2014 ANNUAL REPORT - Vastned · Divestment of š nonstrategic retail warehouse properties ... AUG...
Transcript of 2014 ANNUAL REPORT - Vastned · Divestment of š nonstrategic retail warehouse properties ... AUG...
Retail Belgium
AN
NU
AL
REP
OR
T20
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ANNUAL REPORT
2014
Retail Belgium
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3
VASTNED RETAIL
BELGIUM
• isapublicregulatedrealestatecompanyunderBelgianlaw
• thesharesarelistedonEuronextBrussels
• specialisesininvestmentsincommercialrealestate:inner-cityshopsandretailwarehousesontoplocations
• focusesonaninvestmentpolicybasedoncommercialrealestate,withrespectforcriterionsofriskspreadintherealestateportfolio,relatingtothetypeofbuildingaswellastothegeographicspreadandthesectorofthetenants
• isprovidedwithahealthyfinancialstructure
Turnhout, Gasthuisstraat - 1.269 m2
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68%INNER-CITY SHOPS
58%INNER-CITY SHOPS
31.12.2014
31.12.2013
31.12.2014
31.12.2013
32%RETAIL WAREHOUSES
42%RETAIL WAREHOUSES
+ 10%
RISKSPREADOFTHEREALESTATEPORTFOLIO
Typeofretailproperty
Achievement of the stated strategy to invest 65% of the real
estate portfolio in inner-city shops.
As at 31 December 2014, 68% of the real estate portfolio
consists of inner-city shops (58% as at 31 December 2013).
As at the end of 2014, 49% of the entire portfolio has already
been invested in “premium city high street shops”, i.e. prime
retail properties located on the best shopping streets in the
major cities of Antwerp, Brussels, Ghent and Bruges.
Further intensification of the strategy by focussing on
premium city high street shops.
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Key figures
Occupancyrate
Increase in the occupancy rate in 2014 by 2,5% to 97,9%
as at 31 December 2014 via leases and divestments in
properties with a lower occupancy rate.
Totalleasablespace(m2)
31.12.2014
97,9% 95,4%
31.12.2013 31.12.2014
98,5% 96,0%
31.12.2013
OCCUPANCY RATE (%) OCCUPANCY RATE (%)EXCLUSIVE PROPERTIES IN RENOVATION
31.12.2014
111.594 m² 146.962 m²
31.12.2013
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Fairvalueofinvestmentproperties
In 2014, with an unchanged compo-
sition of the real estate portfolio with
respect to 31 December 2013, the fair
value of the existing real estate port-
folio increased by 3%, mainly due to
the stronger yields of Vastned Retail
Belgium’s properties in prime loca-
tions in the larger cities.31.12.2013
€ 362million
€ 357million
31.12.2014
RISKSPREADOFTHEREALESTATEPORTFOLIO
Ghent, Veldstraat - 2.690 m2
Acquisition of an inner-city shop in a
prime location on Veldstraat in Ghent
in July 2014 for an investment amount
of € 27,7 million.
Divestment of 19 non-strategic retail warehouse properties
and inner-city shops in secondary locations with a total fair
value of € 42,9 million (12% of the real estate portfolio).
ACQUISITIONOFANINNER-CITYSHOPGHENT
DIVESTMENTOF19NON-STRATEGICRETAILWAREHOUSEPROPERTIESANDINNER-CITYSHOPS
EVOLUTIONOFFAIRVALUEOFINVESTMENTPROPERTIES
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Key figures
Geographicspread
Sectoroftenants
15%BRUSSELS
13%WALLOON REGION
72%FLANDERS
63% 13% 10% 6% 5% 3%
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The debt ratio amounts to only 31% as at 31 December 2014.
KEYFIGURESPERSHARE 31.12.2014 31.12.2013
Numberofshares 5.078.525 5.078.525
Netvalue(fairvalue)(€) 47,81 46,37
Netvalue(investmentvalue)(€) 49,59 48,13
Sharepriceonclosingdate(€) 57,97 52,40
Premiumtonetassetvalue(fairvalue)(%) 21% 13%
STRONGBALANCESHEET:DEBTRATIO31%
31.12.2014
242.967
119.447
235.467
129.566
31.12.2013
Shareholders’ equity (€ 000)
Liabilities (€ 000)
Debt ratio
31% 34%
Antwerp, Leysstraat - 528 m2
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Key figures
POSITIVERESULTSIN2014
Rentalincome:€22,0milion
Realisation of 27 rental transactions
representing approx. 16% of the total
annual rental income, resulting in an
average increase in rent of 5%.
Grossdividenddistribution:€2,72pershare
The gross dividend increases
to € 2,72 per share in 2014
(€ 2,65 for financial year 2013).
2013
€ 22,0million
2014
€ 21,7million
20132014
€ 2,65€ 2,72
10
inthousands€ 2014 2013
Operatingdistributableresult 13.801 13.448
Resultonportfolio 7.927 -2.911
Changesinfairvalueoffinancialassetsandliabilities(non-effectivehedges-IAS39)andothernon-distributableelements
-1.240 1.657
Net result 20.488 12.194
RESULTPERSHARE 2014 2013
Numberofsharesentitledtodividend 5.078.525 5.078.525
Netresult(€) 4,03 2,40
Grossdividend(€) 2,72 2,65
Netdividend(€) 2,0400 1,9875
DIVIDENDYIELD
As at 31 December 2014 the share price of Vastned Retail
Belgium is € 57,97, o�ering a gross dividend yield of 4,7%.
EVOLUTIONSHAREPRICE
RESULTS2014
€60
58
56
54
52
50
48
Jan 14
Feb 1
4
Mar
14
Apr 14
May
14Jul 1
4
Aug 14
Sep 14
Jun 14
Nov 14
Oct 14
Dec 14
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Key figures
EPRA-KEYFIGURES 2014 2013
EPRAEarnings(€pershare) 2,72 2,66
EPRANAV(€pershare) 48,71 47,08
EPRANNNAV(€pershare) 47,74 46,32
EPRANetInitialYield(NIY)(%) 4,9% 5,2%
EPRATopped-upNIY(%) 5,1% 5,4%
EPRAVacancyrate(%) 1,5% 4,1%
EPRACostRatio(includingdirectvacancycosts)(%) 17,3% 15,8%
EPRACostRatio(excludingdirectvacancycosts)(%) 16,3% 15,1%
FINANCIALCALENDAR
The change to the status of regulated real estate company
(RREC) is approved by the general meeting of shareholders on
27 October 2014.
EPRA1
1 Financial performance indicator calculated according to Best Practices Recommandations of EPRA (European Public Real Estate
Assocation). See also www.epra.com.
DEC JAN FEB
Announcement of annual results as at31 December 2014
Tue 10
MAR APR
General meeting of shareholders
MAY
Interim statementon the results as at 31 March 2015
Tue 5
JUN JUL
Half-yearly financial statement as at 30 June 2015
Thur 30
AUG SEP OCT
Interim statement on the results as at30 September 2015
Tue 27
NOV DEC
Wed 29 at 14.30
Record date dividend 2014 Wed 6
2014 2015
Ex dividend date 2014Tue 5
Dividend payment 2014 as of Thur 7
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Antwerp, Meir - 583 m2
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Letter to the shareholders 14
Report of the board of directors 17
Profile 18Investmentpolicy 19Corporategovernancestatement 21
Report of the management committee 41
Theretailpropertymarketin2014 42Importantdevelopmentsin2014 44Financialresults 52Financialstructure 58Allocationofprofits2014 61EPRABestPractices 62Outlookfor2015 68
Report on the share 71
Stockmarketinformation 72Dividendandnumberofshares 76Shareholders 77Financialcalendar2015 77
Property report 79
Compositionoftheportfolio 80Overviewoftheportfolio 83Evolutionoftheportfolio 84Valuationoftheportfoliobypropertyexperts 85
Financial report 87
Index 89Consolidatedincomestatement 90Consolidatedstatementofcomprehensiveincome 91Consolidatedbalancesheet 92Statementofchangesinconsolidatedequity 94Consolidatedcash-flowstatement 96Notetotheconsolidatedannualaccounts 97Statutoryauditor’sreport 140StatutoryannualaccountsVastnedRetailBelgiumsa142
General information 147
Identification 148Extractfromthearticlesofassociation 152Statutoryauditor 154Liquidityprovider 154Propertyexperts 156Regulatedrealestatecompany-legalframework 156Statementtotheannualreport 157
Terminology 158
CONTENTS
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2 The market information in this text is based on Cushman & Wakefield, Vastned Retail Belgium Portfolio 31 December 2014,
market overview p. 12 - 18; CBRE Belgium Retailer Survey 2014, p. 2 - 5; CBRE interview Kim Verdonck, dated 14/1/2015 and
CBRE’s annual review of retail activity in 2014 and trends for 2015, p. 46-47.
LETTERTOTHESHAREHOLDERS2
DearShareholder,
In2014,VastnedRetailBelgiumhassucceededinfurtherimplementingitsstrategyforrentincreasesvialeaseextensions,aswellasinexpandingtheshareofinner-cityshopswithintheportfolio.
Despitesignsofslowedgrowthinrecentyears,theBelgian retail real estate market continuestoperformfairlywell.However,thereisamixedsentimentwithintheretailrealestatemarket,thatisevolvingatdi£erent speedswithinitssub-segments.Meanwhile,thedegreetowhichprimelocations(bothretailwarehousesandinner-cityshops)areabletowithstandthesechangingmarketconditionsclearlydiffersfromthatforthesecondarylocations.
Theturnoverofmanyretailershasdeclinedinrecentyears,dueinparttothefactthattheydidnot,ordidnotenough,anticipatetheincreaseinonlinesalesandtheprotractedeconomiccrisis.Thishasresultedinasubstantialdeclineintheirneedtoleaseneworadditionalunits,andthisisreflectedindownwardpressureonrents.Theprimehighstreetsinthemajorcitiesareforthemostpartdoingwellduetothe(planned)presenceofretailerssuchasPrimark,Marks&Spencer,ZaraandUniqlo,whichleaselargeproperties.ButeveninthesixBelgianprimehighstreets,someprimelocationshaveexperiencedadownwardadjustmentinrents.Inthesecondaryhighstreetsandinthesmallercities,vacanciesareontheriseandrentsarefalling.Intheselocationsespecially,retailersareclosingtheirbusinessesiftheyarenotprofitableenough.
RetailwarehouselocationsaredoingrelativelywellinBelgium.Thereisatrendtowardshigherqualityarchitecture,which,combinedwithattractivepricesontheperiphery,isalsoattractingbetterinner-citybrands.This,however,onlyappliestothebestlocationsinthissegment.Theperipheryisforthatmatterthemostactivesegmentin2014,especiallyintheretailparks.Demandishigherinthissegmentcomparedtotherestofthemarket.ExpandingretailerssuchasAlbertHeijnandtypicalcitycentreretailershavebecomeextremelyactiveintheselocations.WeareawaitingtheimpactofthemovetoshiftresponsibilitiesforretaillicencestotheregionallevelinBelgium.It’sexpectedthattheforthcomingregulationswillimpedefuturedevelopmentsintheperipheryandinturnboostthedemandforprimelocationsintheperipherywhicharealreadylicenced.
Inthismarket,VastnedRetailBelgiumhasachievedniceresultsin2014.Atotalof27rental transactionsareconcludedin2014valuedat€3,6millioninannualrentalincome.Thisrepresentsroughly16%ofthecompany’stotalannualrentalincome.Theaveragerentincreaseinthesetransactionsisabout5%.Intermsofitsinvestment strategy,VastnedRetailBelgiumdecidedbackin2012thatatleast65%ofitsrealestateportfoliomustbeinvestedininner-cityshops,preferablyinprimelocationsinthecitycentresoflargercitiessuchasBrussels,Antwerp,GhentandBruges.Asat31December2014,inner-cityshopsalreadyconstitute68%oftherealestateportfolio,whichishigherthanthestatedgoalof65%.In2014,thecompanyhasinvestedinaninner-cityshopinaprimelocationinGhentanddivestednon-strategicpropertiesinordertoachievethisgoal.
5% Average rent increase in 27 transactions
68% Inner-city shops in the real estate portfolio
Divestment 19non-strategic properties
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InlateJuly2014,VastnedRetailBelgiumsucceededinacquiringaninner-cityshopinaprime location:Veldstraat23-27inGhent,whichisleasedtoH&M.
Thisretailpropertyisacquiredforaninvestmentvalueofroughly€27,7millionandatayieldinlinewiththemarket.Thisacquisitionwillgeneratearentalincomestreamforthecompanyofroughly€1,1millionannually.Thetransactionisfundedfromthecom-pany’sexistingcreditlinesandviathetakeoveroftheloansoftheacquiredcompany.
Withtopyieldsat4%,retailpropertiesareinhighdemandontheinvestmentmarket,andVastnedRetailBelgiumhastakenadvantageofthesefavourablemarketconditionsin2014bydivestingatotalof19non-strategicretailwarehousepropertiesandinner-cityshopsinsecondarylocationshavingatotalfairvalueof€42,9million,orroughly12%oftheoverallrealestateportfolio.ThesedivestmentsincludeJulianusShoppinginTongerenandretailpropertiesinFlandersandtheWalloonregionwithatotalgrossretailsurfaceareaofroughly39.000m².ThecombinedannualrentalincomeofthedivestedretailpropertiesamountstoEUR3.6million,orroughly16%ofthecompany’stotalannualrentalincome.Thecompany’sstrategyistousethefundsthatwerefreedupviathesedivestmentstoinvestininner-cityshopsinprimelocations.
Despitethesedivestmentsrepresentingroughly12%oftherealestateportfolio,therental incomeofVastnedRetailBelgiumhasrisenin2014by€0,3million,or1%,duetoinvestmentsininner-cityshopsinprimelocations,indexingandleaseextensions.In2014the financing costsofthecompanyhasdecreasedby€0,7millionor14%,mainlyduetolowerinterestrates.Forthe2014financialyear,theaverageinterestrateofthecompanyhasfallento3,2%includingbankmargins,comparedto4,0%forthe2013financialyear.
Asaresult,theoperating distributable result persharein2014ishigherthanin2013.Forthe2014financialyear,VastnedRetailBelgiumcanofferitsshareholdersagross dividendof€2,72pershare,comparedto€2,65pershareforthe2013financialyear.Thismeansthatthegrossdividendyieldoftheshareis4,7%basedontheclosingpriceasat31December2014.
Wewishtothankyoufortheconfidenceyouplaceinus.Moreover,weherebyalsowishtothankthemanagementandallemployeesfortheircommitment,whichliesatthebasisoftheseexcellentresults.
Theboardofdirectors
Taco de Groot Jean-Pierre BlumbergDirector Chairmanoftheboardofdirectors
Divestment 19 non-strategic properties
+1% Increase rental incdome
-14% Financing costs
Gross dividend € 2,72
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Report of the board of directors
Antwerp, Korte Gasthuisstraat - 145 m2
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VastnedRetailBelgiumisapublicregulatedrealestatecompany(RREC).ThesharesofthecompanyarelistedontheregulatedmarketofEuronextBrussels(VASTB).
VastnedRetailBelgiuminvestsexclusivelyinBelgiancommercialrealestate,focusingprimarilyoninner-citylocationsinprimelocationsandhigh-qualityretailwarehouses.
Atpresenttheportfolioismadeupof169leasableunits,spreadover69differentlocations.
Evolutionoffairvalueofinvestmentproperties(million€)
Typeofrealestateproperty
PROFILE
As at 31 December 2014, 68% of the real estate portfolio consists of inner-
city shops and 32% of retail warehouses, with 49% of the portfolio already
invested in premium city high street shops, located in the prime high streets
of the major cities of Antwerp, Brussels, Ghent and Bruges. The total fair
value of the portfolio amounts to € 357 million as at 31 December 2014.
.
b
285 281 313
20052006
20072008
20092010
20112012
20132014
324 329 362327 362359 357
mill
ion
€
a
b
68%
32%
Inner-city shops
Retail warehouses
a
b
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Report of the board of directors
The investment strategy is aimed at achieving a combination of direct
return based on rental income and indirect return based on the increase
in the value of the real estate portfolio.
INVESTMENTSTRATEGY
Thecompanypursuesaninvestmentpolicygearedtowardhigh-qualitycommercialproperties,whichareinturnleasedtofirst-classtenants.CommercialpropertyconsistsofretailpropertieslocatedinBelgium,whichmaybebothinner-cityshopsandretailwarehouses(locatedoutsidethecities).Thispropertypreferablyrequiresnomajorrepairworkintheshorttermandiscommercially-strategicallysituatedatgoodlocations.Residentialproperties,officesandlogisticspropertiesare,inprinciple,notthesubjectofinvestment.
VastnedRetailBelgiumbelievesthatpopularhighstreetsinthecitycentresofmajorcitiesguaranteethemostauthenticanduniqueshoppingexperiencewhileatthesametimeofferingthegreatestsecurityasalong-terminvestment.Forthisreasonthecompanyestablishedapolicyin2012requiringthatatleast65%ofitsrealestateinvestmentsbeininner-cityshops,preferably
intheseprimelocations.Asat31December2014,inner-cityshopsalreadyconstituted68%oftherealestateportfolio.Currently,49%oftheportfolioisalreadyinvestedinprimeretailpropertieslocatedintheprimehighstreetsofthemajorcitiesofAntwerp,Brussels,GhentandBruges.
VastnedRetailBelgiumhasintensifieditsinvestmentstrategy.Itnowintendstoachievea75%investmentratioininner-cityshopsinBelgiumovertime.Indoingso,overtimetheshareofprimeretailpropertiesinthemostpopularhighstreetsinthemajorcitiesmustamountto50%oftheoverallrealestateportfolio.
VastnedRetailBelgiumwishestoimprovetheattrac-tivenessofitssharefurtherthroughhigherliquidity,expandingtherealestateportfolioandfurtherimprovingriskspreading.
Increaseoftheliquidityoftheshare
Liquidityisdeterminedbytheextenttowhichthesharescanbetradedonthestockmarket.Companieswithhighliquidityaremorelikelytoattractlargeinvestors,whichimprovesgrowthopportunities.
Increasedliquiditymakesiteasiertoissuenewshares(forincreasingthecapital,contributionsinkindormergers),whichisalsoveryimportantforgrowth.
Toimproveitsliquidity,VastnedRetailBelgiumhasconcludedaliquidityagreementwithBankDegroof.TheliquidityofmostBelgianregulatedrealestatecompaniesisrelativelylow.Onemajorreasonforthisisthatthesecompaniesareoftentoosmall-bothintermsofmarketcapitalisationandfreefloat-togaintheattentionofprofessionalinvestors.Inaddition,sharesinregulatedrealestatecompaniesaregenerallypurchasedaslonger-terminvestmentsratherthanonaspeculativebasis,whichreducesthenumberoftransactions.
In 2014 the free float
of the share has remained
unchanged at 34,5%.
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Expansionofthepropertyportfolio
Alargeportfolioclearlyoffersanumberofbenefits.
• Ithelpstospread the riskfortheshareholders.Byin-vestinginrealestatepropertiesthroughoutBelgium,itispossibletocushionpotentialcyclicalmovementsinthemarket.Thisalsomeansthatthecompanyisnotdependentononeorasmallnumberofmajortenantsorprojects.
• Theachievedeconomies of scalemakeitpossibletomanagetheportfoliomoreefficiently,withtheresultthatagreateramountofoperatingprofitcanbepaidout.Thisrelates,forinstance,tocostsofmaintenanceandrepair,the(long-term)renovationcosts,consul-tancyfees,publicitycosts,etc.
• Withalargertotalportfolio,management’snegotia-ting positionisimprovedwhendiscussingnewleasetermsandofferingnewservices,alternativelocations,etc.
• Itmakesitpossibleforaspecialisedmanagementteamtouseitsknowledgeofthemarkettopursueaninnovativeandcreativepolicy,resultinginincrease in shareholder value.Thismakesitpossibletoachieve
growth,notonlyintermsoftherentalincome,butalsointhevalueoftheportfolio.Thiskindofactivemanagementcanleadtotherenovationandoptimi-zationoftheportfolio,negotiationsonnewtermsoflease,animprovementinthequalityofthetenants,offerofnewservices,etc.
Expansionoftherealestateportfoliocanbeachievedthroughadynamicapproachofthemarketontheonehand,onaninternallevelthroughthegrowthpotentialofthecurrentpropertyportfolio,andthroughacquisitionsontheotherhand.
VastnedRetailBelgiumisaveryusefulpartnerforinves-torswhowishtocontributetheirretailpropertiesagainsttheissueofnewshareswithaviewtospreadingriskandcuttingadministrativeactivities.Retailchainsthatstillowntheirownpropertiescanalsobenefitfromconclu-dingsale-and-rent-backtransactionswithVastnedRetailBelgium.
Improvementofriskspread
VastnedRetailBelgiumtriestospreaditsriskinavarietyofways.Forexample,thetenantsoftenoperateinwidelydivergentsectorsoftheeconomy,suchasclothes,food,do-it-yourself,homeinterior,etc.Besides,thecompanystrivestomaximisethegeographicspreadofitsproper-ties.
Theadministrationoftheexpirydatesandfirstinterimexpirydatesoftheleaseagreementsaresubmittedtotherestrictionsbythelegislationoncommercialleases(Actof30April1951),allowingthetenantstoterminatelegallytheirtenancyagreementeverythreeyears.
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Report of the board of directors
General
ThecorporategovernancestatementisinlinewiththeprovisionsoftheBelgianCorporateGovernanceCode2009(‘2009Code’)andtheActof6April2010amendingtheBelgianCompaniesCode.TheRoyalDecreeof6June2010providedthatthe2009Codeistheonlycodeapplicable.ThisCodecanbefoundontheBelgianOfficialGazettewebsiteandonwww.corporategovernancecommittee.be.
VastnedRetailBelgiumtreatstheBelgianCorporateGovernanceCode2009asareferencecode.TheVastnedRetailBelgium’sboardofdirectorshavelaiddowncorpo-rategovernanceprinciplesinanumberofguidelines:
• theCorporateGovernanceCharter• thecodeofconduct• whistle-blowingrules• themarketabuse-preventiondirective.
ThecompleteCorporateGovernanceCharterthatsetsouttheimportantinternalproceduresforthemanage-mententitiesofVastnedRetailBelgium,aswellastheotherdirectives,areavailableonthecompanywebsite(www.vastned.be).
ThetermsoftheBelgianCorporateGovernanceCode2009mayonlybedeviatedfromwhenspecificcircum-stancesrequireit.Ifsuchaneventoccurs,thedeviationisexplained,inaccordancewiththe“complyorexplain”principle,intheannualreport.TheboardofdirectorsofthecompanyhasjudgedthatitissometimesjustifiedforthecompanynottofollowcertaintermsoftheCorporateGovernanceCode2009.Accordingtothe“complyorex-plain”principleitisindeedpermittedtotakeintoaccounttherelativelysmallsizeandowncharacteristicsofthecompany,particularlyregardingthealreadyrigidlegisla-tionrelatingtoregulatedrealestatecompanies.
CORPORATEGOVERNANCESTATEMENT
Brussels, avenue Louise - 245 m2
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Board of directors
EMSO sprl permanently represented by Chris PeetersIndependent director
Berchemstadionstraat76bus62600Berchem-Belgium
Transporteconomist
Term: April2017Attendance: 5/7
Jean-PIerre BlumbergChairman, independent director
Plataandreef72900Schoten-Belgium
ManagingpartnerLinklatersLLP
Term: April2016Attendance: 7/7
Nick van OmmenIndependent director
Beethovenweg502202AHNoordwijkaanZee-TheNetherlands
Directorofrealestatecompanies
Term: April2016Attendance: 7/7
Managemententities
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Report of the board of directors
Hubert RooversDirector
FranklinRooseveltlaan384835ABBreda-TheNetherlands
Directorofcompanies
Term: April2015Attendance: 7/7
Taco de GrootDirector and e�ective leader (pursuant to article 14,§ 3 of the RREC Act)
Schubertlaan163723LNBilthoven-TheNetherlands
ChiefexecutiveofficerVastnedRetail
Term: April2017Attendance: 5/7
Reinier WaltaDirector
Bastion71945EBBeverwijk-TheNetherlands
ChieffinancialofficerVastnedRetail
Term: Asfrom15December2015bycooptationAttendance: 1/1
Ra
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TomdeWitteresignedasdirectorofthecompanyon1November2014(attendance4/6).
Theboardofdirectorscomprisesasat31Decembers2014sixmembers,threeofwhomareindependentdirec-torswhoallthreefulfiltheconditionsofarticle526teroftheBelgianCompaniesCode.Alldirectorsarenon-execu-tivedirectorsexceptTacodeGroot.
Thedirectorsareappointedforaperiodofthreeyears,buttheirappointmentcanberevokedatanytimebythegeneralmeeting.
Theboardofdirectorsmetseventimesin2014.Themostimportantagendaitemsduringthemeetingsoftheboardofdirectorsandwithrespecttowhichtheboardhastakendecisionsin2014are:
• approvalofthequarterly,half-yearlyandannualfigures
• approvaloftheannualaccountsandthestatutoryreports
• approvalofthebudgets2014andthebusinessplan2015
• discussionontherealestateportfolio(investmentsanddivestments,tenancyissues,valuations,insur-ances,renovations,etc.)
• changeofstatustoregulatedrealestatecompany• applicationoftheconflictofinterestsettlementregardingtheprovisionoftemporaryfinancingbyVastnedRetailnvtoVastnedRetailBelgiumsaforthefinancingoftheacquisitionofthesharesofVeldstraat23-27sa(seeNote23oftheFinancialreport).
Duringfinancialyear2014,TacodeGroot,TomdeWitte(till1November2014)andReinierWalta(asfrom15December2014)haverepresentedthemajorityshare-holderVastnedRetailnv.FurthermoreTacodeGrootistheeffectiveleaderofthecompanypursuanttoarticle14,§3oftheRRECAct.
TheCorporateGovernanceCharterofthecompanystipulatesthatdirectorsresignonthedateofthegeneralmeetingofshareholdersheldintheyearinwhichtheyturn70yearsold.Deviatingfromthisintheinterestofthecompanyisonlyallowedforspecificreasons.ThisisthecasewithHubertRooverswhoreachedthemaximumage.Theboardofdirectorsbelievedthat,basedonhisvision,competence,knowledgeandyearsofexperienceinrealestate,itwasintheinterestofthecompanythatHubertRooverswhosemandateexpiresinApril2014wouldbeprolongedforoneyearandwouldendatthegeneralmeetingofshareholdersof29April2015.
SincethepassageoftheActof28July2011,quotasareimposedinBelgiuminordertoensurethatwomenhaveaseatontheboardofdirectorsoflistedcompanies.Asaresult,VastnedRetailBelgiummustseetoitthat,inthefuture,atleastonethirdofthemembersoftheboardofdirectorsarefemale.Forcompanieswithafreefloatoflessthan50%,thislawappliesasfromthefirstdayoftheeighthfinancialyearthatstartsfollowingthepublicationofthislawintheBelgianOfficialGazette,whichis1January2019.Inthefuture,whenthemandateofadirectorends,VastnedRetailBelgiumwillselectalistofcandidatedirectorsonthebasisofclearandobjectivecriteria,andinsodoingitwilltakegenderdiversityintoaccount.
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Report of the board of directors
Audit committee
In2014,theauditcommitteecomprisesthreeindepend-entdirectors:
• NickvanOmmen(chairman)(attendance5/5)• Jean-PierreBlumberg(attendance5/5)• EMSOsprl,permanentlyrepresentedbyChrisPeeters(attendance4/5)
In2014,theseindependentdirectorsfulfilallninecriteriaofindependencepursuanttoarticle526teroftheBelgianCompaniesCode.Thetermoftheirmandateintheauditcommitteeisnotspecified.
Themembersoftheauditcommitteeareexperts.Eachmemberofthecommitteeisindependentlyqualifiedintheareaofaccountancyand/orauditing.Besides,theau-ditcommitteeasawholeisqualified.Thisontwolevels:intheareaoftheactivitiesofVastnedRetailBelgiumandintheareaofaccountancyandauditing.
In2014,theauditcommitteemetfivetimes.Themostimportantitemsontheagendaoftheauditcommitteein2014havebeen:
• discussionofthequarterly,half-yearlyandannualfigures
• analysisoftheannualaccountsandstatutoryreports• discussionofthebudgets• oversightofstatutoryauditofthe(consolidated)annualaccountsandanalysisoftherecommendationsofthestatutoryauditor
• analysisoftheefficiencyoftheinternalauditmechanismandrisk-managementofthecompany.
Thecommitteereportsitsconclusionsandrecommenda-tionsdirectlytotheboardofdirectors.
Management committee
Asat31December2014,themanagementcommitteecomprises:
• SprlJean-PaulSols,representedbyJean-PaulSols,chiefexecutiveofficer,chairmanofthemanagementcommittee
• SprlRudiTaelemans,representedbyRudiTaelemans,chiefoperatingofficer
• IngeTas,chieffinancialofficer.
Jean-PaulSolssprl,permanentlyrepresentedbyJean-PaulSols,andIngeTas,alsoholdamanagementcommittee’smandateatIntervestOffices&Warehousessa,publicregulatedrealestatecompanygovernedbyBelgianlaw.
Pursuanttoarticle524bisoftheBelgianCompaniesCodeandarticle15ofthecompany’sarticlesofassociation,theboardofdirectorshasdelegatedspecificmanagementauthority.Therulespertainingtothecompositionandoperationofthemanagementcommitteearedescribedinmoredetailinthecompany’sCorporateGovernanceCharterthatisavailableonthewebsite(www.vastned.be).TacodeGroot,TomdeWitte(till1November2014)andReinierWalta(asfrom15December2014)haverepresentedthemajorityshareholderVastnedRetailnv.FurthermoreTacodeGrootistheeffectiveleaderofthecompanypursuanttoarticle14,§3oftheRRECAct.
Jean-Paul Sols, ceo Inge Tas, cfo Rudi Taelemans, coo
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Evaluation of management entities
Underthedirectionofthechairman,theboardofdirectorsperiodicallyreviewsitssize,composition,workingandef-ficiency.Itcarriesoutthesamereviewwithrespecttotheauditcommitteeandtheinteractionwiththemanage-mentcommittee.Forthepurposesofsuchreviews,theboardofdirectorscanbeassistedbyexternalexperts.
Duringthisevaluationprocess:
• anassessmentismadeofthefunctioningandleader-shipoftheboardofdirectors
• whethermajorsubjectsarepreparedanddiscussedthoroughlyischecked
• anassessmentismadeoftheactualcontributionandinvolvementofeachdirectorinthediscussionsanddecisions
• thecompositionoftheboardofdirectorsisassessedwithrespecttothedesiredcompositionoftheboard
• thefunctioningandcompositionoftheauditcommit-teeisdiscussed
• thecollaborationandcommunicationwiththeman-agementcommitteeisevaluated.
Iftheabovementionedevaluationproceduresshowsomeweaknesses,theboardofdirectorswillhavetoof-ferappropriatesolutions.Thiscanleadtochangesinthecompositionorthefunctioningoftheboardofdirectorsortheauditcommittee.
Conflicts of interest
Asfarasthepreventionofconflictsofinterestiscon-cerned,thecompanyissubjecttolegalrules(articles523and524oftheBelgianCompaniesCodeandarticles36to38oftheActof12May2014onregulatedrealestatecompanies)andtotherulessetoutinitsarticlesofas-sociationanditsCorporateGovernanceCharter.
Inthisregard,article17ofthearticlesofassociationofthecompanystatesthefollowing:“Directors, persons charged with the day-to-day management and authorised agents of the company shall respect the rules relating to conflicts of interest provided for in articles 36, 37 and 38 of the RREC Act and in the Belgian Companies Code, as these may be amended, where appropriate.”
Conflicting interests of a proprietary nature of directors and members of the management committee
Theboardofdirectors,managementcommitteeandeverymemberstrictlyundertaketoexcludeanypos-sibleconflictofinterest,whetherofaproperty-related,professionalorofanyothernature,andintendtocarefullycomplywiththelegalruledefinedinarticle523oftheBelgianCompaniesCoderegardingconflictsofinterestbetweenthecompanyandadirector.
If,forexample,adirectorofthecompany,duetootherdirectormandatesheldbyhimorforanyotherreason,hasaproprietaryinterestthatisinconflictwithadecisionortransactionfallingundertheauthorityoftheboardofdirectors,article523oftheBelgianCompaniesCodeshallbeapplicableandthedirectorinquestionshallberequestednottoparticipateinthedeliberationsondeci-sionsortransactionsorinthevoting(article523,§1infine).
Ifadirectorormemberofthemanagementcommit-tee,directlyorindirectly,hasaproprietaryinterestthatisinconflictwithatransactionordecisionfallingundertheauthorityoftheboardofdirectorsorthemanage-mentcommittee,thememberinquestionmustinformthechairmanandthemembersofthisinadvance.Inthiscase,theconcernedmembermaynotparticipateinthedeliberationsandvotingonthetransactioninquestion.
Thestatementaswellasthejustificationfortheconflictofinterestshallberecordedintheminutes.Withaviewtoitspublicationintheannualreport,thenatureofthedecisionortransactionisaccountedforintheminutes.Theminutesalsooutlinetheproprietaryconsequencesforthecompanyresultingfromthisdecision.Thereportoftheauditor,tobedrawnupinaccordancewitharticle143oftheBelgianCompaniesCode,containsaseparatedescriptionofthefinancialimplicationsforthecompany.
.
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Report of the board of directors
Conflict of interest for a major shareholder
Incaseofapotentialconflictofinterestwithamajorshareholderofthecompany,theproceduredefinedinarticle524oftheBelgianCompaniesCodeshallbeapplicable.Article524oftheBelgianCompaniesCoderequiresthatoperationswithrelatedcompanies-withcertainexceptions-mustbesubmittedforadvicetoacommitteeofindependentdirectors,assistedbyanindependentexpert.
Conflict of interest on the part of certain individuals mentioned in article 37 of the Act of 12 May 2014 concerning regulated real estate companies
Likewise,article37oftheActof12May2014onregu-latedrealestatecompaniesprovidesthattheFinancialServicesandMarketsAuthority(FSMA)mustbenotifiedinadvancebytheRRECofactivitiesplannedbytheRRECoroneofitssubsidiariesifoneormoreofthefollowingpersonsdirectlyorindirectlyactsoractasopposingparty(parties)insuchactivitiesordraws(draw)anymaterialgainfromit:thepersonscontrollingthepublicRRECorholdingastakeinit;thepromoterofthepublicRREC;theothershareholdersofallsubsidiariesofthepublicRREC;andthedirectors,managingdirectors,themembersofthemanagementcommittee,thepersonsentrustedwiththedailymanagement,theactualmanagersormandata-ries;andthepersonslinkedtoalltheseparties.
TheseplannedtransactionsmustholdaninterestforthepublicRREC,beinlinewithitsstrategyandmustbeexecutedundernormalmarketconditions.Thesetransac-tionsmustbepromptlydisclosed.
Pursuanttoarticle49,§2oftheActof12May2014onregulatedrealestatecompanies,whenarealestatetransactiontakesplacewiththeabove-mentionedper-sons,thecompanyisboundbythevaluationmadebythepropertyexpert.
.
Theprovisionsofarticles36and37oftheRRECActdonotapplyto:
• transactionsinvolvingasumthatislessthanthelow-estamountofeither1%oftheconsolidatedassetsofthepublicRRECor€2.500.000
• theacquisitionofsecuritiesbythepublicRRECoroneofitssubsidiariesinthecontextofapublicissuebyathird-partyissuer,forwhichapromoteroroneofthepersonsreferredtoinarticle37,§1actsasintermedi-arywithinthemeaningofarticle2,10°oftheActof2August2002
• theacquisitionoforsubscriptiontothesharesinthepublicRRECissuedasaresultofadecisionbythegeneralmeetingbythepersonsreferredtoinarticle37,§1;and
• transactionsinvolvingtheliquidassetsofthepublicRRECoroneofitssubsidiaries,providedthepersonactingascounterpartyhasthecapacityofinterme-diarywithinthemeaningofarticle2,10°oftheActof2August2002andthesetransactionsareexecutedundernormalmarketconditions.
Theprocedureforpreventingconflictsofinteresthasbeenappliedduringthe2014financialyearinrelationtotheprovisionoftemporaryfinancingbyVastnedRetailnvtoVastnedRetailBelgiumsatofinancetheacquisi-tionofthesharesofVeldstraat23-27(seeNote23oftheFinancialreport).
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Remunerationreport
Appointment and remuneration committee
VastnedRetailBelgiumdoesnothaveanappointmentandremunerationcommittee.Theboardofdirectorsofthecompanyisoftheopinionthattherelevanttasksoftheappointmentcommitteeandremunerationcom-mitteeshouldberegardedastasksoftheentireboardofdirectors.Herewith,VastnedRetailBelgiumderogatesfromtherecommendationsoftheBelgianCorporateGovernanceCode2009(alsoseeparagraphon“complyorexplain”principle),sincethelimitedsizeoftheboardmakesitpossibletodeliberateefficientlyonthesetopics.Ontheotherhand,theissueofappointmentsorremu-nerationinthecompanyrequirestoolittleadditionalattentiontojustifyaseparatecommitteeanditsrelatedadditionalexpenses.
Remuneration policy of the board of directors
Theboardofdirectorsisresponsiblefortheremunerationpolicyforitsmembersandforthemembersoftheman-agementcommittee.Theremunerationofthedirectorshastobeproposedforapprovaltothegeneralmeeting.
Thispolicyisbasedonthefollowingprinciples:
• theremunerationpolicyfordirectorsandmembersofmanagementcommitteeisinaccordancewithalltheapplicableregulationsandinparticularwiththosecontainedintheRRECAct
• thetotalremunerationlevelandstructureshouldbesuchthatqualifiedandcompetentpersonscanberecruitedandretained
• theremunerationstructure,intermsoffixedincomeandvariableincome,ifany,issuchthattheinterestsofthecompanyarepromotedinthemediumandlongterm
• theremunerationpolicytakesintoaccounttheresponsibilitiesandtimespentbydirectorsandmem-bersofmanagementcommittee.
Otherthingsbeingequal,theremunerationpolicyshallremainapplicableforthenexttwofinancialyears.
Basic remuneration 2014
Directors
In2014,theannualfixedfeeofthedirectors,whodonotrepresentthemajorityshareholder,amountsto€14.000peryearforamemberoftheboardofdirectors(€15.000peryearforthechairmanoftheboardofdirectors).Noadditionalfeesarepaidforservingasamemberorasachairmanofacommittee.Thedirectorsrepresent-ingthemajorityshareholderperformtheirdutieswithoutremuneration.
Noemploymentcontracthasbeenconcludedwithanyofthedirectorsandnoterminationcompensationisap-plicable.Pursuanttoarticle35§1oftheActof12May2014onregulatedrealestatecompanies,thedirectors’feesarenotrelated,eitherdirectlyorindirectly,tothetransactionscarriedoutbythecompany.Thedirectorsdonotownsharesofthecompanyandnorhaveanyoptionsbeengrantedtothedirectorsonsharesofthecompany.
Members of the management committee
Theamountofthefixedfeegrantedasremunerationin2014tothemembersofthemanagementcommit-tee,amountsto€388.560,ofwhich€122.316isforthechairmanofthemanagementcommittee.Nooptionshavebeengrantedtothemanagementcommitteeonsharesofthecompany.
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Report of the board of directors
Bonus for 2013, paid in 2014
Thethreemembersofthemanagementcommitteemaybeeligibleforanannualcombinedbonusofmaximum€47.000.Theamountofbonustobegrantedisdeter-minedonthebasisofmeasurablecriterialinkedtoagreedperformancelevels.
In2013,thesecriteriawereintheareaoftheimprove-mentoftheoccupancyrate,investmentsanddivestmentsaspartofthestrategy,attractingimportantretailers,theoptimisationoftheaccountmanagement,theprolonga-tionanddiversificationoffinancing.Basedontargetsachievedin2013,atotalbonusof€43.500wasawardedin2014.Noreclamationrightsareforeseenforthevari-ableremuneration.
Besidesthisregularbonus,amemberofthemanagementcommitteemaybeeligibleforanadditionalannualbonus,whichmaybegrantedforexceptionalperformance.Noadditionalbonuswaspaidfor2013.
Basic remuneration for 2015 and bonus for 2014
Atthegeneralmeetingofshareholdersof29April2015willbeproposedtoadapttheannualfixedremunerationoftheindependentdirectorsasfollows:
• increasefrom€14.000to€20.000(exceptthechair-manoftheboardofdirectors)
• increasefrom€15.000to€25.000forthechairmanoftheboardofdirectors.
On1Januaryeachyear,theannualfixedfeeofthemembersofthemanagementcommittee,exceptthedirector,is(i)indexedaccordingtothenormalindexofconsumerprices,wherethebasicindexisthatofthemonthprecedingthemonthinwhichtheagreementcameintoeffect,andthenewindexofthemonthpre-cedingthemonthinwhichtheindexationtakesplace(ii)increasedby1percent.Thisrepresentsanincreaseof1%asat1January2015.
Bonuscriteriafor2014areintheareaoftheimprove-mentoftheoccupancyrate,investmentsanddivest-mentsasapartofthestrategyandattractingimportantretailers.
Thethreemembersofthemanagementcommitteemaybeeligibleforfinancialyear2014foranannualcom-binedbonusofmaximum€60.000.Basedonthetargetachievedin2014,atotalbonusof€60.000isawarded.Noadditionalbonuswillbepaidfor2014.
Duration and termination conditions
Membersoftheboardofdirectorsareappointedforaperiodof3years,buttheirappointmentmayberevokedatanytimebythegeneralshareholdersmeeting.Noterminationcompensationisapplicable.
Themembersofthemanagementcommitteeareappointedforanindefiniteperiodandtheterminationcompensationisequivalenttotwelve(forthecfo)andtoeighteen(fortheceoandthecoo)months’fixedfee(exceptforgrossnegligenceordeliberateerror,inwhichcasenocompensationwillbepayable).
Anadditionalexplanationisgivenpursuanttoarticle7.18oftheBelgianCorporateGovernanceCode2009,namelythattheseverancepaymentfortheceoandthecooamountstomorethanthecounter-valueoftwelvemonthsoffixedremuneration,which,however,concernsacontractualarrangementconcludedbefore1July2009thathasnotyetconstitutedthesubjectmatterofanextensionsince23May2010,asaresultofwhicharticle554oftheBelgianCompaniesCodedoesnotapply.
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Majorriskfactorsandinternalcontrolandriskmanagementsystems
In2014,theboardofdirectorsofVastnedRetailBelgiumonceagainfocusesattentionontheriskfactorswithwhichVastnedRetailBelgiummustcontend.
Strategic risks and management
TheserisksarelargelydeterminedbythestrategicchoicesmadebyVastnedRetailBelgiumtolimititsvulnerabilitytoexternalfactors.Thesizeoftheserisksisdeterminedbythestrategicchoicessuchasthechoiceoftypeofrealestateandthetimeofinvestmentanddivestment.
Type of real estate
VastnedRetailBelgiumhasmainlychosentoinvestincommercialproperties,withafocusoninner-cityshopsontoplocations.Retailwarehousesandretailparksalsobelongtotheportfolio.Furthermore,thecompanytriestospreadaswellaspossiblethegeographiclocationsofitsproperties.
TherealestatepatrimonyofVastnedRetailBelgiumisvaluedonaquarterlybasisbyindependentpropertyexperts.Thesepropertyexpertshavethenecessaryqualificationsandsignificantmarketexperience.Thefairvalueofthebuildings,asestimatedbythem,isenteredunderthesection“Investmentproperties”intheassetssideofthestatutoryandconsolidatedbalancesheet.Fluctuationsinfairvaluesareenteredunderthesection“Changesinfairvalueofinvestmentproperties”intheconsolidatedandstatutoryincomestatementsandthesecanhaveeitherapositiveornegativeeffectonthenetincome.Thevaluesestablishedbytheexpertsrepresentthemarketvalueofthebuildings.Consequently,fluctua-tionsinthemarketvalueofthepropertyarereflectedinthenetassetsofVastnedRetailBelgium,aspublished
onaquarterlybasis.VastnedRetailBelgiumisexposedtothefluctuationofthefairvalueofitsportfolio,asesti-matedbytheindependentassessments.
Asat31December2014,a1%hypotheticalnegativeadjustmentoftheyieldusedbypropertyexpertsforthevaluationoftherealestateportfolioofthecompany(yieldorcapitalisationrate)wouldreducetheinvestmentvalueoftherealestateby€54millionor15%.Asare-sult,thedebtratioofthecompanywouldincreaseby6%to37%(inthisregard,alsoseethe“Sensitivityanalysis”inthePropertyreport).
Time of investment and divestment
Basedontheknowledgeofeconomicandrealestatecycles,onetriestoanticipateasaccuratelyaspossiblethedownwardandupwardmovementsofthemarkets.Thenormallyexpectedcourseoftheeconomiccyclescanbeassessedtothebestofone’sabilitybasedoneconomicindicators.Theinvestmentmarketandparticularly,therentalmarketforcommercialrealestaterespondwithacertainamountofdelaytothevolatilityoftheeconomicclimate.Clearperiodsofeconomicboomleadtohighermarketpriceswhichmay,atalaterdate,besubjecttosharpnegativeadjustments.Duringthisperiodofeco-nomicboom,VastnedRetailBelgiumwillpursueafairlymoderatepolicyoninvestmentssoastoreducetheriskofmakingill-timedinvestments.Inperiodsofeconomicrecession,thevalueandoccupancyrateofbuildingsusu-allydecline.However,oncetheeconomypicksupagain,amoreactiveinvestmentpolicyisfollowedinanticipa-tionoftheincreasingvalueofbuildingsandamoreactiverentalmarket.Inthisregard,duecareistakentopreventthedebtratioofthecompanyfromrisingabovethepermittedlevels.
The constant evolutions in the real estate and financial markets require a
continuous monitoring of the strategic, operational and financial risks, as well
as of the financial reporting and compliance risks in order to safeguard the
results and the financial situation of Vastned Retail Belgium.
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Report of the board of directors
Operating risks and management
Theserisksariseoutofdailytransactionsand(external)eventsexecutedwithinthestrategicframework:invest-mentrisks,rentalrisks,costcontrolrisks,risksrelatingtoadeterioratingconditionofbuildingsandtheriskofmajorworks,debtor’srisksandlegalandtaxrisks.
Investment risks
Themainrisksinherentininvestinginrealestatearerelatedtofuturenegativechangesinfairvalueofinvest-mentpropertiescausedprimarilybyincreasingvacancy,unpaidrents,declineinrentswhenconcludingnewleaseagreementsorextendingexistingleaseagreements,andsoilcontamination.
AtVastnedRetailBelgium,internalcontrolmeasuresaretakentoreducetheriskofmakingincorrectinvestmentdecisions.Forexample,theriskprofileisalwayscarefullyassessedbasedonmarketresearch,anestimateoffutureyields,ascreeningofexistingtenants,astudyofenviron-mentalandpermitrequirements,ananalysisoftaxrisks,etc.
Pursuanttoarticle49,§1oftheActof12May2014onregulatedrealestatecompaniesanindependentpropertyexpertvalueseachacquisitionordisposalofproperty.Foreachdisposal,theassessmentvaluedeterminedbytheindependentpropertyexpertisanimportantguidingprincipleforthetransactionvalue.VastnedRetailBelgiumalsocarefullyensuresthattheguaranteesofferedduringthetransactionremainlimited,intermsofbothdurationandvalue.
Foreachacquisition,VastnedRetailBelgiumalsocarriesoutatechnical,administrative,legal,accountingandtax“duediligence”basedoncontinuousanalysisproceduresandusuallywiththeassistanceofexternal,specialisedconsultants.
Rental risks
Theserisksarerelatedtothenatureandlocationoftherealestateproperty,theextenttowhichitmustcompetewithnearbybuildings,theintendedtargetaudienceandusers,thequalityoftherealestateproperty,thequalityofthetenantandtheleaseagreement.VastnedRetailBelgiumcontinuouslyrecordsthedevelopmentofthesefactors.Basedontheabovecriteria,ariskprofileisallocatedtoeachproperty,whichisregularlyevaluated(basedonthecompany’sownlocalknowledgeanddatafromexternalpartiesand/orvaluers).Dependingontheriskprofile,acertainyieldmustberealisedoveracertainperiod,whichiscomparedtotheexpectedyieldaccordingtotheinternalyieldmodel.Onthebasisofthis,ananalysisisdrawnupoftheobjectsinwhichadditionalinvestmentsshouldbemade,wherethetenantmixmustbeadaptedandwhichpropertiesareeligibleforsale.Vacancyandthevacancyriskarealsoanalysedeachmonth,forwhichtheexpirydatesoftheleaseagreementsaretakenintoaccount.Thefundstrivestomaintainabalanceddistributionofthedurationoftheleaseagreementsincompliancewithrulesdefinedintheapplicableleasinglegislation.Thisallowsfutureleaseterminationsandagreementrevisionstobeanticipatedingoodtime.
Cost control risks
Thereisariskofthenetyieldonrealestatepropertiesbeingnegativelyinfluencedbyhighoperatingcostsorinvestments.WithinVastnedRetailBelgium,severalinternalcontrolmeasuresareimplementedthatreducethisrisk,includingregularcomparisonofmaintenancebudgetswiththeactualrealityandapprovalproceduresatthetimeofenteringintomaintenanceandinvestmentcommitments.Theseapprovalproceduresentail,dependingontheamount,oneormoreoffersbeingrequestedfromvariouscontractors.Duringthisprocess,theassetmanagementdepartmentofVastnedRetailBelgiummakesacomparisonofprice,qualityandtimingoftheworks.Dependingonthesizeoftheamountquotedfortheworkstobecarriedout,therearevariouslevelsofapprovalwithinthecompany.
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Debtor’s risks
VastnedRetailBelgiumfollowsclearproceduresforscreeningtenantswhennewleaseagreementsareconcluded.Depositsorbankguaranteesarealsoalwaysrecquiredwhenenteringintoleaseagreements.Arentaldepositorbankguaranteeofsixmonths’rentisprovidedforinthestandardleaseagreementusedbyVastnedRetailBelgiumfortherentalofitsproperties.Asat31December2014,theactualweightedaveragedurationoftherentaldepositsandbankguaranteesisapproximately5months(orabout€8million).
Inaddition,thereareinternalcontrolproceduresinplacetoensuretimelyrecoveryofleasereceivablesandadequatefollow-upofrentarrears.Rentsarepayableinadvanceonamonthlyorquarterlybasis.Thefinancialandassetmanagementpayscloseattentiontolimitingrentarrears.Asat31December2014,thenumberofdaysofoutstandingcustomers’creditisonly2days.
Legal and tax risks
• Contractsandcorporatereorganisations
Beforeconcludingcontractswiththirdpartiesanddependingontheircomplexity,thesearereviewedbyexternalconsultants,toreducetheriskoffinanciallossanddamagebeingcausedtothecompany’sreputationduetoinadequatecontracts.VastnedRetailBelgiumisinsuredagainstliabilityarisingfromitsactivitiesoritsinvestmentsunderathirdpartyliabilityinsurancepolicycoveringbodilyinjuryuptoanamountof€12,4millionandmaterialdamage(otherthanthatcausedbyfireandexplosion)ofupto€0,6million.Further-more,thedirectorsandmembersofthemanagementcommitteeareinsuredfordirectors’liability,coveringlossesuptoanamountof€35million.
Corporatereorganisations,inwhichVastnedRetailBelgiumisinvolved(merger,demerger,partialdemerg-er,contributioninkind,etc.),arealwayssubjectto“duediligence”activities,guidedbyexternalconsultantstominimisetheriskoflegalandfinancialerrors.
• Insurance
TheriskofbuildingsbeingdestroyedbyfireorotherdisastersisinsuredbyVastnedRetailBelgiumforatotalreconstructionvalueof€124million(€81millionforinner-cityshopsand€43millionforretailwarehouses),ascomparedtoafairvalueofinvest-mentpropertiesof€357millionasat31December2014(€242millionforinner-cityshopsand€115millionforretailwarehouses).Coverisalsoprovidedforvacancyinthebuildingsduetotheseeventsfor36monthsrent.
• Taxation
Taxationplaysanimportantroleintheareaofrealestateinvestments(VAT,registrationfees,exittax,splitacquisitions,propertytax,etc.).Thesetaxrisksarecontinuouslyassessedandwherenecessary,theassistanceofexternalconsultantsisused.
• Regulatoryandadministrativeprocedures
Thechangesinregulationsonurbanplanninganden-vironmentalprotectioncanhaveanadverseeffectonthelong-termoperationofabuildingbyVastnedRetailBelgium.Thestrictenforcementandobservanceofurbanplanningregulationsbymunicipalgovern-mentscannegativelyinfluencetheattractivenessofthebuilding.Forexample,areductioninthedimen-sionsofabuildingimposedaspartofthoroughreno-vationcanalsoaffectitsfairvalue.
Theexittax,whichisduebycompaniesacquiredbytheRRECviamerger,iscalculatedwhiletakingCircularLet-terCi.RH.423/567.729of23December2004intoac-count.Thewayinwhichthiscircularletterisinterpretedorappliedinpracticecanalwaysvary.This“actualtaxvalue”,asthecircularletterreferstoit,iscalculatedbydeductingregistrationfeesorVAT,anddiffersfromthefairvalueofthepropertyasrecordedonthefund’sbal-ancesheet(inaccordancewithIAS40).
Finally,theintroductionofnewormorestringentstandardsforsoilcontaminationorenergyconsump-tioncanhaveamajorimpactonthecostsrequiredtocontinueoperatingtheproperty.
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Report of the board of directors
Antwerp, Leysstraat - 528 m2
34
Financial risks and management
Themajorfinancialrisksarethefinancingrisk,theliquid-ityriskandtheinterest-rateriskandtherisksassociatedwithbankingcounterparties.
Financing risk
Therealestateportfoliocanbefinancedpartlywithshareholders’equityandpartlywithborrowedcapital.Arelativeincreaseinborrowedcapitalwithrespecttoshareholders’equitycanresultinahigheryield(knownas“leverage”),butcanalsoimplyanincreasedrisk.Incaseofdisappointingyieldsfromrealestateandadecreaseinfairvalueofinvestmentproperties,ahighdegreeofleveragecangiverisetotheriskofnolongerbeingabletomeetinterestrateandrepaymentobligationsofborrowedcapitalandotherpaymentobligations.Insuchacase,itisnotpossibletoobtainfinancingwithnewborrowedcapitalorthiscanonlybeobtainedunderveryunfavour-ableterms.Tocontinuemeetingpaymentobligations,realestatemustthenbesold,whichentailstheriskthatthissalecannotbecarriedoutunderthemostfavourableconditions.Thevaluedevelopmentoftheretailportfolioislargelydeterminedbydevelopmentsintherealestatemarket.Forfinancingrealestate,VastnedRetailBelgiumalwaysstrivesforabalancebetweenshareholders’equityandborrowedcapital.
VastnedRetailBelgiumalsostrivestosecureaccesstothecapitalmarketbyprovidingtransparentinformationandmaintainingregularcontactswithbankersandcurrentorpotentialshareholdersandbyincreasingtheliquidityoftheshare.
Finally,withrespecttolong-termfinancing,itaimsforabalancedspreadofrefinancingdatesandaweightedaveragedurationbetween3,5and5years.Thismaybetemporarilyderogatedfromifspecificmarketconditionsrequirethis.Theaverageremainingdurationofthelong-termcreditagreementsasat31December2014is2,1years.
ThebankcreditagreementsofVastnedRetailBelgiumaresubjecttocompliancewithfinancialratios,whichareprimarilyrelatedtotheconsolidatedfinancialdebtlevelofVastnedRetailBelgiumoritsfinancialinterestcharges.TheseratioslimittheamountthatcouldstillbeborrowedbyVastnedRetailBelgium.Theseratioswererespectedasat31December2014.IfVastnedRetailBelgiumwerenolongertorespecttheseratios,thefinancingagreementsofVastnedRetailBelgiumcanbecancelled,renegotiated,terminatedorprematurelyrepaid.
VastnedRetailBelgiumislimitedinitsborrowingcapacitybythemaximumdebtratiopermittedbytheregulationsonregulatedrealestatecompanies.Withinthelegallydefinedlimitsofthe65%ratio,thetheoreticaladditionaldebtcapacityofVastnedRetailBelgiumamountstoapproximately€350millionincaseofanunchangedvaluationoftheexistingrealestateportfolio.Asat31December2014thedebtratioamountsto31%.
Liquidity risk
VastnedRetailBelgiummustgeneratesufficientcashflowtomeetitsday-to-daypaymentobligations.Ontheonehand,thisriskislimitedbythemeasuresmentionedunderoperationalrisks,whichreducestheriskoflossofcashflowduetoe.g.vacancyorbankruptciesoftenants.OntheotherhandVastnedRetailBelgiumhastodisposeofsufficientcreditmargintoabsorbfluctuationsinliquidityneeds.Forthispurposecashflowprognosesaremade.Inaddition,VastnedRetailBelgiumhasprovidedforasufficientcreditmarginwithitsbankerstoabsorbfluctuationsinliquidityrequirements.Inordertoavailitselfofthiscreditmargin,theconvenantsofcreditfacilitiesmustbecompliedwithonacontinuousbasis.
Asat31December2014,VastnedRetailBelgiumhasnon-withdrawncreditlinesof€31millionavailableforitsoperationsanddividendpayment.
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Report of the board of directors
Interest rate risk
Asaresultoffinancingwithborrowedcapital,theyieldisalsodependentoninterestratedevelopments.Inordertoreducethisrisk,whencomposingtheloanportfolio,thefundaimsforaratioofone-thirdshort-termborrowedcapital(withavariableinterestrate)andtwo-thirdslong-termborrowedcapital(withafixedinterestrate).De-pendingonthedevelopmentsininterestrates,derogationfromthismayoccur.Additionally,thecompanytries,withrespecttothelong-termborrowedcapital,toachieveabalancedspreadofthedatesofreviewoftheinterestratesanddurationofminimum3years.
Asat31December2014,75%ofthecreditlinesofthecompanyarefinancingwithafixedinterestrateorarefixedbyinterestrateswaps.25%ofthecreditfacilitieshaveavariableinterestrate.Thefixedinterestratesarefixedforaremainingaveragedurationof3,6years.
Risk associated with banking counterparties
Theconclusionofafinancingcontractorinvestmentinahedginginstrumentwithafinancialinstitutiongivesrisetoacounterpartyriskifthisinstitutionremainsindefault.Inordertolimitthiscounterpartyrisk,VastnedRetailBelgiumtakestheassistanceofvariousreferencebanksinthemarkettoensureacertaindiversificationofitssourcesoffinancinganditsinterestratehedges,withparticularattentionfortheprice-qualityratiooftheservicesprovided.
VastnedRetailBelgiummaintainsbusinessrelationswith5banks:
• banksprovidingfinancingare:INGBelgiumsa,BNPParibasFortissa,BayerischeLandesbanksa,BelfiusBanksaandKBCBanknv
• bankswhicharecounterpartiesfortheinterestratehedgesare:BNPParibasFortissa,INGBelgiumsaandKBCBanknv
VastnedRetailBelgiumregularlyreviewsthelistofitsbankingrelationshipsandtheextentofitsexposuretoeachofthese.Inthecurrentcontextofthecrisisinthebankingsector,itispossiblethatoneormoreofthebankingcounterpartiesofVastnedRetailBelgiumcanremainindefault.ThefinancialmodelofVastnedRetailBelgiumisbasedonastructuraldebtburden,whichimpliesthatitscashpositionatafinancialinstitutionisusuallyquitelimited.Asat31December2014,thiscashpositionamountsto€0,3million.
Financial reporting risks and management
Thefinancialreportingriskistheriskthatthecompany’sfinancialreportscontainmaterialinaccuracies,inwhichcasestakeholderswouldreceiveincorrectinformationregardingtheoperationalandfinancialresultsofthecompany,aswellastheriskthatthedeadlineimposedbytheregulationsforfinancialreportingisnothonoured.Thiscanresultindamagetothecompany’sreputation,andstakeholderscouldmakeinvestmentdecisionswhicharenotbasedontherightinformation,whichinturncouldresultinclaimsbeingfiledagainstthecompany.
Eachquarter,acompleteclosingandconsolidationoftheaccountsispreparedandpublished.Tooptimisethefinancialreportingprocess,thefinancedepartmentalwaysdrawsupaschedulewithdeadlinesforallthetaskstobecompleted.Subsequently,thefinancialteampreparesthequarterlyfiguresandbalancesheetsquarterlyfiguresarealwaysanalysedindetailandcheckedinternally.
Toreducetheriskoferrorsinthefinancialreporting,thesefiguresarediscussedwithinthemanagementcommitteeandtheiraccuracyandcompletenesscheckedviaanalysesofrentalincome,operationalcosts,vacancy,rentalactivi-ties,theevolutionofthevalueofthebuildings,outstand-ingdebtors,etc.Comparisonswithforecastsandbudgetsarediscussed.Afterthis,themanagementcommitteepresentsthefinancialstatementstotheauditcommitteeeachquarter,alongwithacomparisonofannualfigures,budget,andexplanationsforderogations.Inaddition,thehalf-yearlyandannualfiguresarealwayscheckedbythestatutoryauditor.
36
Compliance risks and management
Thisincludestheriskofaninadequatelevelofcompliancewithrelevantlawsandregulationsandtheriskofemployeesnotactingwithintegrity.VastnedRetailBelgiumlimitsthisriskbyscreeningitsemployeesatthetimeofrecruitment,bycreatingawarenessamongthemregardingthisriskandbyensuringthattheyhavesufficientknowledgeofthechangesintherelevantlawsandregulations,assistedinthisregardbyexternallegaladvisers.Toensureacorporatecultureofintegrity,VastnedRetailBelgiumhasinthepastdefinedaninternalcodeofconductandwhistleblowingrules.Moreover,thecompanyhasinstitutedadequateinternalcontrolmechanismsbasedonthefour-eyesprinciple.Thesemechanismsaredesignedtolimittheriskofdishonestbehaviour.
Article17,§4oftheRRECActstipulatesthatthepublicRREC“must take the necessary measures to be able at all times to access an appropriate independent compliance function so as to ensure compliance by the public RREC, its directors, e�ective leader, employees and agents with the laws relating to the integrity of the business of a public RREC”. Article6oftheRoyalDecreeonRRECstipulatesthatthepublicRREC “must take the necessary measures to be able to permanently access an appropriate independent compliance function. The compliance function is appropriate when it ensures with reasonable certainty compliance by the public
RREC, its directors, e�ective leader, employees and agents with the laws relating to the integrity of the business of a public RREC”.
The“independentcompliancefunction”canbeunderstoodasanindependentfunctionwithinthecompanyfocusedonexaminingandpromotingcompliancebythecompanywiththerulesrelatingtotheintegrityofitsbusinessactivities.Therulesconcernthoseresultingfromthecompany’spolicy,thestatusofthecompanyandotherlegalandregulatoryprovisions.Inotherwords,thisconcernsanelementofcorporateculture,withanemphasisonhonestyandintegrityandadherencetohighethicalstandardsinbusiness.Inaddition,boththecompanyanditsemployeesmustbehavewithintegrity,i.e.honestly,reliablyandinatrustworthymanner.
IngeTas,memberofthemanagementcommitteeandcfo,isappointedheadoftheindependentcompliancefunction.Shehasafour-yearmandateinrelationtotheindependentcompliancefunction.
Antwerp, Leysstraat - 140 m2
37
Report of the board of directors
Risks associated with the status of public regulated real estate company
Since27October2014,thecompanyhasthestatusofpublicregulatedrealestatecompany.Asapublicregulatedrealestatecompany,VastnedRetailBelgiumisgovernedbytheprovisionsoftheActof12May2014onregulatedrealestatecompaniesandtheRoyalDecreeof13July2014onregulatedrealestatecompanies.
AsapublicRRECVastnedRetailBelgiumisexposedtotheriskoffuturechangesinthelawgoverningRREC.Inaddition,thereisalsotheriskoflosingthestatusofpublicRREC.Inthatcase,VastnedRetailBelgiumwouldlose
theadvantageofthefavourabletaxsystemapplicabletoRRECs.Furthermore,thelossofthisstatuswouldgener-allybeseenasaneventwherebytheloansthatVastnedRetailBelgiumhastakenoutbecomedueimmediately.
RetainingthestatusofpublicRREChastheconstantattentionoftheboardofdirectorsandthemanagementcommittee.Assuch,thedistributionrequirementandfundinglimitsarecalculatedordeterminedperiodicallyandonanad-hocbasiswhenrefinancing,investingandpreparingthedividendproposal.
Otherpartiesinvolved
Statutory auditor
Thestatutoryauditor,appointedbythegeneralmeetingofshareholders,isthecooperativepartnershipDeloitteRéviseursd’EntreprisesSC,whichisrepresentedbyKath-leenDeBrabander,auditor.
Property experts
In2014,therealestateportfolioisvaluedeveryquarterbytwoindependentexperts,Cushman&WakefieldandCBRichardEllis,eachforapartoftheportfolio,basedonarotationprinciple.
Independent control functions
Aspartofitsinternalcontrols,eachpublicRRECmustimplementinternalauditprocedures,ariskmanage-mentpolicyandanintegritypolicy.Thisissupervisedbythepersonresponsiblefortheinternalauditfunction,theriskmanagementfunctionandthecompliancefunction,respectively,inaccordancewitharticle17,§3,4and5oftheRRECAct(togetherthesearethe“independentcontrolfunctions”).
InthecontextoftheconversionofthestatusofVastnedRetailBelgiumtoaRREC,on27October2014personsareappointedwhoareresponsiblefortheinternalauditfunction,theriskmanagementfunctionandthecompli-ancefunction.
3 Results (rental income and capital gains from sales less operating expenses and financial charges) are exempt from corporation
tax as far as the public RREC is concerned; only disallowed expenses and abnormal benefits are taxed. It can also be subjected
to the special secret commissions tax of 309% on commissions and remunerations paid that are not properly documented in
individual pay sheets and a summary statement.
38
Independent internal audit function
Theinternalauditcanbeunderstoodasanindependentevaluationfunction,embeddedintheorganisation,aimedatexaminingandevaluatingtheproperoperation,theeffectivenessandtheefficiencyoftheprocessesandproceduresappliedbythecompanyinthecarryingoutofitsactivities.Thepersonresponsiblefortheinternalauditcanprovidethevariousmembersoftheorganizationwithanalyses,recommendations,advice,evaluationsandinformationconcerningtheactivitiesexaminedinconnectionwiththeexecutionoftheirresponsibilities.
Thisinternalauditconcerns,amongotherthings,theoperation,effectivenessandefficiencyofprocesses,proceduresandactivitiesrelatingto:
• operationalmatters:qualityandsuitabilityofsystemsandprocedures,organisationalstructures,policiesandmethodsandresourcesusedinrelationtoobjectives
• financialmatters:reliabilityofaccounting,thefinancialstatementsandthefinancialreportingprocess,andcompliancewithapplicable(accounting)regulations
• managementmatters:qualityofthemanagementfunctionandstaffservicesinthecontextofthecom-pany’sobjectives
• riskmanagementandcompliance.
VastnedRetailBelgiumhasappointedtheexternalconsultantBDO(representedbyitspermanentrepresentative,LievenVanBrussel-Partner(BDORisk&AssuranceServices))asthepartyresponsiblefortheinternalaudit,withTacodeGroot,directorandmemberofthemanagementcommitteeofVastnedRetailBelgium,beingappointedasthenon-operationaleffectiveleaderwhocontrolstheinternalauditfunctionasexercisedbyBDOfromwithinthecompanyandisthusregardedashavingultimateresponsibilityforinternalaudit.ThemandateofBDOasexternalconsultantaswellasthemandateofTacodeGrootasthepersonultimatelyresponsibleforinternalauditisfor4years.
Independent risk management function
Inthecontextoftheriskmanagementpolicy,thecompanywillensurethattheaboveriskstowhichitisexposed(strategic,operational,financial,financialreportingandcompliancerisks)areassessed,controlledandmonitoredinaneffectivemanner.
Withthisaiminmind,VastnedRetailBelgiumhaschargedapersonwiththeriskmanagementfunctionwhoisresponsiblefor,amongotherthings,preparing,developing,monitoring,updatingandimplementingriskmanagementpolicyandriskmanagementprocedures.
FromtheconversionofthestatusofthecompanytopublicRREC,theindependentriskmanagementfunctioniscarriedoutbyIngeTas,memberofthemanagementcommitteeandcfo.IngeTashasafour-yearmandateinrelationtotheindependentriskmanagementfunction.
Independent compliance function
Rulesregardingcomplianceandintegrityareincludedinthefunctionofthecomplianceofficer.Inaccordancewithprinciples3.7and6.8togetherwithAnnexBtotheBelgianCorporateGovernanceCode2009oftheCorporateGovernanceCommission,thecompanyhasappointedIngeTas,memberofthemanagementcommitteeandcfo,ascomplianceofficer,responsibleforsupervisingcompliancewiththerulesonmarketabuseasimposedby,amongotherthings,theActof2August2002onsupervisionofthefinancialsectorandfinancialservicesandDirective2003/6/EConinsiderdealingandmarketmanipulation.Thecomplianceofficeralsoseestoitthatthecompanycomplieswiththelaws,regulationsandrulesofconductthatapplytoit.Toensureacorporatecultureofintegrity,VastnedRetailBelgiumsahasdefinedaninternalcodeofconductandwhistleblowingrules.
39
Report of the board of directors
Asstatedabove,the“independentcompliancefunction”canbeunderstoodasanindependentfunctionwithinthecompanyfocusedonexamining,andpromoting,compliancebythecompanywiththerulesrelatingtotheintegrityofitsbusinessactivities.Therulesconcernthoseresultingfromthecompany’spolicy,thestatusofthecompanyandotherlegalandregulatoryprovisions.Inotherwords,thisconcernsanelementofcorporateculture,withanemphasisonhonestyandintegrityandadherencetohighethicalstandardsinbusiness.Inaddi-tion,boththecompanyanditsemployeesmustbehavewithintegrity,i.e.honestly,reliablyandinatrustworthymanner.
IngeTas,memberofthemanagementcommitteeandcfo,isappointedheadoftheindependentcompliancefunction.Shehasafour-yearmandateinrelationtotheindependentcompliancefunction.
“Complyorexplain”-principe
In2014,thecompanydeviatedfromthefollowingstipulationsoftheBelgianCorporateGovernanceCode2009(explain):
Clauses 5.3 and 5.4 on the operation of committees (incl. appendix D and E)
Theboardofdirectorsdecidednottosetupanappoint-mentcommitteeoraremunerationcommittee.Itistheopinionoftheboardthattasksofthesecommitteesaretasksofthefullboardofdirectors.Thelimitedsizeoftheboardmakesanefficientdebateonthesesubjectspossible.
Clause 2.9 Company secretary
Theboardofdirectorshasnotdesignatedacompanysecretary,whoadvisestheboardofdirectorsregardingalladministrativemattersandtakescareofthecommunica-tionwithinandbetweenthemanagemententitiesofthecompany,asprovidedforbyclause2.9.Thelimitedsizeofthecompanyandtheboardofdirectorsmakesuchaposi-tionsuperfluous.
Determination of the age limit
TheCorporateGovernanceCharterofthecompanystipulatesthatdirectorsresignonthedateofthegeneralmeetingofshareholdersheldintheyearinwhichtheyturn70yearsold.Deviatingfromthisintheinterestofthecompanyisonlyallowedforspecificreasons.ThisisthecasewithHubertRooverswhoreachedthemaxi-mumage.Theboardofdirectorsbelievedthat,basedonhisvision,competence,knowledgeandyearsofexpe-rienceinrealestate,itisintheinterestofthecompanythatHubertRooverswhosemandateexpiresinApril2014wouldbeprolongedforoneyearandwouldendatthegeneralmeetingofshareholdersof29April2015.
Bruges, Steenstraat - 2.058 m2
40
41
Report of the management
committee
Bruges, Steenstraat - 941 m2
42
Inearly2014turnoverintheretailmarketstabilises,withslightgrowthinFebruary.Thepreviouslycautiousoutlookofretailershasbeenadjustedinthesecondquarterof2014duetosalesgrowthinMayandJunecomparedwiththesameperiodin2013.Despitethegenerallycautiouseconomicclimateandhesitantconsumerconfidence,retailactivitygrowsinAugust.Thedownwardpressureonrentscontinuesmostlyinhighstreets,whichmakethemarketfavourableforlessees.Inthelastquarterof2014,short-termeconomicgrowthremainsbelowexpecta-tionsandwagesremainlower.Governmentexpenditureincreases,whichhasapositiveimpactonGDP.
Owingtothepressureonrentsintherentalmarket,apowershifttakesplaceinthenegotiatingpositionfromownertotenant.
Intheinvestmentmarket,thelastquarteristhestrongest,withatotalvolumeof€337million.Withthis,thetotalvolumefor2014amountsto€631million,15%downon2013.
Sustainabilitycontinuestoplayalimitedroleintheretailmarketwhenchoosingaretaillocation.
Rentalmarket
Inthefirsthalfof2014,culminatinginthethirdquarter,rentsremainunderpressure.Theturnoverofretailersex-hibitedasimilarpatternwherebydemandfornewspaceremainsweak,eveninprimelocations.Theprimehighstreetsinthemajorcitiesforthemostpartdowellduetothe(planned)presenceofretailerssuchasPrimark,Marks&Spencer,ZaraandUniqlo,whichleaselargeproperties.Inthe6Belgianprimehighstreets,someprimelocationsalsoexperienceadownwardadjustmentinrents.Thereislessinterestthanbeforeinprimelocationsthatbecamevacant,andthereforefewerdealsclose.Concludingtrans-actionstakemoretime.Rentsinthehighstreetsstabilisesinthesecondhalfoftheyear.Thesecondaryhighstreetsandsmallercitiescontinuetograpplewithvacanciesandpressureonrents.Sufficientreturnforretailersiscrucial,especiallyintheselocations.Generally,thereisgreateravailability.
Afterthreequarterswithratherlowactivity,thelastquarterof2014showsaslightimprovementintherentalmarketwithatake-upof134.000m²,accountingfor40%oftotaltake-upin2014,inparticularthankstosomemajorleases.Forexample,Primarkisgoodforatotalof
12.150m²spreadover3locations,justlikeMediamarktwith11.550m²,alsoat3locations.
Thereisgrowingdemandforspaceoutsidecitiesonthepartofseveraltraditionalcityretailers.Thereisatrendtowardshigherqualityarchitecturewhich,combinedwithmoreattractivepricesontheperiphery,alsoattractsbetterinner-citybrands,forexampleH&M.This,how-ever,onlyappliestothebestlocationsinthissegment.Theperipheryismoreoverthemostactiveandbest-performingsegmentin2014,especiallyinretailparks.Demandishigherinthissegmentcomparedtotherestofthemarket.ExpandingretailerssuchasAlbertHeijnandtypicalcitycentreretailersbecomeextremelyactiveintheselocations.
Intermsofsupply,onlyDocksBruxselstartsconstructioninthesecondquarteranditisexpectedtobecompletedby2016.TheothertwoprojectsinthepipelineinthenorthofBrussels,UplaceandNeo-Europea,arefacinglegalhurdlesandareheadingtowardslongerperiodsofdelay.
THERETAILPROPERTYMARKETIN20144
4 The market information in this text is based on Cushman & Wakefield, Marketbeat Retail Snapshot Q1-Q4, Cushman & Wake-
field, Vastned Retail Belgium Portfolio 31 December 2014, market overview p. 12 - 18; CBRE Belgium Retailer Survey 2014,
p. 2 - 5; CBRE interview Kim Verdonck, dated 14/1/2015 and CBRE’s annual review of retail activity in 2014.
43
Report of the management committee
Investmentmarket
Inthefirstquarterof2014,onlyalimitednumberoftransactionshavebeenconcludedwithatotalvalueof€73million.Activityremainshighwithanumberofmedium-sizedandlargetransactionsinthepipelineforthesecondquarter.Thelargesttransactionistheacquisi-tionof3HuboshopsbyRetailEstatesfor€10,6millionandayieldof6,4%.
Inthesecondquarterof2014atotalof€113millionintransactionshavetakenplace:mainlyaseriesoftransactionsinvolvingsmallershoppingtownsandretailwarehouses.ThelargesttransactionistheacquisitionoftheCarrefourCentreinEvere(Brussels)fromRedevcobyTeychenéforapproximately€25million.Primeyieldsremainstableat4,5%forthepremiumcityhighstreetshops.
Thelargertransactionsinthepipelinetakemoretimethanexpectedandprovideaslightincreaseininvestoractivityto€148millioninthethirdquarter.Thisisprimarilydrivenbysmallscalehighstreetdealspressuringprimeyieldsfurtherto4,25%inthepremiumhighstreetlocationsinBrussels,andto4,5%inGhent.
ThelargesttransactionistheacquisitionoftheRingShoppingCentreKortrijkfromRedevcobyWereldhaveBelgiumforapproximately€40million.
Otheracquisitions:theH&MshopinVeldstraatinGhentissoldtoVastnedRetailBelgiumforabout€27,7millionandTommyHilfigerinthesamestreetisboughtbyaprivateinvestorforapproximately€12,6million.FrenchREITSofidysaboughtvarioushighstreetlocationsinseveralBelgiantownsfromBermasofor€16million.
Notsurprisingly,thelastquarterof2014isthestrongestwithatotaltransactionvolumeof€337million.Withthis,thetotalvolumefortheyearamountsto€631million,15%downon2013.Inthefirstthreequartersitmainlyinvolvesmallscalehighstreettransactions;inthelastquartertheeye-catcherismainlythe“out-of-town”segmentwith9transactionstotalling€159million.
VastnedRetailBelgiumhasrecordedthelargesttransactionwiththesaleofaportfolio,whichincludesJulianusShoppinginTongeren,toaFrenchprivateinvestorfor€35,6million.
SinceJuly2014,competenceforretailpermitsisregionalised.InFlanders,apolicyisexpectedthattendstosupportthecitycentres.InitsdraftmemorandumstheWalloondecreeprovidesforlimitingpermitsto20years.Theeffectofthisisyettobeseen.
Sustainability
Sustainabilityisnotasimportantforretailpropertiesasitisintheofficemarket.Intheretailmarket,sustainabil-ityplaysamuchsmallerrolewhenchoosingalocation.Whennewretailwarehousesandshoppingcentresarebuilt,however,attentionisdefinitelypaidtothesustain-abilityaspectsoftheproperty.
Thisdoesnotmeanthatsustainabilityisnotimportanttoretailers:theythinkaboutenvironmentallyefficientlightingandairconditioning,andsustainabilityisalsoanimportantissuewithregardtotheproductionprocess.However,intermsofthepropertyitself,sustainabilityisoftennotacriterion.
Brussels, chaussée d’Ixelles - 6.604 m2
44
Investments
Regardingnewinvestments,thefocusofVastnedRetailBelgiumisonhigh-qualityretailpropertyinprimelocationsinthecentreofmajorcitiesinBelgiumsuchasBrussels,Antwerp,GhentandBruges.
Acquisition of an inner-city shop in a prime location on Veldstraat, Ghent
Afterthepurchasein2013ofthemagnificenthistoricpropertyinBrugesatSteenstraat38,inlateJuly2014,VastnedRetailBelgiumagainsucceedsinacquiringaninner-cityshopinaprimelocation,thistimeatVeldstraat23-27inGhent,whichisleasedtoH&M.TheshopislocatedinthebestpartofVeldstraat,onthecornerwithBennesteeg,andhasafrontageof25metersonVeld-straatand28metersonBennesteeg.
GhentisoneofthetopthreeretailcitiesinBelgium,andthefootfallinVeldstraataverages150.000peopleperweek.VastnedRetailBelgiumstrengthensitspositionwiththisacquisitioninGhent,whereitalsoownsotherretailpropertiesonVeldstraat,ZonnestraatandVolderstraat.
Thecommercialsurfaceareaofthisinner-cityshopconsistsofagroundfloorof1.025m2andafirstfloorof850m2.Thefirstandsecondfloorsalsohavestorageandsocialareas,aswellastechnicalareas.
H&MisaSwedishfashionchainwithmorethan3.200branchesinover54countriesandapproximately116.000employees.BesidesH&M,thegroupconsistsof5otherin-dependentbrands:COS,Monki,Weekday,CheapMondayplus‘&OtherStories’,whichwaslaunchedinMarch2013.
Thisretailpropertyisacquiredforaninvestmentvalueofroughly€27,7millionandatayieldinlinewiththemarket.Thisacquisitionwillgeneratearentalincomestreamforthecompanyofroughly€1,1millionannuallyandcontributetotheconsolidatedoperatingdistributableresult.Thetransactionisfundedfromthecompany’sexistingcreditlinesandviathetakeoveroftheloansoftheacquiredcompany.
IMPORTANTDEVELOPMENTSIN2014
The acquisition of the shop in Ghent fits Vastned Retail Belgium’s investment
strategy of focusing on inner-city shops in prime locations in the most
popular shopping streets of larger cities with firmly based shopping precincts.
Ghent, Veldstraat - 2.690 m2
45
Report of the management committee
Divestments
ItisthestrategyofVastnedRetailBelgiumtoreduceinthelongtermtheshareofretailwarehousesinthecompany’srealestateportfolioandtomovetowardsa75%shareofinner-cityshopsintheportfolio,preferablyinprimelocations.
ThepropertiesofVastnedRetailBelgiumarecontinuouslyevaluatedbasedontheirfuturepositioninthisstrategyandtheircontributiontoreturn.Thisway,propertiesareregularlydestinedforsaleforvariousreasons:
• thepropertiesarelocatedwherenogrowthisex-pectedorwhereattractivenesshasdecreased
• thesearedetachedpropertiesthatareincreasinglylesssoughtafterbyretailers.
In2014,VastnedRetailBelgiumhasdivestedatotalof19non-strategicretailwarehousesandinner-cityshopsinsecondarylocationswithatotalfairvalueof€43million.
ThesedivestmentsinvolvetheJulianusShoppinginTongerenandretailpropertiesinVilvoorde,Hoboken,Bree,Chênée,Flémalle,Genk,LaLouvière,Malmédy,Mons,Sint-Pieters-Leeuw,Waterloo,AntwerpandWesterlo.HasseltandWilrijkwithatotalgrossretailareaofroughly39.000m².
Thetotalsellingpriceisonaverageabout1%lowerthanthefairvalueasat31December2013(fairvalueasdeterminedbytheindependentpropertyexpertofthecompany).Thenetsellingprice(includingafterdeductionofsalescostsandVATadjustment)isapproximately4%lowerthanthefairvalueasat31December2013.The19retailpropertiestogethermakeup12%ofthetotalfairvalueofthecompany’srealestateportfolio.
Thecombinedannualrentalincomeofthedivestedretailpropertiesamountsto€3,6million,orroughly16%ofthecompany’stotalannualrentalincome.
“The divestments we have carried out in 2014 are fully in line with our
strategy to focus on shops in prime locations in town centres. As a result of
these divestments, combined with the acquisition of the prime retail property
in Ghent’s city centre, the occupancy rate of the portfolio has increased to
almost 98% and the share of inner-city shops in the real estate portfolio has
increased to 68% as at 31 December 2014.”
JEAN-PAULSOLS-CHIEFEXECUTIVEOFFICER
In 2014, Vastned Retail Belgium has divested 19 non-strategic retail
warehouses and inner-city shops in secondary locations with a total fair
value of € 42,9 million, approximately 12% of its total real estate portfolio.
46
Intensificationofinvestmentstrategy
Overthepastyear,VastnedRetailBelgiumhasachieveditsstatedgoalofincreasingtheshareofinner-cityshopsintheportfolioto65%.Basedoncurrentlyidentifiabletrends,VastnedRetailBelgiumintendstointensifythisstrategybypursuingatargetof75%forpremiumcityhighstreetshops.Premiumcitiesareattractiveshoppingcitiesthathavepositivedemographicgrowth,strongpurchasingpower,ahistoriccitycentre,arehighlyattractivetotouristsandarehometonationalandinternationalinstitutionsanduniversities.TheseincludecitiessuchasAntwerp,Brussels,BrugesandGhent.VastnedRetailBelgiumwillfocusexclusivelyontheprimehighstreetsinthehistoriccentresofthesecities.Atpresent,49%oftheportfoliohasalreadybeeninvestedinthesetypesoflocations.Theaimistoachievethestrategicgoalofinvesting75%oftheportfoliointhesemarketsthroughacquisitionsanddivestments.Fortheremaining25%,VastnedRetailBelgiumwillcontinuetoinvestinhigh-qualityretailwarehouselocationsandinner-citylocationsinothercities.
Evolutioninfairvalueofrealestateportfolio
In2014,thefairvalueoftheinvestmentpropertiesofVastnedRetailBelgiumdecreasesby€5millioncom-paredtothefairvalueasat31December2013andamountsasat31December2014to€357million(€362millionasat31December2013).
Thisdecreasecanbedetailedasfollows(inmillion€):
Fair value of the portfolio at 1 January 2014 362
• acquisitionsofinvestmentproperties 27• disposalsofinvestmentproperties -43• investmentsintheexistingportfolio 0• unrealisedcapitalgains 16• unrealisedcapitallosses -5
Fair value of the portfolio at 31 December 2014 357
Thisdecreaseisthecombinedeffectoftheinvestmentinaninner-cityshopinGhentwithafairvalueof€27million,thedivestmentof19non-strategicpropertieswithatotalfairvalue(asat31December2013)of€43millionandtheincreaseinfairvalueoftheexistingrealestateportfolioby€11million.
Fair value of investment properties (%)
Ghent, Veldstraat - 2.690 m2
31.12.2013
€ 362million
€ 357million
31.12.2014
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Report of the management committee
Leases
Intheareaofleases,2014hasbeenanactiveyearforVastnedRetailBelgium.Atotalof27rentaltransactionsareconcludedthatarevaluedat€3,6millioninannualrentalincome.Thisrepresentsroughly16%ofthecompa-ny’stotalannualrentalincome.Theaveragerentincreaseinthesetransactionsisabout5%.In2014,21agreementshavegoneintoforce,withtheresttocommencein2015orlater.
Givencurrentmarketconditions,itisoftennotpossibletorealiseasubstantialincreaseinrentwhenleasingtonewtenants,especiallyinsecondarylocationswhereitisoftennecessarytolowertherent.Whenleaseagreementsareextendedwithexistingtenants,arentincreasecanbeachievediftheseinvolveprimelocations,bothinthecitycentresofthetopshoppingcities(Antwerp,Brussels,GhentandBruges)andinthebestretailwarehouseparks(GoudenKruispuntinTielt-Winge).
Thisisalsoreflectedinthefairvalueoftheinvest-mentpropertiesofVastnedRetailBelgium,whichhaveexperiencedstrongeryieldsforprimelocationsoverthecourseof2014.Moreover,theimprovementmadetothequalityoftherealestateportfolioviatheacquisitionofaninner-cityshopinaprimelocationinGhentandthedivestmentof19non-strategicpropertieshascausedtheaverageyieldintherealestateportfolioofVastnedRetailBelgiumtodecreaseforbothretailwarehousesandinner-cityshops.Asat31December2014,theaverage yield ofretailwarehousesis6,9%(7,3%asat31Decem-ber2013)andforinner-cityshopsthisis5,2%(5,6%asat31December2013).
Theoccupancy rateoftheportfolioamountsto97,9%on31December2014.Theincreaseof2,5%relativeto31December2013istheresultofdivestmentsinpropertieswithalowoccupancyrateaswellasleases,mainlyinBrussels,PhilippevilleandTurnhout.Theoccupancyrateoftherealestateportfolioexcludingbuildingsundergoingrenovationis98,5%asat31December2014(5,6%asat31December2013).
Occupancy rate (%)
31.12.2013
95,4%97,9%
31.12.2014
48
Lease renewals and renegotiations with existing tenants
In2014,VastnedRetailBelgiumhasrenewed14leaseagreementsforanannualrentalvolumeofroughly€2,5million,orapproximately11%ofthecompany’stotalrentalincome.Thenewrentfortheseleaseagreementsisonaverage7%higherthantherentcurrentlybeingchargedfortheseleaseagreements.
Therehavebeen10transactionsconcludedfor retail warehouse locationsforanannualrentalvolumeof€0,8millionandwithanaveragerentincreaseof18%.Sixofthese10leaseagreementsareextendedbasedonthesameleaseterms.IntheretailwarehouseparkinPhilippeville,a7%increaseinrentisattained.VastnedRetailBelgiumalsocouldmanagetoconcludetwomajortransactionsforleaseextensionsintheGoudenKruispuntretailparkinTielt-Winge.Therentscharged,whichovertheyearshadfallenbelowthemarketrent,areraisedbyalmost50%overthepreviousrentlevel.Thisisevidenceofthequalityofthistopretailwarehouseproject.Therecontinuestobeamarkeddiscrepancybetweentherentlevelsofprimaryandsecondarylocationsin2014.
PropertiesinthecentresofthemajorBelgianshoppingcitiesremainpopularamongcompetitiveretailers,andexistingtenantsarewillingtopayhigherrentinordertopreservetheirnamerecognitionatcertaingoodloca-tions.Asaresult,VastnedRetailBelgiumhasattaineda2%rentincreaseonleaseextensionsforits inner-city shopsonanannualrentalvolumeof€1,7millioninfourtransactions.Thisrentalvolumerepresentsroughly8%ofthecompany’sannualrentalincome.TwoofthesefourleaseextensionsareconcludedwithH&MfortheirshopsonSteenstraatinBrugesandonBondgenoten-laaninLeuven.Theseleaseextensionsareconcludedforthesameleasetermsasthosecurrentlyinforce,andthetenantisalsoundertakingmajorrenovationsatitsownexpense.H&McompletelyrenovateditsshoponLeuven’sBondgenotenlaan.ForitsbuildinginBruges,H&Malsocompletelyrenovatedandexpandedtheshop,whichoccupiesthreelevels(ground,1stand2ndfloors).Theadjoininggroundfloorshop-whichuntilendofSeptemberisstillbeingoperatedbyForMen-aswellasvariousstorageroomsonthe1stand2ndfloorsarenowincorporatedintothecurrentH&Mshop.
Philippeville, Zoning des Quatre Bras - 3.689 m2 Louvain, Bondgenotenlaan - 1.495 m2
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Report of the management committee
New leases
In2014,13transactionsareconcludedwithnewtenantsthatgenerateanannualrentalvolumeof€0,9million.Therentforthesetransactionsisonaverage1%lowerthanthepreviousrent.
Thisdeclineinrentisconcentratedintheretail ware-houses,whichgenerateanannualrentalvolumeof€0,2millionin9transactionswithanaveragerentdecreaseof6%.Alloftheseleasesareforpropertiesinsecondarylocations.4ofthe9rentaltransactionsareconcludedforvacantunitsintheRooseveltcenterinVilvoorde,whichisdivestedinlateDecember2014.IntheretailparkinPhilippeville,anewleaseagreementisconcludedwitharentincreaseof11%fortheopeningofaCassis-Paprikashopof400m².Cassis-PaprikaisanattractiveBelgianfashionretailerthatalsohasapresenceinFrance,LuxembourgandtheNetherlands.
Forthe inner-city shops,fourtransactionsareconcludedfor€0,7millioninannualrentalincome.Thesetransactionshaveproducedanaveragerentincreaseof1%comparedtothepreviouslevel.Inlate2014,G-StarRawhasopenedaflagshipstoreinaprimelocationatHuidevettersstraat12inAntwerp.Untilrecently,thisshopwasleasedto
alocalmulti-brandshop.G-StarRawhascompletelyrenovatedthestore.Withasurfaceareaof530m²,theAntwerpbranchisthesecond-largestG-StarRawoutletintheworld.
Onenewinner-citytenantistheFrenchchainTheKaseinJardind’HarscampinNamur.ThisnewcomerontheBelgianmarketisanestablishedretailchaininFrancethathasinternationalgrowthaspirations.TheKasespecialisesin(personalised)casesforsmartphonesandtablets.
OneoftherentaltransactionsinvolvestheleaseofthepropertylocatedatGasthuisstraat32inTurnhout.Turnhout’scitycentrehasstruggledwithvacanciesforseveralyears,andthisstrategicallylocatedproperty-onthebestsectionofthehighstreet–hasbeendifficulttolease.Thepropertyhasalargeretailsurfaceareaofover1.500m²splitovertwofloors.SincelateOctober2014,theSpanishfashiongiantDesigualhasoccupiedthegroundfloorofthebuilding.DesigualisalreadyatenantofVastnedRetailBelgiuminJardind’HarscampinNamur,andowingtotheexistingagreementsatransac-tionisreadilyconcluded.
Antwerp, Huidevettersstraat - 684 m2 Namur, Place de l’Ange - 2.270 m2
50
Changefrompropertyinvestmentfundtoregulatedrealestatecompany(RREC)
AsaresultofthepublicationoftheActof12May2014concerningregulatedrealestatecompanies(RRECAct)andtheRoyalDecreeof13July2014onregulatedrealestatecompanies(RREC-RD),VastnedRetailBelgiumdecidedtochangeitsstatusandadoptthatofapublicregulatedrealestatecompany(“publicRREC”).
Firstly,itistheintentionofthecompanytopositionitselfasanREIT(RealEstateInvestmentTrust)toimprovevisibilityandunderstandingonthepartofinternationalinvestorsandtoavoidbeingseenasan“alternativeinvestmentfund”,aqualificationwhichhenceforthwillapplytopropertyinvestmentfunds,whichwouldmeanthattheeconomicmodelforanalternativeinvestmentfund,subjecttotheActof19April2014onalternativeundertakingsforcollectiveinvestmentandtheirmanagers,whereintheAIFMDdirectiveistransposed,wouldhavetoberespected.
Inthiscontext,VastnedRetailBelgiumsubmitteditspermitapplicationasapublicregulatedrealestatecom-panytotheFSMAon14August2014.ThecompanywassubsequentlygrantedthestatusofpublicregulatedrealestatecompanybytheFSMApursuanttoarticles9,§3and77oftheRRECActon22September2014,underthesuspensiveconditionofachangeinthearticlesofassocia-tionofthecompanyandcompliancewiththestipulationsofarticle77,§2andfollowingoftheRRECAct.
Tothisend,thecompanythenconvenedanextraordinarygeneralmeetingon27October2014toamendthearti-clesofassociationofthecompanyinviewofthechangeofstatusfromarealestateinvestmentfundtoapubliclyregulatedrealestatecompany.Thisextraordinarygeneralmeetingapprovedthetransformationwitha100%majority.Sincenorightofwithdrawalwasexercisedandallsuspensiveconditionstowhichtheamendmenttothearticlesofassociationwassubjectedwereimmediatelymet,asfrom27October2014,VastnedRetailBelgiumhasacquiredthestatusofpublicRREC.
Asapublicregulatedrealestatecompany,thecompanyisnolongersubjectedtothestipulationsoftheRoyalDecreeof7December2010regardingpropertyinvestmentfundsandtheActof3August2012regardingcertainformsofcollectivemanagementofinvestmentportfolios,andsince27October2014theapplicablelegislationconsistsoftheRRECActandtheRRECRoyalDecree.
VastnedRetailBelgiumispleasedwiththisnewstatusthatisbetteradaptedtotheeconomicrealityandprovidesamodifiedlegalframeworkthatisinlinewiththecapacityofVastnedRetailBelgiumasanoperationalandcommercialrealestatecompany.ThisstatusallowsVastnedRetailBelgiumtocontinueitscurrentoperationsintheinterestofthecompany,itsshareholdersandotherstakeholders.
51
Report of the management committee
Namur, Place de l’Ange - 2.270 m2
52
Consolidatedincomestatement
inthousands€ 2014 2013
Rentalincome 22.011 21.743
Rental-relatedexpenses -81 -72
Propertymanagementcostsandincome 43 37
Property result 21.973 21.708
Propertycharges -2.468 -2.276
Generalcostsandotheroperatingcostsandincome -1.223 -989
Operating result before result on portfolio 18.282 18.443
Resultondisposalsofinvestmentproperties -1.870 273
Changesinfairvalueofinvestmentproperties 11.102 -3.030
Otherresultonportfolio -1.305 -154
Operating result 26.209 15.532
Financialresult(excl.changesinfairvalue-IAS39) -4.191 -4.891
Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39) -1.240 1.586
Taxes -290 -33
NET RESULT 20.488 12.194
Note:
Operatingdistributableresult6 13.801 13.448
Resultonportfolio 7.927 -2.911
Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39)andothernon-distributableelements
-1.240 1.657
RESULTPERSHARE 2014 2013
Numberofsharesentitledtodividend 5.078.525 5.078.525
Weightedaveragenumberofshares 5.078.525 5.078.525
Netresult(€) 4,03 2,40
Grossdividend(€) 2,72 2,65
Netdividend(€) 2,0400 1,9875
FINANCIALRESULTS5
5 Comparative figures for the financial year 2013 between brackets.
6 For the calculation of the operating distributable result: see Note 13 of the Financial report.
53
Report of the management committee
In2014,rental incomeofVastnedRetailBelgiumamountsto€22,0million(€21,7million).Theincreaseof€0,3millionor1%comparedto2013ismainlyduetotheacquisitionoftwopremiumhighstreetsshopsinthecentreofBrugesinMay2013andinGhentinJuly2014,aswellastoindexationsofexistingleaseagreementsandrealisedrentalrenewals,partlycompensatedbythedivestmentofapproximately12%oftherealestateportfolioin2014.
Property chargesofthecompanyincreasein2014by€0,2millionto-€2,5million(-€2,3million)asaresultofhighertechnicalcostsforplannedroofrenovationsandincreasedcommercialcosts,mainlybrokers’feesforlettings.
General costs and other operating costs and income increasein2014to-€1,2million(-€1,0million)mainlythroughadviceandpublishingcostsforthestatuschangeofthecompanyfromrealestateinvestmentcompanyintopublicregulatedrealestatecompany.
Throughtheincreaseinrentalincome,compensatedbytheincreaseofpropertychargesandgeneralcosts,theoperating result before result on portfoliodecreasesin2014by€0,1millionto€18,3million(€18,4million).
The operating margin of Vastned
Retail Belgium is 83% for financial
year 2014 (85% in 2013).
Theresult on disposals of investment propertiesamountsto-€1,9million(€0,3million)andcomprisesthelosswhichisrealisedonthedivestmentof19non-strategicretailwarehousepropertiesandinner-cityshopsinsecondarylocations.Thetotalsalespricesofthedivestedpropertiesisapproximately1%lowerthanthefairvalueasat31December2013(fairvalueasestimatedbytheindependentpropertyexpertofthecompany).Thenetsalesprice(afterdeductionofthesalescostsandtheVATrevision)isapproximately4%lowerthanthefairvalueasat31December2013.
In2014thefairvalueoftheexistingrealestateportfolioofVastnedRetailBelgiumincreasesby3%comparedtotheendof2013.Thechanges in fair value of invest-ment propertiesin2014arethuspositiveandamountto€11,1millioncomparedtothenegativechangesinfairvalueof-€3,0millionin2013.Thisincreaseinfairvaluein2014comesmainlyfromretailpropertiesinprimelocations,intheinner-cityofimportantcitiesaswellasinretailparksintheperipherythroughthesharpeningoftheyieldsduring2014.
In 2014 the fair value of the existing
real estate portfolio of Vastned
Retail Belgium increases by 3%
compared to the end of 2013 which
confirms the quality of the portfolio.
Notwithstanding the divestment of approximately 12% of the real estate
portfolio, rental income of Vastned Retail Belgium increases in 2014 by € 0,3
million or 1% through the acquisition of two inner-city shops in prime loca-
tions, indexations and rental renewals.
54
Theother result on portfolioamountsto-€1,3millionandcomprisestheimmediatewriteoffofthedifferenceinpriceof-€1,1millionontheacquisitionofthesharesofthecompanyVeldstraat23-27sa(ownerofthepre-miumhighstreetshopinGhent)attheendofJuly2014.IFRS3isnotapplicableonthisacquisition.
Thefinancial result (excl. changes in fair value of financial assets and liabilities (ine�ective hedges - IAS 39)) amountsforfinancialyear2014to-€4,2million(-€4,9million).Thedecreaseof€0,7millionor14%resultsmainlyfromthestartofinterestrateswaps(forhedgingcreditfacilitieswithavariableinterestrate)atlowerinterestratesthantheinterestrateoftheinterestrateswapswhichhaveexpired.Theaverageinterestrateofthecompanyfor2014decreasesto3,2%includ-ingbankmarginscomparedto4,0%forfinancialyear2013.
For financial year 2014, the average
interest rate of the outstanding
credit facilities of the company
amounts to 3,2% including bank
margins (4,0% in 2013).
Changes in fair value of financial assets and liabili-ties (ine�ective hedges - IAS 39)in2014includetheincreaseofthenegativemarketvalueofinterestrateswapsthat,inlinewithIAS39,cannotbeclassifiedascashflowhedginginstruments,foranamountof-€1,2million(€1,6million).Thisresultsfromthedecreaseoftheinterestratecurve.
Thenet resultofVastnedRetailBelgiumamountsto€20,5million(€12,2million)forfinancialyear2014andcanbedividedin:
• theoperating distributable resultof€13,8million(€13,4million)oranincreaseof€0,4millionorapproximately3%mainlythroughlowerfinancingcostsasaresultofinterestrateswapsthatstartatlowerinterestrates
• theresult on portfolioof€7,9million(-€2,9million)mainlyasaresultoftheincreaseinfairvalueoftheinvestmentproperties
• changes in the fair value of financial assets and liabilities (ine�ective hedges - IAS 39) and other non-distributable elements foranamountof-€1,2million(€1,7million).
Forfinancialyear2014,theoperating distributable result ofVastnedRetailBelgiumincreasesthusto€13,8million(€13,4million).With5.078.525sharesbeingissued,thisrepresentsagross dividendof€2,72pershareforfinancialyear2014comparedto€2,65in2013.Herewiththegrossdividendyieldamountsto4,7%basedonthesharepriceasat31December2014.
55
Report of the management committee
Consolidatedbalancesheet
inthousands€ 31.12.2014 31.12.2013
ASSETS
Non-currentassets 357.023 362.265
Currentassets 5.391 2.768
Total assets 362.414 365.033
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity 242.967 235.467
Sharecapital 97.213 97.213
Sharepremium 4.183 4.183
Reserves 120.910 121.877
Netresultofthefinancialyear 20.494 12.194
Minorityinterests 167 0
Liabilities 119.447 129.566
Non-currentliabilities 91.632 116.965
Currentliabilities 27.815 12.601
Total shareholders’ equity and liabilities 362.414 365.033
DATAPERSHARE 31.12.2014 31.12.2013
Numberofsharesentitledtodividend 5.078.525 5.078.525
Netvalue(fairvalue)(€) 47,81 46,37
Netvalue(investmentvalue)(€) 49,59 48,13
NetassetvalueEPRA7(€) 48,71 47,08
NNNNetassetvalueEPRA(€) 47,74 46,32
Sharepriceonclosingdate(€) 57,97 52,40
Premiumtonetvalue(fairvalue)(%) 21% 13%
Debtratio(max.65%) 31% 34%
7 Financial performance indicator calculated according to Best Practices Recommandations of EPRA (European Public Real
Estate Assocation). See also www.epra.com. These data are not required by regulation regarding regulated real estate compa-
nies and are not subject to a control by government authorities.
56
Assets
Asat31December2014,thefairvalueoftheinvest-ment propertiesofVastnedRetailBelgiumamountsto€357million(€362million).Thisdecreaseof€5millionin2014comparedto31December2013comesmainlyfrom:
• thedivestmentof19non-strategicretailwarehousepropertiesandinner-cityshopsinsecondaryloca-tionswithatotalfairvalueof€42,9millionasat31December2013
• theacquisitionofapremiumhighstreetshopinaprimelocationonVeldstraatinGhentwithafairvalueofapproximately€26,7million
• anincreaseinfairvalueoftheexistingrealestateport-folioof€11,1millionmainlyforretailpropertieslo-catedinprimelocations,intheinner-cityofimportantcitiesaswellasinretailparksintheperipherythroughthesharpeningoftheyields.
Asat31December2014,therealestatepropertiesarevaluedat€365million(investmentvalue)bytheinde-pendentpropertyexperts.Thefairvalueistheinvestmentvalueminusthehypotheticaltransactionrightsandcoststhatmustbepaidintheeventofanyfuturepotentialdisposal.
Current assetsamountto€5million(€3million)andconsistmainlyof€4millionassetsheldforsaleforwhichthenotarialdeedsstillhavetobeexecuted.
Thanks to a strict credit control
the number of days of outstanding
customers’ credit is only 2 days.
As at 31 December 2014, the fair
value of the real estate portfolio
amounts to € 357 million.
Antwerp, Schuttershofstraat - 66 m2
57
Report of the management committee
Liabilities
Shareholders’ equityofthecompanyamountsto€243million(€235million).Thesharecapital(€97million)andtheshare premium(€4million)haveremainedunchanged.Thenumberofsharesentitledtodividendamountsto5.078.525asat31December2014.
In 2014 the free float of the share
remains unchanged at 34,5%.
Thereservesofthecompanyamountasat31December2014to€121million(€122million)andconsistmainlyof:
• areserveforthebalanceofthechangesinfairvalueofrealestatepropertiesfor€123million(€126million)composedofthereserveforthebalanceofthechangesintheinvestmentvalueofrealestatepropertiesfor€132million(€135million),andareservefortheimpactonthefairvalueofestimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties.Indeed,inaccordancewiththeBeamainterpretationofIAS40(publicationoftheBelgianAssociationofAssetManagersof8February2006),therealestateportfolioisvaluedatfairvalue.Thedifferencewiththeinvestmentvalueisshownseparatelyinshareholders’equity.Asat31December2014,thisdifferenceamountsto-€9million(-€9million)
• areserveforthebalanceofthechangesinfairvalueofallowedhedginginstrumentsof-€3million(-€5million)
• resultscarriedforwardfrompreviousfinancialyearsfor€1million(€1million),availablefordistribution.
Asat31December2014,thenet value(fairvalue)oftheshareis€47,81(€46,37).Giventhatthesharepriceasat31December2014is€57,97,theshareofVastnedRetailBelgiumisquotedwithapremiumofapproximately21%comparedtothisnetvalue(fairvalue).
Comparedto2013, non-current liabilitiesdecreaseto€92million(€117million)andconsistmainlyof€87millionlong-termfinancingsaswellasthenegativemarketvalueof€5millionofnon-currenthedginginstruments.Thedecreaseresultsmainlyfromtherealisedsalesofinvestmentproperties.
Current liabilitiesamountto€28million(€13million)andconsistmainlyof€19million(€8million)currentfinancialdebts(short-termfinancingsprogressingeachtime),of€7millionintradedebtsandothercurrentdebtsandof€1millionindeferredchargesandaccruedincomeandotherliabilities.
A low debt ratio of 31%
as at 31 December 2014
(34% as at 31 December 2013)
o�ers the company a stable
balance-sheet position.
58
Themostimportantcharacteristicsofthefinancialstructureasat31December2014are:
• amountoffinancialdebts:€106million
• 69%oftheavailablecreditlinesatfinancialinstitutionsarelong-termfinancingswithanaverageremainingdurationof2,1years
• well-spreadexpirydatesofcreditfacilitiesbetween2015and2018
• spreadofcreditfacilitiesover5Europeanfinancialinstitutions
• €31millionofavailablenon-withdrawncreditlinesatfinancialinstitutions
• 75%ofthewithdrawncreditfacilitieshaveafixedinterestrateorarefixedthroughinterestrateswaps,25%haveavariableinterestrate
• fixedinterestratesarefixedforaremainingperiodof3,6yearsinaverage
• averageinterestratefor2014:3,2%includingbankmargins(2013:4,0%)
• marketvalueoffinancialderivatives:€4,6millioninnegative
• limiteddebtratioof31%(legalmaximum:65%)(34%asat31December2013).
Balancebetweenlong-termandshort-termfinancings
Asat31December2014,69%oftheavailablecreditlinesatfinancialinstitutionsarelong-termfinancings.31%ofthecreditlinesareshort-termfinancingswith13%con-sistingofcreditfacilitieswithanunlimitedduration(€17,4million)and18%ofacreditfacilitywhichhastoberefinancedinthefirstquarterof2015(€25million).Fortherefinancingofthelattercreditfacility,discussionsareongoingwiththefinancialinstitutionconcerned.
69% of the credit lines are long-
term financings with well spread
expiry dates.
Balance between long-term and short-term financings
FINANCIALSTRUCTURE
a b
b 1b 2
Long-term credit facilitiesShort-term credit facilitiesCredit facilities with indefinite durationCredit facility expiring in the first quarter of 2015
69%31%13%
18%
abb1
b2
Asat31December2014,VastnedretailBelgiumhasaconservativefinancialstructureallowingittocontinuetocarryoutitsactivitiesin2015.
59
Report of the management committee
Availablecreditlines
Asat31December2014,thecompanystillhas€31mil-lion(€15millionin2013)ofnon-withdrawncreditfacili-tiesatitsfinancialinstitutionstomeetthefluctuationsofliquidityneeds,forfinancingfutureinvestmentsandforpaymentofthedividendoffinancialyear2014.
Durationandspreadofexpirydatesoflong-termfinancings
Asat31December2014,theweightedaveragedurationofthelong-termfinancingsis2,1years.ThestrategyofVastnedRetailBelgiumistomaintainthisaveragedura-tionbetween3,5and5years,butitispossibletodeviatefromthatprinciplewhenspecificmarketcircumstancesrequireit.
ThecreditfacilitiesportfolioofVastnedRetailBelgiumisspreadover5Europeanfinancialinstitutions.
Expiry calendar credit lines
Percentagecreditfacilitieswithfixedandvariableinterestrate
Whencomposingtheloanportfolio,thestrategyofVastnedRetailBelgiumconsistsofachievingaratioofone-thirdborrowedcapitalwithavariableinterestrateandtwo-thirdsborrowedcapitalwithafixedinterestrate.Asat31December2014,58%ofthecreditlinesofthecompanyconsistsoffinancingwithafixedinterestorisfixedbyinterestrateswaps.42%arecreditfacilitieswithavariableinterestrate.
Ofthewithdrawncreditfacilitiesasat31December2014,75%hasafixedinterestrateorisfixedbyinterestrateswaps.25%haveavariableinterestratewhichisbeneficialduetothecurrentlowinterestratelevels.
Balance credit facilities with fixed and variable interest rate
The weighted average duration of
long-term credit facilities amounts
to 2,1 years as at 31 December 2014.
75% of the withdrawn credit lines
has a fixed interest rate or is fixed
by interest rate swaps.
17
Indefinite
dura
tion
25
2015
50
20162018
2025
2017
mill
ion
€
a
b
25%
75%
Variable interest rate
Fixed interest rate
k
a
b
60
Durationoffixedinterestrates
Fortheprotectionofitsoperatingresultsagainstfutureinterestratefluctuations,VastnedRetailBelgiumcoverspartiallytheinterestratefluctuationswithinterestrateswaps.
Inthefirstsemesterof2014thecompanyhaspurchasedaninterestrateswapforanotionalamountof€15millionwithadurationof5yearsasfrom1October2014.Thisinterestratecoverhasbeenrealisedat0,72%whichissubstantiallylowerthantheinterestrateoftheexistinginterestrateswapwhichamountedto3,02%andexpiredon1October2014(withanotionalamountof€25million).
Asat31December2014VastnedRetailBelgiumhasanotionalamountof€70millionactiveinterestrateswapsataweightedaverageinterestrateof1,87%(toincreasebythebankmargins).Furthermore,thecompanyhasonecreditfacilityof€10millionwithafixedinterestrateof3,40%.Throughtheseinterestratecoverstheinterestratefor75%ofthewithdrawncreditlinesisfixedasat31December2014foraremainingperiodof3,6yearsinaverage.
Averageinterestrates
TheinterestratepolicyofVastnedRetailBelgiumalwaysconsistsinconcludingone-thirdofitscreditfacilitieswithavariableinterestrate.In2014,thetotalaverageinterestrateofthefinancialdebtsofthecompanyamountsto3,2%,includingbankmargins(4,0%in2013).
For2014,theaverageinterestrateforthenon-currentfinancialdebtsamountsto3,1%(4,6%in2013).
For2014,theaverageinterestrateforthecurrentfinan-cialdebtsamountsto3,3%(1,5%in2013).
Refinancingrealisedin2014
Duringthefirstquarterof2014VastnedRetailBelgiumdidnothavetocarryoutsomerefinancingofitscreditfacilities.ThenextcreditfacilitywhichwillexpireisattheendofMarch2015.
Interestratesensitivity
Forfinancialyear2014theeffectontheoperatingdistributableresultofa(hypothetical)increaseininterestratesby1%givesanegativeresultofapproximately€0,4million(€0,4millionin2013).Theconcludedfinancialderivativesaretakenintoaccountforthiscalculation.Giventhecurrentlylowmarketrateahypotheticalde-creaseofinterestratesby1%isnotrealistic.
Interestcoverratio
Theinterestcoverratioistheratiobetweentheoperat-ingresultbeforeresultonportfolioandthefinancialresult(excludingtherevaluationoffinancialderivativesinaccordancewithIAS39).ForVastnedRetailBelgium,thisratioamountsto4,3forfinancialyear2014(3,7forfinancialyear2013),whichissignificantlybetterthantherequirementsagreedinthefinancingagreementsofcompanyasacovenant.
Debtratio
Asat31December2014,thedebtratioofthecompanyamountsto31%andhasdecreasedby3%comparedto31December2013(34%)asaresultofdivestmentsininvestmentpropertiesin2014andtheincreaseinfairvalueoftheexistingrealestateportfolio.
The company has a limited
debt ratio of 31%.
Debt ratio
31.12.2014 31.12.2013
31% 34%
61
Report of the management committee
Theboardofdirectorsproposestodistributetheresultforfinancialyear2014ofVastnedRetailBelgiumsa,asfollows:
inthousands€ 31.12.2014
Net result for financial year 20148 20.494
Transfertothereservesforthebalanceofchangesinfairvalue9ofinvestmentproperties
• Financialyear -11.327
• Valuerealisedfromrealestateproperties 2.967
Transfertothereservesfortheimpactonfairvalueofestimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties
-752
Transferfromthereserveforthebalanceofchangesinfairvalueofallowedhedginginstrumentsnotsubjecttohedgeaccounting
1.240
Transferfromotherreserves 968
Transferfromresultscarriedforwardfrompreviousfinancialyears 224
Remuneration of capital 13.814
Thisrepresentsanetdividendof€2,0400afterdeductionof25%withholdingtax.
Takingintoaccount5.078.525sharesthatwillparticipateinthefullresultforthefinancialyear,thismeansthatadividendof€13.813.588isavailablefordistribution.
Thedividendishigherthantherequiredminimumof80%oftheoperatingdistributableresultasVastnedRetailBelgium,inaccordancewithitspolicy,willalsodistribute100%oftheoperatingdistributableresultfor2014.
Thedividendwillbepayableasfrom7May2015.Asfarasthebearersharesareconcerned,thiscanbedonebypresentationofdividendcertificatenumber15.
PROFITDISTRIBUTION2014
At the general meeting of shareholders on 29 April 2015, it shall be proposed
that a gross dividend of € 2,72 per share will be distributed.
8 As legally speaking only the operating distributable profit
of the statutory annual accounts can be distributed and
not of the consolidated annual accounts, the present profit
distribution is based on the statutory figures (see Note 13
of the Financial report).
9 Based on the changes in the investment value of invest-
ment properties.
62
InDecember2014theEPRA’sReportingandAccountingCommitteepublishedanupdateofthereportentitled“BestPracticesRecommendations(BPR)11.ThisBPRcontainstherecommendationsfordefiningthemainfinancialperformanceindicatorsapplicabletotherealestateportfolio.VastnedRetailBelgiumsupportsthereportingstandardisationapproachdesignedtoimprovethecomparabilityandthequalityofinformationandsuppliesherinvestorsandotherusersoftheannualreportwithmostoftheEPRArecommendations.ForthisreasonVastnedRetailBelgiumhaschosentorecordthekeyperformanceindicatorsinaseparatechapteroftheannualreport.
Thestatutoryauditorhascheckedwhetherthe“EPRAearnings”,“EPRANAV”and“EPRANNNAV”ratioshavebeencalculatedinaccordancewiththedefinitionsgiveninthe“EPRABestPracticesRecommendations”ofAugust2011andwhetherthefinancialdatausedtocalculatethoseratiostallywiththeaccountingdataincludedintheconsolidatedfinancialstatements.
EPRABESTPRACTICES10
10 These data are not compulsory under the legislation on
regulated real estate companies and are not verified by
public authorities.
11 The report is available on the EPRA website: www.epra.com
Ghent, Volderstraat - 279 m2
63
Report of the management committee
EPRAKeyperformanceindicators
TableEPRA
IndicatorsEPRADefinitions12 31.12.2014 31.12.2013
1 EPRAEarningsRecurringearningsfromcoreopera-tionalactivities
inthousands€ 13.807 13.519
€/share 2,72 2,66
2 EPRANAV
NetAssetValueadjustedtoincludepropertiesandotherinvestmentinterestsatfairvalueandtoexcludecertainitemsnotexpectedtocrystalizeinalongterminvestmentpropertybusinessmodel
inthousands€ 247.352 239.115
€/share 48,71 47,08
3 EPRANNNAVEPRANAVadjustedtoincludethefairvaluesoffinancialinstruments,debtanddeferredtaxes.
inthousands€ 242.434 235.186
€/share 47,74 46,32
4
(i)EPRA
NetInitialYield
(NIY)
Annualisedrentalincomebasedon
thecashrentspassingatthebalance
sheetdate,lessnonrecoverable
propertyoperatingexpenses,divided
bythemarketvalueoftheportfolio,
increasedwithestimatedpurchasers’
costs.
4,9% 5,2%
(ii)EPRA
Topped-up(NIY)
Thismeasureincorporatesanadjust-menttotheEPRANIYinrespect
oftheexpirationofrent-freeperiods
(orotherunexpiredleaseincentives
suchasdiscountedrentperiodsand
steprents).
5,1% 5,4%
5EPRA
VacancyRate
Estimatedmarketrentalvalue(ERV)ofvacantspacedividedbyERVofthewholeportfolio
1,5% 4,1%
6EPRACostRatio(includingdirectvacancycosts)
EPRAcosts(includingdirectvacancycosts)dividedbygrossrentalincomelessgroundrentcosts.
17,3% 15,8%
EPRACostRatio(excludingdirectvacancycosts)
EPRAcosts(excludingdirectvacancycosts)dividedbygrossrentalincomelessgroundrentcosts.
16,3% 15,1%
12 Source: EPRA Best Practices (www.epra.com).
64
Table 1: EPRA Earnings
inthousands€ 31.12.2014 31.12.2013
Net result 20.494 12.194
Ajustments to calculate EPRA earnings
Toexclude:
Changesinfairvalueofinvestmentproperties -11.102 3.030
Resultondisposalofinvestmentproperties 1.870 -273
Changesinfairvalueoffinancialassetsandliabilities 1.240 -1.586
Otherresultonportfolio 1.305 154
EPRA Earnings 13.807 13.519
Weightedaveragenumberofshares 5.078.525 5.078.525
EPRA Earnings (€/share) 2,72 2,66
TheEPRAEarningsamountsto€13,8millionforfinancialyear2014comparedto€13,5millionforfinancialyear2013oranincreaseof€0,3millionor2%,mainlythroughlowerfinancingcostsasaresultofinterestrateswapsthatstartatlowerinterestrates.TheEPRAEarningspershareamountsherewithto€2,72forfinancialyear2014comparedto€2,66forfinancialyear2013.
Namur, Place de l’Ange - 2.270 m2
65
Report of the management committee
Tables 2 and 3: EPRA NAV and EPRA NNNAV
inthousands€ 31.12.2014 31.12.2013
Net value 242.800 235.467
Net value (€/share) 47,81 46,37
Effectofexerciseofoptions,convertibledebtsandotherequityinterests 0 0
Diluted net asset value, after the exercise of options, convertible debts and other equity interests
242.800 235.467
Toexclude:
IV.Fairvalueoffinancialinstruments 4.552 3.610
Va.Deferredtaxes 0 38
EPRA NAV 247.352 239.115
Numberofsharesattheendoftheyear 5.078.525 5.078.525
EPRA NAV (€/share) 48,71 47,08
Toinclude:
I.Fairvalueoffinancialinstruments -4.552 -3.610
II.Revaluationsatfairvalueoffinancingswithfixedinterestrate -366 -221
III.Deferredtaxes 0 -38
EPRA NNNAV 242.434 235.246
Numberofsharesattheendoftheyear 5.078.525 5.078.525
EPRA NNNAV (€/share) 47,74 46,32
TheEPRANAVpershareamountsasat31December2014to€48,71comparedto€47,08asat31December2013.Theincreaseof€1,63pershareresultmainlyfromtheincreaseinfairvalueoftherealestateportfolioinfinancialyear2014.
TheEPRANNNAVpershareamountsasat31December2014to€47,74comparedto€46,32asat31December2013.Theincreaseof€1,42pershareresultsmainlyfromtheincreaseinfairvalueoftherealestateportfolioduringfinancialyear2014,partlycompensatedbythechangeinfairvalueofthefinancialinstruments.
66
Table 4: EPRA Net Initial Yield (NIY) and EPRA Topped-up NIY
inthousands€ 31.12.2014 31.12.2013
Investment properties and properties held for sale 360.692 361.678
Toinclude:
Propertiesthatarebeingconstructedordevelopedforownaccountinordertobeleased -2.129 -2.129
Propertiesheldforsale -4.156 0
Properties available for lease 354.407 359.549
Toinclude:
Estimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties
8.860 8.989
Investment value of properties available for lease (B) 363.267 368.538
Annualisedgrossrentalincome 19.862 21.515
Toexclude:
Propertycharges13 -1.931 -2.362
Annualised net rental income (A) 17.931 19.153
Adjustments:
Rentexpirationofrentfreeperiodsorotherleaseincentives 569 610
Annualised ‘topped-up’ net rental income (C)
18.500
19.763
(in %)
EPRA NET INITIAL YIELD (A/B) 4,9% 5,2%
EPRA ‘topped-up’ NET INITIAL YIELD (C/B) 5,1% 5,4%
TheEPRANetInitialYieldandtheEPRA‘Topped-up’NetInitialYieldhasslightlydecreasedasat31December2014comparedto31December2013,mainlyduetotheincreaseinfairvalueoftherealestateportfolioduringfinancialyear2014.
13 The perimeter of the property charges to be excluded for the calculation is recorded in the EPRA Best Practices and does not
correspond with the “Property charges” as presented in the consolidated IFRS accounts.
67
Report of the management committee
Table 5: EPRA Vacancy rate
SegmentLeasablespace
Estimatedrentalvalue(ERV)onvacantspaces
Estimatedrentalvalue(ERV)
EPRA vacancy rate
EPRAvacancyrate
inm2 inthousands€ inthousands€ in % in%
31.12.2014 31.12.2013
Inner-cityshops 33.805 129 12.384 1,6% 3,9%
Retailwarehouses 77.353 184 7.894 1,5% 4,4%
Total properties available for lease
111.158 313 20.278 1,5% 4,1%
TheEPRAVacancyrateat31December2014hasdecreasedby2,6%comparedto31December2013,resultingmainlyofdivestmentsinpropertieswithalowoccupancyrateaswellasleases,mainlyinBrussels,PhilippevilleandTurnhout.
Table 6: EPRA Cost Ratios
inthousands€ 31.12.2014 31.12.2013
Generalcosts 1.248 1.066
Write-downsontradereceivables 70 84
Compensationsforbuildingrightsandlong-leaserights 110 109
Propertycharges 2.468 2.276
Toexclude:
Compensationsforbuildingrightsandlong-leaserights -110 -109
EPRA costs (including vacancy costs) (A) 3.786 3.426
Vacancycosts -219 -168
EPRA costs (excluding vacancy costs) (B) 3.567 3.258
Rentalincomelesscompensationsforbuildingrightsandlong-leaserights(C) 21.901 21.634
(in %)
EPRA Cost Ratio (including vacancy costs) (A/C) 17,3% 15,8%
EPRA Cost Ratio (excluding vacancy costs) (B/C) 16,3% 15,1%
TheEPRACostRatio(includingvacancycosts)andtheEPRACostRatio(excludingvacancycosts)asat31December2014hasincreasedcomparedto31December2013,mainlyduetotheincreaseofpropertycharges(€0,2million)andthegeneralcosts(€0,2million)duringfinancialyear2014.Thevacancycostshaveremainedatthesamelevelin2014asin2013(€0,2million).
68
VastnedRetailBelgiumintendstopursueitsstrategyfurtherin2015byfocusingexplicitlyonpremiumqual-itylocationsandproperties.Asattheendof2014,theobjectivetoincreasetheshareoftheinner-cityshopstoatleast65%oftheportfolioisrealisedwithaninner-cityshoppropertypercentageof68%wherein49%oftheportfolioisalreadyinvestedinprimeretailpropertieslocatedintheprimehighstreetsofthemajorcitiesofAntwerp,Brussels,GhentandBruges.
VastnedRetailBelgiumhasintensifieditsinvestment strategy.Itnowintendstoachievea75%investmentratioininner-cityshopsinBelgiumovertime.Indoingso,overtimetheshareofprimeretailpropertiesinthemostpopularhighstreetsinthemajorcitiesmustamountto50%oftheoverallrealestateportfolio.
Acquisitionswillonlybemadeinmajorcitieshavingstrongshoppingdistrictsinwhichanauthenticshoppingexperienceispossible,suchasAntwerp,Brussels,GhentandBruges.Itwouldnotberealistictostateshort-termgrowthtargetsduetothefactthatthemarketforhigh-qualityproductsisstillscarce.Butit’sexpectedthatinvestmentswillpickupontheinvestmentmarketin2015,particularlyintheprimehighstreets,wheremainlyprivateinvestorsaccountforalargepartofthetotalin-vestmentvolume.Thelargerinvestorsarefocusingmoreontheshoppingcentresandretailparks,whichhavemorereasonableinvestmentyields(between5,25%-6%and5,75%-6,25%,respectively)thanpropertiesintheprimehighstreets(4%).Makingtheshifttoprimelocationsalsomeansaccept-ingaloweryield.YieldsonprimelocationsinAntwerp,Brussels,GhentandBrugesarecurrentlyabout4%,andsometimesevenlowerdependingonaproperty’srentalpotential.Investinginthesekindsofyieldsonlymakeseconomicsenseiftherentlevelsmakeitpossibletoincreasetherent.
Divestmentswillforthemostpartbemadeinanopportunisticway,andareonlybeingconsideredforlessstrategicinner-cityshopsinsmallercitiesandlessstrategicretailwarehousesorretailparks.
AbsolutepremiumretailwarehouseprojectsofVastnedRetailBelgium,suchastheGoudenKruispuntinTielt-Winge,willremainintheportfolio.Bymeansofactiveassetmanagement,VastnedRetailBelgiumisseekingtobetterexploitthecommercialpotentialofitsbestretailwarehouseprojectsthroughanoptimisationoftheten-antmixaswellasinvestmentsinthebuildings.
Weareawaitingtheimpactofthemovetoshiftrespon-sibilityforretailbusinesstotheregionallevel.ThisbringsaboutuncertaintyregardingfuturedevelopmentsaswellaspotentialdisparitiesbetweentheregionsofBelgium.Flandersisclearlyoptingforcity-centredevelopmentsinlinewiththe‘RetailMemorandum’strategy.It’sexpectedthattheforthcomingregulationswillimpedefuturedevelopmentsintheperipheryandinturnboostthedemandforprimelocationsintheperipherywhicharealreadylicenced.
TheannualCBRESurveymoreovergivesVastnedRetailBelgiumreasonforhope.Apredominantlypositivesentimentisbeingnotedamongretailers.Nearlythree-quartersoftheretailchainssurveyedbyCBREsaytheyarethinkingaboutexpandinginthenexttwelvemonths,withoneofeveryfourlookingatunitswithmoresurfacearea.Halfofthesechainsareconvincedofanincreaseinturnover,andslightlymorethanhalfexpectrentstostaythesame.
Veritascontinuestobeasuccessstorytofollow,asaretwootherlocalplayers,ZEB(ColruytGroup)andLola&Liza.Internationally,weareawaitingtheimpactofthe(planned)arrivalofUniqloontheMeirinAntwerpandtheexpansionplansofPrimarkforGhent,BrusselsandHasselt.
Theoutlookforpuree-commerceplayerslikeZalandoisdifficulttojudge.Belgiumhaslaggedbehindine-commerceforalongtime,thoughitnowfindsitselfattheEuropeanaverageintermsofvolume.Aportionofthisvolumegoestoforeignretailers.Itisestimatedthatthelossinturnoverforlocalretailersamountstoabout3%to4%.
Inregardstofuture rent increasesstemmingprimar-ilyfromleaseextensionsthatwillbenegotiatedin2015,VastnedRetailBelgiumismildlyoptimistic.Anumberofprimelocationsdefinitelyhavethepotentialforrentincreases,buttherearesomecasesinwhichwemighthavetobecontentwithcurrentrentlevels.Therateofinflationwilllikelyremainlow.
In2014,VastnedRetailBelgiumhasdivested19non-strategic,high-yieldretailwarehousepropertiesandinner-cityshopsinsecondarylocations,therebyincreas-ingthequalityoftherealestateportfolio.Intheshortterm,thismeansthatthedistributable operating resultisexpectedtobelowerin2015thanin2014.Theactualdecreaseinthedistributableoperatingresultwilldependlargelyontheinvestmentsthatthecompanyisabletomakeintheprimehighstreetsofmajorcitieswithhealthyshoppingdistrictsinwhichanauthenticshoppingexperienceispossible,suchasAntwerp,Brussels,GhentandBruges.
OUTLOOKFOR201514
14 The market information in this text is based on Cushman & Wakefield, Vastned Retail Belgium Portfolio 31 December 2014,
what to expect p. 19 - 20; CBRE Belgium Retailer Survey 2014, p. 2 - 5; CBRE interview Kim Verdonck, dated 14/1/2015 and
CBRE’s annual review of retail activity in 2014 and trends for 2015, p. 46-47.
69
Report of the management committee
Ghent, Volderstraat - 279 m2 Bruges, Steenstraat - 941 m2
Brussels, Avenue Louise - 245 m2Antwerp, Leysstraat - 528 m2
70
71
Report on the share
Antwerp, Leysstraat - 140 m2
72
STOCKMARKETINFORMATION
TheshareofVastnedRetailBelgium(VASTB)islistedonEuronextBrusselsandisincludedinthestockmarketindexesBELRealEstateandGPR250Europe.
VASTB
Sharepriceevolution2014
ThesharepriceofVastnedRetailBelgiumhasincreasedfrom€52,40asat31December2013to€57,97asat31December2014oranincreasebyapproximately11%.Thelowestclosingsharepricereaches€51,00(20January2014)andthehighestclosingshareprice€58,80(11November2014).
Theaveragesharepriceoffinancialyear2014amountsto€55,24comparedto€€52,06forfinancialyear2013.
Sharepriceevolution2010-2014
Duringthelast5years(2010-2014)thesharepriceoftheVastnedRetailBelgiumsharehasincreasedgradu-allyfrom€37,20on1January2010to€57,97asat31December2014oranincreaseofapproximately56%.
€60
58
56
54
52
50
48
Jan 14
Feb 1
4
Mar
14
Apr 14
May
14Jul 1
4
Aug 14
Sep 14
Jun 14
Nov 14
Oct 14
Dec 14
€60
55
50
45
40
35
30
2010
2011
2012
2013
2014
2015
73
Report on the share
PremiumVastnedRetailBelgium
During2014,theVastnedRetailBelgiumshareisquotedwithapremiumof19%inaveragecomparedtothenetvalue(fairvalue).
ThenetvalueofVastnedRetailBelgiumincludesthe2013dividenduptothepaymentdateon9May2014.
€
Net asset value (fair value)
54
Average share price
58
56
52
50
48
46
44
Jan 14
Feb 1
4
Mar
14
Apr 14
May
14Jul 1
4
Aug 14
Sep 14
Jun 14
Nov 14
Oct 14
Dec 14
74
ComparisonofVastnedRetailBelgiumwithBelRealEstateindexandBEL20Closeindex
TheVastnedRetailBelgiumsharehasperformedlesserthantheBEL20andtheBELRealEstate.
Duringthelast5years(2010-2014)theVastnedRetailBelgiumsharehasperformedmuchbetterthantheBEL20andhasfluctuatedalongwiththeBELRealEstate.
%
Vastned Retail Belgium BEL Real Estate BEL 20
120
115
110
105
100
95
Jan 14
Feb 1
4
Mar
14
Apr 14
May
14Jul 1
4
Aug 14
Sep 14
Jun 14
Nov 14
Oct 14
Dec 14
180
160
140
100
120
80
60
40
20102011
20122013
20142015
%
Vastned Retail Belgium BEL Real Estate BEL 20
75
Report on the share
ComparisonofVastnedRetailBelgiumwithGPRindexes
Thisgraphshowsthatin2014VastnedRetailBelgiumhasfluctuatedalongwiththeGPR250Belgiumindex,theGPR250EuropeindexandtheEuronext100index.
AdditionalinformationontheindexescanbeobtainedfromEuronextBrusselsfortheEuronext100andBEL20andfromGlobalPropertyResearch(www.property-shares.com)regardingtheGPR250EuropeandGPR250Belgium.
TradedvolumesVastnedRetailBelgium
Thetradedvolumes,withanaverageof813sharesperday,areslightlylowerthanpreviousyear(837unitsaday).
AliquiditycontracthasbeenconcludedwithBankDegrooftopromotethenegotiabilityoftheshares.Inpracticethistakesplacethroughtheregularsubmissionofbuyandsellorderswithincertainmargins.
Attheendof2014thefreefloatamountsto34,5%.
%
Vastned Retail Belgium GPR 250 Europe
GPR 250 Belgium
BEL 20
Euronext 100
150
125
100
75
Jan 14
Feb 1
4
Mar
14
Apr 14
May
14Jul 1
4
Aug 14
Sep 14
Jun 14
Nov 14
Oct 14
Dec 14
25.000
20.000
15.000
10.000
5.000
0
Jan 14
Feb 1
4
Mar
14
Apr 14
May
14Jul 1
4
Aug 14
Sep 14
Jun 14
Nov 14
Oct 14
Dec 14
76
31.12.2014 31.12.2013 31.12.2012
Numberofsharesattheendoftheperiod 5.078.525 5.078.525 5.078.525
Numberofsharesentitledtodividend 5.078.525 5.078.525 5.078.525
SHAREPRICE(€) 31.12.2014 31.12.2013 31.12.2012
Highestclosingshareprice 58,80 57,69 51,00
Lowestclosingshareprice 51,00 47,37 44,25
Sharepriceonclosingdate 57,97 52,40 47,60
Premiumtonetvalue(fairvalue)(%) 21% 13% 3%
Averageshareprice 55,24 52,06 47,72
DATAPERSHARE(€) 31.12.2014 31.12.2013 31.12.2012
Netvalue(fairvalue) 47,81 46,37 46,29
Netvalue(investmentvalue) 49,59 48,13 48,07
NetassetvalueEPRA 48,71 47,08 47,61
Grossdividend 2,72 2,65 2,62
Netdividend 2,0400 1,9875 1,9650
Closingpricegrossdividendyield(%) 4,7% 5,0% 5,5%
Closingpricenetdividendyield(%) 3,5% 3,8% 4,1%
DIVIDENDANDNUMBEROFSHARES
As at 31 December 2014 the share price of Vastned Retail Belgium is € 57,97,
o�ering its shareholders a gross dividend yield of 4,7%.
77
Report on the share
SHAREHOLDERS
Asat31December2014,thefollowingshareholdersareknowntothecompany:
Vastned Retail nv
Lichtenauerlaan1303062MERotterdam
TheNetherlands3.320.529shares 65,4%
CFB Belgique sa
Uitbreidingstraat18
2600Berchem-Antwerp
Belgium 5.431shares 0,1%
Public 1.752.565shares 34,5%
TOTAL 5.078.525 shares 100%
Pursuanttoarticle74ofthePublicTakeoverActof1April2007,VastnedRetailnvandCFBBelgiquesahaveinformedtheFSMAthattheyactjointly.
VastnedRetailBelgiumreceivedatransparencynotifica-tionon7January2014fromCapfiDelenAssetManage-mentSA,withregisteredofficesat2020Antwerp,JanVanRijswijcklaan178.ThisnotificationstatedthatthevotingrightsrelatingtotheVastnedRetailBelgiumsharesthatarehelddirectlyorindirectlybyCapfiDelenAssetManage-
mentsaasfrom7January2014exceededthelimitof3%ofthetotaloftheexistingvotingrightsandamountto4,13%.
Thecompletenotificationaswellastheshareholderstructureon7January2014canbeconsultedonthewebsiteofVastnedRetailBelgiumundertheheading“Corporate-CorporateGovernance-Shareholders’struc-tureandtransparencydeclarations”.
FINANCIALCALENDAR2015
DEC JAN FEB
Announcement of annual results as at31 December 2014
Tue 10
MAR APR
General meeting of shareholders
MAY
Interim statementon the results as at 31 March 2015
Tue 5
JUN JUL
Half-yearly financial statement as at 30 June 2015
Thur 30
AUG SEP OCT
Interim statement on the results as at30 September 2015
Tue 27
NOV DEC
Wed 29 at 14.30
Record date dividend 2014 Wed 6
2014 2015
Ex dividend date 2014Tue 5
Dividend payment 2014 as of Thur 7
78
79
Property report
Antwerp, Huidevettersstraat - 684 m2
80
Geographicspread
ThestoresarespreadthroughoutBelgium,withagoodrepartitionacrossthevariousregions.
Typeofretailproperty
Theretailpropertiesconsistof68%ofinner-cityshops,andof32%retailwarehouses.
Thecategory inner-city shops containspropertiesthataresituatedinawell-developedtradingcentrewithaconcentrationoflargeretailorganisations.Twentytownsandcitiesfallintothiscategory.Theinner-cityshopsareparticularlydesiredassetsforaswellretailersasinvestors.Theshortageoftheseobjectssupportsinanimportantmeasurethedevelopmentvalueofthesebuildings.
Forretail warehousesitisprimarilythelocationofthepropertiesalongsidemajortrafficroutesaswellasthelargesalesarea(from400m²).Thiscategoryincludesbothstandalonebuildingsandretailparks.Theseareclustersofretailwarehouses,oftenconceivedastradingcomplexeswithsharedparkingareas.Sinceafewyearstheretailwarehousesundergoaqualitydevelopment.Especiallytheretailwarehousesformanattractionpoolontheirownandarenotonlyattractivefordiscountformula.Sinceafewyearsthereisanevolutionwherebyretailersarenotonlylocatedintheinner-citybutalsointheperiphery.
Thecostswhichareattheexpenseofthelessorareratherlimitedtoimportantmaintenancecoststothestructureofthebuildingorimportantrepairsorreplace-mentsofroofs.Rentalexpenses(suchaspropertytaxandcostsforsharedareas)aremostlypaidbythetenant.
VastnedRetailBelgiuminvestsexclusivelyinBelgiancommercialrealestate,focusingprimarilyoninner-citylocationsandretailware-houses,bothontoplocations.
15 Above charts in this report have been compiled based on
the annual rental income of 2014 and the value of the real
estate properties as at 31 December 2014.
COMPOSITIONOFTHEPORTFOLIO15
a
b
c
72%
15%
13%
Flanders
Brussels
Walloon region
a
b
c
k
a
b
68%
32%
Inner-city shops
Retail warehouses
a
b
81
Property report
Sectoroftenants
Thetenantsareofahighqualityandtheyarespreadequallyovertheprincipalsectorsoftheretailtrade.
Regionofactivityoftenants16
Themajorshareoftenantsareinternationalchains,whichisbeneficialtothestabilityandcontinuityofportfolio.
Mostoftheretailpropertieshavebeenletontraditionalleaseagreementstouserswhoarewidelydistributedacrossallsectorsoftheretailtrade.Sincemostofthesepropertiesareinprimelocations,thetenantsarenotin-clinedtorelocatequickly.Inmanycasestheyhavemadeajointinvestmentintheinterioroftheproperty,whichisbeneficialtothestabilityandcontinuityoftherentalincome.
Allofthesefactorsresultinahighoccupancyrateoftheportfolio(97,9%asat31December2014).
16 A national chain has to have at least five points of sale, an
international chain must have at least five points of sale in
at least two countries.
a
b
c
d
e
f
63%
13%
10%
6%
5%
3%
Clothing, shoes and accessoires
Domestic articles, interior and do-it-yourself
Leisure, luxury articles and personal care
Specialised food shops and department stores
TV, hifi, electrical articels, multimedia and telephone
Others
a b
c
d
e
a
b
c
81%
15%
4%
International
National
Local
a
b
c
Antwerp, Schuttershofstraat -54 m2
82
The Top 10 of tenants
generates 53% of
rental income.
Riskspreadamongstbuildings
Throughthespreadoftenantsoveralargenumberofbuildingsondifferentlocations,theriskofretailcentresevolvinglessfavourablyanditseffectonchangesinrentalpricesisextremelylimited.Asat31December2014theportfolioismadeupof169leasableunits,spreadover69differentlocations.
Riskspreadamongsttenants
RentalincomeofVastnedRetailBelgiumisspreadover113differenttenants,limitingdebtor’sriskandimprovingstabilityofrentalincome.Thetenmostimportanttenantsrepresent53%ofrentalincomeandarealwaysprominentcompaniesintheirsectorandpartofinternationalgroups.
a
b
c
d
e
f
g
h
i
j
k
10%
9%
7%
6%
5%
4%
4%
3%
3%
3%
46%
Tielt-Winge - Aarschotsesteenweg 1/6
Brussels - Chée d’Ixelles 41/43
Ghent - Veldstraat 23/27
Bruges - Steenstraat 80
Antwerp - Leysstraat 28/30
Namur - Jardin d’Harscamp
Malines - Bruul 42/44
Louvain - Bondgenotenlaan 69/73
Antwerp - Meir 99
Bruges - Steenstraat 38/40
Other buildings
46%54%
a
b
cd e
fg
h
i
j
k
a
b
c
d
e
f
g
h
i
j
k
19%
8%
5%
4%
4%
3%
3%
3%
2%
2%
47%
Hennes & Mauritz
Inditex
Ariane
Euro Shoe Group
Aldi
AS Watson
De Secon Group
Giorgio Armani Retail srl
Blokker Group
Maxeda
Other
47%53%
a
bc d e
fg
h
i
j
k
Turnhout, Gasthuisstraat - 1.269 m2
83
Property report
31december2014
Space
(m²)
Annualrent
(€000)
Investment
value(€000)
Fairvalue
(€000)Weighting
(%)
Investment properties
Brussels 11.175 3.106 56.307 54.934 15%
Flanders 79.809 14.452 262.813 256.403 72%
Walloonregion 20.610 3.317 46.330 45.199 13%
Total investment properties 111.594 20.875 365.450 356.536 100%
As at 31 December 2014 the real
estate portfolio has an occupancy
rate of 97,9%.
OVERVIEWOFTHEREALESTATEPORTFOLIO
Tielt-Winge, Aarschotsesteenweg - 19.096 m2
84
31.12.2014 31.12.2013 31.12.2012 31.12.2011 31.12.2010
Investmentvalueinvestmentproperties(€000) 365.450 370.720 368.162 371.268 337.371
Currentrents(€000) 20.431 22.125 21.832 21.942 21.392
Yield(%) 5,6% 6,0% 5,9% 5,9% 6,3%
Currentrents,includingestimatedrentalvalueonvacancy(€000)
20.875 23.183 22.442 22.724 21.656
Yieldiffullylet(%) 5,7% 6,3% 6,1% 6,1% 6,4%
Totalleasablespaceofinvestmentproperties(m²) 111.594 146.962 151.041 161.573 159.581
Occupancyrate(%) 97,9% 95,4% 97,3% 96,6% 98,8%
TherealestateportfolioofVastnedRetailBelgiumresists,givenitseconomiesofscale,diversityandaboveallitsquality,ingeneralrelativelygoodtoevolutionsinthemarket.
ThisisalsoreflectedinthefairvalueoftheinvestmentpropertiesofVastnedRetailBelgiumwhereasharpeningoftheyieldforprimelocationsoccurredduring2014.
FurthermoretheimprovementofthequalityoftherealestateportfoliothroughtheacquisitionofapremiumhighstreetshopinaprimelocationinGhentandthedivestmentof19non-strategicpropertieshasledtoadecreaseoftheaverageyieldoftherealestateportfolioofVastnedRetailBelgiumforretailwarehousepropertiesaswellasforinner-cityshops.Asat31December2014theretailwarehousepropertieshaveanaverageyieldof6,9%(7,3%asat31December2013)andinner-cityshopsof5,2%(5,5%asat31December2013).
.
Total leasable space (m2)
Sensitivityanalysis
Incaseofahypotheticalnegativeadjustmentoftheyieldthepropertyexpertsuseforthevaluationoftherealestateportfolioofthecompanyfund(yieldorcapi-talisationrate)with1%(from5,6%to6,6%inaverage),theinvestmentvalueoftherealestateportfoliowoulddecreaseby€54millionor15%.Herewiththedebtratioofthecompanywouldincreaseby6%to37%.
Intheoppositecaseofahypotheticalpositiveadjustmentofthisyieldwith1%(from5,6%to4,6%inaverage),theinvestmentvalueoftherealestatewouldincreaseby€78millionor22%.Herewiththedebtratioofthecompanywoulddecreaseby6%to25%.
EVOLUTIONOFTHEREALESTATEPORTFOLIO
31.12.2014
111.594 m² 146.962 m²
31.12.2013
85
Property report
Cushman&Wakefield
TheCushman&WakefieldmethodologyisbasedontheERV(EstimatedRentalValue)withadjustmentsthattakeintoaccountthecurrentrentpaidand/oranyotherelementthatinfluencesthevalue,e.g.costsofvacancy.
TheybasetheirdeterminationofthemarketrentalvalueontheirknowledgeoftherealestatemarketandonrecenttransactionsconcludedbytheRetaildepartment.Therentalvalueisinfluenced,interalia,by:
• location• suitabilityofthesite• qualitiesofthebuilding• marketcircumstances.
Theallocatedunitpriceismultipliedbythesurfaceareaofthecommercialbuildinginordertoreachatotalesti-matedrentalvalue.
Fortheinner-cityshops,the“zoneA”principleisused.Thefirststepinvolvescalculatingthefirst10metresdepthoverthefullfaçadewidthofthepropertiesat100%oftheestimatedrent/m²,thenext10metresat50%andtherestat25%.Storeysarechargedat25%oratafixedestimatedamountdependingonlocationandusability.
Next,theAdjustedERViscalculated:thisis60%ofthedifferencebetweenthecurrentrentandtheERV.IfthecurrentrentishigherthantheERV,theAdjustedERVisequaltotheERVandthe60%ruledoesn’tapply.
Afollowingstepconsistsofdeterminingayieldorcapi-talizationrateatwhichaninvestorwouldbepreparedtobuytheproperties.Thegrossvaluebeforecorrectionsisthenobtained.Anyadjustments(e.g.costsofvacancies)canbemadeatthispoint,afterwhichtheinvestmentvalue(valuedeedinhand)isobtained.
Initsreportof31December2014,Cushman&Wakefieldstatesthattheinvestmentvalueoftheretailportfolioamountsto€154.256.081.
CBRichardEllis
ThemethodologyofCBRichardElliscanbesummarisedasfollows:
Valuation on the basis of the capitalisation of rental income
Foreachletproperty,theestimatedmarketrentalvalue(ERV)isdeterminedalongwithamarket-levelcapitalisa-tionrate(caprate)basedonrecentpointsofcomparisonandtakingintoaccounttheresultsofourinspectionsonthespot.
Iftheestimatedmarketvalueexceedsthecurrentrentalvalue,itisassumedthatarentincreasecanbeobtainedatthenextrentalrenewal,whichiscalled‘adjustedERV’.ThisadjustedERVconsistsoftheamountofthecurrentrentalincomeincreasedby60%ofthedifferencebetweentheERVandthecurrentrentalincome.Aftercapitalisa-tionoftheadjustedERV,thegrossmarketvaluebeforeadjustmentsofthepropertyisobtained.
Iftheestimatedmarketvalueislowerthanthecurrentrentalincome,thegrossmarketvaluebeforecorrectionsisobtainedthroughcapitalisationoftheestimatedrentalvalue(ERV).
Theappliedcorrectionsonthegrossmarketvalueconsistof:
• deductionfromthenetcurrentvalueofthedifferencebetweentheadjustedERVandthecurrentrentalincomefortherestofthecurrentrentalperiodiftheestimatedmarketrentalvalueishigherthanthecurrentrentalincome
• increasebythecurrentnetvalueofthedifferencebetweenthecurrentrentalincomeandtheestimatedmarketvaluefortheremainingperiodofcurrentrentsiftheestimatedmarketvalueislowerthanthecurrentrentalincome
• deductionoftherentaldiscountgiven• deductionforthenecessaryexpensestotheproperty• deductionfortheexpectedvacancyperiods.
Initsreportof31December2014,CBRichardEllisdeclaresthatthefairvalueofthecommercialpropertiesamountsto€202.280.362.
VALUATIONOFTHEPORTFOLIO
BYPROPERTYEXPERTS
AllthecommercialpropertiesofVastnedRetailBelgiumarevaluedbyCushman&WakefieldorCBRichardEllis.
86
87
Financial report
Ghent, Veldstraat - 2.690 m2
88
Liège, Rue pont D’Ile - 375 m2
89
Financial report
Consolidated income statement 90
Consolidated statement of comprehensive income 91
Consolidated balance sheet 92
Statement of changes in consolidated equity 94
Consolidated cash flow statement 96
Notes to the consolidated annual accounts 97
Note1. Schemeforannualaccountsofregulated realestatecompanies 97Note2. Principlesoffinancialreporting 97Note3. Segmentedinformation 106Note4. Propertyresult 108Note5. Propertycharges 110Note6. Generalcosts 112Note7. Employeebenefits 113Note8. Resultondisposalsofinvestment properties 114Note9. Changesinfairvalueofinvestment properties 114Note10. Otherresultonportfolio 115Note11. Financialresult 115Note12. Taxesontheresult 116Note13. Numberofsharesand resultpershare 116Note14. Non-currentassets 119Note15. Currentassets 122Note16. Shareholders’equity 124Note17. Currentliabilities 128Note18. Non-currentandcurrentfinancial debts 129Note19. Financialinstruments 131Note20. Calculationofdebtratio 135Note21. Relatedparties 135Note22. Listofconsolidatedcompanies 136Note23. Dealingwithconflictsofinterest 137Note24. Feeoftheauditorandentities affiliatedwiththeauditor 138Note25. Conditionalobligations 138Note26. Eventsafterthebalancesheetdate 138
Statutory auditor’s report 140
Statutory annual accounts Vastned Retail Belgium sa 142
INDEX
90
inthousands€ Note 2014 2013
Rentalincome 4 22.011 21.743
Rental-relatedexpenses 4 -81 -72
NET RENTAL INCOME 21.930 21.671
Recoveryofrentalchargesandtaxesnormallypayablebytenantsonletproperties
4 1.506 1.548
Rentalchargesandtaxesnormallypayablebytenantsonletproperties 4 -1.506 -1.548
Otherrental-relatedincomeandexpenses 43 37
PROPERTY RESULT 21.973 21.708
Technicalcosts 5 -582 -460
Commercialcosts 5 -319 -215
Chargesandtaxesonunletproperties 5 -219 -168
Propertymanagementcosts 5 -1.223 -1.229
Otherpropertycharges 5 -125 -204
Property charges -2.468 -2.276
OPERATING PROPERTY RESULT 19.505 19.432
Generalcosts 6 -1.248 -1.066
Otheroperatingincomeandcosts 25 77
OPERATING RESULT BEFORE RESULT ON PORTFOLIO 18.282 18.443
Resultondisposalsofinvestmentproperties 8 -1.870 273
Changesinfairvalueofinvestmentproperties 9 11.102 -3.030
Otherresultonportfolio 10 -1.305 -154
OPERATING RESULT 26.209 15.532
Financialincome 11 6 3
Netinterestcharges 11 -4.187 -4.883
Otherfinancialcharges 11 -10 -11
Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39) 11
-1.240 1.586
Financial result -5.431 -3.305
RESULT BEFORE TAXES 20.778 12.227
Corporatetax -290 -33
Taxes 12 -290 -33
NET RESULT 20.488 12.194
Note:
Operatingdistributableresult 13 13.801 13.448
Resultonportfolio 8-9-10 7.927 -2.911
Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39)andothernon-distributableelements
-1.240 1.657
Attributable to:
Equityholdersoftheparentcompany 20.494 12.194
Minorityinterests -6 0
CONSOLIDATEDINCOMESTATEMENT
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RESULTPERSHAREin€ Note 2014 2013
Numberofsharesentitledtodividend 13 5.078.525 5.078.525
Weightedaveragenumberofshares 13 5.078.525 5.078.525
Netresult 13 4,03 2,40
Dilutednetresult 13 4,03 2,40
Operatingdistributableresult 13 2,72 2,65
CONSOLIDATEDSTATEMENTOFCOMPREHENSIVEINCOME
inthousands€ 2014 2013
NET RESULT 20.488 12.194
Other components of comprehensive income (recyclable in the income statement)
Changesintheeffectivepartoffairvalueofallowedhedginginstrumentsthataresubjecttohedgeaccounting
297 1.499
COMPREHENSIVE INCOME 20.785 13.693
Attributable to:
Equityholdersoftheparentcompany 20.791 13.693
Minorityinterests -6 0
92
ASSETSinthousands€ Note 31.12.2014 31.12.2013
Non-current assets 357.023 362.265
Intangibleassets 3 7
Investmentproperties 14 356.536 361.678
Othertangibleassets 14 477 560
Non-currentfinancialassets 19 0 17
Tradereceivablesandothernon-currentassets 7 3
Current assets 5.391 2.768
Assetsheldforsale 15 4.156 0
Tradereceivables 15 163 173
Taxreceivablesandothercurrentassets 15 213 91
Cashandcashequivalents 339 1.860
Deferredchargesandaccruedincome 520 644
TOTAL ASSETS 362.414 365.033
CONSOLIDATEDBALANCESHEET
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Financial report
SHAREHOLDERS’EQUITYANDLIABILITIESinthousands€ Note 31.12.2014 31.12.2013
Shareholders’ equity 242.967 235.467
Shareholders’ equity attributable to the shareholders of the parent company
242.800 235.467
Sharecapital 16 97.213 97.213
Sharepremium 16 4.183 4.183
Reserves 120.910 121.877
Netresultofthefinancialyear 20.494 12.194
Minority interests 22 167 0
Liabilities 119.447 129.566
Non-current liabilities 91.632 116.965
Non-currentfinancialdebts 18 86.906 113.712
Credit institutions 86.900 113.700
Financial lease 6 12
Othernon-currentfinancialliabilities 19 4.552 3.106
Othernon-currentliabilities 174 109
Deferredtaxes-liabilities 0 38
Current liabilities 27.815 12.601
Provisions 205 0
Currentfinancialdebts 18 19.256 8.405
Credit institutions 2.250 8.400
Financial lease 6 5
Other current financial debts 17.000 0
Othercurrentfinancialliabilities 19 0 521
Tradedebtsandothercurrentdebts 17 7.209 2.576
Othercurrentliabilities 17 136 175
Accruedchargesanddeferredincome 17 1.009 924
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 362.414 365.033
DEBTRATIO 31.12.2014 31.12.2013
Debtratio(max.65%) 31% 34%
NETVALUEPERSHAREIN€ 31.12.2014 31.12.2013
Netvalue(fairvalue) 47,81 46,37
Netvalue(investmentvalue) 49,59 48,13
NetassetvalueEPRA 48,71 47,08
94
inthousands€ Sharecapital Sharepremium
RESERVES
NETRESULTOFFINANCIAL
YEAR
Minorityinterests
Total
shareholders’ equity
Reserve for the balance of the changes infair value of real estate properties Reserve for the
balance of changes infair value of allowedhedging instruments
subject to hedgeaccounting
Reserve for thebalance of changes infair value of allowedhedging instrumentsnot subject to hedge
accounting
Results carriedforward
from previousfinancial years
TOTAL RESERVESReserve for the
balance of changesin investment
value of real estateproperties
Reserve for theimpact on fair
value*
Balance at 31 December 2012 97.213 4.183 127.648 -9.055 -2.003 -2.602 1.031 115.020 18.664 0 235.080
Comprehensiveincomeof2013 1.499 1.499 12.194 13.693
Transferthroughresultallocation2012
Transferfromresultonportfoliotoreserves 7.340 75 7.415 -7.415 0
Transferfromchangesinfairvalueoffinancialassetsandliabilities
-2.090 -2.090 2.090 0
Othermutations 33 33 -33 0
Dividendsfinancialyear2012 -13.306 -13.306
Balance at 31 December 2013 97.213 4.183 134.988 -8.980 -504 -4.692 1.064 121.877 12.194 0 235.467
Comprehensiveincomeof2014 297 297 20.494 -6 20.785
Transferthroughresultallocation2013
Transferfromresultonportfoliotoreserves -2.849 -62 -2.911 2.911 0
Transferfromchangesinfairvalueoffinancialassetsandliabilities
1.586 1.586 -1.586 0
Othermutations 61 61 -61 0
MinorityinterestGhentVeldstraat23-27nv 173 173
Dividendsfinancialyear2013 -13.458 -13.458
Balance at 31 December 2014 97.213 4.183 132.139 -9.042 -206 -3.106 1.125 120.910 20.494 167 242.967
*ofestimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties.
STATEMENTOFCONSOLIDATEDCHANGESINEQUITY
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inthousands€ Sharecapital Sharepremium
RESERVES
NETRESULTOFFINANCIAL
YEAR
Minorityinterests
Total
shareholders’ equity
Reserve for the balance of the changes infair value of real estate properties Reserve for the
balance of changes infair value of allowedhedging instruments
subject to hedgeaccounting
Reserve for thebalance of changes infair value of allowedhedging instrumentsnot subject to hedge
accounting
Results carriedforward
from previousfinancial years
TOTAL RESERVESReserve for the
balance of changesin investment
value of real estateproperties
Reserve for theimpact on fair
value*
Balance at 31 December 2012 97.213 4.183 127.648 -9.055 -2.003 -2.602 1.031 115.020 18.664 0 235.080
Comprehensiveincomeof2013 1.499 1.499 12.194 13.693
Transferthroughresultallocation2012
Transferfromresultonportfoliotoreserves 7.340 75 7.415 -7.415 0
Transferfromchangesinfairvalueoffinancialassetsandliabilities
-2.090 -2.090 2.090 0
Othermutations 33 33 -33 0
Dividendsfinancialyear2012 -13.306 -13.306
Balance at 31 December 2013 97.213 4.183 134.988 -8.980 -504 -4.692 1.064 121.877 12.194 0 235.467
Comprehensiveincomeof2014 297 297 20.494 -6 20.785
Transferthroughresultallocation2013
Transferfromresultonportfoliotoreserves -2.849 -62 -2.911 2.911 0
Transferfromchangesinfairvalueoffinancialassetsandliabilities
1.586 1.586 -1.586 0
Othermutations 61 61 -61 0
MinorityinterestGhentVeldstraat23-27nv 173 173
Dividendsfinancialyear2013 -13.458 -13.458
Balance at 31 December 2014 97.213 4.183 132.139 -9.042 -206 -3.106 1.125 120.910 20.494 167 242.967
*ofestimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties.
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inthousands€ Note 2014 2013
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR 1.860 216
1. Cash flow from operating activities 13.038 13.334
Operating result 26.209 15.532
Interests paid -4.191 -4.937
Other non-operating elements -1.619 1.445
Adjustment of result for non-cash flow transactions -6.913 1.300
• Depreciationsonintangibleandothertangibleassets 86 106
• Resultondisposalsofinvestmentproperties 8 1.870 -273
• Spreadofrentaldiscountsandbenefitsgrantedtotenants -312 -131
• Changesinfairvalueofinvestmentproperties 9 -11.102 3.030
• Otherresultonportfolio 10 1.305 154
• Changesinfairvalueoffinancialassetsandliabilitiesineffectivehedges-IAS39) 19 1.240 -1.586
Change in working capital -448 -6
Movement of assets
• Tradereceivables 15 11 72
• Taxreceivablesandothercurrentassets 15 -122 70
• Deferredchargesandaccruedincome 192 -42
Movement of liabilities
• Tradedebtsandothercurrentdebts -486 -219
• Othercurrentliabilities 17 -39 -35
• Accruedchargesanddeferredincome -4 148
2. Cash flow from investment activities 17.390 -3.577
Acquisitionsofintangibleandothertangibleassets 0 -66
Acquisitionsofsharesofrealestatecompanies -20.885 0
Acquisitionofinvestmentproperties 14 0 -11.670
Investmentsinexistinginvestmentproperties 14 -36 -204
Prepaidinvestmentinvoices -68 -258
Proceedsofdisposalsofinvestmentproperties 38.379 8.621
3. Cash flow from financing activities -31.949 -8.113
Repaymentofloans -35.550 -10.000
Drawdownofloans 17.000 15.206
Repaymentoffinancialleaseliabilities 18 -5 -5
Receiptsfromnon-currentliabilitiesasguarantee 64 -8
Dividendpaid 13 -13.458 -13.306
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 339 1.860
CONSOLIDATEDCASHFLOWSTATEMENT
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Note1. Schemeforannualaccountsofregulatedrealestatecompanies
Asalistedpublicregulatedrealestatecompany,VastnedRetailBelgiumsahasprepareditsconsolidatedannualaccountsinaccordancewiththe“InternationalFinancialReportingStandards”(IFRS)asacceptedbytheEuropeanUnion.IntheRoyalDecreeof13July2014onregulatedrealestatecompaniesaschemefortheannualaccountsiscontained.
Theschemeprincipallymeansthattheresultontheport-folioispresentedseparatelyintheincomestatement.
Thisresultontheportfolioincludesallmovementsintherealestateportfolioandconsistsof:
• realisedgainsorlossesonthedisposalofinvestmentproperties
• changesinfairvalueofinvestmentpropertiesasaresultofthevaluationbypropertyexperts,beingnon-realisedincreasesand/ordecreasesinvalue.
Theresultontheportfolioisnotdistributedtotheshare-holders,buttransferredtoorfromthereserves.
Note2. Principlesoffinancialreporting
Statement of conformity
VastnedRetailBelgiumisapublicregulatedrealestatecompanyhavingitsregisteredofficesinBelgium.Theconsolidatedannualaccountsofthecompanyasper31December2014includethecompanyanditssubsidiaries(the“Group”).TheannualaccountsofVastnedRetailBelgiumsahavebeenpreparedandarereleasedforpublicationbytheboardofdirectorson16March2015andwillbesubmittedforapprovaltothegeneralmeetingofshareholderson29April2015.
Theconsolidatedfinancialstatementsarepreparedincompliancewiththe“InternationalFinancialReportingStandards”(IFRS)asapprovedbytheEuropeanUnionandaccordingtotheRoyalDecreeof13July2014.ThesestandardscompriseallnewandrevisedstandardsandinterpretationspublishedbytheInternationalAccountingStandardsBoard(‘IASB’)andtheInternationalFinancialReportingInterpretationsCommittee(‘IFRIC’),asfarasapplicabletotheactivitiesoftheGroupandeffectiveforfinancialyearsasfrom1January2014.
New and amended standards and interpretations e�ective for financial year starting as at 1 January 2014
ThefollowingamendedstandardsbytheIASBandpublishedstandardsandinterpretationsbytheIFRICbecameeffectiveforthecurrentperiod,butdonotaffectthedisclosure,notesorfinancialresultsofRREC:IFRS10Consolidated Financial Statements;IFRS11Joint Arrange-ments;IFRS12Disclosures of Interests in Other Entities; IAS27Separate Financial Statements; IAS28Investments in Associates and Joint Ventures; AmendmentstoIFRS10,IFRS12andIAS27-Consolidated Financial Statements and Disclosure of Interests in Other Entities: Investment Entities;AmendmentstoIAS32FinancialInstruments:Presenta-
tion-OffsettingFinancialAssetsandFinancialLiabilities;AmendmentstoIAS36-Impairment of Assets - Recoverable Amount Disclosures for Non-Financial Asset; AmendmentstoIAS39-Financial Instruments - Novation of Derivatives and Continuation of Hedge Accounting.
New and amended standards and interpretations not yet e�ective in 2014
Thefollowingamendedstandardswillbecomeeffectiveasfromfollowingyearorlater,butarenotsupposedtoaffectthedisclosure,notesorfinancialresultsoftheRREC:IFRS9Financial Instruments and subsequent amendments (1/1/2018);IFRS14Regulatory Deferral Accounts(1/1/2016);IFRS15Revenue from Contracts with Customers(1/1/2017);ImprovementstoIFRS(2010-2012)(1/2/2015);ImprovementstoIFRS(2011-2013)(1/1/2015);AmendmentstoIFRS11Joint Arrangements - Accounting for Acquisitions of Interests in Joint Operations(1/1/2016);AmendmentstoIAS16andIAS38Property, Plant and Equipment and Intangible Assets – Clarification of Acceptable Methods of Depreciation and Amortisation(1/1/2016);AmendmentstoIAS16andIAS41Agriculture: Bearer Plants(1/1/2016);AmendmentstoIAS19Employee Benefits – Employee Contributions(1/2/2015);IFRIC21–Levies(1/7/2014);Improvements to IFRS(2012-2014)(notyetendorsedintheEU);AmendmentstoIFRS10,IFRS12andIAS28Investment Entities: Applying the Consolidation Exception(notyetendorsedinEU);AmendmentstoIFRS10andIAS28Sale or Contribution of Assets between an Investor and its Associate or Joint Venture(notyetendorsedintheEU);AmendmentstoIAS1Presentation of Financial Statements – Disclosure Initiative (notyetendorsedinEU);AmendmentstoIAS27Separate Financial Statements - Equity Method (notyetendorsedintheEU).
NOTESTOTHECONSOLIDATEDANNUALACCOUNTS
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Presentation basis
Theconsolidatedannualaccountsareexpressedinthousandsof€,roundedtothenearestthousand.
Theaccountingprinciplesareappliedconsistentlyandtheconsolidatedaccountsarepresentedbeforeprofitdistribution.
Consolidation principles
a.SubsidiarycompaniesAsubsidiarycompanyisanentityoverwhichanotherentityhascontrol(exclusivelyorjointly).Controlisthepowertogovernthefinancialandoperatingpoliciesofanentityinordertoinfluencebenefitsfromitsactivities.Asubsidiarycompany’sannualfinancialstatementisrecognisedintheconsolidatedannualfinancialstatementbymeansoftheintegratedconsolidationmethodologyfromthetimethatcontrolarisesuntilsuchtimeasitceases.Ifnecessary,thefinancialreportingprinciplesofthesubsidiarieshavebeenchangedinordertoarriveatconsistentprincipleswithintheGroup.Thereportingperiodofthesubsidiarycoincideswiththatoftheparentcompany.
b.EliminatedtransactionsAnytransactionsbetweentheGroupcompanies,balancesandunrealisedprofitsandlossesfromtransac-tionsbetweenGroupcompanieswillbeeliminatedwhentheconsolidatedannualaccountsareprepared.ThelistofsubsidiariesisgivenunderNote22.
Business combinations and goodwill
WhentheGrouptakescontrolofanintegratedcombinationofactivitiesandassetscorrespondingtothedefinitionofbusinessaccordingtoIFRS3-Businesscombinations,assets,liabilitiesandanycontingentliabilitiesofthebusinessacquiredarerecognisedseparatelyatfairvalueontheacquisitiondate.Thegoodwillrepresentsthepositivechangebetweenthesumoftheacquisitionvalue,theformerlyinterestintheentitywhichwasnotcontrolled(ifapplicable)andtherecognisedminorityinterest(ifapplicable)andontheotherpartthefairvalueoftheacquirednetassets.Ifthedifferenceisnegative(“negativegoodwill”),itisimmediatelyrecognisedintheresultsafterconfirmationofthevalues.Alltransactioncostsareimmediatelychargedanddonotrepresentapartofthedeterminationoftheacquisitionvalue.
InaccordancewithIFRS3,thegoodwillcanbedeter-minedonaprovisionalbasisatacquisitiondateandadjustedwithinthe12followingmonths.
Afterinitialrecognition,thegoodwillisnotamortisedbutsubmittedtoanimpairmenttestcarriedoutatleasteveryyearforcash-generatingunitstowhichthegoodwillwasallocated.Ifthecarryingamountofacash-generatingunitexceedsitsvalueinuse,theresultingimpairmentisrecognisedintheresultsandfirstallocatedinreductionofthepossiblegoodwillandthentotheotherassetsoftheunit,proportionaltotheircarryingamount.Animpair-mentlossrecognisedongoodwillisnotreversedduringasubsequentyear.
Intheeventofthedisposalofacash-generatingunit,theamountofgoodwillthatisallocatedtothisunitisincludedinthedeterminationoftheresultofthedisposal.
WhentheGroupacquiresanadditionalinterestinasubsidiarycompany,formerlyalreadycontrolledbytheGrouporwhentheGroupsellsapartoftheinterestinasubsidiarycompanywithoutlosingcontrol,thegoodwill,recognisedatthemomentoftheacquisitionofcontrol,isnotinfluenced.ThetransactionwithminorityinterestshasaninfluenceonthetransferredresultsoftheGroup.
.
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Financial report
Foreign currencies
Foreigncurrencytransactionsarerecognisedattheexchangeratevalidonthetransactiondate.Monetaryassetsandliabilitiesdenominatedinforeigncurrencyarevaluedatthefinalrateinforceonthebalancesheetdate.Exchangeratedifferencesderivingfromcurrencytransac-tionsandfromtheconversionofmonetaryassetsandliabilitiesdenominatedinforeignarerecognisedintheincomestatementintheperiodwhentheyoccur.Non-monetaryassetsandliabilitiesdenominatedinforeigncurrenciesareconvertedattheexchangeratevalidatthetransactiondate.
Property result
Incomeisvaluedatthefairvalueofthecompensationreceivedortowhichtitlehasbeenobtained.Incomewillonlyberecognisedifitisprobablethattheeconomicbenefitswillfalltotheentityandcanbedeterminedwithsufficientcertainty.
Therentalincome,thereceivedoperationalleasepay-mentsandtheotherincomeandcostsarerecognisedlinearlyintheincomestatementintheperiodstowhichtheyrefer.
Thecompensationpaidbytenantsforearlyterminationofleaseagreementsisimmediatelytakenintoresultintheperiodinwhichitisirrevocablyobtained.
Property charges and general charges
Thecostsarevaluedatthefairvalueofthecompensa-tionthathasbeenpaidorisdueandarerecognisedintheincomestatementfortheperiodstowhichtheyrefer.
Result on disposal and changes in fair value of in-vestment properties
Theresultfromthedisposalofinvestmentpropertiesisequaltothedifferencebetweenthesellingpriceandthecarryingamount(i.e.thefairvaluedeterminedbythepropertyexpertattheendofpreviousfinancialyear)lessthesellingexpenses.
Thechangesinfairvalueofinvestmentpropertiesareequaltothedifferencebetweentheactualcarryingamountandthepreviousfairvalueasestimatedbytheindependentpropertyexpert.Acomparisonismadeatleastfourtimesayearfortheentireportfolioofinvest-mentproperties.Movementsinfairvalueoftherealestatepropertiesarerecognisedintheincomestatementintheperiodinwhichtheyarise.
Brussels, chaussée d’Ixelles - 622 m2 Brussels, chaussée de Louvain- 2.964 m2
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Financial result
Thefinancialresultconsistsofinterestchargesonloansandadditionalfinancingcosts,lesstheincomefrominvestments.
Taxes on result
Taxesontheresultofthefinancialyearconsistofthetaxesdueandrecoverableforthereportingperiodandpreviousreportingperiods,deferredtaxesandtheexittaxdue.Thetaxexpenseisrecognisedintheincomestate-mentunlessitrelatestoelementsthatareimmediatelyrecognisedinequity.Inthelattercase,taxesarerecog-nisedasachargeagainstequity.
Whencalculatingthetaxationonthetaxableprofitfortheyear,thetaxratesinforceattheendoftheperiodareused.
Withholdingtaxesondividendsarerecognisedinequityaspartofthedividenduntilsuchtimeaspaymentismade.
Theexittaxowedbycompaniesthathavebeentakenoverbytherealpropertyinvestmenttrust,aredeductedfromtherevaluationsurplusatthemomentofthemergerandarerecognisedasaliability.
Taxclaimsandliabilitiesarevaluedatthetaxrateusedduringtheperiodtowhichtheyrefer.
Deferredtaxclaimsandliabilitiesarerecognisedonthebasisofthedebtmethod(‘liabilitymethod’)forallprovisionaldifferencesbetweenthetaxablebasisandthecarryingamountforfinancialreportingpurposeswithrespecttobothassetsandliabilities.Deferredtaxclaimsareonlyrecognisedifitisprobablethattherewillbetax-ableprofitagainstwhichthedeferredtaxclaimcanbeoffset.
.
Ordinary and diluted net result per share
Theordinarynetresultpershareiscalculatedbydividingthenetresultasshownintheincomestatementbytheweightedaverageofthenumberofoutstandingordinaryshares(i.e.thetotalnumberofissuedshareslessownshares)duringthefinancialyear.
Tocalculatethedilutednetresultpershare,thenetresultthatisduetotheordinaryshareholdersandtheweightedaverageofthenumberofoutstandingsharesisadaptedfortheeffectofpotentialordinarysharesthatmaybediluted.
Intangible assets
Intangibleassetsarerecognisedatcost,lessanyaccumu-lateddepreciationandexceptionalimpairmentlosses,ifitislikelythattheexpectedeconomicbenefitsattribut-abletotheassetwillflowtotheentity,andifthecostoftheassetcanbemeasuredreliably.Intangibleassetsareamortisedlinearlyovertheirexpectedusefullife.Thedepreciationperiodsarereviewedatleastattheendofeveryfinancialyear.
Investment properties
a.DefinitionInvestmentpropertiescomprisealllandsorbuildingsthatarelettableand(whollyorinpart)generaterentalincome,includingthebuildingswherealimitedpartiskeptforownuseandbuildingsunderanoperatinglease.
b.InitialrecognitionandvaluationInitialrecognitioninthebalancesheettakesplaceattheacquisitionvalueincludingtransactioncostssuchasprofessionalfees,legalservices,registrationchargesandotherpropertytransfertaxes.Theexittaxduefromcompaniesabsorbedbythecompanyisalsoincludedintheacquisitionvalue.
Commissionfeespaidforacquisitionsofbuildingsmustbeconsideredasadditionalcostsfortheseacquisitionsandaddedtotheacquisitionvalue.
Iftheacquisitiontakesplacethroughtheacquisitionofsharesofarealestatecompany,throughthenon-monetarycontributionofabuildingagainsttheissueofnewsharesorbymergerthroughtakeoverofarealestatecompany,thedeedcosts,auditandconsultancycosts,reinvestmentfeesandcostsofliftingdistraintonthefinancingoftheabsorbedcompanyandothercostsofthemergerarealsocapitalised.
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Financial report
c.SubsequentcostsExpensesforworksoninvestmentpropertiesarechargedagainsttheincomestatementofthereportingperiodiftheyhavenopositiveeffectontheexpectedfutureeconomicbenefitsandarecapitalisediftheexpectedeco-nomicbenefitsfortheentityaretherebyincreased.
Fourtypesofsubsequentcostsaredistinguishedinrespectofinvestment:repairsandmaintenance,refurbishment,renovations,rentincentives.
1. Repairs and maintenance:theseareexpensesthatdonotincreasetheexpectedfutureeconomicbenefitsofthebuildingorprojectandareconsequentlychargedinfullagainsttheincomestatementundertheitem“Technicalcosts”.
2. Refurbishment:theseareexpensesarisingfromaten-antleaving.Theseexpensesarechargedintheincomestatementunder“Costspayablebytenantandbornebylandlordforrentaldamageandrefurbishment”.
3. Renovations:theseareexpensesresultingfromadhocworksthatsubstantiallyincreasetheexpectedeconomicbenefitsfromthebuilding(forexample:installationofairconditioningorcreationofadditionalparkingplaces).Thedirectlyattributablecostsoftheseworks,suchasmaterials,buildingworks,technicalstudiesandarchitects’feesareconsequentlycapitalised.
4. Rent incentives:theseareconcessionsbytheownertothetenantonmoving-incostsinordertopersuadethetenanttorentexistingoradditionalspace.Forexample,furnishingofretailproperties,creationofadditionalsocialareas,etc.Thesecostsarecapitalisedandthenallocatedovertheperiodfromthecom-mencementoftheleaseagreementsuptothenexttimeatwhichitispossibletoterminatethecontractandaredeductedfromtherentalincome.
d.ValuationafterinitialrecognitionAfterinitialrecognition,investmentpropertiesanddevel-opmentprojectsarevaluedbytheindependentpropertyexpertsatinvestmentvalue.Forthispurposeinvestmentpropertiesanddevelopmentprojectsarevaluedquar-terlyonthebasisofthecashvalueofmarketrentsand/oreffectiverentalincome,afterreductionofassociatedcostsinlinewiththeInternationalValuationStandards2001,drawnupbytheInternationalValuationStandardsCommittee.
Valuationsaremadebydiscountingtheannualnetrentreceivedfromthetenants,reducedbytherelatedcosts.Discountingusesayieldfactordependingontheinherentriskoftherelevantbuilding.
InaccordancewithIAS40,investmentpropertiesarerecognisedonthebalancesheetatfairvalue.Thisvalueisequaltotheamountforwhichabuildingmightbeexchangedbetweenknowledgeable,willingpartiesinnormalcompetitiveconditions.Fromtheperspectiveoftheseller,itshouldbeunderstoodasbeingsubjecttothedeductionofregistrationtaxes.
TheBelgianAssociationofAssetManagers(BEAMA)pub-lishedapressreleaseon8February2006withrespecttotheamountsoftheseregistrationfees(seealsowww.beama.be-publications-pressrelease:“FirstapplicationofIFRSaccountingrules”).
Agroupofindependentpropertyexperts,carryingouttheperiodicalvaluationofbuildingsofregulatedrealestatecompanies,ruledthatfortransactionsinvolvingbuildingsinBelgiumwithanoverallvalueoflessthan€2,5million,registrationtaxesofbetween10,0%and12,5%shouldapply,dependingontheregionwherethebuildingsarelocated.
Fortransactionsconcerningbuildingswithanoverallvalueofmorethan€2,5millionandconsideringthewiderangeofpropertytransfermethodsusedinBelgium,thesameexperts-onthebasisofarepresentativesampleof220transactionsthattookplaceinthemarketfrom2002to2005andrepresentingagrandtotalof€6,0billion-valuedtheweightedaverageofthetaxescomesto2,5%.
Thismeansthatthefairvalueisequaltotheinvestmentvaluedividedby1,025(forbuildingswithavalueofmorethan€2,5million)ortheinvestmentvaluedividedby1,10/1,125(forbuildingswithavalueoflessthan€2,5million).AsVastnedRetailBelgiuminprincipleonlyofferscollectiveportfoliosofindividualbuildingsforsaleinthemarket,andtheseusuallyhaveahigherinvestmentvaluethan€2,5million,thefairvaluewascalculatedbydividingtheinvestmentvalueby1,025.
Thedifferencebetweenthefairvalueofthepropertyandtheinvestmentvalueofthepropertyasdeterminedbytheindependentpropertyexpertsisrecognisedattheendoftheperiodintheitem“Impactonthefairvalueof
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theestimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties”intheshareholders’equity.
Profitsorlossesderivingfromthechangeoffairvalueofaninvestmentpropertyordevelopmentprojectsarerecognisedintheincomestatementintheperiodwheretheyemergeandallocatedtothereservesintheprofitallocation.
Thebuildingsforownusearevaluedatfairvalueifonlyalimitedpartisoccupiedbytheentityforitsownuse.Inanyothercasethebuildingwillbeclassifiedin“Othertangibleassets”.
e.DisposalsofinvestmentpropertiesThecommissionfeespaidtorealestateagentsunderamandatetosellarechargedagainstprofitorlossmadeonthesale.
Theprofitsorlossesrealisedonthesaleofinvestmentpropertiesanddevelopmentprojectsarerecordedintheincomestatementofthereportingperiodin“Resultondisposalsofinvestmentproperties”andareallocatedtothereservesnotavailablefordistribution.
f.AssetsheldforsaleAssetsheldforsalerefertorealestatepropertieswhosecarryingamountwillberealisedduringasalestransactionandnotthroughcontinuinguse.ThebuildingsheldforsalearevaluedinaccordancewithIAS40atfairvalue.
Other tangible assets
a.DefinitionThefixedassetsundertheentity’scontrolthatdonotmeetthedefinitionofinvestmentpropertyareclassifiedas“Othertangibleassets”.
b.ValuationOthertangibleassetsareinitiallyrecognisedatcostandthereaftervaluedaccordingtothecostmodel.
Additionalcostsareonlycapitalisedifthefutureeconomicbenefitsrelatedtothetangibleassetincrease.
c.DepreciationandexceptionalimpairmentlossesOthertangibleassetsaredepreciatedusingthelineardepreciationmethod.Depreciationbeginsatthemomenttheassetisreadyforuseasforeseenbythemanagement.Thefollowingpercentagesapplyonanannualbasis:
• plant,machineryandequipment 20%• furnitureandvehicles 25%• computerequipment 33%• realestateforownuse:• land 0%• buildings 5%
• othertangibleassets 16%
Ifthereareindicationsthatanassetmayhavesufferedimpairmentloss,itscarryingamountiscomparedtotherealisablevalue.Ifthecarryingamountisgreaterthantherealisablevalue,anexceptionalimpairmentlossisrecognised.
d.DisposalandretirementWhentangibleassetsaresoldorretired,theircarryingamountceasestoberecognisedonthebalancesheetandtheprofitorlossisrecognisedontheincomestatement.
Solar panelsSolarpanelsarevaluedbasedontherevaluationmodelinaccordancewithIAS16-TangibleAssets.Afterinitialrecognition,anassetwhosefairvaluecanbereliablydeterminedmustbebookedattherevaluedvalue,i.e.thefairvalueatthemomentofrevaluationlessanysubsequentlyaccumulateddepreciationandsubse-quentlyaccumulatedimpairmentlosses.Thefairvalueisdeterminedbasedonthediscountingmethodforfutureincome.Theusefullifeofsolarpanelsisestimatedat20years.
Capitalgainsgenerateduponthestart-upofanewsiteareenteredinaseparatecomponentoftheshareholders’equity.Capitallossesarealsoincludedinthiscomponent,unlesstheyhavebeenconvertedintocashorunlessthefairvaluedropsbelowtheoriginalcost.Inthelattercasestheyareincludedintheresults.
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Impairment losses
Thecarryingamountoftheassetsofthecompanyisreviewedperiodicallytodeterminewhetherthereisanindicationofimpairment.Specialimpairmentlossesarerecognisedintheincomestatementifthecarryingamountoftheassetexceedstherealisablevalue.
Financial instruments
a.TradereceivablesTradereceivablesarerecordedatinitialrecognitionatfairvalue,andaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterestratemethod.Appropriateallowancesforimpairmentlossesarerecognisedinprofitorlosswhenthereisobjectiveevidencethattheassetisimpaired.Theallowancerecognisedismeasuredasthedifferencebetweentheasset’scarryingamountandthepresentvalueofestimatedfuturecashflowsdiscountedattheeffectiveinterestratecomputedatinitialrecognition.
b.InvestmentsInvestmentsarerecognisedandderecognisedonatradedatebasiswhenthepurchaseorsaleofaninvestmentisunderacontractwhosetermsrequiredeliveryoftheassetwithinthetimeframeestablishedbythemarketconcerned,andareinitiallymeasuredatfairvalue,plusdirectlyattributabletransactioncosts.
DebtsecuritiesofwhichtheGrouphastheexpressedintentionandabilitytoholdtomaturity(held-to-maturitydebtsecurities)arevaluedatamortisedcostusingtheeffectiveinterestratemethod,lessanyimpairmentrecognisedtoreflectirrecoverableamounts.Animpairmentlossisrecognisedinprofitorlosswhenthereistheobjectiveevidencethatanassetisimpaired,andismeasuredasthedifferencebetweentheinvestment’scarryingamountandthepresentvalueofestimatedfuturecashflowsdiscountedattheeffectiveinterestratecomputedatinitialrecognition.Specialimpairmentlossesarereversedinsubsequentperiodswhenanincreaseintheinvestment’srecoverableamountcanberelatedobjectivelytoaneventoccurringaftertheimpairmentwasrecognised,subjecttotherestrictionthatthecarryingamountoftheinvestmentatthedatetheimpairmentisreversedshallnotexceedwhattheamortisedcostwouldhavebeenhadtheimpairmentnotbeenrecognised.
c.CashandcashequivalentsCashandcashequivalentscomprisecashonhandanddemanddepositsandothershort-termhighlyliquidinvestmentsthatarereadilyconvertibletoaknownamountofcashandaresubjecttoaninsignificantriskofchangesinvalue.
d.FinancialliabilitiesandequityFinancialliabilitiesandequityinstrumentsissuedbytheGroupareclassifiedaccordingtotheeconomiccertaintyofthecontractualarrangementsandthedefinitionsofafinancialliabilityandanequityinstrument.Anequityinstrumentisanycontractthatevidencesaresidualinter-estintheassetsoftheGroupafterdeductingallofitsliabilities.Theprinciplesoffinancialreportingrelatedtospecificfinancialliabilitiesandequityinstrumentsaresetoutbelow.
e.Interest-bearingbankloansInterest-bearingbankloansandcreditoverdraftsareinitiallyvaluedatfairvalueandaresubsequentlyvaluedatamortisedcost,usingtheeffectiveinterestratemethod.Anydifferencebetweentheproceeds(netoftransactioncosts)andthesettlementorredemptionofborrowingsisrecognisedoverthetermoftheborrowingsinaccordancewithprinciplesoffinancialreportingrelatedtofinancingcosts,appliedbytheGroup.
f.TradedebtsTradedebtsareinitiallyvaluedatfairvalueandaresubsequentlyvaluedatamortisedcostusingtheeffectiveinterestratemethod.
g.EquityinstrumentsEquityinstrumentsissuedbythecompanyarerecognisedintheproceedsreceived(netofdirectissuecosts).
h. DerivativesTheGroupusesderivativestohedgeitsexposuretointerestraterisksarisingfromoperational,financingandinvestmentactivities.TheGroupdoesnotengageinspeculativetransactionsnordoesitissueorholdderiva-tivesfortradingpurposes.
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Derivativesareinitiallyvaluedatcostpriceandarevaluedafterinitialrecognitionatfairvalue.
• DerivativesthatdonotqualifyforhedgeaccountingCertainderivativesdonotqualifyforhedgeaccount-ing.Changesinthefairvalueofeachderivativethatdoesnotqualifyforhedgeaccountingarerecognisedimmediatelyintheincomestatement.
• HedgeaccountingTheGroupdesignatescertainhedginginstrumentsasfairvaluehedgesandcashflowhedges.
Theeffectiveportionofchangesinthefairvalueofderivativesthataredesignatedandqualifyascashflowhedgesisrecognisedintheothercomprehensiveincome.Theineffectiveportionisrecognisedintheincomestatementontheline“Changesinfairoffinan-cialassetandliabilities(ineffectivehedges-IAS39)”.
Amountspreviouslyrecognisedinothercomprehen-siveincomeandaccumulatedinequityarereclassifiedtotheincomestatementwhenthehedgeditemisrecognisedintheincomestatement,inthesamelineastherecognisedhedgeditem.Whentheforecasttransactionthatishedgedresultsintherecognitionofanon-financialassetoranon-financialliability,theprofitsorlossesonthefinancialderivativepreviouslyaccumulatedinequityarerecognisedintheinitialvaluationoftheassetorliability.
HedgeaccountingisdiscontinuedwhentheGrouprevokesthehedgingrelationship,thehedginginstru-mentissoldorterminated,orexercised,ornolongerqualifiesforhedgeaccounting.Anyprofitorlossaccu-mulatedinequityatthattimeremainsinequityandisrecognisedwhentheforecasttransactionisultimatelyrecognisedintheincomestatement.Whenaforecasttransactionisnolongerexpectedtooccur,thegainorlossaccumulatedinequityisrecognisedimmediatelyintheincomestatement.
i.OwnsharesWhenownsharesarepurchased,theamountpaid,includingattributabledirectcosts,isaccountedforasadeductionofshareholders’equity.
Provisions
Aprovisionisanobligationofuncertainsizeorwithanuncertaintimeelement.Theamountthatisrecognisedisthebestestimateatbalancesheetdateoftheexpenditurerequiredtosettletheexistingliability.
Provisionsareonlyrecognisedwhenthereisapresentobligation(legalorconstructive)asaresultofapasteventthatprobablywillbringanoutflowofresourceswherebyareliableestimateoftheamountoftheobliga-tioncanbemade.
Post-employment benefits
Contributionstodefined-contributionretirementbenefitplansarerecognisedasanexpenseagainstthereportingperiodwhenemployeeshaverenderedservicesentitlingthemtothecontributions.
Dividend distribution
Dividendsarerecognisedasequityuntiltheannualshareholders’meetingapprovesthedividends.Thedividendsarethereforerecognisedasaliabilityintheannualaccountsoftheperiodinwhichthedividenddistributionisapprovedbytheannualgeneralshareholders’meeting.
Events after the balance sheet date
Eventsafterthebalancesheetdateareevents,bothfavourableandunfavourable,thattakeplacebetweenthebalancesheetdateandthedatethefinancialstatementsareauthorisedforissue.Eventsprovidinginformationoftheactualsituationonbalancesheetdatearerecognisedasresultintheincomestatement.
.
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Significant valuations and main sources of uncer-tainty regarding valuations
a.FairvalueofinvestmentpropertiesThefairvalueoftheinvestmentpropertiesofVastnedRetailBelgiumisvaluedonaquarterlybasisbyindepen-dentpropertyexperts.Thisvaluationofthepropertyex-pertsismeanttodeterminethemarketvalueofabuild-ingonacertaindateaccordingtotheevolutionofthemarketandthecharacteristicsoftherelevantbuildings.Thepropertyexpertsusetheprinciplesdescribedinthechapter“Valuationoftheportfoliobypropertyexperts”inthePropertyreportandin“Note14:Non-currentassets:investmentproperties”oftheFinancialreport.Therealestateportfolioisrecordedintheconsolidatedannualaccountsatfairvaluedeterminedbythepropertyexperts.
b.FinancialderivativesThefairvalueofthefinancialderivativesofVasnedRetailBelgiumisvaluedonaquarterlybasisbytheissuingfinancialinstitute.Acomprehensivedescriptioncanbefoundin“Note19.Financialinstruments”intheFinancialreport.
c.DisputesThecompanyis,andmayinthefuture,beinvolvedinlegalprocedures.VastnedRetailBelgiumisinvolvedasat31December2014asclaimeraswellasdefendantinanumberoflegalprocedureswhich(accordingtothein-formationheldbythecompanyonthedateofthisannualreport)willmostprobablynothaveasignificantimpactontheassets,liabilitiesandresultsofthecompany.
Antwerp, Korte Gasthuisstraat - 145 m2
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Note3. Segmentedinformation
ThereportingbysegmentisdonewithinVastnedRetailBelgiumaccordingtotwosegmentationbases:
1. by business segment:thissegmentationbasisissub-dividedinto“retailwarehouses”17and“inner-cityshops”
2. by geographic segment:thissegmentationbasisrepresentsthe3geographicalmarketsinBelgiuminwhichtheGroupoperates,namelyFlanders,BrusselsandtheWalloonregion.
By business segment
Thetwobusinesssegmentscompriseinner-cityshopsandretailwarehouses.
Thecategoryof“inner-cityshops”includesthoseshopsthatarelocatedinsubstantiallydevelopedcommercialcentreswithaconcentrationoflarge-scaleretailorgani-sations.Twentytownsqualifyforthis.
Thecategoryof“retailwarehouses”relates,ontheone
hand,tosinglebuildingsorretailparksalongthemajortrafficaxesandmostlyanimportantsalesarea(from400m²).Retailparksareclustersofretailwarehouses,oftenconceivedastradingcomplexeswithsharedparkingareas.
Thecategoryof“corporate”includesallnon-segmentallocatedfixedcostsborneatagrouplevel.
Income statement by segment
BUSINESSSEGMENTinthousands€
Inner-cityshops Retailwarehouses Corporate TOTAL
2014 2013 2014 2013 2014 2013 2014 2013
Rentalincome 11.466 10.954 10.545 10.789 22.011 21.743
Rental-relatedexpenses 2 -52 -83 -20 -81 -72
NET RENTAL RESULT 11.468 10.902 10.462 10.769 21.930 21.671
Rental-relatedcostsandincome
-2 -1 45 38 43 37
PROPERTY RESULT 11.466 10.901 10.507 10.807 21.973 21.708
OPERATING RESULT
BEFORE RESULT ON PORTFOLIO
10.092 9.700 9.250 9.564 -1.060 -821 18.282 18.443
Resultondisposalsofinvestmentproperties
-73 -52 -1.797 325 -1.870 273
Changesinfairvalueofinvestmentproperties
8.739 -59 2.363 -2.971 11.102 -3.030
Otherresultonportfolio -1.329 -149 24 -5 -1.305 -154
OPERATING RESULT OF THE SEGMENT
17.429 9.440 9.840 6.913 -1.060 -821 26.209 15.532
Financialresult -5.431 -3.305 -5.431 -3.305
Taxes -290 -33 -290 -33
NET RESULT 17.429 9.440 9.840 6.913 -6.781 -4.159 20.488 12.194
17 Till the date of the divestment, being 22 December 2014, this segment also comprised shopping centre Julianus Shopping in
Tongeren. Shopping centres are complexes of di£erent shops. Shopping centres are complexes comprising di£erent shops that
are dependent commercially on each other and which have joint commercial and promotional aspects.
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Financial report
Key figures by segment
BUSINESSSEGMENT
inthousands€
Inner-cityshops Retailwarehouses TOTAL
2014 2013 2014 2013 2014 2013
Fairvalueofrealestateproperties 242.031 211.386 114.505 150.292 356.536 361.678
• ofwhichinvestmentsduringthefinancialyear(fairvalue) 0 204 36 0 36 204
• ofwhichacquisitionofsharesofrealestatecompanies 26.605 0 0 0 26.605 0
• ofwhichpurchases/acquisitionofinvestmentpro-perties 0 11.670 0 0 0 11.670
Divestmentsduringthefinancialyear(fairvalue) -4.699 -1.631 -38.186 -4.718 -42.885 -6.349
Investmentvalueofrealestateproperties 248.082 216.671 117.368 154.049 365.450 370.720
Accountingyieldofthesegment(%) 4,7% 5,2% 9,2% 7,2% 6,2% 6,0%
Totalleasablespace(m²) 34.241 33.624 77.353 113.338 111.594 146.962
Occupancyrate(%) 98% 95% 98% 96% 98% 95%
By geograph segment
TheactivityofVastnedRetailBelgiumisgeographicallysubdividedinto3regionsnamelyFlanders,BrusselssandtheWalloonregion.
GEOGRAPHICALSEGMENTATIONinthousands€
Flanders Walloonregion Brussels TOTAL
2014 2013 2014 2013 2014 2013 2014 2013
Rentalincome 15.004 14.704 3.984 4.021 3.023 3.018 22.011 21.743
Fairvalueofrealestateproperties
256.403 250.478 45.199 58.006 54.934 53.194 356.536 361.678
Investmentvalueofrealestateproperties
262.813 256.740 46.330 59.456 56.307 54.524 365.450 370.720
Accountingyieldofthesegment(%)
5,9% 5,9% 8,8% 6,9% 5,5% 5,7% 6,2% 6,0%
Investmentsduringthe
financialyear(fairvalue)-49 181 85 23 0 0 36 204
Divestmentsduring
thefinancialyear(fairvalue)-31.362 -6.349 -11.523 0 0 0 -42.885 -6.349
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Note4. Propertyresult
Rental income
inthousands€ 2014 2013
Rents 22.642 22.118
Rentaldiscounts -660 -375
Compensationforearlyterminationofleaseagreements 29 0
Total rental income 22.011 21.743
Rentalincomecomprisesrents,incomefromoperationalleaseagreementsanddirectlyassociatedrevenues,suchasrentsecuritiesgrantedbypromotersandcompensationforearlyterminatedleaseagreementsminusanyrentaldiscountsandrentalbenefits(incentives)granted.Therentaldiscountsandincentivesarespreadovertheperiodrunningfromthestartoftheleaseagreementtothenextpossibilityofterminatingaleaseagreement.
RentalincomeofVastnedRetailBelgiumisspreadover113differenttenants,limitingthedebtor’sriskandimprovingstabilityofrentalincome.Thetenmostimportanttenantsrepresent53%(48%in2013)ofrentalincomeandarealwaysprominentcompaniesintheirsectorandpartofinternationalgroups.Themostimportanttenantrepresents19%ofrentalincome(12%in2013).In2014,thereare3tenantswhoseleasepay-mentsonanindividualbasisrepresentmorethan5%oftotalrentalincomeofVastnedRetailBelgium(5tenantsin2013).
Overview of future minimum rental income
Thecashvalueofthefutureminimumrentalincomeuntilthefirstexpirydateofthenon-cancellableleaseagree-mentsissubjecttothefollowingcollectionterms:
inthousands€ 2014 2013
Receivables with a remaining duration of:
Lessthanoneyear 19.922 21.547
Betweenoneandfiveyears 20.110 28.181
Morethanfiveyears 128 221
Total of future minimum rental income 40.160 49.949
Thedecreaseofthefutureminimumrentalincomeasat31December2014of€9,8millionresultsmainlyofthedivestmentof19non-strategicbuildingsin2014,partlycompensatedbytheacquisitionofapremiumhighstreetshopinGhent.
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Financial report
Rental-related expenses
inthousands€ 2014 2013
Rentforleasedassetsandgroundlease -110 -109
Write-downsontradereceivables -70 -84
Reversalofwrite-downsontradereceivables 99 121
Total rental-related expenses -81 -72
Therental-relatedexpensescomprisewrite-downsontradereceivablesandarerecognisedintheincomestatementwhenthecarryingamountishigherthanthe
estimatedrealisationvalue,aswellascostsandincomeofthelettingofbuildingsnotbelongingtoformerclasses.
Recovery of rental charges and taxes normally payable by tenants on let properties
inthousands€ 2014 2013
Rebillingofrentalchargesbornebythelandlord 33 64
Rebillingofadvanceleviesandtaxesonletproperties 1.473 1.484
Recovery of rental charges and taxes normally payable by tenants on let properties 1.506 1.548
Rentalchargesbornebythelandlord -33 -64
Advanceleviesandtaxesonletproperties -1.473 -1.484
Rental charges and taxes normally payable by tenants on let properties -1.506 -1.548
Total net amount of recovered rental charges and taxes 0 0
Rentalchargesandtaxesonletbuildingsandrecoveryofthesechargesrefertocoststhatare,bylaworcustom,oftheresponsibilityofthetenant.Thesecostscompriseprimarilypropertytaxandrentalcharges.VastnedRetailBelgiumisresponsibleforthemanagementanddoesnotcontractitouttoathirdparty,exceptfortheexecutivemanagementofthecommercialcomplex“Jardin
d’Harscamp”thatismanagedbytheexternalpropertymanagerDevimoConsultsa.ThisfacilitymanagementissupervisedbythecooofVastnedRetailBelgiumwhohasbuilt-inthenecessarycontrols.Dependingoncontractualagreementswiththetenants,thelandlordmayormaynotchargethetenantsfortheseservices.
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Note5. Propertycharges
Technical costs
inthousands€ 2014 2013
Recurrent technical costs -112 -112
Insurancepremiums -112 -112
Non-recurrent technical costs -470 -348
Maintenance -464 -341
Claims -6 -7
Total technical costs -582 -460
Technicalcostscomprise,interallia,maintenancecostsandinsurancepremiums.
Maintenancecoststhatcanbeseenasrenovationofanexistingbuildingbecausetheybringaboutanimprove-
mentofthereturnortherent,arenotrecognisedascostsbutarecapitalised.
Thetechnicalcostshaveincreasedin2014asaresultoftheplannedroofrenovations.
Commercial costs
inthousands€ 2014 2013
Brokers’fees -147 -58
Publicity -51 -35
Lawyers’feesandlegalcosts -121 -122
Total commercial costs -319 -215
Commercialcostsalsoincludebrokers’fees.Brokers’feespaidtobrokersafteraperiodofvacancyarecapitalisedasthepropertyexperts,afteraperiodofvacancy,reducetheestimatedfeesfromtheestimatedvalueoftherealestate
property.Brokers’feespaidafteranimmediatereletting,withoutvacancyperiod,arenotcapitalisedandarerecognisedintheresultasthepropertyexpertsdonottakethisfeeintoaccountatthemomentofvaluation.
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Financial report
Charges and taxes on unlet properties
inthousands€ 2014 2013
Vacancychargesofthefinancialyear -169 -125
Vacancychargesofprecedingfinancialyears 12 13
Propertytaxonvacantproperties -97 -76
Recuperationofpropertytaxonvacantproperties 35 20
Total charges and taxes on unlet properties -219 -168
Theincreaseofchargesandtaxesonunletpropertiesresultsin2014mainlyfromthegrowingvacancyintheon22December2014divestedJulianusShoppinginTongeren.
VastnedRetailBelgiumlargelyrecoversthepropertytaxthatischargedonvacantpartsofbuildingsthroughob-jectionssubmittedtoFlandersTaxAdministration.
Property management costs
inthousands€ 2014 2013
Externalpropertymanagementfees -4 -35
Internalpropertymanagementfees -1.219 -1.194
Property experts -152 -189
Remuneration of employees -726 -708
Other costs -341 -297
Total property management costs -1.223 -1.229
Propertymanagementcostsarecostsrelatedtothemanagementofthebuildings.Theseincludepersonnelcostsandindirectcostswithrespecttothemanagementcommitteeandthestaff(suchasofficecosts,operating
costsetc.)whomanagetheportfolioandlettings,andalsodepreciationsandimpairmentsontangibleassetsusedforsuchmanagementandotherbusinessexpensesrelatedtothemanagementoftheproperty.
Other property charges
inthousands€ 2014 2013
Propertytaxcontractuallybornebythelandlord -34 -37
Costscontractuallybornebythelandlord -104 -70
Securitycosts 0 -45
Othercosts 13 -52
Total other property charges -125 -204
Theotherpropertychargescomprisemainlycostscon-tractuallybornebythelandlordfortheon22December2014divestedJulianusShoppinginTongeren.
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Note6. Generalcosts
inthousands€ 2014 2013
CIItax -218 -227
Auditor’sfee -80 -77
Directors’remunerations -31 -31
Liquidityprovider -14 -14
Financialservices -10 -5
Employeebenefits -441 -403
Advicecosts -108 -20
Othercosts -346 -289
Total general costs -1.248 -1.066
Generalcostsareallcostsrelatedtothemanagementofthecompanyandcoststhatcannotbeallocatedtopro-pertymanagement.Theseoperatingcostsincludegeneraladministrationcosts,costofpersonnelengagedinthe
managementofthecompanyassuch,depreciationsandimpairmentsontangibleassetsusedforhismanagementandotheroperatingcosts.
Wilrijk, Boomsesteenweg - 4.884 m2
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Financial report
Note7. Employeebenefits
inthousands€ 2014 2013
Chargesforthe
patrimonymanage-
ment
Chargeslinkedtothemanage-
mentofthe
company
TOTAL
Chargesforthe
patrimonymanage-
ment
Chargeslinkedtothemanage-
mentofthe
company
TOTAL
Remunerations of employees 457 266 723 444 242 686
Salaryandotherbenefits
paidwithin12months281 155 436 282 144 426
Pensionsandpost-employment
benefits13 8 21 13 8 21
Socialsecurity 79 49 128 77 46 123
Variableremunerations 39 25 64 26 16 42
Dismissalindemnities 0 0 0 0 0 0
Othercharges 45 29 74 46 28 74
Remuneration of the
management committee269 175 444 264 161 425
Chairmanofthemanagementcommittee 69 68 137 65 65 130
Fixed remuneration 61 61 122 60 61 121
Variable remuneration 8 7 15 5 4 9
Othermembersofthe
managementcommittee200 107 307 199 96 295
Fixed remuneration 186 80 266 184 73 257
Variable remuneration 14 15 29 15 12 27
Retirement obligations 0 12 12 0 11 11
Total employee benefits 726 441 1.167 708 403 1.111
Thenumberofemployeesatyear-end2014,expressedinFTEis4staffmembersand2membersofthemanage-mentcommitteefortheinternalmanagementofthepatrimony(respectively4and2in2013)and4staffmembersand1memberofthemanagementforthemanagementofthecompany(respectively4and1in2013).Themanagementteamcomprises3persons.
Remuneration,supplementarybenefits,compensationupontermination,redundancyandresignationcom-pensationforpersonnelinpermanentemploymentareregulatedbytheActontheLabourAgreementsof4July1978,theAnnualHolidayActof28June1971,thejointcommitteeforthesectorthatthecompanyfallsunderandthecollectivebargainingagreementsthathavebeenrecognisedintheincomestatementintheperiodtowhichtheyrefer.
Pensionsandcompensationsfollowingtheterminationoftheworkcomprisepensions,contributionsforgroupinsurance,lifeassuranceanddisabilityandhospitalisationinsurance.Forpermanentemployees,VastnedRetailBelgiumhastakenoutagroupinsurancepolicy-a“definedcontributionplan”-withanexternalinsurancecompany.Thecompanypayscontributionstothisfund,whichisindependentofthecompany.Apensionplanwithadefined-contributionschemeisaplaninvolvingfixedpremiumspaidbythecompanyandwithoutthecompanyhavinglegallyenforceableoractualobligationstopayfurthercontributionsifthefundweretohaveinsufficientassets.Thecontributionstotheinsuranceplanarefinancedbythecompany.ThisgroupinsurancecontractcomplieswiththeVandenbrouckeActonpen-sions.Thecompulsorycontributionsarerecognisedintheincomestatementfortheperiodthattheyrelateto.Forfinancialyear2014thesecontributionsamountto€32.000(€32.000in2013).Theinsurancecompanyconfirmedasat31December2014thatthedeficittoguaranteetheminimumreturnisnotmaterial.
.
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Note8. Resultondisposalsofinvestmentproperties
inthousands€ 2014 2013
Acquisitionvalue 43.176 4.208
Accumulatedcapitalgainsandextra-ordinaryimpairmentlosses -291 2.288
Carrying amount (fair value) 42.885 6.496
Salesprice 42.581 7.105
Sellingcosts -1.566 -336
Net result of sale 41.015 6.769
Total result on disposals of investment properties -1.870 273
In2014VastnedRetailBelgiumhassold19non-stra-tegicretailwarehousepropertiesandinner-cityshopsinsecondarylocationswithatotalfairvalueof€42,9million.
ThedivestmentsconcernJulianusShoppinginTongerenandretailpropertiesinVilvoorde,Hoboken,Bree,Chênée,Flémalle,Genk,LaLouvière,Malmédy,Mons,Sint-Pieters-Leeuw,Waterloo,Antwerp,Westerlo,HasseltandWilrijkwithatotalgrosscommercialspaceofapproximately39.000m².
Thetotalsalespriceisabout1%lowerthanthefairvalueasat31December2013(fairvalueasestimatedbytheindependentpropertyexpertofthecompany).Thenetsalesprice(afterdeductionofthesalescostsandtheVATrevision)liesapproximately4%lowerthanthefairvalueasat31December2013.The19retailpropertiesrepre-senttogether12%ofthetotalfairvalueoftherealestateportfolioofthecompany.
Thecommonrentalincomeofthedivestedretailproper-tiesamountsto€3,6millionorapproximately16%ofthetotalrentalincomeofthecompany.
Note9. Changesinfairvalueofinvestmentproperties
inthousands€ 2014 2013
Positivechangesofinvestmentproperties 15.855 7.003
Negativechangesofinvestmentproperties -4.753 -10.033
Total changes in fair value of investment properties 11.102 -3.030
In2014thefairvalueoftheexistingrealestateportfoliohasincreasedby3%comparedto2013.Thechangesinfairvalueofinvestmentpropertiesin2014aresub-sequentlypositiveandamountto€11,1millioncom-paredtonegativechangesof-€3,0millionin2013.The
increaseinfairvaluecomesfromretailpropertiesontoplocations,aswellintheinner-cityofimportantcitiesasfromimportantperipheralretailwarehouseswhereasharpeningoftheyieldoccurredduring2014.
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Financial report
Note10. Otherresultonportfolio
inthousands€ 2014 2013
Changesinspreadofrentaldiscountsandbenefitsgrantedtotenants -207 -131
Otherchanges -1.098 -23
Total other result on portfolio -1.305 -154
Theotherresultonportfolioamountsto-€1,3millionandcomprisestheimmediatewriteoffofthedifferenceinpriceof-€1,1millionontheacquisitionofthesharesof
thecompanyVeldstraat23-27sa(ownerofthepremiumhighstreetshopinGhent)attheendofJuly2014.IFRS3isnotapplicableonthisacquisition.
Note11. Financialresult
inthousands€ 2014 2013
Financialincome 6 3
Netinterestchargeswithfixedinterestrate -3.652 -4.529
Netinterestchargeswithvariableinterestrate -535 -354
Otherfinancialcosts -10 -11
Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39) -1.240 1.586
Total financial result -5.431 -3.305
Thefinancialresult(excl.changesinfairvalueoffinan-cialassetsandliabilities(ineffectivehedges-IAS39))amountsforfinancialyear2014to-€4,2million(-€4,9millionin2013).Thedecreaseof€0,7millionor14%resultsmainlyfromthestartofinterestrateswaps(forhedgingcreditfacilitieswithavariableinter-
estrate)atlowerinterestratesthantheinterestrateoftheinterestrateswapswhichhaveexpired.Theaverageinterestrateofthecompanyfor2014decreasesto3,2%includingbankmarginscomparedto4,0%forfinancialyear2013.
116
Net interest charges classified by credit line expiry date
inthousands€ 2014 2013
Netinterestchargesonnon-currentfinancialdebts -3.009 -4.541
Netinterestchargesoncurrentfinancialdebts -1.178 -342
Total net interest charges -4.187 -4.883
Theaverageinterestrateofthefinancialdebtsamountsfor2014to4,0%includingbankmargins(4,0%for2013).
Theaverageinterestratefor2014ofthenon-currentfinancialdebtsamountsto3,1%includingbankmargins(4,6%in2013),andofthecurrentfinancialdebtsto3,3%includingbankmargins(1,5%in2013).
For2015the(hypothetical)futurecashoutflowoftheinterestchargesfromtheloansdrawnonat31
December2014atthefixedorvariableinterestrateasat31December2014amountstoapproximately€3,3mil-lion(€3,6millionin2013).
Forfinancialyear2014,theeffectontheoperatingdistributableresultofa(hypothetical)increaseininterestratesby1%givesanegativeresultofapproximately€0,4million(€0,3millionin2013).Thefinancialderivativesareincludedinthecalculations.Giventhecurrentlylowmarketrateahypotheticaldecreaseoftheinterestratesby1%isnotrealistic.
Note12. Taxesontheresult
inthousands€ 2014 2013
Corporateincometax -290 -33
Total taxes -290 -33
WiththeRRECAct(formerlytheRoyalDecreeof7December2010andtheRoyalDecreeof10April1995),thelegislatorgaveafavourabletaxstatustoaRREC.IfacompanyconvertsitsstatusintothatofaRREC,orifan(ordinary)companymergeswithaRREC,itmustpaya
one-offtax(exittax).Thereafter,theRRECisonlysubjecttotaxesonveryspecificitems,e.g.“Disallowedexpendi-ture”.Nocorporatetaxisthereforepaidonthemajorityoftheprofitthatcomesfromlettingsandaddedvalueondisposalsofinvestmentproperties.
Note13. Numberofsharesandresultpershare
Movement of the number of shares
2014 2013
Numberofsharesatthebeginningofthefinancialyear 5.078.525 5.078.525
Numberofsharesattheendofthefinancialyear 5.078.525 5.078.525
Numberofsharesentitledtodividend 5.078.525 5.078.525
Adjustmentsforcalculationofdilutedresultpershare 0 0
Weightedaveragenumberofsharesforcalculationofdilutedresultpershare 5.078.525 5.078.525
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Financial report
Determination of amount of mandatory dividend distribution
Theamountsubjecttodistributionisdeterminedpursuanttoarticle13§1sixthparagraphoftheRRECRoyalDecreeandChapter4oftheannexCoftheRRECRoyalDecree.
inthousands€ 2014 2013
Net result according to statutory annual accounts 20.494 12.194
Adjustmentfornon-cashflowtransactionsincludedinthenetresult:
• Depreciationsandreversalofdepreciationsandimpairments 58 70
• Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39) 2.207 -1.590
• Resultonportfolio -9.111 2.844
Corrected result for mandatory distribution 13.648 13.518
Mandatory distribution: 80% 10.918 10.814
Operatingdistributableresult(statutoryannualaccounts) 13.590 13.448
Operatingdistributableresult(consolidatedannualaccounts) 13.801 13.448
Thedistributableearningspershare,basedonthestatutoryannualaccountsofVastnedRetailBelgiumsa,amountto€13,6millionin2014comparedto€13,4millionin2013.Thedifferencewiththeoperatingdis-tributableresultaccordingtotheconsolidatedannualaccountsconcernstheoperatingdistributableresultofthesubsidiariesVeldstraat23-27andEuroInvestRetailProperties.
Nofurtheradjustmentsmustbemadeonthecorrectedresultforanynon-exemptedcapitalgainondisposalsofinvestmentpropertiesordebtreductions.Consequently,
thecorrectedresultisequaltotheamounteligibleformandatorydistributionof80%pursuanttoarticle45,2°oftheRRECAct.
VastnedRetailBelgiumchoosestodistribute100%oftheconsolidatedoperatingdistributableresulttoitsshareholdersandoffersconsequentlyanadditionaldistributionfromthereservesofthecompanyregardingthedifferencebetweenthestatutoryandconsolidatedoperatingdistributableresult.Thisamountsto101%ofthestatutoryoperatingdistributableresult.
Calculation of result per share
in€ 2014 2013
Ordinarynetresultpershare 4,03 2,40
Dilutednetresultpershare 4,03 2,40
Operatingdistributableresultpershare(statutoryannualaccounts) 2,68 2,65
OperatingdistributableresultofthesubsidiariesVeldstraat23-27saandEuroInvestRetailPropertiessa
0,04 0
Operatingdistributableresultpershare(consolidatedannualaccounts) 2,72 2,65
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Proposed dividend per share
Aftertheclosingofthefinancialyear,thedividenddistributionshownbelowisproposedbytheboardofdirectors.Thiswillbepresentedtothegeneralmeetingof
shareholderson29April2015.InaccordancewithIAS10,thedividenddistributionisnotrecognisedasaliabilityandhasnoeffectonthetaxonprofit.
2014 2013
Dividendpershare(in€) 2,72 2,65
Remunerationofsharecapital(inthousands€) 13.814 13.458
Dividendasapercentageofconsolidatedoperatingdistributableresult(%) 100% 100%
Determination of the amount pursuant to article 617 of the Belgian Companies Code
Theamount,asreferredtoinarticle617oftheBelgianCompaniesCode,ofpaid-upcapitalor,ifthisamountishigher,thecalled-upcapital,plusallreserveswhich,pur-suanttothelaworthearticlesofassociation,maynotbedistributed,isdeterminedinChapter4ofannexCoftheRRECRoyalDecreeof13Julyof2014.
ThiscalculationisbasedonthestatutoryannualaccountsofVastnedRetailBelgiumsa.
inthousands€ 2014 2013
Non-distributable elements of shareholders’ equity for distribution
Paid-upcapital 97.213 97.213
Unavailablesharepremium,accordingtothearticlesofassociation 4.183 4.183
Reserveforthepositivebalanceofchangesininvestmentvalueofrealestateproperties 131.743 134.524
Reservefortheimpactonfairvalueofestimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties
-8.970 -8.907
Reserveforthebalanceofchangesinfairvalueofallowedhedginginstrumentssubjecttoahedgeaccounting
-206 -504
Reserveforthebalanceofchangesinfairvalueofallowedhedginginstrumentsnotsubjecttoahedgeaccounting
-3.106 -4.692
Otherreserves 625 622
Result of the financial year which, pursuant to Chapter I of Annex C of the Royal Decree of 13 July 2014, is to be allocated to non-distributable reserves
Resultonportfolio 9.111 -2.844
Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39)andnon-currentfinancialassets
-2.207 1.590
Total non-distributable shareholders’ equity 228.386 221.184
Statutory shareholders’ equity 242.800 235.467
Planneddividenddistribution 13.814 13.458
Numberofshares 5.078.525 5.078.525
Operatingdistributableresultpershare 2,72 2,65
Shareholders’ equity after dividend distribution 228.986 222.009
Remaining reserves after distribution 600 824
119
Financial report
Note14. Non-currentassets
Investment properties
Investment and revaluation table
inthousands€ 2014 2013
Inner-cityshops
Retailware-houses18 TOTAL
Inner-cityshops
Retailwarehouses
TOTAL
Balance sheet on 1 January 211.386 150.292 361.678 201.202 157.981 359.183
Acquisitionsofinvestmentproperties 0 0 0 11.670 0 11.670
Investmentsinexistinginvestmentproperties
0 36 36 204 0 204
Acquisitionofsharesofrealestatecompanies
26.605 0 26.605 0 0 0
Disposalsofinvestmentproperties -4.699 -38.186 -42.885 -1.631 -4.718 -6.349
Changesinfairvalueofinvestmentproperties
8.739 2.363 11.102 -59 -2.971 -3.030
Balance sheet as at 31 December 242.031 114.505 356.536 211.386 150.292 361.678
OTHERINFORMATION
Investmentvalueofrealestateproperties 248.082 117.368 365.450 216.671 154.049 370.720
Asat31December2014,thefairvalueoftheinvestment propertiesofVastnedRetailBelgiumamountsto€357million(€362millionin2013).Thisdecreaseof€5millionin2014comparedto31December2013ismainlythecombinedeffectof:
• thedivestmentof19non-strategicretailwarehousesandinner-cityshopsinsecondarylocationswithafairvalueof€42,9millionasat31December2013
• theacquisitionofapremiumhighstreetshopinaprimelocationonVeldstraatinGhentwithafairvalueofapproximately€26,7million
• anincreaseinfairvalueoftheexistingrealestateport-folioof€11,1millionmainlyforretailpropertiesloca-tedinprimelocations,intheinner-cityofimportantcitiesaswellasinretailparksintheperiphery,throughthesharpeningoftheyields.
In2014VastnedRetailBelgiumhasacquired99%ofthesharesofthecompanyVeldstraat23-27forapurchase
priceof€21,7million.Veldstraat23-27comprises€0,7millionincash.Thenetcashflowfollowingtheacquisitionamountsthusto€21,0million.Theretailpropertyrepre-sentsafairvalueof€26,7millionandgeneratesanannualrentalincomeofapproximately€1,1million.Furthermorefollowingthisacquisitionthedeferredtaxof€3,7millionisrecorded.IFRS3isnotapplicableonthisacquisition.
Asat31December2014,theinvestmentpropertiesarevaluedat€365million(investmentvalue)bytheinde-pendentpropertyexperts.Thefairvalueistheinvestmentvalueminusthehypotheticaltransactionrightsandcoststhatmustbepaidintheeventofanyfuturepotentialdisposal.
Fortheexplanationofthechangesinfairvalueofinvest-mentproperties,pleaseseeNote9.
Asat31December2014,therewerenoinvestmentpro-pertiesmortgagedassecurityforloanstakenoutorforcreditfacilitiesatfinancialinstitutions.
18 Till the date of divestment, being 22 December 2014, this segment also comprised shopping centre Julianus Shopping in
Tongeren.
120
IFRS 13
IFRS13appliestofinancialyearsbeginningonorafter1January2013.ItintroducesastandardisedframeworkformeasuringfairvalueandadisclosurerequirementregardingfairvaluemeasurementwhenthisvaluationprincipleisrequiredorpermittedbyvirtueofotherIFRSstandards.IFRS13specificallydefinesfairvalueasthepricethatwouldbereceivedforthesaleofanassetorthatwouldhavetobepaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate.ThedisclosurerequirementinIFRS13regardingfairvaluemeasurementsalsoservestore-placeorexpandupontherequirementsimposedbyotherIFRSstandards,includingIFRS7FinancialInstruments:Disclosures.
Investmentpropertiesarerecognisedatfairvalue.Thefairvalueisdeterminedonthebasisofoneofthefollowinglevelsofthehierarchy:
• level1:measurementisbasedonquotedmarketpricesinactivemarkets
• level2:measurementisbasedon(externally)obser-vableinformation,eitherdirectlyorindirectly
• level3:measurementisbasedeitherfullyorpartiallyoninformationthatisnot(externally)observable
IFRS13classifiesinvestmentpropertiesaslevel3.
Valuation of investment properties
Thefairvalueofallofthecompany’sinvestmentpro-pertiesisvaluedeachquarterbyindependentpropertyexperts.Thefairvalueisbasedonthemarketvalue(i.e.adjustedforthe2,5%purchasingfeesasdescribedinthe“Principlesoffinancialreporting-Investmentproperties”-seeabove),whichistheestimatedamountforwhichaninvestmentpropertycanbesoldatthemeasurementdatebyasellertoawillingbuyerinabusiness-like,objectivetransactionprecededbysoundnegotiationsamongknowledgeableandwillingparties.
Ifnocurrentmarketpricesareavailableinanactivemarket,themeasurementsaremadeonthebasisofacalculationofgrossreturnsinwhichthegrossmarketrentsarecapitalised.Themeasurementsobtainedareadjustedforthepresentvalue(NPV)ofthedifferencebetweenthenetcurrentactualrentandtheestimatedrentalvalueatthedateofvaluationfortheperioduptothefirstopportunitytogivenoticeunderthecurrentleaseagreements.Rentdiscountsandrent-freeperiodsarealsotakenintoconsideration.Forbuildingsthatarepartiallyorcompletelyvacant,themeasurementismadeonthe
basisoftheestimatedrentalvalueminusthevacancyandthecosts(rentalcosts,publicitycosts,etc.)forthevacantportions.
Theyieldsusedarespecifictothetypeofproperty,loca-tion,stateofmaintenanceandtheleasabilityofeachproperty.Thebasisusedtodeterminetheyieldsisformedbycomparabletransactionsandsupplementedwithknowledgeofthemarketandofspecificbuildings.Comparabletransactionsinthemarketarealsotakenintoaccountforthevaluationofproperties.
Theyieldsdescribedinthepropertyreportarecalculatedbydividingthe(theoretical)grossrentoftherealestatebytheinvestmentvalueoftheinvestmentpropertiesexpressedasapercentage.Theaveragegrossyieldofthetotalinvestmentportfolioasper31December2014comesto5,7%(6,3%asat31December2013).
Assumptionsaremadeperproperty,pertenantandpervacantunitconcerningthelikelihoodoflease/re-lease,numberofmonthsvacant,incentivesandrentalcosts.
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Financial report
Themostimportanthypothesesregardingthevaluationoftheinvestmentpropertiesare:
2014 2013
Average gross market rent per m² (in €)
• Inner-cityshops 373 356
• Retailwarehouses 105 99
Average gross yield (in %) 5,7% 6,3%
• Inner-cityshops 5,2% 5,6%
• Retailwarehouses 6,9% 7,3%
Average net yield (in %) 5,1% 5,6%
• Inner-cityshops 4,6% 4,9%
• Retailwarehouses 6,1% 6,5%
Vacancy rate (in %) 2,1% 4,6%
Inthecaseofahypotheticalnegativeadjustmentof1%(from5,6%to6,6%onaverage)totheyieldusedbypropertyexpertsforvaluingtherealestateportfolioofthecompany(yieldorcapitalisationrate),thefairvalueoftherealestatewoulddecreaseby€54millionor15%.Thiswouldraisethedebtratioofthecompanyby6%toaround37%.Ifthisisreversed,andahypotheticalpositiveadjustmentof1%(from5,6%to4,6%onaverage)ismadetothisyield,thefairvalueoftherealestatewouldin-creaseby€78millionor22%.Thiswouldlowerthedebtratioofthecompanyby6%toaround25%.
Inthecaseofahypotheticaldecreaseinthecurrentrentsofthecompany(assumingaconstantyield)of€1million
(from€20,4millionto€19,4million),thefairvalueoftherealestatewoulddecreaseby€17millionor5%.Thiswouldraisethedebtratioofthecompanyby2%toaround33%.Inthereversecaseofahypotheticalincreaseofthecurrentrentsofthecompany(assumingaconstantyield)of€1million(from€20,4millionto€21,4million),thefairvalueoftherealestatewouldincreaseby€17millionor5%.Thiswouldlowerthedebtratioofthecompanyby1%toaround30%.
Acorrelationexistsbetweenchangesinthecurrentrentsandtheyieldsthatareusedtovaluetherealestate,butthiswasnotfactoredintotheabovesensitivityanalysis.
Valuation process for investment properties
Investmentpropertiesarerecordedintheaccountsonthebasisofvaluationreportsdrawnupbyindependentandexpertpropertyassessors.Thesereportsarebasedoninformationsuppliedbythecompanyandtheassumptionsandvaluationmodelsusedbythepropertyexperts.
• Informationsuppliedbythecompany,suchascurrentrents,periodsandconditionsofleaseagreements,servicecharges,investments,etc.Thisinformationcomesfromthecompany’sfinancialandmanage-mentsystemandissubjecttothegenerallyapplicableverificationsystemofthecompany.
• Theassumptionsandvaluationmodelsusedbythepropertyexperts.Theseassumptionsrelatemainlytothemarketsituation,suchasyieldsanddiscountrates.Theyarebasedontheirprofessionalassessmentandobservationofthemarket.
Foradetaileddescriptionofthevaluationmethodusedbythepropertyexperts,pleaserefertothesectionofthePropertyreportentitled“valuationoftheportfoliobypropertyexperts”.
Theinformationprovidedtothepropertyexperts,aswellastheassumptionandthevaluationmodels,arecheckedbythecompany’sbusinessanalystandalsobythemanagementcommitteeofthecompany.Thisinvolvesanexaminationofthechangesinfairvalueduringtherelevantperiod.
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Other tangible assets
inthousands€ 2014 2013
Amount at the end of the preceding financial year 560 602
Acquisitions 0 60
Depreciations -83 -102
Amount at the end of the financial year 477 560
VastnedRetailBelgiuminstalledin2012solarpanelsinownmanagementontheretailwarehouselocatedonBoomsesteenweg660inWilrijk.ThegeneratedenergyisprovidedatfavourableratestotenantsASAdventure,TonyMertens,BrantanoandPremaman.VastnedRetailBelgiumreceivesasubsidyof€250per1.000kWhofen-ergygenerated.Thisinvestmentinsolarpanelsamountedin2012to€0,5millionandgeneratesayieldof7,6%.Therevenueofthesolarpanelsarerecordedundertheitem
“Otherrental-relatedincomeandexpenses”.
Solarpanelsarevaluedonanannualbasisbytheinde-pendentpropertyexperts.Thefairvalueisdeterminedbasedonthediscountofthefutureguaranteedrevenuesfromgreenpowercertificates,undernormalsunshinehours,takingintoaccountnormalmaintenancecosts.Theusefullifeofsolarpanelsisestimatedat20years.
Note15. Currentassets
Assets held for sale
inthousands€ 2014 2013
HobokenZeelandstraat 1.912 0
AntwerpAbdijstraat 470 0
Other 1.774 0
Total assets held for sale 4.156 0
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Financial report
Trade receivables
inthousands€ 2014 2013
Outstandingtradereceivables 157 147
Invoicestobeissuedandcreditnotestobereceived 6 26
Doubtfuldebtors 162 170
Provisiondoubtfuldebtors -162 -170
Total trade receivables 163 173
Thankstoastrictcreditcontrolthenumberofdaysofoutstandingcustomers’creditisonly2days.
Aging analysis of trade receivables
inthousands€ 2014 2013
Receivables<30days 71 50
Receivables30-90days 48 42
Receivables>90days 38 55
Total outstanding trade receivables 157 147
Forthefollow-upofthedebtor’sriskusedbyVastnedRetailBelgium,pleaseseethedescriptionofthemostimportantriskfactorsandinternalcontrolandriskmanagementsystems.
Tax receivables and other current assets
inthousands€ 2014 2013
Taxesreceivables 106 81
Receivablesoninsurances 0 7
Otherreceivables 107 3
Total tax receivables and other current assets 213 91
124
Note16. Shareholders’equity
Evolution of share capital
Date TransactionSharecapital
movement
Totaloutstan-dingshare
capitalafter
transaction
Numberof
shareissued
Total
number
ofshares
inthousands€ inthousands€ inunits inunits
15.06.1987 Constitution 74 74 3 3
30.06.1996 Capitalincrease 3.607 3.682 146 149
30.06.1997 Absorption 62 3.744 8 156
31.07.1997 Capitalincrease 1.305 5.049 71 227
22.12.1997 Absorption 1.529 6.578 69 296
06.11.1998 Absorption 3.050 9.628 137 434
23.12.1998 Absorption 874 10.502 101 535
23.12.1998 Capitalincrease 23.675 34.178 1.073 1.608
23.12.1998 Capitalincrease 33.837 68.015 1.723 3.332
31.03.1999 Capitaldecrease -3.345 64.670 0 3.332
01.11.1999 MergerGLTrust 13.758 78.428 645.778 3.977.626
01.11.1999 Capitalincrease(VastNed) 21.319 99.747 882.051 4.859.677
25.11.1999 Capitaldecrease(compensationoflosses) -7.018 92.729 0 4.859.677
29.02.2000Capitalincrease(contributioninkindMechelenBruul)
2.263 94.992 90.829 4.950.506
30.06.2000Capitalincrease(contributioninkindLaLouvière)
544 95.536 21.834 4.972.340
30.06.2000Capitalincrease(contributioninkindavenueLouise7)
1.306 96.842 52.402 5.024.742
20.09.2000MergerbyabsorptionImmorent,NieuweAntwerpseLuxeBuildings,ZevenZevenandNewsOfTheWorld
79 96.921 14.004 5.038.746
20.09.2000 Conversionofsharecapitaltoeuro 79 97.000 0 5.038.746
08.05.2002MergerbyabsorptionofthelimitedliabilitycompanyImmobilièredel’Observatoire
3 97.003 7.273 5.046.019
30.12.2002
MergerbyabsorptionofthelimitedliabilitycompaniesGLProperties,RetailDeve-lopment,Winvest,Immo2000M,Avamij,Goorinvest,Tafar,Lemi,Framonia,MicolandImmoShoppingTienen
209 97.212 26.701 5.072.720
30.12.2002 MergerbyabsorptionofcompanyImmoGL 1 97.213 5.805 5.078.525
Asat31December2014,thesharecapitalamountsto€97.213.233,32andisdividedamong5.078.525fullypaid-upshareswithnostatementofnominalvalue.
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Financial report
Authorised capital
Theboardofdirectorsisexpresslyauthorisedtoincreasethenominalcapitalononeormoreoccasionsbyanamountof€97.213.233,32bycontributionincashorcontributioninkind,ifapplicable,byincorporationofreservesorsharepremiums,byincorporationofreservesorsharepremiums,underregulationsprovidedforbytheBelgianCompaniesCode,article7ofthearticlesofassociationandarticle26oftheRRECAct.
ThisauthorisationisvalidforaperiodoffiveyearsfromthepublicationintheannexestotheBelgianOfficialGazetteoftheofficialreportoftheextraordinarygeneralmeetingdated24April2013,i.e.from26June2013onwards.Thisauthorisationisvaliduntil26June2018.Theauthorisationtouseauthorizedcapitalaspossiblemeansofdefenceintheeventofatakeoverbidis,pursuanttoarticle607,secondparagraph,oftheBelgianCompaniesCode,onlyvalidforthreeyearsandexpireson26June2016.Thisauthorisationisrenewable.
Wheneverthereisacapitalincrease,theboardofdirec-torsshallsettheprice,anysharepremiumandthecondi-tionsofissuanceofthenewshares,unlessthegeneralmeetingistodecideonthatitself.Thecapitalincreasesmaygiverisetotheissuanceofshareswithorwithoutvotingright.
Capitalincreasescangiverisetotheissueofshareswithorwithoutvotingright.Whencapitalincreases,decidedbytheboardofdirectorsfollowingthisauthorisation,compriseasharepremium,theamountofthissharepremiummustberecordedonaspecialunavailableac-count,named“sharepremium”,whichconstitutesasthecapitaltheguaranteeforthirdpartiesandwhichwillnotbereducedordecreasedunlessbydecisionofthegeneralassembly,meetingpursuanttotheconditionsofattend-anceandmajorityprovidedforacapitaldecrease,exceptfortheconversionintocapitalasmentionedabove.
In2014,theboardofdirectorsdidnotmakeuseoftheauthorisationgrantedtouseamountsfromtheauthor-isedcapital.
Purchase of own shares
Pursuanttoarticle9ofthearticlesofassociation,theboardofdirectorscanproceedtothepurchaseofownpaid-upequitysharesbybuyingorexchangingwithinthelegallypermittedlimits,ifthepurchaseisnecessarytoprotectthecompanyfromaseriousandthreateningloss.
Thisauthorisationisvalidforthreeyearsfromthepubli-cationoftheminutesofthegeneralmeetingof24April2013,i.e.from26June2013.Thispermissionisvalidtill26June2016andisrenewable.
Capital increase
Allcapitalincreaseswillbeimplementedpursuanttoarticles581to607oftheBelgianCompaniesCode,subjecttothatstatedhereafterwithrespecttothepre-emptiveright.
Moreover,thecompanymustcomplywiththeprovisionsforthepublicissueofsharesasdefinedinarticles26and27oftheRRECAct.
Incaseofacapitalincreasethroughacontributionincashandwithoutprejudicetoarticles592to598oftheBelgianCompaniesCode,thepre-emptiverightmayonlybelimitedorwithdrawnifapriorityallocationrightisgrantedtotheexistingshareholdersatthetimeofallocatingnewsecurities.Thispriorityallocationrightmustsatisfythefollowingconditions:
1. itisrelatedtoallnewlyissuedsecurities;2. itisgrantedtotheshareholdersinproportiontothepartofthecapitalrepresentedbytheirsharesatthetimeofthetransaction;
3. amaximumpricepershareisannouncedatthelatestontheeveoftheopeningofthepublicsubscriptionperiod;and
4. insuchacase,thepublicsubscriptionperiodmustbeatleastthreetradingdays.
126
Capitalincreasesrealisedthroughcontributionsinkindaresubjecttotheprovisionsofarticles601and602oftheBelgianCompaniesCode.Moreover,pursuanttoarticle26§2oftheRRECAct,thefollowingconditionsmustbemet:
1. theidentityofthecontributormustbementionedinthereportreferredtoinarticle602oftheBelgianCompaniesCodeaswellasinthenoticeofthegeneralmeetingconvenedwithregardtothecapitalincrease;
2. theissuepricemaynotbelessthanthelowestvalueof(a)anetassetvaluedatingfromnotmorethanfourmonthsbeforethedateofthecontributionagreementor,atthediscretionofthecompany,beforethedateofthecapitalincreasedeed,and(b)theaverageclos-ingpriceduringthethirtycalendardayspriortothissamedate;fortheapplicationofprevioussentenceitisallowedtodeductanamountoftheamountmeantinpreviousparagraphatpoint(b)whichcorrespondtothepartofthenon-distributedgrossdividendonwhichthenewsharespossiblywouldgivenorights,ontheconditionthattheboardofdirectorsspecifi-
callyjustifiesthedeductedamountofthecumulateddividendinitsspecialreportandexplainsthefinancialconditionsoftheoperationinitsfinancialreport.
3. exceptiftheissuepriceorexchangeratioandtherelatedconditionsaredeterminednolaterthanontheworkingdayfollowingtheconclusionofthecontri-butionagreementandcommunicatedtothepublicmentioningthetimewithinwhichthecapitalincreasewilleffectivelybeimplemented,thecapitalincreasedeedshallbeexecutedwithinamaximumperiodoffourmonths;and
4. thereportreferredtounder1.mustalsoexplaintheimpactoftheproposedcontributiononthesituationofformershareholders,particularlyasfarastheirshareoftheprofits,netassetvalueandcapitalisconcerned,aswellastheimpactonthevotingrights.
Theabovedoesnotapplytothetransferoftherighttodividendsinthecontextofthedistributionofanoptionaldividend,insofarasthisisactuallymadeavailableforpaymenttoallshareholders.
Share premium
inthousands€ 2014 2013
Date Transaction
01.11.1999 MergerGLTrust 4.183 4.183
Total share premium 4.183 4.183
Reserves
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Financial report
Reserve for the impact on fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties
inthousands€ 2014 2013
Amount at the end of the preceding financial year -8.980 -9.055
Changesininvestmentvalueofinvestmentpropertiesoftheprecedingfinancialyear 71 -196
Impactonacquisitions/purchasesofinvestmentspropertiesoftheprecedingfinancialyear -292 0
Impactondisposalsofinvestmentspropertiesoftheprecedingfinancialyear 159 271
Total reserves for the impact on fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties
-9.042 -8.980
Thedifferencebetweenthefairvalueoftherealestateproperty(inaccordancewithIAS40)andtheinvestmentvalueofthepropertyasdeterminedbytheindependentpropertyexpertsisrecognisedinthisitem.
Thetransferoftheimpactonfairvalueofestimatedtransactionrightsandcostsresultingfromthehypo-theticaldisposalofinvestmentpropertiesarenolonger,
recordedduringthefinancialyearbutonlyafterapprovaloftheresultdistributionbythegeneralmeetingofshare-holders(inAprilofnextfinancialyear).Asthisconcernsatransferwithintwoitemsofshareholders’equity,ithasnoimpactonthetotalshareholders’equityofthecompany.
Forthemovementofthereservesduringthefinancialyear2014,pleaseseethestatementofchangesinequity.
128
Note17. Currentliabilities
Trade debts and other current debts
inthousands€ 2014 2013
Tradedebts 946 833
Advancesreceivedfromtenants 391 1.134
Invoicestobereceived 992 434
Othercurrentdebts 4.880 175
Total trade debts and other current debts 7.209 2.576
Theothercurrentdebtscomprise,amongothers,thedeferredtaxesonthecompanyVeldstraat23-27for€3,7
millionandtheVATrevisionresultingfromthedivestmentofJulianusShoppinginTongerenfor€0,6million.
Other current liabilities
inthousands€ 2014 2013
Dividendspayable 25 25
Guaranteesreceivedafterbankruptcies 57 92
Othercurrentliabilities 54 58
Total other current liabilities 136 175
Accrued charges and deferred income
inthousands€ 2014 2013
Accruedinterestcharges 391 488
Accruedvacancycosts 207 180
Otheraccruedchargesanddeferredincome 411 256
Total accrued charges and deferred income 1.009 924
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Financial report
Note18. Non-currentandcurrentfinancialdebts
ForthedescriptionoftheFinancialstructureofthecompany,pleaseseetheReportofthemanagementcommittee.
Classification by expiry date of withdrawn credit facilities
inthousands€ 2014 2013
Debts with a remaining duration of Debtswitharemainingdurationof
< 1 year > 1 year and < 5 years TOTAL <1year
>1yearand<5years
TOTAL
Creditinstitutions:
(creditswithdrawn)
19.250 86.900 106.150 8.400 113.700 122.100
Financiallease 6 6 12 5 12 17
TOTAL 19.256 86.906 106.162 8.405 113.712 122.117
Percentage 18% 82% 100% 7% 93% 100%
Guarantees regarding financing
Inadditiontotherequirementtomaintaintheregu-latedrealestatecompany’scharterandtocomplywithfinancialratiosasenforcedbytheRRECAct,thebankcreditagreementsofVastnedRetailBelgiumaresubjecttocompliancewithfinancialratios,whichareprimarilyrelatedtocompany’sconsolidatedfinancialdebtoritsfinancialinterestcharges,theprohibitiononthemort-gagingorpledgingofrealestateinvestmentsandtheparipassutreatmentofcreditors.ThefinancialratioslimittheamountthatcouldstillbeborrowedbyVastnedRetailBelgium.
Forthepurposeofthefinancingofthecompany,nomortgageregistrationshavebeenmadeandnomortgageauthorisationshavebeenpermittedasper31December2014.
Formostfinancings,creditinstitutionsgenerallyrequireaninterestcoverageratioofmorethan2(seedescriptionoftheFinancialstructureintheReportofthemanage-mentcommittee).
Theseratiosarerespectedasat31December2014.IfVastnedRetailBelgiumwerenolongertorespecttheseratios,thefinancialinstitutionscoulddemandthatthefinancingagreementsofthecompanybecancelled,renegotiated,terminatedorprematurelyrepaid.
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Classification by expiry date of credit lines
inthousands€ 2014 2013
Debts with a remaining duration of Debtswitharemainingdurationof
< 1 year > 1 year and < 5 years TOTAL <1year
>1yearand<5years
TOTAL
Creditinstitutions:
(creditswithdrawn)
19.250 86.900 106.150 8.400 113.700 122.100
Not-withdrawncreditlines 23.145 8.100 31.245 8.994 6.300 15.294
TOTAL 42.395 95.000 137.395 17.394 120.000 137.394
Percentage 31% 69% 100% 13% 87% 100%
“Classificationbyexpirydateofcreditlines”comprisesanamountof€31millionofnot-withdrawncreditlines(€15millionasat31December2013).Thesedonot
formatclosingdateaneffectivedebtbutareonlyapotentialdebtundertheformofanavailablecreditline.
Classification by variable or fixed character of withdrawn credit facilities at financial institutions
inthousands€ 2014 2013
Debts with a remaining duration of
Percen-tage
Debtswitharemainingdurationof
Percen-tage
< 1 year
> 1 year and
< 5 yearsTOTAL
<1year
>1yearand
<5yearsTOTAL
Variable 4.250 21.900 26.150 25% 8.400 23.700 32.100 26%
Fixed 15.000 65.000 80.000 75% 0 90.000 90.000 74%
TOTAL 19.250 86.900 106.150 100% 8.400 113.700 122.100 100%
Intheabovetable“Classificationbyvariableorfixedcharacterofwithdrawncreditfacilitiesatfinancialinstitu-
tions”thepercentageiscalculatedastherelationofeachcomponenttothesumofthecreditlines.
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Financial report
Note19. Financialinstruments
ThemajorfinancialinstrumentsofVastnedRetailBelgiumconsistoffinancialandcommercialreceivablesanddebts,
cashandcashequivalentsaswellasfinancialinstrumentsoftheinterestrateswaptype(IRS).
SUMMARYOFTHEFINANCIALINSTRUMENTSinthousands€ 2014 2013
Categories Level Carryingamount Fairvalue
Carryingamount
Fairvalue
FINANCIAL INSTRUMENTS ON ASSETS
Non-current assets
Non-currentfinancialassets C 2 0 0 17 17
Tradereceivablesandothernon-currentassets A 2 7 7 3 3
Current assets
Tradereceivables A 2 163 163 173 173
Taxreceivablesandothercurrentassets A 2 213 213 91 91
Cashandcashequivalents B 2 339 339 1.860 1.860
FINANCIAL INSTRUMENTS ON LIABILITIES
Non-current liabilities
Non-currentfinancialdebts(interest-bearing) A 2 86.906 87.272 113.712 113.933
Othernon-currentfinancialliabilities C 2 4.552 4.552 3.106 3.106
Othernon-currentliabilities A 2 174 174 109 109
Current liabilities
Currentfinancialdebts(interest-bearing) A 2 19.256 19.256 8.405 8.405
Othercurrentfinancialliabilities C 2 0 0 521 521
Tradedebtsandothercurrentdebts A 2 7.209 7.209 2.576 2.576
Othercurrentliabilities A 2 136 136 175 175
Thecategoriescorrespondtothefollowingfinancialinstruments:
A. financialassetsorliabilities(includingreceivablesandloans)heldtomaturityandmeasuredatamortisedcost
B. investmentsheldtomaturityandmeasuredatamor-tisedcost
C. assetsandliabilitiesheldatfairvaluethroughprofitandloss,withtheexceptionoffinancialinstrumentsdefinedashedginginstruments.
Financialinstrumentsarerecognisedatfairvalue.Thefairvalueisdeterminedbasedononeofthefollowinglevelsofthefairvaluehierarchy:
• level1:measurementisbasedonquotedmarketpricesinactivemarkets
• level2:measurementisbasedon(externally)obser-vableinformation,eitherdirectlyorindirectly
• level3:measurementisbasedeitherfullyorpartiallyoninformationthatisnot(externally)observable.
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ThefinancialinstrumentsofVastnedRetailBelgiumcor-respondtolevel2ofthefairvaluehierarchy.Thefollow-ingtechniquesareusedtomeasurethefairvalueoflevel2financialinstruments:
• fortheitems“Othernon-currentfinancialliabilities”and“Othercurrentfinancialliabilities”(whichapplytotheinterestrateswaps),thefairvalueisdeterminedbymeansofobservabledata,namelytheforwardinterestratesthatapplytoactivemarkets,whicharegenerallysuppliedbyfinancialinstitutions
• thefairvalueoftheremaininglevel2financialassetsandliabilitiesispracticallythesameastheircarryingamount,eitherbecausetheyhaveashort-termmaturity(suchastradereceivablesanddebts)orbecausetheycarryavariableinterestrate.Whenthefairvalueoftheinterest-bearingfinancialliabilitiesiscalculated,thefinancialliabilitieswithafixedinterestratearetakenintoaccount,andthefuturecashflows(interestandcapitalredemption)arediscountedwithamarket-basedyield.Financialliabilitiesthatcarryavariableinterestrateorwhicharehedgedbyafinan-cialderivativewerenottakenintoaccount.
VastnedRetailBelgiumemploysinterestrateswapstohedgepotentialchangesintheinterestchargesonaportionofthefinancialliabilitiesthathaveavariableinterestrate(theshort-termEuriborrate).Theseinterestrateswapsareclassifiedasacashflowhedge,withtheeffectivenessorineffectivenessofthehedgesdeterminedintheprocess.
• Theeffectivepartofthechangesinthefairvalueofderivativesdesignatedascashflowhedgesisrecognisedinthecomprehensiveincomeontheline“Changesintheeffectivepartoffairvalueofauthorisedhedginginstrumentsthataresubjecttohedgeaccounting”.Asaresult,hedgeaccountingisappliedtotheseswaps,anditisonthisbasisthatchangesinthevalueoftheseswapsarerecogniseddirectlyintheshareholders’equityandnotintheincomestatement.
• Theineffectivepartisrecognisedintheincomestatementontheline“Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39)”inthefinancialresult.
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Financial report
Fair value of financial derivatives
Asat31December2014,thecompanyhasfollowingfinancialderivatives:
inthousands€ Startdate ExpirydateInterest
rate
Contractual
notionalamount
Hedgeaccounting
Fairvalue
Yes/No 2014 2013
1a IRS 15.12.2013 15.12.2017 0,79% 10.000 Yes 0 17
Non-current financial assets 0 17
1b IRS 15.12.2013 15.12.2017 0,79% 10.000 Yes -206 0
3 IRS 15.04.2013 15.04.2018 2,29% 10.000 No -726 -589
4 IRS 06.10.2013 06.10.2018 2,60% 15.000 No -1.412 -1.118
5 IRS 06.10.2013 06.10.2018 2,50% 10.000 No -902 -698
6 IRS 15.12.2013 15.12.2018 2,50% 10.000 No -937 -701
7 IRS 01.10.2014 01.10.2019 0,72% 15.000 No -369 0
Other non-current financial liabilities -4.552 -3.106
IRS 01.10.2009 01.10.2014 3,02% 25.000 Yes 0 -521
Other current financial assets 0 -521
Total fair value financiële derivaten 70.000 -4.552 -3.610
Accountingprocessasat31December:
• Inshareholders’equity:Reserveforthebalanceofchangesinfairvalueofallowedhedginginstrumentssubjecttoahedgeaccounting -206 -504
• Inshareholders’equity:Reserveforthebalanceofchangesinfairvalueofallowedhedginginstrumentsnotsubjecttoahedgeaccounting -3.106 -4.692
• Intheincomestatement:Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39) -1.240 1.586
Total fair value financial derivatives -4.552 -3.610
Asat31December2014,theseinterestrateswapshaveanegativemarketvalueof-€4,6million(contractualnominalvalue:€70million),whichisdeterminedonaquarterlybasisbytheissuingfinancialinstitute.Inter-estrateswap1hadapositivemarketvalueasat31December2013andwasclassifiedunderthefinancialassets.Asat31December2014thisswaphasanegativemarketvalueandisclassifiedothernon-currentfinancialliabilities.Theconversionisdividedinabovesummaryin1aand1b.
Thefairvalueofthederivativesisexclusivelydeterminedbytheinformationhavinganobservablecharacterforthederivative(directlyorindirectly)butwhichisnotapricelistedontheactivemarketandconsequentlytheIRScontractsarebelongingtolevel2ofthehierarchyofthefairvalueasdeterminedbyIFRS7.
Asat31December2014,VastnedRetailBelgiumclas-sifiestheinterestrateswap1ascashflowhedges,determiningthatthisinterestrateswapiseffective.Thefluctuationsinvalueoftheinterestrateswaps2till7includedarerecogniseddirectlyintheincomestatement.
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Management of financial risks
ThemajorfinancialrisksofVastnedRetailBelgiumarethefinancialrisk,liquidityriskandtheinterestraterisk.
• FinancialriskForthedescriptionofthisriskanditsmanagementisreferredtochapter“Financialrisk”inthedescriptionoftheMajorriskfactorsandinternalcontrolandriskmanagementsystemsoftheReportoftheboardofdirectors.
Forfinancingrealestate,VastnedRetailBelgiumalwaysstrivesforabalancebetweenshareholders’equityandborrowedcapital.Inaddition,VastnedRetailBelgiumaimstosafeguarditsaccesstothecapitalmarketthroughthetransparentdisclosureofinforma-tion,bymaintainingregularcontactswithfinanciersand(potential)shareholdersandbyincreasingtheliquidityoftheshare.Finally,withrespecttolong-termfinancing,itaimsforabalancedspreadofrefinancingdatesandaweightedaveragedurationbetween3,5and5years.Thismaybetemporarilyderogatedfromifspecificmarketconditionsrequirethis.Theaverageremainingdurationofthelong-termcreditagreementsasat31December2014is2,1years.VastnedRetailBelgiumhasalsodiversifieditsfundingsourcesthroughtheuseof5Europeanfinancialinstitutions.
MoreinformationonthecompositionofthecreditportfolioofVastnedRetailBelgiumcanbefoundinthesectionentitled“Financialstructure”intheReportofthemanagementcommitteeandalsoin“Note18.Non-currentandcurrentfinancialdebts”intheFinan-cialreport.
• LiquidityriskForthedescriptionofthisriskandthewayitisman-aged,pleaserefertothesectionentitled“Liquidityrisk”inthedescriptionoftheMajorriskfactorsandinternalcontrolandriskmanagementsystemsintheReportoftheboardofdirectors.
ThebankcreditagreementsofVastnedRetailBelgiumaresubjecttocompliancewithfinancialratios,whichareprimarilyrelatedtotheconsolidatedfinancialdebtlevelofVastnedRetailBelgiumoritsfinancialinterestcharges.Inordertoavailitselfofthiscreditmargin,theconditionsofcreditfacilitiesmustbecompliedwithonacontinuousbasis.Asat31December2014,thecompanystillhad€31millioninnon-withdrawncreditlineswithitslendersforthepurposeofabsor-bingfluctuationsinliquidityrequirements.
MoreinformationonthecompositionofthecreditportfolioofVastnedRetailBelgiumcanbefoundinthesectionentitled“Financialstructure”intheReportofthemanagementcommitteeaswellin“Note18.Non-currentandcurrentfinancialdebts”oftheFinancialreport.
• InterestrateriskForthedescriptionofthisriskandthewayitisman-aged,pleaserefertothesectionentitled“Interestraterisk”inthedescriptionoftheMajorriskfactorsandinternalcontrolandriskmanagementsystemsintheReportoftheboardofdirectors.
Asaresultoffinancingwithborrowedcapital,theyieldisalsodependentoninterestratedevelopments.Inor-dertoreducethisrisk,whencomposingtheloanport-folio,thefundaimsforaratioofonethirdborrowedcapitalwithavariableinterestrateandtwothirdsbor-rowedcapitalwithafixedinterestrate.Dependingonthedevelopmentsininterestrates,aderogationfromthismayoccur.Furthermore,forlong-termborrowedcapital,abalancedspreadofinterestratereviewdatesandaminimumdurationof3yearsaretargeted.Asat31December2014theinterestratesonthecreditfacilitiesofthecompanyremainfixedforaremainingaveragedurationof3,3years.
MoreinformationonthecompositionofthecreditportfolioofVastnedRetailBelgiumcanbefoundinthesectionentitled“Financialstructure”intheReportofthemanagementcommitteeandalsoin“Note18.Non-currentandcurrentfinancialdebts”and“Note11.Financialresult”intheFinancialreport.
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Financial report
Note20. Calculationofdebtratio
Asat31December2014,theconsolidateddebtratioamountsto31%.
inthousands€ Note 2014 2013
Non-currentfinancialdebts 18 86.906 113.712
Othernon-currentliabilities 173 109
Currentfinancialdebts 18 19.256 8.405
Tradedebtsandothercurrentdebts 17 7.209 2.576
Othercurrentliabilities 17 136 175
Total liabilities for calculation of debt ratio 113.680 120.215
Assets 362.414 365.033
Non-currentfinancialassets 0 -17
Total assets for calculation of debt ratio 362.414 365.016
Debt ratio 31% 34%
Note21. Relatedparties
Thecompany’srelatedpartiesareitsmajorityshare-holder,itssubsidiaries(seeNote22)anditsdirectorsandmembersofthemanagementcommittee.
Debts to related parties
inthousands€ 2014 2013
VastnedRetailnvcreditfacility 17.000 0
VastnedRetailnvinterestchargestopay 26 0
Total 17.026 0
Aspartoftheacquisitionof99%ofthesharesofthecompanyVeldstraat23-27sa,ownerofthepremiumhighstreetshopinGhent,VastnedRetailBelgiumcon-cludedattheendofJuly2014atemporaryfinancingwithitsmajorityshareholderVastnedRetailnvforanamountof€17million.
On12January2015VastnedRetailBelgiumrepaidthetotalamountofthefinancingtoVastnedRetailnvandthe“TermLoanAgreement”washerewithterminated.
Intheframeworkofapossibleconflictofinterestswiththemajorityshareholdersofthecompanytheprocedureofarticle524oftheBelgianCompaniesCodewasappliedattheendofJuly2014(seeNote23).
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Directors and members of the management committee
Theremunerationforthedirectorsandthemembersofthemanagementcommitteeareclassifiedintheitems“Propertymanagementcosts”and“Generalcosts”(see
Notes5and6).Forfurtherexplanationofthecomposi-tionoftheremunerationofthemembersofthemanage-mentcommittee,pleasesee“Note7.Employeebenefits”.
inthousands€ 2014 2013
Directors 62 62
Membersofthemanagementcommittee 444 425
Total 506 487
Thedirectorsandmembersofthemanagementcommit-teedonotreceiveadditionalbenefitsontheaccountofthecompany.
Note22. Listofconsolidatedcompanies
Company
nameAddress
Enterprise
identificationnumber
Capitalshare
(in%)Minority interests
in thousands €
2014 2013
Veldstraat23-27saUitbreidingstraat18
2600BerchemBE0448976277 99% 167 0
EuroInvestRetailPropertiessa
Uitbreidingstraat18
2600BerchemBE0479506731 100% 0 0
Total minority interests 167 0
137
Financial report
Note23. Dealingwithconflictsofinterest
Incaseofapotentialconflictofinterestwithamajorshareholderofthecompany,theproceduredefinedinarticle524oftheBelgianCompaniesCodeshallbeap-plicable.ReferenceisalsomadetoArticles36to38oftheRRECActconcerningthepreventionofconflictsofinterest.
AsimilarconflictofinterestoccurredinJuly2014re-gardingtheprovisionoftemporaryfinancingbyVastnedRetailnvtoVastnedRetailBelgiumsaforthefinancingoftheacquisitionofthesharesofVeldstraat23-27sa.
Initscapacityaslender,VastnedRetailnvwishedtoprovidealoanofEUR17milliontoVastnedRetailBelgiumsaunderthe“TermLoanAgreement,”whichhadtoberepaidinfullatthelateston29March2015byVastnedRetailBelgiumsatoVastnedRetailnv.
Theamountoftheloanof€17millionunderthe“TermLoanAgreement”couldonlybeusedbyVastnedRetailBelgiumsawithaviewtoacquiring99%ofthesharesofthecompanyVeldstraat23-27sa,whichisowneroftheinner-cityshoplocatedatVeldstraat23-27inGhent.
Theloanunderthe“TermLoanAgreement”wasnotsecuredbutalsonotsubordinated.Theinterestratewas6-monthEuriborplus1.40%perannum.
Bydecisionof28July2014,theboardofdirectorscon-sequentlyappointedacommitteeofthreeindependentdirectors,inthepersonofJean-PierreBlumberg,NickvanOmmen,andEMSObvbapermanentlyrepresentedbyChrisPeeters,whointurnappointedtwoexpertsinthepersonofPatrickMoermansandAlexisMeeùsofDegroofCorporateFinance,awholly-ownedsubsidiaryofBankDegroofsa.
InconsultationwithandassistedbyPatrickMoermansandAlexisMeeùs,thiscommitteedraftedarecommen-dation,ofwhichthedecisionwasasfollows:
“The Committee believes that entering into the “Term Loan Agreement” for the purpose of acquiring 99% of the shares of the company Veldstraat 23-27 NV is to the advantage of the Company and certainly not of such a nature for it be disadvantageous to it, which, in the light of the policy of the Company is manifestly unlawful. The commercial advantage was described above.
The Company can thus obtain very short-term liquid funds amounting to € 17.000.000 at a market interest rate of Euribor 6 months plus 1,40% per year and this in the context of Company’s strategy to add a top retail property in the city centre of Ghent to its real estate portfolio.”
Theboardofdirectorssubsequentlydecidedon28July2014tosignthe“TermLoanAgreement”betweenVastnedRetailnvandVastnedRetailBelgiumsa.
Theboardofdirectorsalsorequestedthecompany’saudi-tors,DeloitteCompanyAuditors,Burgl.Venn.specifyingCVBA,representedbyKathleenDeBrabander,companyauditor,inaccordancewitharticle524§3oftheBelgianCompaniesCode,togiveanopinionontheaccuracyofthedataspecifiedintherecommendationofthecom-mitteeofthreeindependentdirectors,assistedbytheindependentexpert.Thedecisionoftheauditorinthisrespectisasfollows:
“On the basis of the above work, we can conclude that the data contained in the recommendation of the Committee and in the minutes of the board of directors are faithfully presented. However, this does not mean that we have given a discretionary opinion on the recommendation of the Com-mittee and the decision of the board of directors.”
TheboardalsostatedthattheprocedureimposedbyArticle37oftheRRECActhasbeenrespected.
On12January2015,VastnedRetailBelgiumsarepaidinfulltheamountofthefinancingtoVastnedRetailnvandthe“TermLoanAgreement”wastherebyterminated.
138
Note24. Feeoftheauditorandentitiesaffiliatedwiththeauditor
inthousands€ 2014 2013
Excl.VAT
Feestatutoryauditor 67 63
Feeforexceptionalactivitiesorspecialassignmentswithinthecompanybythestatutoryauditorregarding
• Othercontrolassignments 2 0
• Taxadviceassignments 0 0
• Otherassignmentsapartfromauditassignments 16 9
Feeforexceptionalactivitiesorspecialassignmentswithinthecompanybypersonsaffiliatedwithstatutoryauditor
0 0
Total fee of the statutory auditor and the entities a©liated with the statutory auditor 85 77
Note25. Conditionalobligations
Asat31December2014VastnedRetailBelgiumhasapotentialconditionalsheetobligationregardingstabilityproblemsinitsinner-cityshopinMalines.Basedonitscontractualresponsibilityagainstitstenants,whichdoesnotfallunderthepublicliabilityinsurance,apossiblein-demnitymaybeduebyVastnedRetailBelgiumtoCoolcatandH&M.PresentlytheresponsibilityofVastnedRetailBelgiumhasnotbeendeterminedandtheamountofthesuffereddamagesisnotyetknown.AttheendofOctober2013thelegalexperthaspresentedhispreliminaryreporttotheconcernedparties.Fromthispreliminaryreportcan
currentlybeconcludedthatVastnedRetailBelgiumisnotresponsibleforthestabilityproblems.
Furthermore,asat31December2014VastnedRetailBelgiumhasconditionalsheetobligationsregardingfinancing.Noregistrationsofmortgageweretaken,andnomortgageauthorisationspermitted.MostfinancialInstitutionsdohoweverdemandthattheinvestmentfundcontinuestocomplywiththefinancialratiosaslaiddownbytheRRECAct.Forthefinancing,thecreditinstitutionsgenerallyrequireacoverageratioofmorethan2.
Note26. Eventsafterthebalancesheetdate
Therearenosignificanteventstobementionedthatoccurredaftertheclosingoftheaccountsasat31December2014.
On12January2015,VastnedRetailBelgiumsarepaidinfulltheamountofthefinancingtoVastnedRetailnvandthe“TermLoanAgreement”wastherebyterminated(seeNote23).
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Financial report
Bruges, Steenstraat - 2.058 m2
140
VASTNEDRETAILBELGIUMNV/SA,PUBLICREGULATEDREALESTATECOMPANYUNDERBELGIANLAW
STATUTORYAUDITOR’SREPORTTOTHESHAREHOLDERS’MEETINGONTHECONSOLIDATEDFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2014
Totheshareholders,
Asrequiredbylaw,wereporttoyouinthecontextofourappointmentasthecompany’sstatutoryauditor.Thisreportincludesourreportontheconsolidatedfinancialstatementstogetherwithourreportonotherlegalandregulatoryrequirements.Theseconsolidatedfinancialstatementscomprisetheconsolidatedbalancesheetasat31December2014,theconsolidatedincomestatement,theconsolidatedstatementofcomprehensiveincome,theconsolidatedstatementofchangesinequityandtheconsolidatedstatementofcashflowsfortheyearthenended,aswellasthesummaryofsignificantaccountingpoliciesandotherexplanatorynotes.
Report on the consolidated financial statements - Unqualified opinion
WehaveauditedtheconsolidatedfinancialstatementsofVastnedRetailBelgiumNV/SA,PublicregulatedrealestatecompanyunderBelgianlaw(“thecompany”)anditssubsidiaries(jointly“thegroup”),preparedinaccordancewithIn-ternationalFinancialReportingStandardsasadoptedbytheEuropeanUnionandwiththelegalandregulatoryrequire-mentsapplicableinBelgium.Theconsolidatedstatementoffinancialpositionshowstotalassetsof362.414(000)EURandtheconsolidatedincomestatementshowsaconsolidatedprofit(groupshare)fortheyearthenendedof20.494(000)EUR.
Board of directors’ responsibility for the preparation of the consolidated financial statements
TheboardofdirectorsisresponsibleforthepreparationandfairpresentationofconsolidatedfinancialstatementsinaccordancewithInternationalFinancialReportingStandards(IFRS)asadoptedbytheEuropeanUnionandwiththelegalandregulatoryrequirementsapplicableinBelgium,andforsuchinternalcontrolastheboardofdirectorsdeterminesisnecessarytoenablethepreparationofconsolidatedfinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
Statutory auditor’s responsibility
Ourresponsibilityistoexpressanopinionontheseconsolidatedfinancialstatementsbasedonouraudit.Wecon-ductedourauditinaccordancewithInternationalStandardsonAuditing(ISA).Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhethertheconsoli-datedfinancialstatementsarefreefrommaterialmisstatement.
Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresintheconsoli-datedfinancialstatements.Theproceduresselecteddependonthestatutoryauditor’sjudgment,includingtheassess-mentoftherisksofmaterialmisstatementoftheconsolidatedfinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,thestatutoryauditorconsidersinternalcontrolrelevanttothegroup’spreparationandfairpresentationoftheconsolidatedfinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessofthegroup’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebytheboardofdirectors,aswellasevaluatingtheoverallpresentationoftheconsolidatedfinancialstatements.Wehaveobtainedfromthegroup’sofficialsandtheboardofdirectorstheexplanationsandinformationnecessaryforperformingouraudit.
STATUTORYAUDITOR’SREPORT
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Financial report
Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.
Unqualified opinion
Inouropinion,theconsolidatedfinancialstatementsofVastnedRetailBelgiumNV/SA,PublicregulatedrealestatecompanyunderBelgianlawgiveatrueandfairviewofthegroup’snetequityandfinancialpositionasof31December2014,andofitsresultsanditscashflowsfortheyearthenended,inaccordancewithInternationalFinancialReportingStandardsasadoptedbytheEuropeanUnionandwiththelegalandregulatoryrequirementsapplicableinBelgium.
Report on other legal and regulatory requirements
Theboardofdirectorsisresponsibleforthepreparationandthecontentofthedirectors’reportontheconsolidatedfinancialstatements.
AspartofourmandateandinaccordancewiththeBelgianstandardcomplementarytotheInternationalStandardsonAuditingapplicableinBelgium,ourresponsibilityistoverify,inallmaterialrespects,compliancewithcertainlegalandregulatoryrequirements.Onthisbasis,wemakethefollowingadditionalstatement,whichdoesnotmodifythescopeofouropinionontheconsolidatedfinancialstatements:
• Thedirectors’reportontheconsolidatedfinancialstatementsincludestheinformationrequiredbylaw,isconsistentwiththeconsolidatedfinancialstatementsandisfreefrommaterialinconsistencieswiththeinformationthatwebecameawareofduringtheperformanceofourmandate.
Antwerp,16March2015
Thestatutoryauditor,
DELOITTEBedrijfsrevisoren/Réviseursd’EntreprisesBVo.v.v.e.CVBA/SCs.f.d.SCRL
Representedby
KathleenDeBrabander
142
ThestatutoryannualaccountsofVastnedRetailBelgiumsaarepreparedaccordingtotheIRFSstandardsandinaccordancewiththeRRECRoyalDecreeof13July2014.
TheentireversionofthestatutoryannualaccountsofVastnedRetailBelgiumsa,alongwiththeannualreportandthereportofthestatutoryauditor,willbedepositedwithinthelegaltimeframeattheNationalBankof
Belgiumandcanbeobtainedforfreethroughthewebsiteofthecompany(www.vastned.be)orondemandattheregisteredoffice.
Thestatutoryauditorhasissuedanunqualifiedauditor’sreportonthestatutoryannualaccountsofVastnedRetailBelgiumsa.
Incomestatement
inthousands€ 2014 2013
Rentalincome 21.214 21.399
Rental-relatedexpenses -41 -32
NET RENTAL INCOME 21.173 21.367
Recoveryofrentalchargesandtaxesnormallypayablebytenantsonletproperties 1.454 1.534
Chargesandtaxesnormallypayablebytenantsonletproperties -1.454 -1.534
Otherrental-relatedincomeandexpenses 43 37
PROPERTY RESULT 21.216 21.404
Technicalcosts -582 -460
Commercialcosts -319 -215
Chargesandtaxesonunletproperties -219 -168
Propertymanagementcosts -1.165 -1.202
Otherpropertycharges -125 -204
Property charges -2.410 -2.249
OPERATING PROPERTY RESULT 18.806 19.155
Generalcosts -1.224 -1.047
Otheroperatingincomeandcosts 25 77
OPERATING RESULT BEFORE RESULT ON PORTFOLIO 17.607 18.185
Resultondisposalsofinvestmentproperties -1.932 273
Changesinfairvalueofinvestmentproperties 11.250 -2.986
Otherresultonportfolio -207 -131
OPERATING RESULT 26.718 15.341
Financialincome 210 190
Netinterestcharges -4.187 -4.883
Otherfinancialcharges -10 -11
Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39) -1.240 1.586
Changesinfairvalueofnon-currentfinancialassets -967 4
Financial result -6.194 -3.114
RESULT BEFORE TAXES 20.524 12.227
Taxes -30 -33
NET RESULT 20.494 12.194
STATUTORYANNUALACCOUNTSVASTNEDRETAILBELGIUMSA
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Financial report
RESULTPERSHARE Note 2014 2013
Numberofsharesentitledtodividend 13 5.078.525 5.078.525
Netresult(€) 13 4,03 2,40
Dilutednetresult(€) 13 4,03 2,40
Operatingdistributableresult(€) 13 2,68 2,65
Statementofcomprehensiveincome
inthousands€ 2014 2013
NET RESULT 20.494 12.194
Other components of comprehensive income
(recyclable in income statement)
Changesintheeffectivepartoffairvalueofallowedhedginginstrumentssubjecttohedgeaccounting
297 1.499
COMPREHENSIVE INCOME 20.791 13.693
Appropriationofresult
inthousands€ 2014 2013
NET RESULT 20.494 12.194
• Allocationto/transferfromreservesforthebalanceofchangesinfairvalue19ofinvest-mentproperties:
-Financialyear -11.327 2.895
-Valuerealisedfromrealestateproperties 2.967 -115
• Allocationto/transferfromthereservesoftheimpactontheestimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties
-752 63
• Allocationto/transferfromthereservesforthebalanceofchangesinfairvalueofallowedhedginginstrumentsthatarenotsubjecttoahedgeaccounting
1.240 -1.586
• Transferfromotherreserves 968 -3
• Transferfromresultscarriedforwardfrompreviousfinancialyears 224 10
Remuneration of capital 13.814 13.458
inthousands€ 2014 2013
NET RESULT 20.494 12.194
Note:
Operatingdistributableresult 13.590 13.448
Resultonportfolio 9.111 -2.844
Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39)andNon-currentfinancialassets
-2.207 1.590
Incomestatement(continued)
19 Based on the changes in investment value of investment properties.
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Balancesheet
ASSETSinthousands€ 31.12.2014 31.12.2013
NON-CURRENT ASSETS 350.846 360.417
Intangibleassets 3 7
Investmentproperties 328.738 358.818
Othertangibleassets 477 560
Financialfixedassets 21.625 1.029
Tradereceivablesandothernon-currentassets 3 3
CURRENT ASSETS 7.424 4.568
Assetsheldforsale 4.098 0
Tradereceivables 163 173
Taxreceivablesandothercurrentassets 2.342 1.898
Cashandcashequivalents 301 1.853
Deferredchargesandaccruedincome 520 644
TOTAL ASSETS 358.270 364.985
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Financial report
SHAREHOLDERS’EQUITYANDLIABILITIESinthousands€ 31.12.2014 31.12.2013
SHAREHOLDERS’ EQUITY 242.800 235.467
Sharecapital 97.213 97.213
Sharepremium 4.183 4.183
Reserves 120.910 121.877
Netresultofthefinancialyear 20.494 12.194
LIABILITIES 115.470 129.518
Non-current liabilities 91.632 116.927
Non-currentfinancialdebts 86.906 113.712
Credit institutions 86.900 113.700
Financial lease 6 12
Othernon-currentfinancialliabilities 4.552 3.106
Othernon-currentliabilities 174 109
Current liabilities 23.838 12.591
Provisions 205 0
Currentfinancialdebts 19.256 8.405
Credit institutions 2.250 8.400
Financial lease 6 5
Other current financial debt 17.000 0
Othercurrentfinancialliabilities 0 521
Tradedebtsandothercurrentdebts 3.240 2.574
Othercurrentliabilities 136 175
Accruedchargesanddeferredincome 1.001 916
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 358.270 364.985
NETVALUEPERSHAREIN€ 31.12.2014 31.12.2013
Netvalue(fairvalue) 47,81 46,37
Netvalue(investmentvalue) 49,59 48,12
NetassetvalueEPRA 48,71 47,08
DEBTRATIO 31.12.2014 31.12.2013
Debtratio(max.65%) 31% 34%
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147
General information
Louvain, Bondgenotenlaan - 1.495 m2
148
Name
VastnedRetailBelgiumsaisapublicregulatedrealestatecompanyunderBelgianlaw.
On24April2013thenameofthecompanychangedfrom“IntervestRetail”into“VastnedRetailBelgium”.
Registeredoffice
Uitbreidingstraat18,2600Berchem-Antwerp.
Enterpriseidentificationnumber
ThecompanyisregisteredattheCentralEnterpriseDatabaseundertheenterpriseidentificationnumber0431.391.860.
Legalform,formation,publication
Thecompanywasfoundedbydeed,executedbeforenotaryAndrévanderVorst,inElsene,on15June1987,aspublishedintheappendicestotheBelgianOfficialGazetteofOrdersandDecreesof9July1987underno.870709-272.
ThearticlesofassociationhavelastbeenamendedbydeedexecutedbynotaryEricDeBieon27October2014,announcedintheAnnexesoftheBelgianOfficialGazetteundernumber2014-11-14/0207159,wherebythecorporateobjectivewaschangedbecausethecompanyhasbecomeapublicregulatedrealestatecompanyinthesenseofarticle2,2°oftheActof12May2014concern-ingtheregulatedrealestatecompanies(andisthereforenolongerapropertyinvestmentfund)andwherebyalsootherchangestothearticlesofassociationhavebeenimplementedinordertorefertotheActof12May2014concerningtheregulatedrealestatecompaniesinsteadofthepropertyinvestmentfundslegislation.
On22December1998,VastnedRetailBelgiumwasrecognisedasa“PublicpropertyinvestmentfundwithfixedcapitalunderBelgianlaw”,abbreviatedto“PropertyinvestmentfundsunderBelgianlaw”.TakingintoaccountthecomingintoforceoftheActof19April2014regard-ingthealternativeinstitutionsforcollectiveinvestmentsandtheirmanagers(the“AIFMDAct”)20,thecompanyhas
optedtoapplyforthestatusofpublicregulatedreales-tatecompany,asimplementedbytheRRECAct,insteadofthestatusofpublicpropertyinvestmentfund.Inthiscontext,thecompanysubmitteditspermitapplicationaspublicregulatedrealestatecompanytotheFSMAon14August2014.ThecompanywassubsequentlygrantedthestatusofpublicregulatedrealestatecompanybytheFSMApursuanttoarticles9,§3and77oftheRRECActon22September2014,underthesuspensiveconditionofachangeinthearticlesofassociationofthecompanyandcompliancewiththestipulationsofarticle77,§2andfollowingoftheRRECAct.Finally,on27October2014,theextraordinarygeneralmeetingofshareholdersinthecompanyapproved,with100%majorityofthevotes,thechangeinthecorporateobjectiveregardingthechangeofstatusfrompropertyinvestmentfundtopublicregulatedrealestatecompany,pursuanttotheRRECAct.Consid-eringthatattheabovementionedextraordinarygeneralmeetingofshareholdersnorightofabstentionwhat-soeverwasexecuted,andallsuspensiveconditionswerefulfilledtowhichthechangeinthearticlesofassociationbytheextraordinarygeneralmeetingofshareholdersandthepermitgrantedbytheFSMAweresubject,VastnedRetailBelgiumenjoysthestatusofpublicregulatedrealestatecompanyasfrom27October2014.Asapublicregulatedrealestatecompany,thecompanyisnolongersubjectedtothestipulationsoftheRoyalDecreeof7December2010regardingpropertyinvestmentfundsandtheActof3August2012regardingcertainformsofcollectivemanagementofinvestmentportfolios,butsince27October2014theapplicablelegislationconsistsoftheRRECActandtheRRECRoyalDecree.
ThecompanyisregisteredattheFinancialServicesandMarketsAuthority(FSMA).
Thecompanydrawspubliclyonthesavingssysteminthesenseofarticle438oftheBelgianCompaniesCode.
Duration
Thecompanyisfoundedforanindefiniteperiod.
IDENTIFICATION
20 This act forms the conversion of the European Directive to Belgian law with regard to alternative investment funds managers,
with the result that this Directive is known as the “AIFMD Directive” and this law as the “AIFMD Act”.
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General information
Purposeofthecompany
Article 4 of the articles of association
4.1.Thecompanyhastheexclusiveobjectiveof:
a. eitherdirectly,orbymeansofacompanyinwhichitpossessesaholdingpursuanttothestipulationsoftheRRECActandthedecisionsandregulationsmadefortheexecutionofthesame,tomakerealestateavail-abletousers;and,
b. withintheboundsoftheapplicablelegislationonregulatedrealestatecompanies,topossessrealestateasmentionedinarticle2,5°,vitoxoftheRRECAct.
Realestateinthesenseofarticle2,5°oftheRRECActincludes:
i. realestateasdefinedinarticles517andfollowingoftheCivilCode,andrightsinremonrealestate,withtheexclusionofrealestateofanarchitectural,agri-culturalorminingnature;
ii. votingsharesissuedbyrealestatecompaniesman-agedexclusivelyorjointlybythecompany;
iii. optionrightstoproperty;iv. sharesofpublicorinstitutionalregulatedrealestate
companies,providedthatthelatterarejointlyorexclusivelymanagedbythecompany;
v. rightsarisingfromcontractsunderwhichoneormorepropertieshavebeenplacedunderarentalarrangementwiththecompany,oranyothersimilarrightsofusufructhavebeengranted;
vi. sharesofpublicpropertyinvestmentfunds;vii. unitsinforeigninstitutionsforcollectiveproperty
investmentregisteredonthelistreferredtoinarticle260oftheActof19April2014onalternativeinstitu-tionsforcollectiveinvestmentandtheirmanagers;
viii.unitsininstitutionsforcollectivepropertyinvestmentlocatedinanotherMemberStateoftheEuropeanEconomicAreaandwhicharenotregisteredonthelistreferredtoinArticle260oftheActof19April2014onalternativeinstitutionsforcollectiveinvest-mentandtheirmanagers,insofarastheyaresubjecttoasimilarcontrolaspublicpropertyinvestmentfunds;
ix. sharesissuedbycompanies(i)withthestatusofalegalentity;(ii)resortingunderthejurisdictionofanotherMemberStateoftheEuropeanEconomicArea;(iii)ofwhichtheshareshavebeenadmittedfortradingonaregulatedmarketand/orthataresubjecttoaprudentialcontrolregime;(iv)ofwhichthemainactivityconsistsoftheacquisitionorestablishmentof
realestatewithaviewtomakingthesameavail-abletousers,orthedirectorindirectpossessionofholdingsincompanieswithsimilaractivities;and(v)whichareexemptfromtaxonprofitincomearisingfromtheactivityintendedbythestipulationunder(iv)above,providedcertainlegalobligationsarecom-pliedwith,andwhichareatleastmandatoryforthedistributionofaportionoftheirincomeamongtheirshareholders(hereinafter“RealEstateInvestmentTrusts”(or“REITs”);
x. propertycertificatesasdefinedinarticle5,§4oftheActof16June2006onpublicofferingsofinvestmentinstrumentsandtheadmissionofinvestmentinstru-mentstotradingonaregulatedmarket;
Inthecontextofmakingavailablerealestate,thecom-panymayexecuteallactivitiesrelatedtotheestablish-ment,rebuilding,renovation,development,acquisition,disposal,managementandexploitationofrealestateproperties.
Thecompanydevelopsastrategyenablingittopositionitselfinallstagesofthevaluechainoftherealestatesector.Tothisend,thecompanyacquiresanddisposesofrealestateandrightsinremwithregardtorealestatewiththeobjectiveofmakingthesameavailabletoitsusers,howeverthecompanymayalsomanageitsdevelopment,(therenovation,development,expansion,establishment,etc.),andthedailymanagementofrealestateinitspossession.Itmaybeabuildingmanagerforrealestateofwhichitisco-owneror“propertymanager”ofabuildingcomplexofwhichitisoneoftheowners.Inthiscontextitmayexecuteallotheractivitiesthatprovideaddedvaluetoitsrealestateortoitsuserse.g.facilitymanagement,theorganisationofevents,caretakerservices,rebuildingactivitiesadaptedtothespecificneedsofthetenant,etc.Thecompanymayalsooffercustomisedrealestatesolutionswherebytherealestateisadaptedtothespecificneedsofitsusers.
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Forthatpurpose:
a. thecompanyexercisesitsactivitiesindependently,withoutdelegatingsuchactivitiestoathirdpartyotherthananaffiliatedcompanyinanywaywhatso-ever,pursuanttoarticles19and34oftheRRECAct,bywhichmeanstheassetmanagementcannotbedelegated;
b. itconductsdirectrelationshipswithitsclientsandsuppliers;
c. ithas,withaviewtotheexecutionofitsactivitiesinthemannerstipulatedbythisarticle,operationalteamsatitsdisposalwhichformasignificantpropor-tionofitsworkforce.
4.2.Thecompanymayincidentallyortemporarilyinvestinsecuritiesthatarenotrealestateinthesenseoftheapplicablelegislationonregulatedrealestatecompanies.Theseinvestmentswillbeexecutedinaccordancewiththeriskmanagementpolicyadoptedbythecompanyandwillbediversified,thusguaranteeinganappropriateriskdiversification.Thecompanymayalsoownunallocatedliquidassetsinanycurrencyintheformofdemandde-positaccountsortermdepositaccounts,orintheformofanyothereasilynegotiablemonetaryinstrument.
Thecompanymayalsoconcludetransactionsincon-nectionwithhedginginstruments,insofarastheseareexclusivelyintendedtocoverinterestandexchangeraterisksinthecontextofthefinancingandmanagementofthecompany’srealestateandtotheexclusionofanytransactionsofaspeculativenature.
4.3. Thecompanymayleaseorrentoneormorerealestateproperties(asreferredtointheIFRSstandards).Theactivityofleasingrealestatewithapurchaseoption(referredtointheIFRSstandards)mayonlybecarriedoutasanincidentalactivity,unlesssuchrealestateisintendedforgeneralpurposes,includingsocialhousingandeducation(inthiscasetheactivitymaybeexecutedasthemainactivity).
4.4. Pursuanttointermediatelegislationontheregulatedrealestatecompanies,thecompanymaybeinvolvedin:• purchasing,renovation,furnishing,rental,subletting,
managing,exchanging,selling,subdividingtheprop-ertyorplacingitunderthesystemofjointownershipasdescribedabove;
• grantingmortgagesorothersecuritiesorguaranteesonlyinthecontextofthefinancingofitsrealestateactivities,pursuanttoarticle43oftheRRECAct;
• grantingcreditsandprovidingsecuritiesorguaranteesinfavourofasubsidiaryofthecompanypursuanttoarticle42oftheRRECAct.
4.5. Thecompanymayacquire,rentorrentout,carryoverorexchangeallmovableorimmovableproperty,materialsandaccessoriesandgenerally,pursuanttotheapplicablelegislationonregulatedrealestatecompanies,performallcommercialorfinancialactionsthataredirectlyorindirectlyrelatedtoitsobjectiveandtheexploitationofallintellectualrightsandcommercialpropertiesrelatedtoit.Insofarasitiscompatiblewiththearticlesofassociationofregulatedrealestatecompanies,thecompanymay,throughcontributionsincashorinkind,mergers,sub-scriptions,participations,financialinterventionsorothermeans,participateinallexistingcompaniesorenterprises,orthoseyettobeformed,inBelgiumorabroad,thecorporateobjectiveofwhichisidenticaltoitsownorthenatureofwhichissuchthatitpromotesitsobjective.
Financialyear
Thefinancialyearstartson1Januaryandendson31Decemberofeachyear.
Inspectionofdocuments
• thearticlesofassociationofVastnedRetailBelgiumsaareavailableforinspectionattheOfficeoftheClerkoftheCommercialCourtinAntwerp,andatthecompany’sregisteredoffice
• theannualaccountsarefiledwiththebalancesheetcentreoftheNationalBankofBelgium
• theannualaccountsandassociatedreportsaresentannuallytoholdersofregisteredsharesandtoanyotherpersonwhorequeststhem
• theresolutionsrelatingtotheappointmentanddismissalofthemembersofthecompany’sbodiesarepublishedintheappendicestotheBelgianOfficialGazette
• financialannouncementsandnoticesconveningthegeneralmeetingsarepublishedinthefinancialpress
• importantpubliccompanydocumentsareavailableonthewebsite:www.vastned.be.
Theotherpubliclyaccessibledocumentsareavailableforinspectionatthecompany’sregisteredoffice.
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General information
Antwerp, Groendalstraat - 48 m2
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EXTRACTFROMTHEARTICLESOFASSOCIATION21
21 These articles are not the complete or the literal reproduction of the articles of association. The complete articles of association
can be consulted on the company’s registered o»ce and on the website www.vastned.be.
Capitalshares
Article 7 - Authorised capital
Theboardofdirectorsisauthorisedtoincreasethenominalcapitalcapitalononeormoreoccasionsbyanamountofninetysevenmilliontwohundredthirteenthousandtwohundredandthirtythreeeuroandthirtytwoeurocent(97.213.233,32EUR),bycontributionincashorcontributioninkind,ifapplicablethroughincor-porationofthereservesorsharepremiums,orbyissuingconvertiblebondsorwarrants,underregulationsprovidedforbytheBelgianCompaniesCode,thesearticlesofas-sociationandtheapplicablelegislationonregulatedrealestatecompanies.
Thisauthorisationisvalidforaperiodof5yearsstartingfromthepublicationintheAppendicestotheBelgianOfficialGazetteoftherelevantpowerofauthorisationofthegeneralmeeting.Thisauthorisationisrenewable.
Foreverycapitalincrease,theboardofdirectorsshallsettheprice,anysharepremiumandtheconditionsofissuanceofthenewshares,unlessthegeneralmeetingshoulddecideotherwise.
Capitalincreasescangiverisetotheissueofshareswithorwithoutvotingright.Whencapitalincreases,decidedbytheboardofdirectorsfollowingthisauthorisation,compriseasharepremiumtheamountofthissharepremiummustberecordedonaspecialunavailableaccount,named“sharepremium”,whichconstitutesasthecapitaltheguaranteeforthirdpartiesandwhichwillnotbereducedordecreasedunlessbydecisionofthegeneralassembly,meetingpursuanttotheconditionsofattendanceandmajorityprovidedforacapitaldecrease,exceptfortheconversionintocapitalasmentionedabove.
Article 8 - Nature of the shares
Thesharesareregisteredsharesorindematerialisedform.Arecordoftheregisteredshares,whicheachshareholderisentitledtoinspect,ismaintainedatthecompany’sregisteredoffice.
Registeredsubscriptioncertificateswillbeissuedtotheshareholders.
Anytransferbetweenlivingpersonsorfollowingdeath,aswellasanyexchangeofsecurities,willberecordedintheaforementionedregister.
.
Possession
Article 11 - Transparency regulations
Inaccordancewithlegalrequirements,allnaturalpersonsorlegalentitieswhoacquireorsurrendersharesorotherfinancialderivativeswithvotingrightsgrantedbythecompany,regardlessofwhethertheserepresentthecapital,areobligedtoinformboththecompanyandtheFinancialServicesandMarketsAuthorityofthenumberoffinancialderivativesintheirpossession,wheneverthevotingrightsconnectedwiththesefinancialderivativesreachfivepercent(5%)oramultipleoffivepercentofthetotalnumberofvotingrightsinexistenceatthattime,orwhencircumstancesthatrequiresuchnotificationarise.
Besidesthelegalthresholdmentionedinthepreviousparagraph,thecompanyalsoprovidesforastatutorythresholdof3%.
Thisdeclarationisalsocompulsoryintheeventofthetransferofshares,ifasaresultofthistransferthenumberofvotingrightsrisesaboveorfallsbelowthethresholdsspecifiedinthefirstorsecondparagraph.
Administrationandsupervision
Article 12 - Composition of board of directors
Thecompanyismanagedbyaboardofdirectorsconsist-ingofatleastthreedirectors,whomayormaynotbeshareholders.Theywillbeappointedforamaximumofsixyearsbythegeneralmeetingofshareholders,andtheirappointmentmayberevokedatanytimebythelatter.
Intheeventthatoneormoredirectors’positionsbecomevacant,theremainingdirectorshavetherighttofillthevacancyonaprovisionalbasisuntilthenextgeneralmeeting,whenadefinitiveappointmentwillbemade.
Inapplicationofwhatisdeterminedbyarticle13oftheRRECAct,theboardofdirectorsiscomposedinsuchwaythatthecompanycanbemanagedautonomouslyandinthesoleinterestoftheshareholders.Threeindepend-entdirectorswithinthemeaningofarticle526teroftheBelgianCompaniesCodehavetositontheboardofdirectors.
Theeffectiveleadershipofthepublicregulatedrealestatecompanymustbeconsignedtoatleasttwopersons.
Alldirectorsandtheirrepresentativesmustsatisfytherequirementsintermsofprofessionalreliability,
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experienceandautonomy,asspecifiedbyarticle14§1,oftheRRECAct.Theymaynotfallundertheapplicationoftheprohibitionsreferredtoinarticle20oftheActof25April2014relatedtothestatuteforandsupervisionofcreditinstitutions.
Themembersoftheboardofdirectorsandthepersonsinchargeoftheeffectiveleadershipmustsatisfytherequirementsofarticles14and15oftheRRECAct.
Unabatedthetransitionalstipulationasprovidedforbyarticle37,themembersoftheboardofdirectorsandthepersonsinchargeofeffectiveleadershipareexclusivelypersons.
Article 15 - Delegation of authority
Inapplicationofarticle524bisoftheBelgianCompaniesCode,theboardofdirectorscanputtogetheraman-agementcommittee,whosemembersareselectedfrominsideoroutsidetheboard.Thepowerstobetrans-ferredtothemanagementcommitteeareallmanagerialpowerswiththeexceptionofthosemanagerialpowersthatmightrelatetothecompany’sgeneralpolicy,ac-tionsreservedtotheboardofdirectorsonthebasisofstatutoryprovisionsoractionsandtransactionsthatcouldgiverisetotheapplicationofarticle524oftheBelgianCompaniesCode.Ifamanagementcommitteeisappointed,theboardofdirectorsischargedwiththesupervisionofthiscommittee.
Theboardofdirectorsdeterminestheconditionsfortheappointmentofthemembersofthemanagementcommittee,theirdismissal,theirremuneration,anyseverancepay,thetermoftheirassignmentandwayofworking.
Ifamanagementcommitteeisappointed,itcanonlydelegateday-to-daymanagementofthecompany.
Ifnomanagementcommitteeisappointed,theboardofdirectorscanonlydelegateday-to-daymanagementasprovidedforbyarticle13,fourthparagraphofthecur-rentarticlesofassociation.
Theboardofdirectors,themanagementcommitteeandthemanagingdirectorschargedwiththeday-todaymanagementmayalso,withinthecontextofthisday-to-daymanagement,assignspecificpowerstooneormorepersonsoftheirchoice,withintheirrespectiveareasofcompetence.
Theboardcandeterminetheremunerationofeachmandate-holdertowhomspecialpowersareassigned,allinaccordancewiththeapplicablelegislationonregu-latedrealestatecompanies.
Unabatedthetransitionalstipulationsasprovidedbyarticle38,thememberofthemanagementcommitteeareexclusivelynaturalpersonsandtheyhavetocomplywitharticles14and15oftheRRECAct.
Article 17 - Conflicts of interest
Thedirectors,thepersonschargedwithday-to-dayman-agementandtheauthorisedagentsofthecompanywillrespecttherulesrelatingtoconflictsofinterest,aspro-videdforbyarticles36,37and38oftheRRECActandbytheBelgianCompaniesCodeastheymaybeamended.
Article 18 - Auditing
Thetaskofauditingthecompany’stransactionswillbeassignedtooneormorestatutoryauditors,appointedbythegeneralmeetingfromthemembersoftheBelgianInstituteofCompanyAuditorsforarenewableperiodofthreeyears.Thestatutoryauditor’sremunerationwillbedeterminedatthetimeofhis/herappointmentbythegeneralmeeting.
Thestatutoryauditor(s)alsoaudits(audit)andcertifies(certify)theaccountinginformationcontainedinthecompany’sannualaccounts.
Themissionofthestatutoryauditormayonlybecon-signedtooneormorerecognisedstatutoryauditors’companies,recognisedbytheFSMA.PriorapprovalisrequiredfromtheFSMAfortheappointmentofauditorstothecompany.Thisapprovalisalsorequiredfortherenewalofanorder.
Generalmeeting
Article 19 - Meeting
Theordinarygeneralmeetingofshareholders,knownastheannualmeeting,mustbeconvenedeveryyearonthelastWednesdayofAprilat2.30p.m.Ifthisdayisapublicholiday,themeetingwillbeheldonthenextworkingday.
Anextraordinarygeneralmeetingcanbeconvenedatanytimetodeliberateanddecideonanymatterthatfallswithinitscompetenceandthatdoesnotrelatetochangestothearticlesofassociation.Anextraordinarygeneralmeetingcanbeconvenedbeforeanotaryatanytimetodeliberateanddecide,onchangestothearticlesofassociation.
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Thegeneralmeetingsareheldatthecompany’sreg-isteredofficeoratanotherlocationinBelgium,asan-nouncedinthenoticeconveningthemeeting.
Article 22 - Participation to the general meeting
Tobeadmittedtogeneralmeetingandtoexpressavote,dependsontheaccountingregistrationofbearersharesoftheshareholderonthefourteenthdaypriortothegeneralmeetingatmidnight(Belgiumtime)(namedhereinafter“registrationdate”),eitherbysubscriptiontotheregisterofbearersharesofthecompany,eitherbysubscriptionbyanauthorisedaccountholderorasettle-mentbody,orbyfilingthebearershareswithafinancialintermediary,regardlessoftheamountofsharesheldbytheshareholderonthedayofthegeneralmeeting.
Ownersofdematerialisedsharesinformingthecompanyoftheirwishtoattend,mustprovideacertificatethathasbeenfiledwithafinancialintermediaryorauthorizedaccountholder,attestingthenumberofdematerialisedsharesthathavebeenregisteredintheiraccountsontheregistrationdateinthenameoftheshareholderorthenumberofbearersharesthathavebeenregistered,at-testingthattheshareholderwishestoattendthegeneralmeeting.Thisfilinghastobedoneatthelatestthesixthdaypriortothegeneralmeetingdateattheregisteredofficeorattheinstitutionsmentionedintheinvitation.
Ownersofnominativesharescommunicatetheirwishtoparticipatetothecompany,byordinarymail,faxore-mailatleastthesixthdaybeforethedateofthegeneralmeeting.
Article 26 - Voting rights
Eachsharegivestheholdertherighttoonevote.
Ifoneormoresharesarejointlyownedbydifferentpersonsorbyalegalentitywitharepresentativebodyconsistingofseveralmembers,theassociatedrightsmayonlybeexercisedvis-à-visthecompanybyasinglepersonwhohasbeenappointedinwritingtodosobyallthepersonsholdingrights.Untilsuchapersonhasbeenappointed,alloftherightsassociatedwiththosesharesremainsuspended.
Ifashareisencumberedwithausufruct,thevotingrightsassociatedwiththeshareareexercisedbytheusufructu-ary,subjecttoanobjectionfromthebareowner.
Resultallocation
Article 29 - Appropriation of profit
Pursuanttoarticle45,2°oftheRRECActthecompanydistributesannuallyascapitalatleast80%asdeterminedbytheRRECAct,asimplementationofthetakendeci-sionsandregulations.Thisobligationisnotdetrimentaltoarticle617oftheBelgianCompaniesCode.
STATUTORYAUDITOR
On24April2013,DeloitteBedrijfsrevisoren/Réviseursd’EntreprisesSCundertheformofaSCRL,whichisrepresentedbyKathleenDeBrabander,Berkenlaan8b–1831Diegem,hasbeenreappointedasstatutoryauditorofVastnedRetailBelgium.Themandateofthestatutoryauditorwillendimmediatelyaftertheannualmeetingtobeheldin2016.
Theremunerationofthestatutoryauditoramountsto€58.580(excl.VAT,incl.costs)asfromthefinancialyearstartedon1January2014forthesurveyofthestatutoryandconsolidatedannualaccounts.
LIQUIDITYPROVIDER
SinceDecember2001,aliquiditycontracthasbeencon-cludedwithBankDegroof,ruedel’Industrie44,B-1000Brussels,topromotethenegotiabilityoftheshares.Inpracticethistakesplacethroughtheregularsubmissionofbuyandsellorderswithincertainmargins.
Theremunerationhasbeensetatafixedamountof€1.000amonth.
.
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Brussels, avenue Louise - 245 m2
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PROPERTYEXPERTS
ThepropertyexpertsdesignatedbyVastnedRetailBelgiumare:
• Cushman&Wakefield,1000Brussels,avenuedesArts56.ThecompanyisrepresentedbyKrisPeetermans.
• CBRichardEllis,1000Brussels,avenueLloydGeorge7.ThecompanyisrepresentedbyPeterdeGroot.
InaccordancewiththeActof12May2014onregulatedrealestatecompanies,theyvaluetheportfoliofourtimesayear.Thefeeofthepropertyexpertsiscalculatedonthebasisofanannualfixedamountperbuilding.
REGULATEDREALESTATE
COMPANIES-
LEGALFRAMEWORK
Theregulatedrealestatecompany’ssystemisformal-isedintheActof12May2014onregulatedrealestatecompanies(theRRECAct)andintheRoyalDecreeof13July2014onregulatedrealestatecompanies(theRRECRoyalDecree)tostimulatepublicinvestmentsinrealestateproperties.TheconceptisverysimilartothatoftheRealEstateInvestmentTrusts(REIT-USA),theFiscalInvestmentInstitutions(FBI-Netherlands),theSociétésd’InvestissementImmobilierCôtées(SIIC-France)andtheREITintheUnitedKingdomandGermany.
AsapublicRRECwithaseparateREITstatus,theRRECissubjecttostrictlegislationwithaviewtotheprotec-tionofitsshareholdersandfinanciers.Thestatusprovidesbothfinanciersandprivateinvestorswiththeopportunityofgainingaccessinabalanced,cost-effectiveandfiscallytransparentmannertoadiversifiedrealestateportfolio.
Itisthelegislator’sintentionthatRRECguaranteeopti-mumtransparencywithregardtoinvestmentpropertiesandensurethepay-outofmaximumcashflow,whiletheinvestorenjoysawiderangeofbenefits.
TheRRECisunderthesupervisionoftheFinancialServicesandMarketsAuthority(FSMA)andissubjecttospecificregulationsofwhichthemostnotableprovisionsarethefollowing:
• adopttheformofalimitedliabilitycompanyoralim-itedpartnershipwithasharecapitalwithaminimumcapitalof€1.200.000
• companywithfixedcapitalandafixednumberofshares
• compulsorylistingonthestockexchangewithatleast30ofthesharesinpublichands
• thepublicregulatedrealestatecompanyhasforonlypurpose(a)eitherdirectly,orbymeansofacompanyinwhichitpossessesaholdingpursuanttothestipula-tionsoftheRRECActandthedecisionsandregula-tionsmadefortheexecutionofthesame,tomakerealestateavailabletousersandb)withintheboundsoftheapplicablelegislationonregulatedrealestatecom-panies,topossessrealestateasmentionedinarticle2,5°,vitoxoftheRRECAct.TheRRECdoesnothaveastatutoryembeddedinvestmentpolicybutdevelopsastrategyenablingittopositionitselfinallstagesofthevaluechainoftherealestatesector
• limitedpossibilityforconcludingmortgages• adebtratiolimitedto65%ofthetotalassets;ifthe
consolidateddebtratioexceeds50%,afinancialplanhastobedrawnuppursuanttotheprovisionsofarticle24oftheRRECAct.Incaseofadispensationauthor-isedbytheFSMAbasedonarticle30,§3and§4oftheRRECAct,theconsolidateddebtratioofthepublicRRECpursuanttheprovisionsofarticle30,§3and§4oftheRRECActmaynotexceed33%
• annualfinancialinterestchargesresultingfrombor-rowingsmayundernocircumstancesexceedthethresholdof80%oftheoperatingdistributableresultbeforeresultonportfolioincreasedwiththefinancialincomeofthecompany
• strictrulesrelatingtoconflictsofinterests• theportfoliomustberecordedatmarketvaluewithout
thepossibilityofdepreciationathree-monthlyesti-mateofthepropertyassetsbyindependentpropertyexperts,basedonarotationprinciple
• riskspread:amaximumof20%ofcapitalinonebuild-ing,exceptcertainexceptions
• aRRECmaynotengageitselfin“developmentactivi-ties”;thismeansthatthecompanycannotactasabuildingpromoteraimingtoerectbuildingsinordertosalethemandtocashadeveloper’sprofit
• exemptionfromcorporationtaxprovidedthatatleast80%oftheoperatingdistributableresultaredistributed
• awithholdingtaxof25%tobededucteduponpay-mentofdividends(subjecttocertainexemptions)
• theopportunitytoestablishsubsidiarycompanieswhichtaketheformofan“institutionalRREC”whichmustoperateundertheexclusiveorjointcontrolofthepublicRRECinordertobeabletoimplementspecificprojectswithathird,being1)professionalclientssuchascreditinstitutions,investmentcompaniesandcol-lectiveinvestmentinstitutions,or2)legalpersonswhocanbeconsideredaseligibleinvestorbyintroducingasimplyrequesttotheFSMAwithoutadditionalcondi-tionshavingtobefulfilled
157
General information
• atleastthreeindependentdirectorsinthesenseofarticle526boftheBelgianCompaniesCodesitontheboardofdirectors
• thefixedfeesofdirectorsandtheactualmanagersmaynotdependontheoperationsandtransactionscarriedoutbythepublicRRECoritssubsidiaries:thisthere-foreprohibitsthembeinggrantedafeebasedontheturnover.Thisrulealsoappliestothevariablefee.Ifthevariablefeeisdeterminedaccordingtotheresult,onlytheconsolidatedoperatingdistributableresultmaybeusedasbasisforthis.
Theaimoftheserulesistominimisetheriskforshare-holders.
CompaniesthatmergewithaRRECaresubjecttoatax(exittax)of16,995%ondeferredaddedvaluesandtax-freereserves.
STATEMENTTOTHEANNUAL
REPORT
Pursuantto13§2oftheRoyalDecreeof14November2007,theboardofdirectors,composedofJean-PierreBlumberg(chairman),EMSOsprlpermanentlyrepresent-edbyChrisPeeters,NickvanOmmen,HubertRoovers,TacodeGrootandReinierWalta,declaresthataccordingtoitsknowledge:
a. theannualaccounts,preparedinaccordancewiththe“InternationalFinancialReportingStandards”(IFRS)asacceptedbytheEuropeanUnionandinaccordancewiththeActof12May2014,giveatrueandfairviewoftheequity,thefinancialpositionandtheresultsofVastnedRetailBelgiumandthecompaniesincludedintheconsolidation
b. theannualreportgivesatruestatementofthedevel-opmentandresultsofVastnedRetailBelgiumduringthecurrentyearandofthepositionofthecompanyandthecompaniesincludedintheconsolidation,aswellasofthemainrisksanduncertaintiesthatVastnedRetailBelgiumisconfrontedwith.
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Acquisition value of an investment property
Thistermisusedattheacquisitionofaproperty.Iftransfercostsarepaid,theyareincludedintheacquisitionvalue.
Corporate governance
Corporategovernanceisanimportantinstrumentforconstantlyimprovingthemanagementofthecompanyandtoprotecttheinterestoftheshareholders.
Current rents
Annualrentonthebasisoftherentalsituationonacer-tainmomentintime.
Debt ratio
Thedebtratioiscalculatedastherelationofallliabilities(excludingprovisionsandaccruedchargesanddeferredincome)lessthenegativechangeinfairvalueoffinancialinstruments,comparedtototalassets.Thecalculationmethodofthedebtratioispursuanttoarticle13,§1secondparagraphoftheRoyalDecreeof13July2014.BymeansofthisRoyalDecreethemaximumdebtratioofthecompanyis65%.
Diluted net result
Thedilutednetresultpershareisthenetresultaspub-lishedintheincomestatement,dividedbytheweightedaveragenumberofordinaryshares,adaptedtotheeffectofpotentialordinarysharesleadingtodilution.
EPRA vacancy rate
TheEPRAvacancyrateiscalculatedastheratiobetweentheestimatedrentalvalueofthevacantpropertiesavail-ableforlettingandthesameestimatedrentalvalueoftheentireportfolioavailableforletting.
Fair value of investment properties (in accordance with Beama interpretation of IAS 40)
Thisvalueisequaltotheamountatwhichabuildingmightbeexchangedbetweenknowledgeable,will-ingpartiesinnormalcompetitiveconditions.Fromtheperspectiveoftheseller,theyshouldbeunderstoodasinvolvingthedeductionofregistrationfees.
Inpractice,thismeansthatthefairvalueisequaltotheinvestmentvaluedividedby1,025(forbuildingswitha
valueofmorethan€2,5million)ortheinvestmentvaluedividedby1,10/1,125(forbuildingswithavalueoflessthan€2,5million).
Free float
Freefloatisthenumberofsharescirculatingfreelyonthestockexchangeandthereforenotinpermanentowner-ship.
Gross dividend
Thegrossdividendpershareistheoperatingdistribut-ableresultdividedbythenumberofsharesentitledtodividend.
Gross dividend yield
Thegrossdividendyieldisthegrossdividenddividedbythesharepriceonclosingdate.
Gross initial yield
Thegrossinitialyieldiscalculatedastherelationbetweenrentalincomeonanannualbasisontheacquisitiondateoftheinvestmentpropertyandtheinvestmentvalueoftheinvestmentproperty.
Gross market rent
Thegrossmarketrentcomprisesthecurrentrentsin-creasedbytheestimatedrentalvalueofvacantproperties.
Gross yield
Thegrossyieldiscalculatedastherelationbetweengrossmarketrentandtheinvestmentvalueofinvestmentproperties.
Investment value of an investment property
Thisisthevalueofabuildingestimatedbyanindepend-entpropertyexpert,andincludingthetransfercostswithoutdeductionoftheregistrationfee.Thisvaluecor-respondstotheformerlyusedterm“valuedeedinhand”.
Liquidity of the share
Theratiobetweenthenumberofsharestradeddailyandthenumberofcapitalshares.
TERMINOLOGY
159
Terminology
Net asset value EPRA
Totalshareholders’equityattributabletothesharehold-ersoftheparentcompany,adjustedforthefairvalueoffinancialinstrumentsanddeferredtaxes,dividedbythenumberofsharesattheendoftheyear.
Net value (investment value)
Totalshareholders’equityincreasedwiththereservefortheimpactonthefairvalueofestimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties,dividedbythenumberofsharesattheendoftheyear.
Net value (fair value)
Totalshareholders’equitydividedbythenumberofsharesattheendoftheyear.
Net dividend
Thenetdividedisequaltothegrossdividendafterdeduc-tionofwithholdingtaxof25%.
Net dividend yield
Thenetdividendyieldisequaltothenetdividenddividedbythesharepriceonclosingdate.
Net result per share
Thenetresultpershareisthenetresultaspublishedintheincomestatement,dividedbytheweightedaveragenumberofordinaryshares(i.e.thetotalamountofissuedshareslesstheownshares)duringthefinancialyear.
Net yield
Thenetyieldiscalculatedastherelationbetweenthegrossmarketrent,lesstheallocatedpropertycharges,andtheinvestmentvalueofinvestmentproperties.
Occupancy rate
Theoccupancyrateiscalculatedastheratiooftherentalincometothesamerentalincomeplustheestimatedrentalvalueofthevacantlocationsforrent.
Operating distributable result
Theoperatingdistributableresultistheoperatingresultbeforetheresultonportfoliolessthefinancialresultandtaxes,andexclusivethechangeinfairvalueoffinancialderivatives(whicharenotconsideredaseffectivehedgeinaccordancewithIAS39)andothernon-distributableelementsonthebasisofthestatutoryannualaccountsofVastnedRetailBelgium.
Regulated real estate company (RREC)
ThestatusofregulatedrealestatecompanyisregulatedbytheActof12May2014onregulatedrealestatecompanies(RRECAct)andbytheRoyalDecreeof13July2014onregulatedrealestatecompanies(RRECRoyalDecree)inordertostimulatejointinvestmentsinproperty.
RREC Act
TheActof12May2014onregulatedrealestatecompa-nies.
RREC Royal Decree
TheRoyalDecreeof13July2014onregulatedrealestatecompanies.
Vacancy rate
Thevacancyrateiscalculatedastheratiobetweentheestimatedrentalvalueofthevacantpropertiesandthesameestimatedrentalvalueincreasedbycommercialrentalincome.
Yield
Theyieldiscalculatedastheratiobetweentherentalincome(increasedornotbytheestimatedrentalvalueofvacantlocationsforrent)andtheinvestmentvalueofinvestmentproperties.
Retail Belgium
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