Annual report 2008 - Altarea Cogedim

e) Short-term benefits
Short-term benefits include an incentive agreement for
employees to share in the profit recorded by their economic
and social unit, signed by the service companies of the
Group that are members of the economic and social unit,
and the works council (non-mandatory profit-sharing plan).
Benefits also include a (mandatory) employee profit-sharing
applicable to the profit of the economic and social unit as
required under ordinary law.
Short-term employee benefits including those arising from
these profit-sharing plans are expensed as incurred.
7.22. Provisions and contingent liabilities
In accordance with IAS 37, a provision is recognised when
an obligation to a third party will certainly or probably result
in an outflow of resources without any equivalent benefits
being received in consideration, and when the amount
required to settle the obligation can be reliably estimated.
The provision is maintained as long as the timing and amount
of the outflow of resources are not known with precision.
In general, provisions are not linked to the Group’s normal
operating cycle. Provisions are discounted when appropriate
using a pre-tax discount rate that reflects the risks specific
to the liability.
Non-current provisions consist mainly of provisions arising
from litigation between the ALTAREA group and third parties.
Contingent liabilities correspond to a potential obligation for
which the probability of occurrence or a reliable estimate of
the amount cannot be determined. They are not recognised on
the balance sheet. A disclosure is made in the notes unless the
amounts at stake can reasonably be expected to be small.
7.23. Income taxes
Following its decision to adopt SIIC tax status, the ALTAREA
group is subject to a specific tax regime. For tax purposes,
the Group is divided into two sectors:
• an SIIC sector comprising the Group companies that have
elected to adopt SIIC tax status and are therefore exempt
from income tax on their ordinary profits and gains on
disposal, and
• a taxable sector comprising those companies that cannot
elect to adopt SIIC status.
Income taxes are recognised in accordance with IAS 12.
From the time that SIIC tax status was adopted, deferred
taxes are calculated for companies without such status and on
the taxable profits of companies in the SIIC sector. Deferred
taxes are recognised on all timing differences between
the carrying amounts of assets and liabilities for financial
reporting purposes and their values for tax purposes, and on
tax loss carryforwards, using the liability method.
The carrying amount of deferred tax assets is reviewed
at each balance sheet date and reduced if it is no longer
probable that sufficient future taxable profits will be available
to permit utilisation of all or part of the deferred tax assets.
Deferred tax assets are reassessed at each balance sheet
date and are recognised where it is likely that future taxable
profits will allow their recovery based on a business plan for
tax purposes prepared by management and derived from the
Group’s five-year business plan.
Deferred tax assets and liabilities are measured using the
liability method at the tax rates expected to apply when the
asset will be realised or the liability settled, on the basis of
known tax rates at the balance sheet date.
Taxes on items recognised directly in equity are also
recognised in equity, not in the income statement.
Deferred tax assets and liabilities are offset when they relate
to the same tax entity and the same tax rate.
7.24. Revenue and revenue-related expenses
Income from ordinary activities is recognised when it is
probable that future economic benefits will flow to the Group
and the amounts of income can be reliably measured.
a) Net rental income
Net rental income is rental revenues and other net rental
income less land expenses, non-recovered service charges
and management fees.
Rental revenues include gross rent payments, including the
effects of spreading stepped rents over the non-cancellable
lease term, rent holidays and other benefits granted by
contract to the lessee by the lessor.
Other net rental income includes revenues and expenses
recognised on initial lease payments received, termination
fees received and early termination fees paid to tenants.
Termination fees are charged to tenants when they terminate
the lease before the end of the contract term. They are
recognised in income when charged. Termination fees paid
to tenants in return for vacating the premises before term
are expensed where it is not possible to demonstrate that
enhancement of the rental profitability of the property is
attributable to the tenants’ removal.
Land expenses correspond to amounts paid for fees and on
very long-term land leases and construction leases, both of
which are treated as operating leases.
Non-recovered service charges correspond to charges that
are normally passed on to tenants (building maintenance
expenses, local taxes, etc.) but are borne by the owner
because of caps on rebilling or because some rental
premises are vacant.
Management fees include all other expenses associated with
the rental business: rental management fees, letting fees
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