Annual report 2008 - Altarea Cogedim

integration of management systems and a lower risk of
material errors. Cartesis Magnitude can be upgraded for
compliance with new regulations. After ALTAREA acquired
Cogedim, Cogedim’s configuration in Cartesis Magnitude
was modified to match ALTAREA’s system, so that the group
could generate consolidated financial statements.
(iv) Rental property software
The Company’s French and Italian operations started using
Altaix rental property management software on 1 January
2007. Data will be automatically incorporated into the
company accounts from Altaix to Sage starting in the first
half of 2008. Management reports have been produced
automatically as of February 2008. Since June 2008,
inputs of supplier invoices and monitoring of commitments
made by marketing centres have been automatically passed
on to the centralised rental management system via Altaix.
(v) Property transaction software
Cogedim uses a software package that enables it to manage
its property transactions efficiently through each step of the
development and sales process. With the real-time integration
of marketing data, daily accounting information and cash
flow positions, also on a daily basis, this software allows
for budget monitoring and steering for each of Cogedim’s
property transactions. This software is complemented by
a reporting and forecasting tool that uses operating data
from “Primpromo“ to provide projected consolidated data
for each subsidiary and for Cogedim as a whole.
(d) Other risks related to ALTAREA’s business
activities
ALTAREA may be exposed to other risks and has the
resources to limit these risks and manage the consequences
should they materialise.
Risks related to trends in the property market
ALTAREA operates in several sectors of the property market,
mainly commercial property (mostly shopping centres) and
residential property. The Company is exposed to systemic
risks and uncertainties specific to the property market, most
notably its cyclical nature, as well as the risks inherent
to each property asset. The Company’s risk management
strategy and measures taken aim to limit the negative
consequences should one of these risks materialise.
However, abrupt changes in the economic, financial,
monetary, regulatory, political, geopolitical, social, health,
or environmental climate could have a negative impact on
ALTAREA’s businesses, asset values, earnings, development
projects, and investments.
Risk of tenant insolvency
ALTAREA’s ability to collect rental income depends on the
solvency of its tenants. The Company carefully reviews
potential tenants before granting any leases, although it may
occur that a tenant does not pay its rent on time or defaults
on its rental payments, which would impact ALTAREA’s
operating income.
In order to anticipate this risk as best possible, the Portfolio
Management department produces systematic reports on
payments in arrears by 30 days, 60 days and 90 days.
Follow-ups in the procedure for recovering rental payments
have also been stepped up.
Legal, regulatory, environmental,
insurance and tax risks
Legal and regulatory risks
ALTAREA must comply with regulations in a variety of areas,
including urban planning, construction, leases, operating
permits, health and safety, the environment, and taxes (most
notably the tax rules governing SIICs). Changes to any of these
regulations could require ALTAREA to adjust its operations,
assets, or business strategy accordingly, which may have
negative consequences on its earnings, asset values, and
expenses, and may slow or halt progress on some of the
Company’s property development or marketing activities.
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.
ALTAREA’s entities are subject to changes in regulatory
requirements due to the nature of their businesses.
ALTAREA France, ALTAREA Italie and ALTAREA Espagne:
These subsidiaries’ legal departments ensure compliance
with all applicable regulations and the possession of all
permits needed to carry out their operations. The regulations
relate mostly to urban planning (commercial licences,
building permits, etc.), construction, and commercial leases.
ALTAREA’s Corporate Secretary coordinates the efforts of the
subsidiaries’ legal departments. The Chief Financial Officer
oversees the corporate legal department, which ensures that
ALTAREA and its main subsidiaries comply with workplace
legislation and the requirements of being a listed company.
Cogedim: Cogedim does not have a legal department,
although many operating managers have had legal training.
These operating managers hire outside law firms on a
regular basis. The legal secretary functions of Cogedim
SAS’s subsidiaries were carried out by a specialised outside
firm in 2008. As of 2009, Cogedim’s main subsidiaries
will be overseen by the corporate legal department and
companies in charge of development projects will continue
to be monitored by outside firms.
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