Annual report 2008 - Altarea Cogedim

7.3.1. IFRS 8 “Operating Segments”
• Accounting treatment
After adopting IFRS 8 early at 31 December 2007,
the Group reviewed the breakdown of its activities into
operating segments and came to the conclusion that the
activities performed by Cogedim, be they residential
property development (predominantly off-plan sales) and
commercial property development (primarily delegated
project management and property development contract
transactions), were conducted on a totally centralised basis
from a decision-making standpoint. Management took the
view that each programme constituted a CGU and that the
group of CGUs formed an operating segment. It was thus
considered that the Property development for third parties
business represented a unique operating segment and
accordingly a decision was made to merge the Residential
Property Development and Commercial Property operating
segments as previously defined. The Residential and
Commercial Property segments now represent product lines
(residential, hotels, offices, large mixed-use urban projects)
broken down by business line (property development,
development for own account and third parties, delegated
project management and marketing).
Management believes that the three characteristics of an
operating segment are satisfied for the third-party property
development as defined below, i.e.:
- an activity generating revenues and incurring expenses,
- Operating profit regularly reviewed by ALTAREA’s
management, which makes resource allocation decisions
and assesses performances,
- Information fully available.
Accordingly, at Group level, management introduced a
change in accounting method based on a reduction in the
number of operating segments to three, that is an owned
shopping centre business, a shopping centre development
business for its own account and the property development
for third parties business.
See note 7.31. “Operating Segments” for a detailed
presentation of these.
• Consequences and impact of the change in accounting
method on the Group’s consolidated financial statements
This change in accounting method was applied
retrospectively.
It did not lead to any impact on the Group’s financial
statements, except for:
– the presentation of the costing-based profitability analysis,
which is presented according to the two analytical axes of
recurring profit and non-recurring profit. Recurring profit
in the costing-based profitability analysis is now analysed
through the contribution made by the two operating
segments, i.e. the owned shopping centre business and
the property development for third parties business.
– The presentation of the balance sheet and profit by
operating segment.
All the quantified figures by operating segment in the notes
to the financial statements have been adjusted in respect of
the two financial years shown.
7.3.2. IAS 36 “Impairment of Assets”
• Accounting treatment
Goodwill and other intangible assets not subject to
amortisation are grouped with other non-current assets
(property, plant and equipment and intangible assets subject
to amortisation) within Cash-Generating Units (CGUs).
A CGU is defined as the smallest identifiable grouping of
assets that generates cash flows independently of the cash
flows generated by other assets or groups of assets.
As stated in note 7.3.1, the Group considers that each
programme represents a CGU, with the group of CGUs being
a single operating segment called “Property development
for third parties”.
At 31 December 2007, goodwill arising from the acquisition
of Cogedim was provisionally allocated to three CGUs
representing identified operating segments at the time,
namely,
– shopping centre development,
– residential property development,
– commercial property.
This goodwill was reallocated to several Cash-Generating
Units (groupings of programmes/projects) comprising:
– major urban mixed-use projects within the “shopping
centre development for own account” operating segment,
– all the programmes combined in the “Property development
for third parties” operating segment.
• Consequences and impact of the change in accounting
method on the Group’s consolidated financial statements
The definitive allocation (compared with the provisional
initial allocation) of goodwill arising from the Cogedim
acquisition was as follows:
(in € thousand)
Property development for third parties
Definitive
allocation
Initial
allocation
240,222
of which Residential Property Development 262,222 122,260
of which Commercial Property Development 117,962
Retail development - GPUM* 89,056 111,056
Total Goodwill - Cogedim 351,278 351,278
*Large Urban Mixed-Use Projects
87