2013-vinci-annual-report

VINCI considers the health and safety of its personnel and third parties involved with or affected by its operations to be a major priority.
It has therefore set up an accident prevention policy and measures relating to occupational illnesses and pandemics.
VINCI has set up a workforce planning system to handle the risks related to the availability and/or suitability of technical, administrative or
financial staff at the management, white- and blue-collar worker levels. This system is intended to anticipate the future workloads and
resources needed.
Detailed information on VINCI’s social responsibility approach is given in the Report of the Board of Directors – E. Social and environmental
information, on page 156.
Cost increases
VINCI is potentially exposed to cost increases, particularly in the prices of some commodities and materials (examples include oil products,
steel and cement). These issues are analysed for each core business in section 1.2.2. Commodities risk is also covered in section 2.3.
126 VINCI 2013 ANNUAL REPORT
Subcontractors, joint contractors and suppliers
The quality of work done by other companies working with VINCI and, in some cases, their default may affect the satisfactory performance
of projects. Given the diverse nature of VINCI’s business activities and its decentralised organisation, which results from the essentially
local character of its markets, the Group considers that it has little dependence on any particular subcontractor, joint contractor or
supplier.
In most cases, VINCI companies guard against this type of risk by selecting partners carefully, monitoring progress and taking any corrective
measures needed during the project life.
Unstable security, social or political context (country risk)
Given the large number of countries where the Group operates, some activities may occasionally be affected by industrial action, various
forms of political unrest (riots, terrorism, armed conflict, embargoes, seizure of bank accounts, equipment, etc.), as well as malevolent acts
such as vandalism and theft on construction sites, or criminal acts such as kidnapping.
VINCI’s Safety/Security Department makes information available to business lines to ensure the best possible preparation for work and
travel, and issues recommendations to ensure the protection of people and goods. It can also be called on to conduct site audits and/or
implement regularly updated security plans. It also intervenes within the framework of crisis management, in particular to organise staff
evacuation.
Country risk is analysed prior to the submission of the tender for new projects and is monitored for current projects or operations (see Report
of the Chairman of the Board of Directors on corporate governance and internal control procedures, page 195).
In addition to the aforementioned events, criminal acts may include cyber attacks and fraud attempts. The Group’s Finance Department,
in conjunction with the Safety/Security Department, has set down measures to prevent fraud, encompassing information system security,
means of payment guidelines, and instructions available on the Group’s intranet site to be followed in the various cases examined.
Financial risk linked to country risk is analysed in paragraph 2.3.
Changes in the economic and fiscal context
The economic situation in Europe and North America, as well as a slowdown in emerging economies’ growth, could lead to a worsening of
conditions in markets where VINCI operates, given the geographical spread of the Group’s business activities.
Despite a good level of revenue in 2013 and an order book that will sustain activity in the years ahead, the threat of a slowdown in demand
and the ensuing growth in competition cannot be excluded. In addition, harsher tax provisions in some countries are putting further pressure
on the profit margins of VINCI companies. Given uncertainty about the future course of tax provisions, their impact cannot be incorporated
into tenders submitted.
Natural events
Like any other company, VINCI’s business may be affected by natural events (earthquakes, floods, cyclones, windstorms, lightning, etc.),
which can interrupt operations or trigger the collapse or accidental destruction of Group infrastructure assets under construction or in use.
Such events may result in an interruption to business for the relevant entity and could also entail a substantial hike in the costs involved in
maintaining or repairing facilities. Part of these expenses may be borne by insurance policies.
A centralised crisis management system includes actions to be undertaken and training in all phases (alert procedures, the triggering of
crisis measures, management of and exit from crises). This central organisation is cascaded in the Group’s subsidiaries, which have also set
up their own crisis management and communication arrangements.
1.2.2 Risks specific to VINCI’s business lines
The VINCI companies within each of the Group’s business lines are exposed to specific risks, the prevention, control and daily management
of which lie at the heart of their business.
Concessions and public-private partnerships (PPP)
In this type of business activity, some risks may remain with the granting authority, in particular in relation to making land available. However,
default by the authority cannot be ruled out. The special purpose vehicles (SPVs) holding the PPP or concession contract usually transfer
the design- and construction-related risks to the contractors in charge of construction. Financing risks, however, remain managed at the
level of the SPVs and their shareholders (see section 2.4).