
Long-term financial debt	143.8	150.5
Short-term financial debt	62.2	67.7
Trade payables and other liabilities	42.7	25.7
TOTAL EQUITY & LIABILITIES	447.1	444.5

3. lrúMoeel SA company results

Income statement

The operating profit amounts 7.20 MEUR for the past financial year compared to -3.84 MEUR for the year closed at 31't December 2014.

The financial result amounts to 0.24 MEUR as opposed to -0.71 MEUR in 2014.

The exceptional result amounts to -0.41 MEUR compared to 21.98 MEUR in 2014.

llvltvlosrt's financial year ended with a net profit of 7.04 MEUR, compared to a net profit of 17.32 MEUR at 31't December 2014.

The Balance sheet

The Balance sheet total amounts to 422.14 MEUR compared to 421.66 MEUR for the financial year closed at 31't December 2014.

On 31"1 December 2015 equity came to 207.45 MEUR. lt was 2OO.41MEUR in 2014.

Allocation of results

The profit to be allocated, taking into account the amount carried fonvard from the previous year, amounts to 137,07 MEUR.

Given the dividend policy approved by the Board of Directors and the 2015 results, the Board of Directors proposes to the General Meeting of Shareholders not to distribute a dividend for the year under review.

Main risks and uncertainties.

The ll,llr¡oaEl Group faces the risks and uncertainties inherent to the property development sector as well as those associated with the economic situation and the financial world. Without the list being exhaustive, we would like to mention the following in particular:

- Market risk

Changes in general economic conditions in the markets in which lul¡oeet's properties are located can adversely affect the value of lrvluoget's property development portfolio, as well as its development policy and, consequently, its growth prospects.

lrr¡llr¡oarl is exposed to the national and international economic conditions and other events and occurrences that affect the markets in which ltvltvlogrt's property development portfolio is located: the office property market in Belgium (mainly in Brussels), Luxembourg and Poland; and the residential (apartments and plots) property market (Belgium, Luxembourg and Poland).

This diversification of both business and countries means it can target different clients, economic cycles and sales volumes.

Changes in the principal macroeconomic indicators, a general economic slowdown in Belgium or one or more of ln¡llr¡oerl's other markets, or on a global scale, could result in a fall in demand for office buildings or residential property or building plots, higher vacancy rates and higher risk of default of service providers, building contractors, tenants and other counterparties, any of which could materially adversely affect lvur¡ogrt's value of its property portfolio, and, consequently, its development prospects.

llr¡lvoerl has spread its portfolio of projects under development or earmarked for development so as to limit the impact of any deterioration in the real estate market by spreading the projects in terms of time and nature.

- Operational risk

Ittrluoeel may not be able to dispose of some or all of its real estate projects.

lMn¡ogrL's revenues are determined by disposals of real estate projects. Hence, the results of ll4tr4osrl can fluctuate significantly from year to year depending on the number of projects that can be put up for sale and can be sold in a given year.

Furthermore, it cannot be guaranteed that lvtlvloarl will find a buyer for the transfer of its assets or that the transfer price of the assets will reach a given level. lttltr¡ogtt's inability to conclude sales can give rise to significant fluctuations of the results.

The policy of diversification implemented by lvvoarl for the last 5 years has allowed it to reduce its concentration on and therefore its exposure to offices in Brussels with an increased portfolio of residential and landbanking projects, which should give it a revenue base and regular cash flows.

þ

The development strategy adopted by lnrtuoeeL may prove to be inappropriate.

When considering property development investments, ltvllr¡ogrt makes certain estimates as to economic, market and other conditions, including estimates relating to the value or potential value of a property and the potential return on investment. These estimates may prove to differ from reality, rendering ltr,ttrloerl's strategy inappropriate with consequent negative effects for lN¡lr¡ogEl's business, results of operations, financial condition and prospects.

ln¿lvloerl takes a prudent approach to the acquisition and development of new projects and applies precise selection criteria. Each investment follows a clear and strict approval process.

llr¡luoeeL may face a higher risk due to the expansion of its operations into Poland.

Since 2011 lMruoerl acquired several offices/residential/commercial projects in Poland, which are either under development or will be developed, thereby confirming its strategy to further expand in in Poland.

Although lMruoarl has carried out development projects in Poland in the past, it has a more limited experience in managing projects outside of the Belux market and has a more restricted knowledge of the market and regulatory situation and requirements in this new market.

That is the reason why ltr,tloaEl does not launch itself on a new market until it can count on the expertise and network of a local partner on the spot, who can help it limit the risks linked to the new market.

lnnnnoget's development projects may experience delays and other difficulties.

Before acquiring a new project, IMMoBEL carries out feasibility studies with regard to urban planning, technology, the environment and finance, usually with the help of specialised consultants. Nevertheless these projects are always subject to a variety of risks, each of which could cause late delivery of a project and consequently increase the length of time before it can be sold, engender a budget overrun or cause the loss or decrease of expected income from a project or even, in some cases, its actual termination.

Risks involved in these activities include but are not limited to: (i) delays resulting from amongst other things adverse weather conditions, work disputes, construction process, insolvency of construction contractors, shortages of equipment or construction materials, accidents or unforeseen technical difficulties; (ii) difficulty in acquiring occupancy permits or other approvals required to complete the project; (iii) a refusal by the planning authorities in the countries in which lrvllr¡oarl operates to approve development plans; (iv) demands of planning authorities to modify existing plans; (v) intervention by pressure groups during public consultation procedures or other circumstances; and (vi) upon completion of the development project, occupancy rates, actual income from sale of properties or fair value being lower than forecasted.

Taking into account these risks, llr¡lvoaEL cannot be sure that all its development projects (i) can be completed in the expected timeframe, (ii) can be completed within the expected budgets or (iii) can even be completed at all. lt is in the framework of controlling this risk and others that IMMoBEL has increased the diversification of its business/countries/clients, which allows it to reduce its concentration on any particular project or another.

Furthermore lvvoget has some projects where an asset under development is pre-leased or pre-sold to a third party and where ll4tvoarl could incur substantial liabilities if and when such projects are not completed within the pre-agreed timeline.

lMMoeeL may be liable for environmental issues regarding its property development portfolio.

llvllr¡ogrL's operations and property development portfolio are subject to various laws and regulations in the countries in which it operates concerning the protection of the environment, including but not limited to regulation of air, soil and water quality, controls of hazardous or toxic substances and guidelines regarding health and safety.

Such laws and regulations may also require lvvlogrt to obtain certain permits or licenses, which it may not be able to obtain in a timely manner or at all. ln¡voaEL may be required to pay for clean-up costs (and in specific circumstances, for aftercare costs) for any contaminated property it currently owns or may have owned in the past.

As a property developer, lvtloaEl may also incur fines or other penalties for any lack of environmental compliance and may be liable for remedial costs. ln addition, contaminated properties may experience decreases in value.

lMrríoeel may lose key management and personnel or fail to attract and retain skilled personnel.

Loss of its managerial staff and other key personnel or the failure to attract and retain skilled personnel could hamper ltvlvlosEt's ability to successfully execute its business strategies.

llr¡lvlosrl believes that its performance, success and ability to fulfil its strategic objectives depend on retaining its current executives and members of its managerial staff who are experienced in the markets and business in which lft4n¡oerl operates. llt¡luoarl might find it difficult to recruit suitable employees, both for expanding its operations and for replacing employees who may resign, or recruiting such suitable employees may entail substantial costs both in terms of salaries and other incentive schemes.

The unexpected loss of the services of one or more of these key individuals and any negative market or industry perception arising from such loss could have a material adverse effect on lN¡N¡oarL's business, results of operations, financial condition and prospects.

The conduct of its management teams, in Belgium, Luxembourg and in Poland, is therefore monitored regularly by the CEO and the Remuneration & Appointments Committee (hereafter "RAC"), one of the organs of the Board of Directors.

lMrvloeel is subject to the risk of litigation, including potential warranty claims relating to the lease, development or sale of real estate.

ln the normal course of lM[,loarl's business, legal actions, claims against and by lvltvoarl and its subsidiaries and arbitration proceedings involving lMltvlosrl and its subsidiaries may arise. lvlvloarl may be subject to other litigation initiated by sellers or purchasers of properties, tenants, contractors and subcontractors, current or former employees or other third parties.

ln particular, lMl¡oarl may be subject to warranty claims due to defects in quality or title relating to the leasing and sale of its properties. This liability may apply to defects in properties that were unknown to ltvruogrl but could have, or should have, been revealed.

llr¿lr¡oarl may also be subject to claims by purchasers of its properties as a result of representations and warranties about those properties given by llvltvosel at the time of disposal.

llr¡lrlogel makes sure to control these risks with a systematic policy of taking out adequate insurance cover.

lilllt¡osel is exposed to risk in terms of liquidity and financing.

llr¡lvloerl is exposed to risk in terms of liquidity and financing which might result from a lack of funds in the event of non-renewal or cancellation of its existing financing contracts or its inability to attract new financing.

llvttuosrl does not initiate the development of a project unless financing for it is assured by both internal and external sources for the estimated duration of its development.

lMvoerL gets its financing from several firstrate Belgian banking partners with which it has maintained longstanding good relations and mutual trust. During 2015,lMtvoerL renewed or negotiated credit lines for 285 MEUR (100 o/o participation) either alone or with partners.

lMMoeeL is exposed to risk linked to the interest rate which could materially impact its financial results.

Given its current and future indebtedness, lMMoBEt is affected by a short or long-term change in interest rates, by the credit margins taken by the banks and by the other financing conditions.

With the exception of bond issues of 2011 and 2013, which are at a fixed rate, IMMoBEL's financing is mainly provided on the basis of short-term interest rates (based on Euribor rates for 1 to 12 months). ln the context of a global programme of risk management coverage, lrvMoarl has set up a "hedging" policy aimed to provide adequate cover against the risk of interest rates on its debt with financial instruments.

Feasibility studies for each project are based on the predictions for long-term rates.

lMMoeeL is exposed to a currency exchange risk which could materially impact its results and financial position.

Following its entering in the Polish market, IMN¡oarL is subject to currency exchange risks. There is the foreign currency transaction risk and the foreign currency translation risk

llr,llr,logEl- also makes sure whenever possible to carry out all of its operations outside the Eurozone in EUR, by having purchase, lease and sales contracts drawn up for the most part in EUR.

lMrvloeeu is subject to regulatory risk.

Any development project depends on obtaining urban planning, subdivision, urban development, building and environmental permits. A delay in granting them or failure to grant them could impact on IMn¿oart's activities.

Furthermore, the granting of a subdivision permit does not mean that it is immediately enforceable. An appeal against it is still possible.

Furthermore, IMMoBEL has to respect various urban planning regulations. Local authorities or public administrations might embark on a revision and/or modification of these regulations, which could have a material impact on lvllr¡oget's activities.

Itríluoeel is exposed to counterparty risk.

ll¡ttvloeel has contractual relations with multiple parties, such as partners, investors, tenants, contractors, financial institutions, architects. The inability of such counterparty to live up to their contractual obligations could have an impact on lMl¡oarl's operational and financial position.

lN¡N¡oerL pays great attention, through appropriate studies, to the choice of its counterparties.

Changes in direct or indirect taxation rules could impact the financial position of llrttríoeeL.

llvlluoeel is active in Belgium, Luxemburg and Poland. Changes in direct or indirect fiscal legislation in any of these could impact llvuuosrl's financial position.

il. IMPORTANT EVENTS THAT TOOK PLACE AFTER THE END OF THE YEAR (art. 96 \$ 1, 2" and 119,2" Companies Code)

The finalisation of the sale of the Okragtak project in Poznan on 13th January latest excepted, there were, to the Directors' knowledge, no important events after the closure of the financial year.

CIRCUMSTANCES LIKELY TO HAVE A SIGNIFICANT INFLUENCE ON THE DEVELOPMENT OF THE GROUP (art. 96 S 1, 3' and 1 19, 3' Companies Code)

ïo the Directors' knowledge, there should not be any circumstances likely to have any significant influence on the development of the Group.

IV ACTIVITIES lN TERMS OF RESEARCH & DEVELOPMENT (art. 96 S 1, 4" and 119, 4' Companies Code)

ln as much as it is necessary the Board of Directors reiterates that, given the nature of its business, the Group did not engage in any research and development activities during the year which has just ended.

V. USE OF FINANCIAL INSTRUMENTS (art. 96 S 1, 8' and art. I 19, 5' Companies Code)

The Board of Directors confirms that ln¡tuoett used financial instruments intended to cover any rise in interest rates. The market value of these financial instruments was 140 KEUR at 31't December 2015.

VI EVIDENCE OF THE INDEPENDENCE AND COMPETENCE OF AT LEAST ONE MEMBER OF THE AUDIT & FINANCE COMMITTEE (art. 96 S 1, 9o and I 19, 6' Companies Code)

The Boards of Directors of 26th August and 25th September latest decided to co-opt Mrs Astrid De Lathauwer as well as the company ARFIN sprl, represented by Mr Pierre Nothomb, as new Directors. These Directors meet all of the criteria of independence in Articles 524 and 526ter of the Companies' Code and sit on the Board of Directors and the Audit & Finance Committee of lMMoarL as independent Directors. These Directors hold university degrees and hold the roles of Director in international groups.

Mrs Hilde DE VALCK, permanent representative of DV CONSULTING, DE VALCK. H. Comm. V. and the present CFO of Allfin Group, also has the necessary expertise in accounting and audit.

VII. ADDITIONAL INFORMATION

ln as far as it is necessary, the Board of Directors reiterates:

• that lvllvloarl has not set up any branches (art. 96 S 1, 5' Companies Code; and
• that, given the results of the Company, there has been no reason to justify the application of continuity accounting rules (art. 96 S 1, 6" Companies Code).

Regarding the information to be inserted pursuant to art. 96 S 1 ,7o of the Companies Code the Board of Directors report:

• that during the past year the Board of Directors of the Company has decided not to increase the capital of llr¡lvlosrl under the authorized capital (article 608 Companies Code);
• that neither ltulrtogEL, nor any direct subsidiary, nor any other person acting in his own name but on behalf of lM¡¡oarl or a direct subsidiary has bought or sold shares in lMft¡oael @rt.624 Companies Code).

Vlfl. APPLICATION OF ARTICLE 5231524 of the COMPANIES CODE - "CORPORATE OPPORTUNITIES''

ñ-

The Board reports that it has started the conflict of interest procedure three times in February 2015 as part of a possible merger between l¡¡ltloarl and Allfin Group, its main shareholder:

• o art. 523 Companies' Code:
• deliberation and decision on a study of the feasibility / opportunity of the said merger;
• approval of a non-disclosure agreement between lN¡N¡osrL and Allfin Group;

"The Board of Directors of luuoail has decided to start the feasibility study on the proposed merger and approve the non-disclosure agreement between luuoail and Allfin and his advlsers. "

o art.524 Companies' Code - decision about a possible merger between lMMogrL and Allfin Group.

Whereas that decision could justify the application of article 524 Companies'Code, the Board of Directors has decided to enter a Committee of lndependent Directors consisting of Messrs Didier BELLENS, Marek MODECKI and Wilfried VERSTRAETE in order to advise it, with assistance of Mr. Jean-François Cats acting as an independent expert within the meaning of that provision. As it has not lead to a merger, the procedure has not been finalized.

Messrs Marnix Galle and Piet Vercruysse as well as Mrs Hilde De Valckl and Sophie Lambrighs2 reported having a potential conflict of interest in connection with the deliberation on a possible merger, and had therefore not taken part in the deliberations of the Board in this framework. More in particular, Mr. Galle had a potential conflict of interest within the meaning of Article 523 Companies'Code as he has ultimate control (in the sense of "ultimate controlling shareholder") in Allfin; while the conflict of interest of Mrs. De Valck was of a more functional nature (as she is a member of the management team of Allfin). The other Directors appointed by Allfin i.e. Sophie Lambrighs and Piet Vercruysse, had estimated, in the spirit of the Companies Code, not to be enabled to attend the deliberations of the Board for these two items on the Agenda.

The costs associated with the study of the proposed merger with Allfin amounted lo 2,031 KEUR in the year under review.

• o For the sake of completeness, we also inform you that the Board has also followed the procedure in the context of the ratification of the letter of intent for the sale of the Cedet project. As the transaction was unsuccessful, this procedure has become without object.
• lX. CORPORATE GOVERNANCE STATEMENT (art. 96 S 2 Companies Code), including the REMUNERATION REPORT (art. 96 \$ 3 Companies Code) and the description of the |NTERNAL CONTROL systems and RISK MANAGEMENT (art. 119,7" Companies Code)

The Corporate Governance Statement is part of this Director's report. (cf. page .. of the Annual Report).

JMI/FRH/cpo -14- \$' Director's Report

t as permanent representative of DV Consulting, De Valck H. Comm. V

X. TAKEOVER BID

Pursuant to article 34 of the Royal Decree of 14th November 2007 concerning the obligations of issuers of financial instruments admitted for trading on a regulated market, the Board of Directors of ln¿lr¡ogrl states that the following information could have an incidence in case of takeover bid (being understood that the other elements are currently not applicable for Itr,tuoael):

• 1" the capital stock is 60,302,318.47 EUR represented by 4,121,987 shares, without any mention of par value, each representing an equal share of the capital stock (art. 4 of the Articles of Association).
• 2" the Board of Directors is authorized to increase the Company's capital by a maximum of 50,000,000 EUR (art. 13 of the Articles of Association), bearing in mind that the exercise of this power is limited in the case of a takeover bid by article 607 of the Companies Code.

• 3' the authorization to the Board of Directors (article 14 of the Articles of Association) for ^a term of 3 years from the date of publication in the Belgian Official Journal of the latter to acquire and dispose of the company shares when such acquisition or alienation is necessary to prevent a serious and imminent harm, expired in May 2014.

• concerning the nomination and replacement of the Members of the Board of Directors, the Articles of Association specify that the Board of Directors should be composed of at least 5 Members, appointed by the Ordinary General Meeting at the proposal of the RAC for a maximum of 4 years

• for the modification of the Articles of Association there are no regulations other than those established by the Companies Code.

XI. MANAGEMENT OF THE COMPANY - EXECUTIVE COMMITTEE

Board of Directors

At the General Meeting to be held on next 26th May, you will have to vote on the finat election of the following Directors:

• Ms. Astrid DE LATHAUWER in order to complete the mandate of Count BUYSSE, until the Ordinary General Meeting to be held in 2016;
• the company AHO CONSULTING bvba, represented by Mr Alexander HODAC in order to complete the mandate the company GAETAN PIRET sprl, represented by Mr Gaëtan PIRET, until the Ordinary General Meeting to be held in 2019;
• the company ARFIN sprl, represented by Mr Pierre Nothomb as permanent representative, in order to complete the term of Mr Wilfried Verstraete, until the Ordinary General Meeting to be held in 2019;
• Mr Jacek WACHOWICZ in order to complete the mandate of the company ARSEMA sprl, represented by Mr Didier BELLENS, until the Ordinary General Meeting to be held in 2019.

Moreover, you will also be proposed to vote on :

• the reappointment of Mr Piet VERCRUYSSE for a period of 4 years expiring at the Annual General Meeting to be held in 2020; and
• the appointmenf of the company ADL Comm. V. represented by Mrs Astrid DE LATHAUWER for a period of 4 years expiring at the Annual General Meeting to be held in 2020.

Thus, following the resignations occurred, the Board of Directors consists, since February 18, 2016, of the following Directors :

• Marnix Galle *, Chairman of the Board;
• Alexander Hodac*, Managing Director;
• Astrid De Lathauwer, also Chairman of the Remuneration & Appointments Committee;
• Pierre Nothomb*, also Chairman of the Audit & Finance Committee
• Hilde De Valck ";
• Sophie Lambrighs *;
• Piet Vercruysse; and
• Jacek Wachowicz.

Executive Gommittee

It is also recalled that the positions held by Messrs. Pierre DELHAISE, Christian KARKAN., Jean-Louis MAZY. , Paul MUYLDERMANS* , Philippe OPSOMER* and Gaëtan PIRET * as Members of the Executive Committee of lMMoerL ended during thefourth quarter2015. The Board expresses its most heartfelt thanks.

Mr. Jean-Louis MAZY continues to exercise certain missions on behalf of the Company until 31 December 2016.

At the Board of Directors held on 10 December 2015, Messrs. Valery AUTIN **, Nicolas BILLEN***, Jean-Paul BUESS *** and Alexander HODAC *** were appointed to serve as new members of the Executive Committee. ln addition, Mr. Alexander HODAC, as permanent representative of the Managing Director of the Company, assumes the Chair of the Executive Committee since 10 December 2015.

As the Management Committee has ceased to exist on 1't December 2015, its tasks have been taken over by the Executive Committee, composed as follows, since 1"t January 2016

• Alexander Hodac ", CEO;
• Valéry Autin **, CFO;
• Nicolas Billen *, Head of Development;
• Jean-Paul Buess *, Head of Technical Development;
• Philippe Helleputte, Head of Landbanking;
• Bartlomiej Hofman, Head of lmmobel Poland;
• Joëlle Micha *, Head of Legal & Corporate Affairs.

We therefore ask you to approve the terms of this report and grant discharge to the Members of the Board and the Statutory Auditor.

Ag at the ULTING bvba nted by Alexander Hodac Managing Director of the Board of Directors on th March 2016 A3 ME bvba represented by Chairman of the Board !

* acting for a company.

^.. acting for a company, since l"t.February 2016.