Annual report 2008 - Altarea Cogedim

General information
ALTAREA is involved in legal procedures as part of its regular
business, and is subject to tax or regulatory audits. The
company recognises a provision whenever a risk is identified
and its cost can be reasonably estimated.
Tax risks related to SIIC status
ALTAREA is subject to SIIC tax rules, which means that it is
exempt from French corporate income tax if it meets certain
criteria regarding dividend distributions and share ownership.
If ALTAREA fails to meet these criteria it will be required to
pay corporate income tax under French common law for the
fiscal years in which it does not meet these criteria, which
would have a negative impact on its earnings. The criteria also
stipulate that no single shareholder or group of shareholders
acting in concert can own more than 60% of ALTAREA’s share
capital or voting rights, which is why ALTAREA’s Articles of
Association cap voting right ownership at 60%.
ALTAREA could be liable for an additional income tax
charge if it pays an exempt dividend to a shareholder not
subject to French corporate income tax (or an equivalent
tax) and which owns at least 10% of ALTAREA’s shares, and
if ALTAREA cannot pass the charge on to this shareholder.
ALTAREA’s Articles of Association state explicitly that
shareholders must pay this charge, but ALTAREA may have
difficulty collecting the payment if it cannot be deducted
from the dividend, or if the shareholder becomes insolvent
before the payment is made.
Finally, ALTAREA is subject to changes in existing tax laws.
Risk related to the cost and availability of insurance
coverage
ALTAREA feels that the type and amount of insurance
coverage it has is consistent with the practices in its
industry.
Nevertheless, the company could experience losses that are
not fully covered by its insurance policies, or the cost of its
insurance policies could go up. The company could be faced
with insufficient insurance or an inability to cover some or
all of its risks, which could result from capacity limitations
in the insurance market.
The cost or unavailability of appropriate coverage in the case
of damages could have a negative impact on the company’s
asset values, earnings, operations, and financial position.
Health and environmental risks (asbestos, Legionella,
lead, classified facilities, etc.), and the risk of flood or
building collapse
ALTAREA’s assets could be exposed to health and safety
risks such as those related to asbestos, Legionella, termites,
or lead. As the owner of buildings, facilities, and land,
ALTAREA could be formally accused of failure to adequately
monitor and maintain its property against these risks. Any
proceedings invoking the company’s liability could have a
negative impact on its operations, outlook, and reputation.
Therefore ALTAREA closely follows all applicable regulations
in this area, and has a preventive approach to carrying out
property inspections and carrying out any building work
needed to come into compliance.
ALTAREA’s property is exposed to natural and technological
risks. One or more of its properties may receive an
unfavourable inspection report from a safety commission,
which could require the full or partial closure of the premises.
This could make the company’s assets less attractive and
have a negative impact on its operations and earnings.
Risk of conflicts of interest
ALTAREA has entered into partnerships or protocol
agreements with other organisations, mostly for the purposes
of carrying out joint property development projects. In the
future, a conflict of interests could arise in one or more of
these partnerships or agreements.
Financing risks
Borrowing capacity and liquidity risks
ALTAREA finances some of its investments through fixedor
floating-rate loans and through the capital markets.
The company may not always have the desired access to
the capital markets or be able to obtain financing under
favourable conditions. This situation could result from a
crisis in the bond or equity markets, a serious deterioration
in the property market, or any change in ALTAREA’s
businesses, financial position, or shareholder structure
which affects investors’ perception of ALTAREA’s credit
quality or attractiveness as an investment.
ALTAREA manages its liquidity risk by keeping track of its
debt maturity and available lines of credit, and diversifying
its sources of financing.
ALTAREA does not feel it has a significant exposure to
liquidity risk as of the date of this registration document.
Equity risk
ALTAREA does not feel it has a significant exposure to equity
risk as of 31 December 2008.
Currency risk
ALTAREA generates almost all of its revenue in the
Eurozone and pays almost all of its expenses (investments
and capital expenditures) in euros. ALTAREA’s operations
in non-Eurozone countries, such as Russia, are still minor.
Therefore ALTAREA does not feel it has a significant
exposure to currency risk as of 31 December 2008.
188