Annual report 2008 - Altarea Cogedim

Business review
manager, the Group provides development services for the
owner of a property in exchange for fees. In 2008, provision
of these services accounted for nearly 80% of the Group’s
commercial property business volume.
In residential property, the Group has adapted its commitment
policy to current economic conditions by stepping up the
prudential criteria implemented at the start of the year. The
main aim of these criteria is to favour the signature of a
unilateral preliminary sales agreement rather than bilateral
sale and purchase agreements, to set out conditions for
the acquisition of the site and the start of works with a
high level of pre-marketing, and to abandon developments
that would not profitable enough or the marketing of which
would be disappointing.
The Group’s management of properties for sale is
particularly efficient and has allowed it to control the level
of unsold properties, which represented just €5 million (14)
at 31 December 2008.
3.1.4 Organisation of the property development division
within the ALTAREA Group
The property development division was legally and
operationally restructured at the end of 2008, marking the
definitive integration of Cogedim into the ALTAREA Group.
Cogedim and Compagnie ALTAREA Habitation (15) were
merged to begin with and the new entity was then transferred
to Altareit, a 99.6%-owned subsidiary of ALTAREA listed on
Euronext Paris. On this occasion, the powers of Cogedim’s
Supervisory Board were reinforced with regard to deciding
on commitments. The property development division,
managed on an integrated basis, is therefore one of the two
contributors to the Group’s cash flow alongside the shopping
centre business.
3.2 Revenues
On a like-for-like basis, revenues from the property development
division remained robust in 2008, rising by 29%.
(in €m) 12/31/2008 12/31/2007
like-for-like (1)
Property revenues 739.6 577.0
O/w commercial property 147.9 70.2
O/w residential property 591.7 506.8
Services to third parties 29.4 18.9
Total revenues 769.0 +29% 595.9
This growth relates partly to the quality of the backlog at
the start of 2008, as well as very strong growth in services
provided for third parties.
3.3 Operating profit
The effects of the crisis are visible in operating profit,
which fell by 21% (reduction in selling prices and slower
adjustment of development costs).
(in €m) 12/31/2008 12/31/2007
like-for-like (1)
Total revenues 769.0 +29% 595.9
Cost of sales (664.0) (486.5)
Net overhead expenses (43.5) (34.8)
Other (3.6) (0.9)
RECURRING OPERATING PROFIT 57.9 -21% 73.7
% of revenues 7.5% 12.4%
(1) Including one year’s contribution from Cogedim
3.4 Operating review by product line
3.4.1 Commercial property
At 31 December 2008, the Group was in charge of
32 commercial property developments representing a total
net floor area of 612,400 m², comprising mainly offices (26
developments), as well as six hotels.
(Net floor area, 000 m², 100%)
Delegated
project
management
Property
development
Total
Offices 214 305 519
Hotels 39 38 76
Miscellaneous
(research centres, multimedia etc.)
– 17 17
Total development projects 253 359 612
Economic conditions in 2008
Investment in commercial property (16) :
With transactions totalling €12.5 billion in 2008, investment
in commercial property fell by 55% year-on-year to the
level of 2004. This was due to both investors encountering
difficulties in obtaining financing and deterioration in
economic conditions.
(1) Including one year’s contribution from Cogedim
38
(14) Incomplete properties net of reservations Compared with net reservations of €557 million in 2008, as a share of ownership
(15) Compagnie ALTAREA Habitation comprised ALTAREA’s property development activities before the acquisition of Cogedim
(16) CRBE data for 2008.