A N N U A L R E P O R T - Bouygues

RISKS
Telecommunications regulations
evolve every year. Recent changes
are described in the section of this
report describing Bouygues Telecom’s
activity in 2005.
To access certain contracts, especially
for infrastructure, a construction firm
must be approved on the basis of its
expertise and sound financial health.
Bouygues Construction believes that
it has the necessary approvals, or
fulfils all the criteria needed to obtain
is subject to the regulations issued
by the governments and public
authorities of the countries in which
it operates. For example, a set of
administrative authorisations must be
obtained for each site before work
begins. Failure to obtain these authorisations
could result in the start of
work being delayed, which could lead
to penalties at the end of the project if
the delay is not made up. Penalties are
generally limited by contract.
1992). There is a risk that the start of
work will be postponed due to the time
taken to obtain these authorisations
and the need to wait for the results of
public enquiries. It is generally up to
local authorities to fulfil these obligations,
but in concession contracts the
duty falls to the concession-holder.
Bouygues Construction makes a constant
effort to keep up with the often
rapid changes in the regulations.
However, the relatively short cycle
of the construction business and the
comparatively low level of investment
in the sector help to reduce the risk
arising from regulatory change.
them, to secure its development in
countries and markets identified as
strategic.
For housing and infrastructure works
and services, Bouygues Construction
Infrastructure projects in France are
subject to public utility declarations
and environmental protection authorisations,
such as those provided for
in the Water Act (Act 92-3 of 3 January
Bouygues Construction’s infrastructure
concession activities share a characteristic
common to all activities
contracted out by governments or
local authorities, insofar as publicsector
clients can exercise their public
powers to modify or cancel contracts,
although in such cases the contractor
is entitled to compensation.
The African companies transferred
to Finagestion under the agreements
relating to the disposal of Saur are
exposed to this risk.
Bouygues Immobilier’s property
development activities are subject to
authorisations that may give rise to
many third party claims, which can
cause delays and difficulties in starting
operations. Bouygues Immobilier
is exposed to the risk of appeals
against the administrative authorisa-
tions, such as construction permits,
that it needs for its property development
projects. The risk is especially
high in densely populated urban
areas. The company forestalls the risk
by not signing any promises to buy
land until all time limits for appeals
have expired.
Any change, abolition or restriction
on tax incentives for investment in
new rental housing causes a change in
investor behaviour, inducing property
sales. Bouygues Immobilier limits the
impact of this risk on its business by
ensuring that its property and customer
portfolio does not become unduly
unbalanced.
EXCEPTIONAL EVENTS
- LEGAL DISPUTES
Group companies are involved in
various lawsuits and disputes in the
normal course of their business. Risks
have been assessed on the basis
of past experience and analysis by
the Group’s legal departments and
counsel. To the company’s knowledge,
there is no exceptional event or lawsuit
that may substantially affect the
activities, assets, results or financial
situation of the Group as a whole.
Lawsuits are reviewed regularly, especially
when new facts arise. Provisions
seem appropriate with regard to these
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