Compagnies des Alpes // 2019 Universal Registration Document

2 RISK FACTORS Strategic risks

2.2.2 RISKS LINKED TO THE REAL ESTATE MARKET Many French winter sports resorts are seeing a part of their rental property downgraded, and some professional accommodations transferred to general use, which can a ff ect occupancy and thus Group revenue fi gures. Compagnie des Alpes intends to fi nd solutions to solve this problem. As a consequence, it partnered with a group of institutional investors to set up a mechanism for acquiring and marketing of these so-called “cold beds”. This project, initiated by “Foncière Rénovation Montagne”, allows the acquisition, renovation, upgrade and marketing of accommodation units. It has been deployed in 5 resorts located in a ski area managed by the Group.

The latest grooming techniques also help to maximise the duration of the snow cover on the slopes while reducing the number of grooming operations required. Visitor numbers at open-air Leisure parks can be a ff ected by rainfall and severe heat waves. The Group reduces this risk through an adapted business policy (pre-sales for speci fi ed dates, for example) and by increasing the number of covered attractions. While the possibility of intense continuous rainfall having a lasting e ff ect on main park visitor numbers during the summer peak cannot be ruled out, such conditions remain rare. To improve visitor comfort, the Group has stepped up the installation of mist sprayers and sun shelters. The Group’s diverse range of activity, both in terms of its business lines, geographic locations, and multi-seasonal operations reduces the impact of this weather-related risk. Whenever possible, the Group favours real estate operations with long-term leases and high-performance managers o ff ering highly attractive products, thus spurring development projects with a positive impact on the ski Areas it operates. Transactions on the real estate market are only carried out if there is a direct link to the operation of the sites on which the Group conducts its principal business activities. Consequently, Compagnie des Alpes is exposed to the risk of a possible downturn in the real estate market. However, since most of the land rights in which it had invested have been sold, its exposure so far remains limited. Furthermore, Compagnie des Alpes is developing a network of real estate agencies with 13 companies and 28 o ffi ces managing a total of 11,000 beds.

Compagnie des Alpes is thus contributing to re-marketing of accommodation units previously occupied very few days a year, with a total renovation investment of €11 million.

2.2.3 RISKS LINKED TO THE IMPACTS OF CLIMATE CHANGE Ongoing shortage of snow throughout a season cannot be totally ruled out and constitutes the risk which ski area operators are most aware of.

All climate models forecast a gradual increase in average air temperatures worldwide in the 21 st century. Concerning future snow levels, there could be good winters, along with normal winters and low-snowfall winters. However, Compagnie des Alpes has acknowledged this risk through its choice of sites, which are located at high altitudes to enjoy favourable long-term snow conditions. Moreover, our snow-making and snow-quality programmes strengthen this strategy and increase the resilience of our economic model. The Group’s resorts actively participate in e ff orts to limit greenhouse gas emissions. Measures are taken to reduce the pollutant emissions of grooming machines (of which the latest models reduce fuel consumption), as well as optimise cable ski lifts and collective transport to the resorts, etc.

2.2.4 RISKS LINKED TO THE COMPETITIVE ENVIRONMENT Given the sti f f competition in leisure activities, the Group must constantly improve its o ff ering and enhance the customer experience, while investing in new attractions and in the renovation of ski lifts to ensure both comfort and safety. The Group has also undertaken to optimise its resources, particularly through yield management. Our new digital strategy, which involves extensive knowledge of our customers, is instrumental in improving our customers’ satisfaction and securing their loyalty.

This drive to provide Very High Satisfaction to our customers – which has been one of our core concerns for a number of years – enables us to constantly improve our competitiveness and thus raise the positioning of the Group’s sites in relation to competitors. Moreover, Compagnie des Alpes tracks the positioning of its competitors in each of its strategic activities and geographical areas.

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Compagnie des Alpes I 2019 Universal registration document