2008 Financial Vinci Construction

8/3/2019 2008 Financial Vinci Construction

1/42

2008 Financial report


2/42

VINCI Construction 2008 Financial report 2

Assets

(in thousands) Nt Gr

2008

Amrt. Dp'nand Prv. Nt

2007

Nt

Nn-currnt at

Intangible assets 1 104,590 59,185 45,405 19,207

Goodwill 2 620,598 13,397 607,201 544,042

Concession intangible assets 3 11,286 5,453 5,833 3,869

Property, plant and equipment 4 3,356,250 1,891,482 1,464,768 1,322,184

Investment property 5 13,145 7,082 6,063 14,751

Investments in associates 6 20,794 23 20,771 24,206

Other non-current nancial assets 7-14 165,717 36,666 129, 051 70,071

Non-current deerred tax assets 19 97,690 97,690 57,229

Tta nn-currnt at 4,390,070 2,013,288 2,376,782 2,055,559

Currnt at

Inventories and work in progress 8-10 417,867 29,703 388,164 289,606

Trade and other operating receivables 10 6,689,898 238,567 6,451,331 6,064,760

Other current assets 10 246,664 2,333 244,331 211,893

Current tax assets 10 59,996 59,996 24,076

Current deerred tax assets 19 118,391 118,391 98,272

Current nancial assets 14 20,217 20,217 10,175

Cash management nancial assets 9-14 1,763,346 1,763,346 1,144,296

Cash and cash equivalents 9-14 1,219,486 1,219,486 1,384,571

Tta currnt at 10,535,865 270,603 10,265,262 9,227,649

ToTAl AsseTs 14,925,935 2,283,891 12,642,044 11,283,208

Consolidated IFRS

balance sheet at31 December 2008


3/42


Equity and liabilities(in thousands) Nt 2008 2007

equity

Share capital 148,806 148,806

Share premium 54,333 54,333

Consolidated reserves 519,612 454,237

Net prot or the period 488,456 411,217

Interim dividend (163,129) (111,605)

equity attributab t quity hdr th parnt 1,048,078 956,988

Minority interest 204,200 181,056

Tta quity 1,252,278 1,138,044

Nn-currnt iabiiti

Retirement and other employee benet obligations 11 139,675 132, 696

Non-current provisions 12 63,607 53,619

Participating loans and bonds 14 147

Other loans and borrowings 14 500,717 428,756

Other non-current liabilities 62,617 35,429

Non-current deerred tax liabilities 19 56,035 18,339

Tta nn-currnt iabiiti 822,651 668,986

Currnt iabiiti

Current provisions 12 1,203,870 1,026,579

Trade payables 10 4,353,489 3,956,214

Other current payables 10-13 4,293,431 3,753,317

Current tax payables 10 137,727 112,401

Current deerred tax liabilities 19 17,374 18,252

Current borrowings 14 561,224 609,415

Tta currnt iabiiti 10,567,115 9,476,178

ToTAl eQUITY AND lIABIlITIes 12,642,044 11,283,208

Consolidated IFRS

balance sheet at31 December 2008


4/42


For the period from 1 January 2008 to 31 December 2008(in thousands) Nt 2008 2007

Rvnu 15 14,819,604 13,027,231

Revenue rom ancillary activities 16 116,122 122,574

oprating incm 14,935,726 13,149,805

Purchases consumed (3,665,984) (3,092,007)

Subcontracting and other external expenses (6,950,246) (6,392,371)

Employment costs (2,906,181) (2,486,601)

Taxes and levies (139,542) (131,547)

Other operating income and expense 13,977 35,257

Net amortisation, depreciation and provisions (561,457) (437,714)

oprating prt rm rdinary activiti 16 726,293 644,822

(% o revenue) 4.90% 4.95%

Share-based payment expense 17 (41,231) (41,293)

Goodwill impairment expense (582) (68)

Share o prot / (loss) o associates 2,807 4,486

oprating prt 687,287 607,947

(% o revenue) 4.64% 4.67%

Cost o gross nancial debt (50,804) (36,901)

Financial income rom cash management investments 91,523 73,575

Ct nt nancia dbt 40,719 36,674

Other nancial income 18 117,547 61,889

Other nancial expenses 18 (89,318) (41,210)

Income tax expense 19 (227,585) (219,725)

Nt prt r th prid 528,650 445,575Minority interest 40,194 34,358

Nt prt attributab t quity hdr th parnt 488,456 411,217

(% o revenue) 3.30% 3.16%

Number o shares 18,600,811 18,600,811

earning pr har (in ur) 26.26 22.11

Consolidated IFRS

income statement


5/42


(in thousands) 31/12/2008 31/12/2007

Net prot or the period (including minority interest) 528,650 445,576

Depreciation and amortisation 335,222 280,123

Net increase / (decrease) in provisions 43,323 15,670

Share-based payments (IFRS 2) (17,819) 4,060

Gain / (loss) on disposals (58,077) (36,020)

Change in air value o oreign currency derivative nancial instruments (1,462) (5,669)

Share o prot / (loss) o associates and dividends received rom unconsolidated entities (4,911) (6,810)

Capitalised borrowing costs 32 12

Cost o net nancial debt (40,719) (36,674)

Current and deerred tax expenses 227,585 219,725

Cah w (ud in) / rm pratin br tax and nancing ct 1,011,824 879,993

Changes in working capital requirement and current provisions 535,098 521,255

Income taxes paid (208,878) (179,829)

Net interest payments 43,459 34,689

Nt cah w (ud in) / rm prating activiti 1,381,503 1,256,108

Purchases o property, plant and equipment, and intangible assets (523,708) (445,295)

Proceeds rom sales o property, plant and equipment, and intangible assets 38,284 59,240

Purchases o non-current nancial assets (147,500) (591,397)Proceeds rom disposal o non-current nancial assets 48,907 33,154

Net eect o changes in scope o consolidation 70,619 181,404

Change in nancial receivables on PPPs and concession contracts (36,702) (3,593)

Dividends received rom associates and unconsolidated entities 4,112 4,237

Other 6,792 408

Nt cah w (ud in) / rm invting activiti (539,196) (761,842)

Minority interest in share capital increases o subsidiaries 988 2,031

Dividends paid by VINCI Construction (315,098) (211,118)

Dividends paid to minority shareholders (10,641) (6,848)

Proceeds rom new long-term borrowings 74,492 223,833

Repayments o borrowings (14,957) (192,533)

Changes in cash management assets and current borrowings (586,364) 96,456Nt cah w (ud in) / rm nancia activiti (851,580) (88,179)

Chang in nt cah (9,273) 406,087

Net cash and cash equivalents at beginning o period 957,786 576,421

Other changes (58,022) (24,722)

Nt cah and cah quivant at nd prid 890,491 957,786

Net cash and cash equivalents at end o period 890,491 957,786

Cash management fnancial assets 1,763,346 1,144,296

Loans and collateralised receivables and other fnancial assets 894 904

Non-current fnancial debt (475,259) (426,809)

Other current fnancial debt (excluding bank overdrats) (221,835) (182,093)

Fair value o derivatives, net (19,605) 2,294

Net fnancial surplus at end o period 1,938,032 1,496,378

Consolidated IFRS

cash flow statement


6/42


(in thousands)shar

capitashar

prmium

Cni-datd

rrv

Currncytranatin

rrv

Nt pritr

th prid

Ntincmrcg-

niddircty in

quity

Attributabt quity-hdr th parnt

Minrityintrt Tta

At 31 Dcmbr 2006 148,806 54,333 260,714 4,113 351,697 166 819,829 148,100 967,929

Allocation o net incomeor previous period

351,697 (351,697)

Dividends paid (99,513) (99,513) (6,848) (106,361)

Interim dividend (111,605) (111,605) (111,605)

Net prot or the period 411,217 411,217 34,358 445,575

Financial instruments:changes in air value

559 559 190 749

Share-based payments (IFRS2) 3,872 3,872 3,872

Currency translation dierences (3,081) (24,363) (27,444) (1,310) (28,754)

Eect o acquisitions o non-controllinginterests ater acquisition o control

(40,706) (40,706) (40,706)

Changes in consolidation scopeand miscellaneous (512) 1,291 779 6,566 7,345

At 31 Dcmbr 2007 148,806 54,333 360,866 (20,250) 411,217 2,016 956,988 181,056 1,138,044

Allocation o net incomeor previous period

411,217 (411,217)

Dividends paid (151,969) (151,969) (10,641) (162,610)

Interim dividend (163,129) (163,129) (163,129)

Net prot or the period 488,456 488,456 40,194 528,650

Financial instruments:changes in air value

288 288 (6,991) (6,703)

Share-based payments (IFRS2) 4,846 4,846 4,846

Currency translation dierences 4 (86,154) (86,150) (1,531) (87,681)Changes in consolidation scopeand miscellaneous

(2,627) 1,310 65 (1,252) 2,113 861

At 31 Dcmbr 2008 148,806 54,333 459,208 (105,094) 488,456 2,369 1,048,078 204,200 1,252,278

Statement of changes in

consolidated equity


7/42

VINCI Construction 2008 Financial reportNotes to the consolidated inancial statements 7

Contents

A. Accounting policiesand measurement methods 81. Gnra princip 8

2. Cnidatin mthd 9

3. Maurmnt ru and mthd 11

B. Business combinations 20Acquiitin Tayr Wdrw Cntructin 20

C. Notes to the balance sheetand income statement 211. Intangib at 21

2. Gdwi 21

3. Cncin intangib at 22

4. Prprty, pant and quipmnt 22

5. Invtmnt prprty 23

6. Invtmnt in aciat 247. othr nn-currnt inancia at 24

8. Invntri and wrk-in-prgr 24

9. Cah managmnt inancia at, cah and cah quivant 25

10. Wrking capita rquirmnt 25

11. Rtirmnt and thr mpy bnit bigatin 26

12. Prviin 27

13. othr currnt payab 28

14. Nt inancia urpu and inancing rurc 28

15. Rvnu 30

16. oprating prit 31

17. shar-bad paymnt 31

18. othr inancia incm and xpn 3219. Anayi nt tax xpn 33

20. Cntructin cntract 33

21. Tranactin with ratd parti 34

22. Cntractua bigatin and thr cmmitmnt mad and rcivd 35

23. empy and ta training right 35

24. Diput and arbitratin 36

25. lit th main cnidatd cmpani 37

Rprt th statutry Auditr 41


8/42


Notes to the

consolidated financialstatementsat 31 December 2008

A. Accounting policies and measurement methods1. General principlesIn application o Regulation (EC) no. 1606/2002 o 19 July 2002, the Groups consolidated inancial statements or the year ended 31 December 2008have been prepared under the International Financial Reporting Standards (IFRS) as endorsed by the European Union at that date.

The accounting policies applied by the Group at 31 December 2008 are identical to those used to prepare the consolidated inancial statements at

31 December 2007, except or: the Standards and Interpretations adopted by the European Union, applicable as rom 1 January 2008 (see Note A.1.1. New Standards andInterpretations applicable rom 1 January 2008); the change o accounting policy relating to the early application o Interpretation IFRIC 12 (see Note A.1.2. Change o accounting policy: IFRIC 12Service Concession Arrangements);

1.1. New Standards and Interpretations applicable rom 1 January 2008

1.1.1. IFRIC 11 Group and Treasury Share TransactionsThis Interpretation describes how share-based payments (under IFRS 2) by Group subsidiaries should be accounted or whenever these payments aremade by means o equity instruments o the parent.

VINCI Constructions accounting policies already complied with this Interpretation.

1.1.2. IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their InteractionThis Interpretation sets out the conditions i.e. reunds or reductions in uture contributions enabling the entity in question to recognise a receivablewhen a inancial asset or pension und is in surplus. Moreover, the existence o a minimum unding requirement may restrict the amount o the receivablerecognised or require the recognition o an additional liability.

The application o this Interpretation has had no material impact on the Groups consolidated inancial statements at 31 December 2008.


9/42


1.1.3. IAS 39 & IFRS 7: Reclassification of Financial Assets Amendment published on 27 November 2008The Amendments to IAS 39 and IFRS 7 allow entities, in rare circumstances, to reclassiy certain inancial instruments originally held or trading to otherasset categories. The current inancial crisis is considered as a rare circumstance o a nature such as to justiy the use o this option by entities.

This Amendment has not been applied to the consolidated inancial statements at 31 December 2008.

1.2. Change o accounting policy: IFRIC 12 Service Concession ArrangementsInterpretation IFRIC 12, published in November 2006, was adopted by the Accounting Regulatory Committee (ARC) on 6 November 2008 and shouldbe ratiied by the European Commission in the irst quarter o 2009. VINCI Construction has elected to apply its principles as rom the 2008 balancesheet date as it considers that this Interpretation enables better inancial inormation to be given.

1.2.1. Accounting treatment of concession agreements under IFRIC 12 The application scope o IFRIC 12 covers public service concession contracts in which the concession grantor is considered to exercise control overthe assets operated. The concession grantor is considered to control the asset i: the grantor controls or regulates what services the operator must provide with the inrastructure, to whom it must provide them, and what and howthe operator will be paid; and

the grantor controls the residual interest in the inrastructure at the end o the arrangement.Under the terms o this Interpretation, the operator has a twoold activity: a construction activity in respect o its obligations to design, build and inance an asset that it makes available to the grantor: revenue is recognisedon a stage o completion basis in accordance with IAS 11; an operating and maintenance activity in respect o the assets under the concession: revenue is recognised in accordance with IAS 18.

The operator receives payment in return or its activities. The inancial asset model applies i the operator is paid a consideration by the grantor. The operator has an unconditional contractual right to receivepayments rom the grantor, irrespective o the use o the inrastructure by customers.Under this model, the operator recognises an interest-bearing inancial asset in its balance sheet in consideration or the services it provides (designing,building, operation or maintenance). These inancial assets are recognised in the balance sheet under Loans and receivables or the amount o theair value o the inrastructure at initial recognition and subsequently at amortised cost. It is settled by means o the grantors payments received. Theinancial income calculated on the basis o the eective interest rate, equivalent to the projects internal rate o return, is recognised under operatingincome. This model applies to all o the Groups PPP (Public Private Partnership) contracts.

An intangible asset model is also available and applies whenever an operator has a right to receive tolls (or other payments) rom users in considerationor the inancing and construction o the inrastructure. This treatment does not apply to the Group.

Under the mixed model, whenever only part o the investment is covered by an unconditional right to receive payments rom the grantor, it is recognisedas a inancial receivable up to the amount guaranteed by the grantor. The unguaranteed balance, o which the amount is dependent on the extent ouse o the inrastructure, is recognised as an intangible asset.

The accounting consequences o application o IFRIC 12 have had no material eect on the Groups consolidated inancial statements.

2. Consolidation methods

2.1. Consolidation scopeCompanies over which VINCI Construction exercises majority control are ully consolidated. Companies that are less than 50% owned but in which

VINCI Construction exercises de acto control are consolidated using this same method. This relates in particular to CFE, o which VINCI Constructionowns 46.84%.

Companies over which VINCI Construction exercises signiicant inluence are accounted or using the equity method.The proportionate method is used to consolidate companies in which the Group exercises joint control and joint venture agreements in which theGroups share o the revenue and balance sheet are material or the Group.

The consolidated inancial statements include the inancial statements o all companies with revenue o over 2 million, and o subsidiaries whoserevenue is below this igure but whose impact on the Groups inancial statements is material.

Joint venture agreements created or speciic construction projects and that manage revenue o over 45 million (on a 100% basis) are consolidatedproportionately.The other joint venture agreements are consolidated by booking in the income statement the Groups share o revenue and expenses while keepingassociates current accounts in the balance sheet.


10/42


Number o companies by reporting method:

31 Dcmbr 2008 31 Dcmbr 2007

Tta France Foreign Tta France Foreign

Full consolidation 640 325 315 609 307 302

Proportionate consolidation 259 66 193 241 58 183

Equity method 49 20 29 42 16 26

Tta 948 411 537 892 381 511

The main change during the year related to the acquisition o the UK company Taylor Woodrow Construction, reerred to in Note B.

2.2. Intragroup transactions

Reciprocal operations and transactions relating to assets and liabilities, income and expenses between consolidated or equity-accounted companiesare, in general, eliminated in the consolidated inancial statements. This is done: or the ull amount i the transaction is between two ully consolidated entities; applying the percentage o proportionate consolidation o an entity i the transaction is between a ully consolidated entity and a proportionatelyconsolidated entity; applying the percentage owned o an equity-accounted entity in the case o internal proits or losses realised between a ully consolidated entityand an equity-accounted entity.

2.3. Translation o the inancial statements o oreign subsidiaries and establishmentsIn most cases, the unctional currency o oreign entities and establishments is their local currency.

The inancial statements o oreign entities whose unctional currency is dierent rom that used in preparing the Groups consolidated inancialstatements are translated at the closing rate. Balance sheet items are translated at the exchange rate on the balance sheet date and income statement

items are translated at the average rate or the period. Any resulting translation dierences are recognised under translation di erences in consolidatedreserves. Goodwill relating to oreign entities is considered as comprising part o the assets and liabilities acquired and is thereore translated at theexchange rate in orce on the balance sheet date.

2.4. Foreign currency transactionsTransactions in oreign currency are translated into euros at the exchange rate on the transaction date. At the balance sheet date, trade receivables andpayables expressed in oreign currencies are translated at the closing rate. Resulting exchange gains and losses are recognised under oreign exchangegains and losses and are shown under other inancial income and expenses in the income statement.

Foreign exchange gains and losses arising on loans denominated in oreign currency or on oreign currency derivatives used to inance or hedgeinvestments in oreign subsidiaries are recorded under currency translation dierences in equity.

2.5. Business combinationsThe Group applies the so-called purchase method or business combinations made as rom 1 January 2004. In application o this method, the Grouprecognises the identiiable assets, liabilities and contingent liabilities at air value at the dates when control was acquired. The cost o a businesscombination is the air value, at the date o exchange, o the assets given, liabilities incurred, and/or equity instruments issued by the acquirer in exchangeor control o the acquiree, plus any costs directly attributable to the acquisition. When an agreement provides or an adjustment to the purchase pricecontingent on uture events, the Group includes the amount o that adjustment in the purchase cost o the target entity at the acquisition date i theadjustment is probable and can be measured reliably.

The cost o acquisition is allocated by recognising the identiiable assets, liabilities and contingent liabilities o the acquiree at air value on that date,except or assets or asset groups classiied as held or sale under IFRS 5, which are recognised at air value less costs to sell. The positive dierencebetween the cost o acquisition, as deined above, and the Groups interest in the air value o the identiiable assets, liabilities and contingent liabilitiesis recognised as goodwill.

The Group has twelve months rom the date o acquisition to inalise the accounting or business combinations.


11/42


2.6. Transactions between shareholders, acquisitions and disposals o non-controlling interests ateracquisition o controlAcquisitions or disposals o non-controlling interests, with no change o control, are considered as equity transactions with the Groups shareholders.Under this approach, the dierence between the consideration paid to increase the percentage shareholding in the entities that are already controlledand the supplementary share o the equity thus acquired is recorded under consolidated equity. Similarly, a decrease in the Groups percentage holdingin an entity that continues to be controlled is booked in the accounts through equity, with no impact on proit or loss.

3. Measurement rules and methods

3.1. Use o estimatesThe preparation o inancial statements under the IFRSs requires estimates to be used and assumptions to be made that aect the amounts shown inthese inancial statements.These estimates assume the operation is a going concern and are made on the basis o the inormation available at the time. Estimates may be revisedi the circumstances on which they were based change or i new inormation becomes available. Actual results may dier rom these estimates.

3.1.1. Measurement of construction contract profit or loss using the stage of completion methodThe Group uses the stage o completion method to recognise revenue and proit or loss on construction contracts, applying the general revenuerecognition rules on the basis o the percentage o completion.The percentage o completion and the revenue to recognise are determined on the basis o a large number o estimates based on monitoring o thework perormed and using the beneit o experience to take account o unoreseen circumstances. In consequence, adjustments may be made to initialestimates throughout the contract and may have material eects on uture results.

3.1.2. Values used in impairment testsThe assumptions and estimates made to determine the recoverable amount o goodwill, intangible assets and property, plant and equipment, relatein particular to the assessment o market prospects needed to estimate the cash lows and discount rates adopted. Any change in these assumptionscould have a material eect on the recoverable amount and could entail a change in the impairment losses to recognise.The main assumptions used by the Group are described in Note A.3.11. Goodwill.

3.1.3. Measurement of share-based payment expenses under IFRS 2

The Group recognises a share-based payment expense relating to the granting to its employees o share options (oers to subscribe to or purchaseshares), perormance share plans and shares under the Group Savings Scheme. This expense is measured on the basis o actuarial calculations usingestimated behavioural assumptions based on observation o past behaviour.

3.1.4. Measurement of retirement benefit obligationsThe Group is involved in deined contribution and deined beneit retirement plans. Its obligations in connection with these plans are measured actuariallybased on assumptions such as the discount rate, the return on the investments dedicated to these plans, uture increases in wages and salaries, employeeturnover, mortality rates and the rate o increase o health expenses. These assumptions are generally updated annually. Details o the assumptionsused and how they are determined are given in Note C.11. Retirement and other employee beneit obligations.The Group considers that the actuarial assumptions used are appropriate and justiied in the current conditions. Obligations may, however, change inthe event o changes in assumptions.

3.1.5. Measurement of provisionsThe actors that materially inluence the amount o provisions relate to:

the estimates made on a statistical basis rom expenses incurred in previous years, or ater-sales service provisions; the estimates o orecast proit or loss on construction contracts, which serve as a basis or the determination o losses on completion.

3.1.6. Measurement of financial instruments at fair value.Whenever inancial instruments are not listed on a market, the air value is determined using measurement models based on assumptions that givepreerence to the use o observable inputs.


12/42


3.2. RevenueConsolidated revenue is recognised in accordance with IAS 11 as described below. The total includes the revenue, ater elimination o intragrouptransactions, o: ully consolidated companies; jointly controlled companies, which are consolidated proportionately on the basis o the Groups share in the company; and joint venture partnerships, based on the Groups share in the entity.

It includes any revenue recognised in respect o construction work carried out by non-Group enterprises on assets covered by PPP contracts, or whichthe consideration received is shown in the balance sheet under inancial receivables.

The method or recognising revenue in respect o construction contracts is explained in Note A.3.4. Construction contracts below.

3.3. Revenue rom ancillary activitiesRevenue rom ancillary activities is recognised in accordance with IAS 18 and comprises rental income, sales o equipment, materials and goods, study

work and ees other than those recognised by concession operating companies.

3.4. Construction contractsThe Group recognises construction contract income and expenses using the stage o completion method deined by IAS 11. For the Group, the stageo completion is usually determined on a physical basis.

I the estimate o the outcome o a contract indicates a loss on completion, a provision is made or the loss on completion regardless o the stage ocompletion, based on the best estimates o income, including, i need be, any rights to additional revenue or claims i these are probable and can bereliably estimated. Provisions or losses on completion are classiied under liabilities.

Part payments received under construction contracts beore the corresponding work has been carried out are recognised under liabilities underadvances and payments on account received.

3.5. Share-based paymentsThe measurement and recognition methods or share subscription and purchase plans, the Plans dEpargne Groupe (Group Savings Schemes) andperormance share plans, are deined by IFRS 2 Share-based Payment. The granting o share options, VINCI perormance shares and oers to subscribeto the VINCI Group Savings Scheme represent a beneit granted to their beneiciaries and thereore constitute supplementary remuneration borne byVINCI Construction. Because such transactions do not give rise to monetary transactions, the beneits granted in this way are recognised as expenses inthe period in which the rights are acquired, with a corresponding increase in equity. Beneits are measured on the basis o the air value at the grant dateo the equity instruments granted. The Monte Carlo binomial model is considered to be the most reliable and long-lasting method or measuring thisair value insoar as it allows a greater number o scenarios to be modelled, by including in particular the valuation o assumptions about beneiciariesbehaviour on the basis o observation o historical data.

3.5.1. Share subscription or purchase option plansPerormance shares subject to vesting conditions have been granted to Group employees and Company oicers in prior years. Options to subscribeto or purchase VINCI shares are granted to Group employees and Company oicers. The air value o these options granted is determined at the grant

date using a Monte Carlo binomial valuation model. The number o options measured is adjusted or the probability that the vesting conditions or theexercise o the option will not be satisied.

3.5.2. Performance share plansThese concern plans under which the inal vesting o the perormance shares is dependent on the realisation o conditions relating to marketperormance and inancial criteria. As such, the air value o the VINCI perormance shares has been estimated at the grant date using a Monte Carlosimulation model in order to incorporate the impact o the market perormance condition (i.e. the risk-ree rate) as recommended by IFRS 2.The number o perormance shares measured at air value in the calculation o the IFRS 2 expense is then adjusted at each balance sheet date or theimpact o the change in the likelihood o the inancial criteria being met.


13/42


3.5.3. Group Savings SchemeUnder the Group Savings Scheme, VINCI issues new shares reserved or its employees in France three times a year at a subscription price that includesa discount o 10% against the average stock market price o the VINCI share during the 20 business days preceding the authorisation by the Board o

Directors. This discount is considered as a beneit granted to the employees; its air value is determined using a Monte Carlo binomial valuation modelat the date on which the subscription price is announced to the employees. As certain restrictions apply to the shares acquired by VINCI Constructionemployees under these plans regarding their sale or transer, the air value o the beneit to the employee takes account o the act that the sharesacquired cannot be reely disposed o or ive years, other than in certain speciic cases.

In 2007, VINCI carried out a leveraged employee shareholding transaction, called Castor Avantage, or the employees o its French subsidiaries. Theexpense related to leveraged plans is measured at grant date in accordance with IFRS 2, on the basis o the plan units granted by VINCI to VINCIConstructions employees.

The Group recognises the beneits granted in this way to its employees as an expense over the vesting period, with a corresponding increase inconsolidated equity.Beneits granted under share option plans, perormance share plans and the Group Savings Scheme are implemented as decided by VINCIs Board oDirectors and approved by the Shareholders General Meeting, and are not, in general, systematically renewed. As their measurement is not directly linkedto business lines operations, the Group has considered it appropriate not to include this expense in the operating proit rom ordinary activities, which is

an indicator o the business lines perormance, but to report it on a separate line, labelled Share-based payment expense (IFRS 2), in operating proit.

3.6. Cost o net inancial debtThe cost o net inancial debt includes: the cost o gross inancial debt, which includes the interest expense calculated at the eective interest rate, gains and losses on interest-rate derivativesallocated to gross inancial debt, whether they are designated as hedges or accounting purposes or not; the line item financial income from cash management investments, which comprises the return on investments o cash and cash equivalents. Investmentso cash and cash equivalents are measured at air value through proit or loss.

3.7. Other inancial income and expensesOther inancial income and expenses mainly comprises oreign exchange gains and losses, the eects o discounting to present value, dividends receivedrom unconsolidated entities, capitalised borrowing costs and changes in the value o derivatives not allocated to interest rate risk management.

3.8. Income taxIncome tax is computed in accordance with the tax legislation in orce in the countries where the income is taxable.

In accordance with IAS 12, deerred tax is recognised on the temporary dierences between the carrying amount and the tax base o assets andliabilities. It is calculated using the latest tax rates enacted or substantially enacted at the date o closing the accounts. The eects o a change in thetax rate rom one period to another are recognised in the income statement in the period in which the change occurs.Deerred tax relating to items recognised directly under equity, in particular share-based payment expenses (under IFRS 2), is also recognised underequity.

Whenever subsidiaries have distributable reserves, a deerred tax liability is recognised in respect o the probable distributions that will be made inthe oreseeable uture. Moreover, shareholdings in associates and joint ventures give rise to recognition o a deerred tax liability in respect o all thedierences between the carrying amount and the tax base o the shares.

Net deerred tax is determined on the basis o the tax position o each entity or group o entities included in the tax group under consideration and isshown under assets or liabilities or its net amount per taxable entity.Deerred tax is reviewed at each balance sheet date to take account in particular o the impact o changes in tax law and the prospects or recovery.Deerred tax assets are only recognised i their recovery is probable.Deerred tax assets and liabilities are not discounted.

3.9. Earnings per shareEarnings per share is the net proit ater minority interest, divided by the weighted average number o shares outstanding during the period. The Grouphas not issued any equity instruments that could have a dilutive eect.


14/42


3.10. Other intangible assetsThis mainly includes computer sotware. Purchased intangible assets are measured at cost less amortisation and cumulative impairment losses andare amortised on a straight-line basis over their useul lie.

3.11. GoodwillGoodwill is the excess o the cost o a business combination over the Groups interest in the net air value o the acquirees identiiable assets, liabilitiesand contingent liabilities at the date(s) o acquisition, recognised on irst consolidation.

Goodwill relating to ully and proportionately consolidated entities is reported under the consolidated balance sheet under Goodwill. Goodwill relatingto associates is included in the line item Investments in associates.

Goodwill is not amortised but is tested or impairment at least annually and whenever there is an indication that it may be impaired. Whenever goodwillis impaired, the dierence between the carrying amount and recoverable amount is recognised in operating proit or loss in the period and is notreversible.

Negative goodwill is recognised directly in proit or loss in the year o acquisition.

3.12. Concession intangible assetsConcession intangible assets correspond to the concession operators right to operate the asset under concession in consideration or the investmentexpenditures incurred or the design and construction o the asset. This operators right corresponds to the air value o the construction o the assetunder concession plus the borrowing costs capitalised during the construction phase. It is amortised over the term o the arrangement in a mannerthat relects the pattern in which the assets economic beneits are consumed by the entity, starting rom the date o commencement o use o theoperating right (see Note A.1.2. Change o accounting policy: IFRIC 12 Service Concession Arrangements).

3.13. Grants related to assetsGrants related to assets are presented in the balance sheet as a reduction o the amount o the asset or which they were received.

3.14. Property, plant and equipmentItems o property, plant and equipment are recorded at acquisition or production cost less cumulative depreciation and any impairment losses. Theyare not revalued.Depreciation is generally calculated on a straight-line basis over the period o use o the asset. Accelerated depreciation may however be used whenit appears more appropriate to the conditions under which the asset is used. For certain complex assets comprising various components, in particularbuildings and constructions, each component o the asset is depreciated over its own period o use.

The main periods o use o the various categories o items o property, plant and equipment are as ollows:

Buildings: Structure between 20 and 40 years General technical installations between 5 and 20 yearsSite equipment and technical installations between 3 and 10 yearsVehicles between 3 and 5 years

Fixtures and ittings between 5 and 10 yearsOice urniture and equipment between 3 and 10 years

Depreciation commences as rom the date when the asset is ready to enter service.

3.15. Finance leasesAssets acquired under inance leases are recognised as non-current assets, whenever the eect o the lease is to transer to the Group substantially allthe risks and rewards incidental to ownership o these assets, with recognition o a corresponding inancial liability. Assets held under inance leasesare depreciated over their period o use.


15/42


3.16. Investment propertyInvestment property is property held to earn rental or or capital appreciation. Such property is shown on a separate line in the balance sheet.Investment property is recorded at its acquisition cost less cumulative depreciation and any impairment losses, in the same way as items o property,

plant and equipment.

3.17. Impairment o non-inancial non-current assetsUnder certain circumstances, impairment tests must be perormed on intangible and tangible ixed assets. For intangible assets with an indeinite useullie and goodwill, a test is perormed at least annually and whenever there is an indication o a loss o value. For other ixed assets, a test is perormedonly when there is an indication o a loss o value.Assets to be tested or impairment are grouped within cash-generating units that correspond to homogeneous groups o assets that generate identiiablecash inlows rom their use. Whenever the recoverable value o a cash-generating unit is less than its carrying amount, an impairment loss is recognisedin operating proit or loss. The recoverable amount o an asset or a cash-generating unit is the higher o its air value less costs to sell and its value in use.Value in use is the present value o the uture cash lows expected to be derived rom an asset or cash-generating unit. The discount rate is determinedor each cash-generating unit, taking account o its geographical location and the risk proile o its business.

3.18. Investments in associatesEquity-accounted investments in associates are initially recognised at cost o acquisition, including any goodwill arising. Their carrying amount is thenincreased or decreased to recognise the Groups share o the associates proits or losses ater the acquisition date. Whenever losses are greater than thevalue o the Groups net investment in the associate, these losses are not recognised unless the Group has entered into a commitment to recapitalisethe associate or made payments on its behal.I there is an indication that an investment may be impaired, its recoverable value is tested as described in Note A.3.17. Impairment o non-inancialnon-current assets.In order to present business lines operational perormance in the best way possible, the proit or loss o associates is reported on a speciic line, betweenthe lines operating proit rom ordinary activities and operating proit.

3.19. Other non-current inancial assetsOther non-current inancial assets comprise available-or-sale securities, the part at more than one year o loans and receivables measured at amortisedcost, the part at more than one year o Public Private Partnership contracts (PPP) and the air value o non-current derivative inancial instruments (assets)

(see Note A.3.27.2. Fair value o derivative instruments, (assets and liabilities)).

3.19.1. Available-for-sale securitiesAvailable-or-sale securities comprises the Groups shareholdings in unconsolidated entities.

At the balance sheet date, available-or-sale securities are measured at air value. The air value o shares in listed companies is determined on the basiso the stock market price at that balance sheet date.I the air value o unlisted securities cannot be determined reliably, they continue to be measured at their original cost, i.e. acquisition cost plustransaction costs.

Changes in air value are recognised directly in equity.

Whenever there is an objective indication that this asset is impaired, the corresponding loss is recognised in proit or loss and may not be reversed. Along-term or material decline in air value below the assets cost is an objective indication o its impairment.

The actors considered by the Group in assessing the long-lasting or material nature o a decline in air value are generally the ollowing: the impairment is long-lasting whenever the moving average over nine months o the closing stock market price is less than 20% o the cost o theinancial asset; the impairment is material whenever there is a all in the spot price o 30% compared with the cost o the security at the balance sheet date, exceptin rare, exceptional circumstances in which the Group adjusts the quoted price.


16/42


3.19.2. Loans and receivables at amortised costLoans and receivables at amortised cost mainly comprises receivables connected with shareholdings, current account advances to associates orunconsolidated entities, guarantee deposits, collateralised loans and receivables and other loans and receivables. It also includes the inancial receivables

relating to concession contracts and Public Private Partnerships whenever the concession operator has an unconditional right to receive remuneration(generally in the orm o scheduled construction payments) rom the grantor.

Upon initial recognition, these loans and receivables are measured at their air value plus directly attributable transaction costs. At each balance sheetdate, these assets are measured at amortised cost using the eective interest method. In the particular case o receivables coming under the scope oIFRIC 12, the eective interest rate used corresponds to the projects internal rate o return.

I there is an objective indication o impairment o these loans and receivables, an impairment loss is recognised at the balance sheet date. Theimpairment loss corresponding to the dierence between the carrying amount and the recoverable amount (i.e. the present value o the expected cashlows discounted using the original eective interest rate) is recognised in proit or loss. This loss may be reversed i the recoverable value increasessubsequently and i this avourable change can objectively be linked to an event arising ater recognition o the impairment loss.

3.20. Inventories and work in progress

Inventories and work in progress are recognised at acquisition cost or production cost by the entity. At each balance sheet date, they are measured atthe lower o cost and net realisable value.

3.21. Trade and other operating receivablesTrade and other operating receivables are current inancial assets initially measured at air value, which generally relects the nominal value, unless theeect o discounting is material. At each balance sheet date, receivables are measured at amortised cost less any impairment losses taking accounto any likelihood o non-recovery.

3.22. Other current inancial assetsOther current inancial assets comprises the air value o derivative inancial instruments (assets) and the part at less than one year o loans andreceivables reported under other non-current inancial assets.

3.23. Cash management inancial assetsCash management inancial assets comprises investments in monetary and bond securities, and units in UCITS, made with a short-term managementobjective, that do not satisy the IAS 7 criteria or recognition as cash (see Note A.3.24. Cash and cash equivalents). As the Group adopts air value asbeing the best relection o the perormance o these assets, they are measured and recognised at air value, and changes in air value are recognisedthrough proit or loss.

Purchases and sales o cash management inancial assets are recognised on their transaction date.Their air value is determined using commonly used valuation models or, or non-listed cash management assets, at the present value o uture cashlows. In assessing the air value o listed instruments, the Group uses the market price at the balance sheet date or the cash-in-value o UCITS.


17/42


3.24. Cash and cash equivalentsThis item comprises current accounts at banks and cash equivalents corresponding to short-term, liquid investments subject to negligible risks oluctuations o value. Cash equivalents comprise in particular monetary UCITS (in accordance with the AMF classiication), and certiicates o deposit

with maturities not exceeding three months at the origin. Bank overdrats are not included in cash and are reported under current inancial liabilities.

The Group has adopted the air value method to assess the return on its inancial instruments. Changes in air value are recognised directly in proitor loss.

3.25. Non-current provisionsNon-current provisions comprise provisions or retirement beneit obligations and other non-current provisions.

3.25.1. Provisions for retirement benefit obligationsProvisions are taken in the balance sheet or obligations connected with deined beneit retirement plans, or both current and ormer employees (peoplewith deerred rights or who have retired). These provisions are determined using the projected unit credit method on the basis o actuarial assessmentsmade at each annual balance sheet date. The actuarial assumptions used to determine the obligations vary depending on the economic conditions othe country where the plan is operated. Each plans obligations are recognised separately.

For deined beneit plans inanced under external management arrangements (i.e. pension unds or insurance policies), the surplus or shortall o theair value o the assets compared with the present value o the obligations is recognised as an asset or liability in the balance sheet, ater deduction ocumulative actuarial gains and losses and any past service cost not yet recognised in proit or loss. However, the surplus assets are only recognised inthe balance sheet i they satisy the conditions deined in IFRIC 14 (see Note A.1.1.2 IFRIC 14 The Limit on a Deined Beneit Asset, Minimum FundingRequirements and their Interaction).

Past service cost corresponds to the beneits granted either when an entity adopts a new deined beneit plan or when it changes the level o beneito an existing plan. Whenever new rights to beneit are acquired as rom the adoption o the new plan or the change o an existing plan, the past servicecost is recognised immediately in proit or loss. Conversely, whenever adoption o a new plan or a change in a plan gives rise to the acquisition o rightsater its implementation date, past service costs are recognised as an expense on a straight-line basis over the average period remaining until thecorresponding rights are ully vested.

Actuarial gains and losses result rom changes in actuarial assumptions and rom experience adjustments (the eects o dierences between the

actuarial assumptions adopted and what has actually occurred).Cumulative unrecognised actuarial gains and losses that exceed 10% o the higher o the present value o the deined beneit obligation and the airvalue o the plan assets are recognised in proit or loss or the excess portion on a straight-line basis over the average expected remaining workinglives o the employees in that plan.

For deined beneit plans, the expense recognised under operating proit or loss comprises the current service cost, the amortisation o past servicecost, the amortisation o any actuarial gains and losses and the eects o any reduction or winding up o the plan. The interest cost (cost o discounting)and the expected yield on plan assets are recognised under other inancial income and expenses.

Commitments relating to lump-sum payments on retirement or manual construction workers, which are met by contributions to an outside multi-employer insurance scheme (CNPO), are considered as being under deined contribution plans and are recognised as an expense as and whencontributions are payable.

That part o provisions or retirement beneit obligations that matures within less than one year is shown under current liabilities.


18/42


3.25.2. Other non-current provisionsThese comprise provisions or other employee beneits, measured in accordance with IAS 19, and those provisions that are not directly linked to theoperating cycle, measured in accordance with IAS 37. These are recognised whenever, at the balance sheet date, the Group has a legal or constructive

present obligation towards third parties arising rom a past event, whenever it is probable that an outlow o resources embodying economic beneitswill be required to settle this obligation whenever a reliable estimate can be made o the amount o the obligation. These provisions are measured atpresent value, corresponding to the best estimate o the outlow o resources required to settle the obligation.

Provision expenses and reversals result rom the change in these assessments at each balance sheet date.

The part at less than one year o other employee beneits is reported under other current payables. The part at less than one year o provisions notdirectly linked to the operating cycle is reported under current provisions.

3.26. Current provisionsCurrent provisions are provisions directly linked to each business lines own operating cycle, whatever the expected time o settlement o the obligation.They are recognised in accordance with IAS 37 (see above). They also include the part at less than one year o provisions not directly linked to theoperating cycle.

Provisions or ater-sales service cover Group entities commitments under statutory warranties relating to completed projects, in particular ten-yearwarranties on building projects in France. They are estimated statistically on the basis o expenses incurred in previous years or individually on the basiso speciically identiied events.

Provisions or losses on completion o contracts and construction project liabilities are made mainly when end-o-contract projections, based on the mostlikely estimated outcome, indicate a loss, and when work needs to be carried out in respect o completed projects under completion warranties.Provisions or disputes connected with operations mainly relate to disputes with customers, sub-contractors, joint contractors or suppliers.

Restructuring provisions include the cost o plans and measures or which there is a commitment whenever these have been announced beore theyear end.

Provisions or other current liabilities mainly comprise provisions or late-delivery penalties, or individual dismissals and or other risks related tooperations.

3.27. Bonds and other inancial debt (current and non-current)

3.27.1. Bond loans, other loans and borrowingsThese are recognised at amortised cost using the eective interest method. The eective interest rate is determined ater taking account o redemptionpremiums and issuance expenses. Under this method, the interest expense is measured using the amortised cost method and reported under thecost o gross inancial debt.

The beneit o a government loan at a signiicantly below-market rate o interest, which is in particular the case or project inance granted by public-sectororganisations, is treated as a government grant and recognised as a reduction o the debt and the related investments, in accordance with IAS 20.

Financial instruments that comprise both a debt component and an equity component are recognised in accordance with IAS 32. The carrying amounto the hybrid instrument is apportioned between its debt component and its equity component, the equity component being deined as the dierence

between the air value o the hybrid instrument and the air value o the debt component. The debt component corresponds to the air value o a debtwith similar characteristics but without an equity component. The value attributed to the separately recognised equity component is not altered duringthe term o the instrument. The debt component is measured using the amortised cost method over its estimated term. Issuance costs are allocatedproportionately between the debt and equity components.

The part at less than one year o borrowings is included in current borrowings.


19/42


3.27.2. Fair value of derivative financial instruments (assets and liabilities)The Group uses derivative inancial instruments to hedge its exposure to market risks (interest rates, exchange rates, equity prices). In accordance withIAS 39, all derivatives are required to be recognised in the balance sheet at their air value. I a derivative is not designated as a hedge, the change in its

air value must be recognised through proit or loss. I a derivative is designated as a hedge, recognising it as a hedging instrument allows changes inthe value o the derivative to be cancelled out in the income statement.

Derivative instruments may be designated as hedging instruments in three cases: when the instrument is a air value hedge, a cash low hedge, or ahedge o a net investment in a oreign operation: a air value hedge allows the exposure to changes in air value o a recognised asset or liability or an unrecognised irm commitment, attributable tochanges in inancial variables (interest rates, exchange rates, equity prices, raw material prices, etc.) to be hedged; a cash low hedge allows exposure to variability in cash lows associated with a recognised asset or liability or a highly probable orecast transactionto be hedged; a hedge o a net investment denominated in a oreign currency hedges the oreign exchange risk relating to the net investment in a consolidatedoreign subsidiary.

Most o the interest rate and oreign currency derivatives used by VINCI Construction are considered as trading instruments, directly allocated to thecontract in question.

The air value o derivative inancial instruments designated as hedges o which the maturity is greater than one year is reported in the balance sheetunder non-current inancial assets or other loans and non-current inancial debt. The air value o other derivative instruments not designated as hedgesand the part at less than one year o instruments designated as hedges are reported under current inancial assets or current inancial liabilities.

The market value o interest rate and oreign exchange transactions is estimated on the basis o valuations provided by bank counterparties or inancialmodels commonly used in inancial markets, using market data at the balance sheet date.

3.27.3. Put options granted to minority shareholdersPut options (options to sell) granted to the minority shareholders o certain Group subsidiaries are recognised under inancial liabilities or the presentvalue o the exercise price o the option and as a corresponding reduction o consolidated equity (minority interest and equity attributable to equityholders o the parent or the surplus, i any).

3.28. O-balance sheet commitmentsThe Groups o-balance sheet commitments are monitored through speciic annual and six-monthly reports.O-balance sheet commitments are reported in the appropriate Notes, as dictated by the activity to which they relate.


20/42


B. Business combinationsRegarding the acquisition reerred to below, the values o the identiiable assets, liabilities and contingent liabilities have been allocated on the basiso inormation available at the date o closing the accounts. The goodwill arising may be subject to adjustment in the 12 months ollowing the date oacquisition o control, depending on any changes made during this period.

Acquisition o Taylor Woodrow ConstructionVINCI PLC, a UK subsidiary o VINCI Construction, agreed in September 2008 to acquire all the shares in Taylor Woodrow Construction. Taylor WoodrowConstruction booked revenue o 688 million (864 million) and net proit o 6.2 million (7.8 million) or the twelve months o 2008. The acquiredcompany is a major operator in the United Kingdom in railway and airport civil engineering and energy inrastructure and PPPs in the health andeducation sectors.

The Group has ully consolidated the company in its consolidated inancial statements since 9 September 2008.

Determination o identiiable assets and liabilities at the date o acquisition o control

(in millions)Hitrica

vauFair-vau

adjutmntFair

vau

Nn-currnt at

Property, plant and equipment and intangible assets 11.7 26.2 37.9

Non-current nancial assets 3.7 0.2 4.0

Deerred tax assets 0.2 3.9 4.1

Tta nn-currnt at 15.7 30.3 46.0

Currnt at 209.0 (1.0) 208.0

including cash for 112.1 112.1

Nn-currnt iabiiti

Non-current nancial debt and derivatives 0.0 0.0

Other non-current liabilities 0.0 2.0 2.0

Deerred tax liabilities 0.0 0.0

Tta nn-currnt iabiiti 0.0 2.0 2.0

Currnt iabiiti

Current nancial debt and derivatives 0.0 0.0

Other current payables 251.2 2.7 253.9

Tta currnt iabiiti 251.2 2.7 253.9

Tta nt at (26.5) 24.5 (2.0)

Purcha cnidratin (100% th har) 93.2 93.2

The air value adjustments at the date o acquisition o control mainly relate to the recognition o the acquired brand name or 26.2 million andcontingent liabilities.The goodwill arising on acquisition o control o Taylor Woodrow Construction amounted to 76.4 million (95.2 million at the date o acquisition ocontrol). It has been valued by comparing the acquisition price with the corresponding share o the assets and liabilities owned, remeasured at air value.This goodwill corresponds to the supplementary uture economic beneits that VINCI Construction considers it will receive as a result o this acquisition.Allocation o the purchase consideration is not deinitive.Taylor Woodrow Constructions 2008 post-acquisition revenue and operating proit were 207 million (260 million) and 1.4 million (1.8 million)

respectively.


21/42


C. Notes to the balance sheet and income statement

1. Intangible assets (net in thousands)

31/12/2007 Incra DcraTranatin difrnc

and thr 31/12/2008

Gross 79,220 6,308 (1,413) 20,475 104,590

Amortisation and provisions (60,013) (6,212) 1,435 5,605 (59,185)

Tta nt 19,207 96 22 26,080 45,405

Intangible assets mainly comprise sotware licences and patents.

The impact o acquisitions and reversals o amortisation in connection with business combinations, and that o impairment losses and reversals, onchanges in the period is not material.

2. Goodwill (in thuand)Gr Impairmnt Nt

Goodwill at start o the period 558,002 (13,960) 544,042

Goodwill recognised during the period 154,233 154,233

Amortisation and provisions (834) (834)

Translation dierences and others (91,637) 1 397 (90,240)Tta 620,598 (13,397) 607,201

Th main itm gdwi at nt vau at th baanc ht dat wr a w: Nt

Soltanche Bachy 178,927

Nuvia 119,212

Taylor Woodrow Construction 80,249

Sogea Holdings UK 53,618

VINCI PLC 15,835

Fiehead Ltd (Stradorm) 14,396VMA 11,115

Energilec 8,920Reco Holdings Inc. 8,707Geopac 7,314


22/42


Impairment tests on goodwill and other non-nancial assets (in millions)

In accordance with IAS 36 Impairment o Assets, goodwill and other non-nancial assets have been tested or impairment at 31 December 2008.

The value in use o cash-generating units is determined on the basis o activity and country, by discounting the orecasted operating cash ows be-ore tax (operating prot plus depreciation and amortisation plus non-current provisions less operating investments less change in operating WCR),at the rates below.

Forecasted cash ows are generally determined on the basis o the latest three-year plans available. For periods beyond the three-year period, cashows are extrapolated until the th year, generally using a growth rate based on managements assessment o the outlook or the entity underconsideration.

Beyond the th year, the terminal value is determined by capitalising cash ows to innity.

(in millions)

Grwthrat (YarY+1 t Y+5)

Grwthrat

(trmina vau)

Pr-taxdicunt rat31 Dcmbr

2008

Pr-taxdicunt rat31 Dcmbr

2007 2008 2007

Soltanche Bachy 178.9 1.2 to 3.4% 1.50% 10.13% 9.48% - -

Other goodwill 428.3 0 to 3% 0 to 3%10.13

to 14.47%

8.5

11.3%0.8 0.1

Tta 607.2 0.8 0.1

3. Concession intangible assets (in thuand)

31/12/2007 Incra Dcra

Tranatindifrnc

and thr 31/12/2008

Gross 9,108 2,178 11,286

Amortisation and provisions (5,239) (214) (5,453)

Nt tta 3,869 1,964 5,833

The impact on the Groups nancial statements o acquisitions and reversals o amortisation in connection with business combinations, and o impairment losses andreversals, is not material.

4. Property, plant and equipment (in thuand)4.1. Change in the period


Tranatindifrnc

and thr 31/12/2008

Gross 3,055,991 512,839 (169,589) (42,991) 3,356,250

Amortisation and provisions (1,733,807) (331,696) 148,777 25,244 (1,891,482)

Nt tta 1,322,184 181,143 (20,812) (17,747) 1,464,768

Paramtr th md appidt cah w rcat

Impairmnt rcgnid in th prid

Nt carryingamunt gdwi

31 Dcmbr2008

Nt tta


23/42


4.2 Breakdown by type o asset

Gr Dprciatin Nt

Land 51,217 (5,528) 45,689

Buildings 213,095 (90,937) 122 ,158

Plant and equipment 2,788,613 (1 ,664,207) 1,124,406

Oce urniture, computer equipment, xtures and ttings 197,656 (130,762) 66,894

Non-current assets in progress 105,669 (48) 105,621

Tta 3,356,250 (1,891,482) 1,464,768

The impact on the Groups nancial statements o acquisitions and reversals o amortisation in connection with business combinations, and o impair-ment losses and reversals, is not material.

4.3. Investments during the period

31/12/2008

Land 4,387

Buildings 15,565

Plant and equipment 463,807

Oce urniture, computer equipment, xtures and ttings 29,080

Tta invtmnt 512,839

4.4. Leased assetsLeased assets amounted to 124.4m at 31 December 2008 and mainly relate to assets used in operations.

5. Investment property (in thuand)


Tranatindifrnc

and thr 31/12/2008

Gross 25,481 (1,215) (11,121) 13,145

Amortisation and provisions (10,730) (35) 3,683 (7,082)

Nt tta 14,751 (35) (1,215) (7,438) 6,063

The impact on the Groups nancial statements o acquisitions and reversals o amortisation in connection with business combinations, and o impair-ment losses and reversals, is not material.


24/42


6. Investments in associates (in thuand)

31/12/2007 31/12/2008Vau har at tart th prid 14,036 24,206

Share capital increases o associates 4,651 (943)

Group share o net income or the period 4,486 2,807

Dividends paid (1,913) (2,008)

Changes in consolidation scope, oreign currency translation dierences and other 2,946 (3,291)

Tta 24,206 20,771

7. Other non-current inancial assets (in thuand)

Gr Impairmnt Nt

Financial receivables PPPs 40,458 40 ,458

Investments in subsidiaries and associates 68,271 (27,420) 40,851

Other available-or-sale nancial assets 4,135 (2,344) 1,791

Other non-current nancial assets 39,278 (6,902) 32,376

Fair value o derivative nancial instruments (assets) 8 8

Retirement benet plans net surplus nancial assets 13,567 13,567

Tta 165,717 (36,666) 129,051

8. Inventories and work in progress (in thuand)

31/12/2007 31/12/2008

Inventories 240,455 320,368

Work in progress 49,151 67,796

Nt tta 289,606 388,164


25/42


9. Cash management inancial assets, cash and cash equivalents (in thuand)Cash management nancial assets break down as ollows:

31/12/2007 31/12/2008Cah managmnt nancia at 1,144,296 1 ,763,346

Cash equivalents 591,508 521,266

Cash 793,063 698 ,220

Cah and cah quivant 1,384,571 1,219,486

Financial assets mainly comprise an investment o cash with the parent company VINCI, attracting interest close to market rates.

10. Working capital requirement (surplus) (in thuand)31/12/2007 31/12/2008

Inventories and work in progress (net) 289,606 388,164

Trade and other operating receivables 6,064,760 6,451,331

Other current assets 211,893 244,331

Current tax assets 24,076 59 ,996

Invntri and prating rcivab (I) 6,590,335 7,143,822

Trade payables 3,956,214 4,353,489

Other current liabilities 3,753,317 4,293,431

Current tax payables 112,401 137,727

oprating payab (II) 7,821,932 8,784,647

Wrking capita rquirmnt cnnctd with pratin (I-II) (1,231,597) (1,640,825)

Current provisions (1,026,579) (1,203,870)

Wrking capita rquirmnt cnnctd with pratin (ater current provisions) (2,258,176) (2,844,695)


26/42


11. Retirement and other employee beneit obligations (in thuand)

11.1. Retirement beneit obligationsAt 31 December 2008, provisions or retirement benet obligations amounted to 135,732 thousand in total (including 125,256 thousand at morethan one year) compared with 131,366 thousand at 31 December 2007 (including 116,772 thousand at more than one year). They comprise provi-sions or lump sums on retirement and provisions or obligations or supplementary retirement benets. The part at less than one year was 10,476thousand at 31 December 2008 and 14,594 thousand at 31 December 2007, and is reported under other current payables.

VINCI Constructions retirement benet obligations under dened benet plans comprise: obligations borne directly by VINCI Construction or its subsidiaries, or which provisions are taken in the consolidated balance sheet; these aremainly lump sums paid on voluntary retirement (in accordance with the social security law currently in orce); obligations borne through external pension unds; or the most part these relate to the UK subsidiaries (VINCI plc and Freyssinet UK) and the CFEGroup in Belgium.The retirement benet obligations covered by provisions recognised in the balance sheet mainly relate to France and Belgium. For these countries,the provisions are calculated on the basis o the ollowing assumptions:

Pan 31/12/2008 31/12/2007

Discount rate 5.60% 5.25%

Ination rate 2.0% 1.9%

Rate o salary increases 2% - 4% 2% - 4.2%

Rate o pension increases 1.5% - 2.5% 1.5% - 2.5%

Probable average remaining working lie o employees 10-15 years 10-15 years

For the United Kingdom the provisions have been calculated using the ollowing assumptions:

Pan 31/12/2008 31/12/2007

Discount rate 6.10% 5.80%Ination rate 3.2% 3.2%

Rate o salary increases 3% - 4.2% 3% - 4.15%

Rate o pension increases 3.1% - 5% 3.05% - 5%

Probable average remaining working lie o employees 2-15 years 5-17 years

For each plan, the expected return on plan assets is determined using the building block method, which breaks down the expected return into threeparts: money market investments, investments in bonds and investments in equities. The return on equities is determined by adding 3% to the long-termreturn on government bonds. The money and bond market components are determined rom published market indexes.

Plan assets are valued at their air value at 31 December 2008. The book value at 31 December 2008 is used or assets invested with insurance com-panies.


27/42


On the basis o these assumptions, the retirement benet obligations, the part provided or, and the retirement benet expenses recognised breakdown as ollows:

Reconciliation o obligations and provisions in the balance sheet

31/12/2008 31/12/2007

(in millions) Franc Frign Tta Franc Frign Tta

Present value o retirement benet obligations (142.2) (368.0) (510.2) (141.0) (446.3) (587.3)

Fair value o plan assets 0.8 335.7 336.5 1.3 454.0 455.3

surpu (r dcit) (141.4) (32.3) (173.7) (139.7) 7.7 (132.0)

Prviin rcgnid in baanc ht (117.4) (18.2) (135.6) (113.3) (18.1) (131.4)

Assets recognised in balance sheet 13.6 13.6 0.9 0.9

Itm nt rcgnid in baanc ht

Actuarial gains and losses 8.5 27.7 36.2 9.7 (16.0) (6.3)

Past service cost 15.5 15.5 16.7 16.7

Assets not recognised in balance sheet (8.9) (8.9)

The actuarial pension expense or the nancial year amounts to 24.4 million.

11.2. Other employee beneitsAt 31 December 2008, provisions or other employee benets amounted to 19,853 thousand (including 14,419 thousand at more than one year)against 19,638 thousand at 31 December 2007 (including 15,924 thousand at more than one year). The part at less than one year was 5,434 thou-sand at 31 December 2008 and 3,714 thousand at 31 December 2007 and is reported under other current liabilities. Provisions or other employeebenets are measured using the projected unit credit method and mainly relate to obligations to pay long-service bonuses.

12. Provisions (in thuand)

31/12/2007 expn Rvra

Rvra unudprviin

othrchang 31/12/2008

Warranties given to customers 332,676 127,875 (62,856) (21,972) (20,121) 355,602

Losses on completion 222,754 158,879 (123,321) (24,475) 3,395 237,232

Disputes 182,101 80,718 (27,037) (11,639) 1,936 226,079

Restructuring 12,272 6 ,732 (4,783) (3,089) (104) 11,028

Other current liabilities 213,633 165,555 (87,257) (35,776) (9,328) 246,827

Discounting o current provisions (1,550) 264 5 (1,281)

Reclassication o the part at less than

one year o non-current provisions 64,693 63,690 128,383

Currnt prviin 1,026,579 539,759 (304,990) (96,951) 39,473 1,203,870

Liabilities in respect o subsidiaries 6,880 10,762 (711) (3,000) (229) 13,702

Other non-current liabilities 113,136 100,347 (18,342) (21,283) 6,080 179,938

Discounting o non-current provisions (1,704) 54 (1,650)

Reclassication o the part at less thanone year o non-current provisions (64,693) (63,690) (128,383)

Nn-currnt prviin 53,619 111,109 (18,999) (24,283) (57,839) 63,607

ToTAl 1,080,198 650,868 (323,989) (121,234) (18,366) 1,267,477


28/42


13. Other current payables (in thuand)Other current payables break down as ollows:

31/12/2007 31/12/2008

Trade receivables - Advances received on work 729,226 803,565

Deerred income 973,890 1,122,763

Operating current accounts 544,233 623,863

Tax, employment and social benet liabilities 1,066,543 1,122,627

Payables related to non-current assets 31,623 26,517

Other current liabilities 389,494 578,186

Provisions or retirement benet and other employee benets at less than 1 year 18,308 15,910

oTHeR CURReNT PAYABles 3,753,317 4,293,431

14. Net inancial surplus and inancing resources (in thuand)At the year end the Group had a net cash surplus o 1,938,032 thousand which breaks down as ollows:

31/12/2007 31/12/2008

Participating an and bnd (a) (147)

Other loans and borrowing (a) (426,662) (475,259)

Fair value o derivative nancial instruments (non-current liabilities) (2,094) (25,458)

Financial debt (428,756) (500,717)

Nn-currnt nancia dbt (428,903) (500,717)

Part at less than one year o long-term borrowing (a) (80,012) (85,474)

Cash management current accounts, liabilities (12,350) (27,742)Other current nancial liabilities (89,732) (108,619)

Fair value o derivative nancial instruments (current liabilities) (536) (10,394)

Bank overdrats (426,785) (328,995)

Currnt nancia dbt (609,415) (561,224)

GRoss DeBT (1,038,318) (1,061,941)

Fair value o derivative nancial instruments (assets) 4,925 16,247

Loans and collateralised receivables and other nancial assets 904 894

Cash management nancial assets 1,144,296 1,763,346

Cash and cash equivalents 1,384,571 1,219,486

NeT FINANCIAl sURPlUs 1,496,378 1,938,032

(a) Long-term loan and nancial debt (see analysis below)

Cash management nancial assets include investments with parent companies o 1,689.4 million attracting interest at rates close to market rates.


29/42


Including net cash (see cash fow statement) or:

31/12/2007 31/12/2008

UCITS - Cash equivalents 591,508 521,266Cash 793,063 698,220

Bank overdrats (426,785) (328,995)

NeT CAsH 957,786 890,491

Analysis o long-term loans and nancial debt (in millions)

31/12/2007 31/12/2008

Bonds 0.1

Bank loans and other nancial debt 240.8 314.5

Financial lease debt restated 98.3 107.0

VINCI Group loans 167.6 139.2

loNG-TeRM loANs AND FINANCIAl DeBT (a) 506.8 560.7

The other loans and borrowings are not subject to any specic covenant, except or CFEs syndicated loan which is subject to covenants that takeaccount, amongst other items, o equity and the debt-to-equity ratio, and o the cash ow generated.

Analysis o long-term loans and nancial debt (in millions)

Cntractua rat intrt Maturity

Nminati du

Vauin baanc ht

Bank an and thr nancia dbt 314.5 314.5

CFE 3.7% up to 2020 242.2 242.2

Soltanche 4.8% up to 2020 32.9 33.0

Other 39.4 39.3

Financ a dbt rtatd 107.0 107.0

CFE 4.4% up to 2015 27.3 27.3

Soltanche 5.6% up to 2016 48.9 48.9

Other 30.8 30.8

VINCI GRoUP loANs 139.2 139.2


30/42


15. Revenue (in miin)The change in revenue takes account o changes in consolidation scope and oreign exchange rates and breaks down as ollows:

31/12/2008 31/12/2007

Rvnu r th prid 14,820 13,027

. Revenue o companies consolidated or the rst time (442) 883

. Revenue o companies no longer consolidated (248)

. Impact o oreign exchange rate uctuations (226)

Rvnu at cntant cnidatin cp and xchang rat 14,378 13,436

At constant consolidation scope and exchange rates, revenue shows a 7% increase against the previous period.

ReVeNUe BY DIVIsIoN 31/12/2008 31/12/2007

VINCI Construction France 6,684 6,189

VINCI Construction Filiales Internationales 1,951 1,965

VINCI Construction UK 1,278 1,131

Compagnie dEntreprises CFE 1,728 1,518

VINCI Construction Grands Projets 771 861

Freyssinet 970 831

Soltanche Bachy 1,510 588

Intragroup eliminations (72) (56)

Tta 14,820 13,027

ReVeNUe BY GeoGRAPHICAl AReA (BY DesTINATIoN) 31/12/2008 31/12/2007

France (including overseas territories - (DOM-TOM)) 8,145 7,361

Europe excluding France 4,237 3,839

Arica 992 751

North and South America 495 374

Middle East 503 328

Asia 333 272

Oceania 115 102

Tta 14,820 13,027

ReVeNUe BY ACTIVITY 31/12/2008 31/12/2007

Building 6,332 5,925

Civil engineering and earthworks 6,219 4,972

Hydraulic engineering 801 780

Roads 639 602

Facility management and other services 277 238

Real estate development and promotion 208 219

Public works and environmental 181 172

Provision o services and other 163 119

Tta 14,820 13,027


31/42


16. Operating proit rom ordinary activities (in thuand)31/12/2008 31/12/2007

Revenue 14,819,604 13,027,231Revenue rom ancillary activities 116,122 122,574

oprating rvnu 14,935,726 13,149,805

Purchases (raw materials, supplies, goods) (3,665,984) (3,092,007)

Subcontracting and other external expenses (6,950,246) (6,392,371)

Wages, salaries and social benet charges (2,906,181) (2,486,601)

Taxes and levies (139,542) (131,547)

Other operating income and expenses 13,977 35,257

Operating depreciation and amortisation expense (335,222) (280,123)

Net operating provision charges

. Impairment losses on tangible and intangible assets (1,392) (1,302)

. Impairment o assets (53,808) (15,436)

. Retirement and other benet obligations 5,815 (6,772)

. Current and non-current provisions (176,850) (134,081)

oprating prt rm rdinary activiti 726,293 644,822

Revenue rom ancillary activities amounted to 116.1 million at 31 December 2008. It consisted mainly o sales o equipment, materials and merchan-dise or 54.6 million, study work, engineering and proessional ees invoiced in connection with construction contracts, or 28.4 million and rentalincome or 29.5 million.

17. Share-based payments (in miin)The expense relating to benets granted to employees has been assessed at 41.2 million beore tax in respect o 2008, o which 3.7 million was inrespect o share option plans, 12.7 million in respect o the Group Savings Schemes and 24.8 million in respect o the perormance share plans.

17.1. Group Savings SchemeThe benets granted to employees o the Group in connection with the Group Savings Scheme are recognised in prot or loss and are valued inaccordance with IFRS 2 on the basis o the ollowing assumptions: length o subscription period: 4 months; length o period during which unds are rozen: 5 years rom the end o the subscription period.

The estimated number o shares subscribed to at the end o the subscription period is obtained by an analytical ormula, based on linear regressionmethods, applied to historical observations o the plans between 2002 and 2008, taking account o the cost o restrictions on the availability o unitsin the savings und.

The opportunity cost o the rozen shares subscribed to is estimated rom the point o view o a third party holding a diversied portolio and prepa-red to acquire the rozen shares in return or a discount corresponding to the return demanded by the purchaser on own unds allocated to hedge

against market risk over the period in which the shares are rozen (ve years). The market risk is assessed on an annual basis applying a value-at-riskapproach.


32/42


17.2. Share subscription and purchase optionsNo new share option plans have been set up in 2007 or 2008. The main assumptions used to determine the air values o the options granted in 2004-2006, in accordance with IFRS 2, were:

Pan 16/05/2006 09/01/2006 01/03/2005 07/09/2004

Volatility (*) 24.19% 23.60% 23.55% 25.23%

Expected return on share 6.50% 5.70% 6.30% 6.6 %

Risk-ree rate o return (**) 3.68% 2.99% 3.17% 4.06%

Anticipated dividend distribution rate (***) 2.75% 2.92% 3.52% 3,33%

Fair value o the option (in euros) 7.74 5.66 5.93 4.90

(*) Volatility estimated using a multi-criteria approach.(**) 5-year rate on French government bonds.(***) Average return expected by nancial analysts over the three years ollowing the grant date adjusted by a theoretical annual growth rate beyond that period.

The validity period o the options included in the model is the contractual validity period adjusted to take account o behavioural assumptions (em-ployee turnover, early exercise) based on past observations.

17.3. Perormance sharesThe air value o the perormance shares has been estimated by an external actuary. The main assumptions used or this assessment are:

2008 Pan 2007 Pan

Price o VINCI share on date plan was announced (in euros) 55.7 49.5

Fair value o perormance share at grant date (in euros) 28.2 24.5

Fair value o share price at grant date (in %) 50.53% 49.61%

Original maturity (in years) - vesting period 2 or 3 years 2 or 3 years

Volatility 26.51% 21.79%

Risk-ree interest rate 4.07% 3.76%

These plans provide that the shares will only be denitively allocated ater a two-year vesting period subject to VINCIs stock market and nancial peror-

mance criteria being met. In accordance with IFRS 2, the number o per ormance shares measured at air value in the calculation o the IFRS 2 expense isadjusted at each balance sheet date or the impact o the change since the grant date o the shares in the likelihood o the nancial criteria being met.

18. Other inancial income and expenses (in thuand)31/12/2008 31/12/2007

Dividends received 2,104 2,324

Foreign exchange gains and losses (10,596) (445)

Eect o discounting to present value (4,276) (2,905)

Capital gains or losses on asset disposals and withdrawals rom reserves 40,629 17,194

Other nancial income and expenses, net 368 4,511

othr nancia incm and xpn, nt 28,229 20,679


33/42


19. Net tax expense (in thuand)

19.1. Analysis o net tax expense

31/12/2008 31/12/2007

Current and deerred tax (227,585) (219,725)

Eective tax rate 30.21% 33.25%

19.2. Eective tax rate

Prt br tax and prt r aciat 753,428

Theoretical tax rate 34.43%

Thrtica tax charg (259,405)

Goodwill impairment expense (197)

Prots taxed at reduced and other rates 3,108Tax rate dierential between current and previous year 49

Tax rate dierences (oreign countries) 29,187

Creation/(use) o carryorward losses not having given rise to deerred tax (19,089)

Fixed-sum and other additional taxes (25,248)

Permanent dierences and miscellaneous 44,010

Tax charg rcgnid (227,585)

Eective tax rate 30.21%

19.3. Breakdown o deerred tax assets and liabilitiesDeerred tax assets and liabilities arising rom temporary dierences were as ollows at year-end:

At liabiiti Nt

216,081 73,409 142,672

19.4. Unrecognised deerred tax assetsDeerred tax assets unrecognised because their recovery is uncertain amounted to 83.4 million at 31 December 2008.

20. Construction contracts (in miin)

20.1. Financial inormation on construction contractsCost incurred plus recognised prots, less recognised losses and intermediate invoicing, is determined on a contract by contract basis. I this amount

is positive it is shown on the line Construction contracts in progress assets. I negative, it is shown on the line Construction contracts in progress liabilities.Advances are the amounts received beore the corresponding work has been perormed. Repayment terms depend on the terms o each individualcontract. These advance payments are usually maintained over the length o the contract, irrespective o the amount o work carried out or in progress.


34/42


The various items relating to construction contracts in progress at the balance sheet date are:

(in millions) 31/12/2008 31/12/2007

Construction contracts in progress - assets 692 580

Construction contracts in progress - liabilities (926) (775)

Cntructin cntract in prgr (234) (195)

Costs

Date post:	06-Apr-2018
Category:	Documents
Upload:	le-thanh-hang
View:	217 times
Download:	0 times

2008 Financial Vinci Construction

Documents