VINCI - 2008 annual report

Main impacts recognised at 31 December 2008:
Consolidated fi nancial statements
31/12/2008
(in € millions) Grants Loans
Impact of change of accounting policy 57.2 (56.3)
The impacts on the income statement are not material.
1.3 Change of accounting policy: IFRIC 12 Service Concession Arrangements
Interpretation IFRIC 12, published in November 2006, was adopted by the Accounting Regulatory Committee (ARC) on 6 November 2008 and
should be ratifi ed by the European Commission during the fi rst quarter of 2009. VINCI has elected to apply its principles as from the 2008
balance sheet date as it considers that this Interpretation enables better fi nancial information to be given.
1.3.1 Accounting treatment of concession agreements under IFRIC 12
The application scope of IFRIC 12 covers public service concession contracts in which the concession grantor is considered to exercise control
over the assets operated. The concession grantor is considered to control the asset if:
- the grantor controls or regulates what services the operator must provide with the infrastructure, to whom it must provide them, and what
and how the operator will be paid; and
- the grantor controls the residual interest in the infrastructure at the end of the arrangement.
Under the terms of this Interpretation, the operator has a twofold activity:
- a construction activity in respect of its obligations to design, build and fi nance an asset that it makes available to the grantor: revenue is
recognised on a stage of completion basis in accordance with IAS 11;
- an operating and maintenance activity in respect of the assets under the concession: revenue is recognised in accordance with IAS 18.
In return for its activities, the operator receives consideration from either:
- users: the intangible asset model applies. The operator has a right to receive tolls (or other payments) from users in consideration for the
fi nancing and construction of the infrastructure. The intangible asset model also applies whenever the concession grantor remunerates the
concession operator on the basis of the extent of use of the infrastructure by users, but with no guarantees as to the amounts that will be paid
to the operator (under a simple pass through or shadow toll agreement).
Under this model, the operator’s rights are recognised in the balance sheet under Concession intangible assets. This operating right corresponds
to the fair value of the asset under concession plus the borrowing costs capitalised during the construction phase. It is amortised over the term
of the arrangement in a manner that refl ects the pattern in which the asset’s economic benefi ts are consumed by the entity, starting from the
entry into service of the asset.
This treatment applies to most of the infrastructure concessions that are today operated by VINCI, in particular the motorway networks of ASF,
Escota and Cofi route, the A19, the A4 Hörselberg in Germany, the Rion-Antirion bridge in Greece, the Athens-Patras-Corinth motorways in
Greece and most of the parking facilities managed under concessions by VINCI Park.
or
- the grantor: the fi nancial asset model applies. The operator has an unconditional contractual right to receive payments from the grantor,
irrespective of the amount of use made of the infrastructure.
Under this model, the operator recognises a fi nancial asset, attracting interest, in its balance sheet, in consideration for the services it provides
(designing, building, operation or maintenance). These fi nancial assets are recognised in the balance sheet under Loans and receivables, for the
amount of the fair value of the infrastructure on fi rst recognition and subsequently at amortised cost. It is settled by means of the grantor’s
payments received. The fi nancial income calculated on the basis of the eff ective interest rate, equivalent to the project’s internal rate of return,
is recognised under operating income.
This model applies to the Newport bypass contract in the UK, the Liefk enshoek Tunnel and Coentunnel contracts granted in 2008 (in Belgium
and the Netherlands respectively), to some VINCI Park contracts, and to all VINCI’s Public-Private Partnerships in France and PFI (Private Finance
Initiative) contracts in the United Kingdom.
Under the mixed model, whenever only part of the investment is covered by an unconditional right to receive payments from the grantor, it is
recognised as a fi nancial receivable up to the amount guaranteed by the grantor. The unguaranteed balance, of which the amount is dependent
on the extent of use of the infrastructure, is recognised as an intangible asset. On the basis of an analysis of VINCI’s existing contracts, this
model applies to some VINCI Park contracts.
Concession operating assets that are not controlled by the grantor even though they are necessary for the operation of the concession – such
as buildings intended for use in the operation, equipment for toll collection, signage, data transmission, and video-surveillance, and vehicles and
equipment – are recognised under property, plant and equipment (see Note E.12 “Property, plant and equipment)” and are depreciated over
their useful life.
The accounting consequences of the application of IFRIC 12 for the Group’s consolidated fi nancial statements are given below (see Note A.1.3.2
“Consequences of the fi rst application of IFRIC 12 for the Group’s consolidated fi nancial statements” and Note A.1.3.3 “Main impacts of the
change of accounting policy following application of IFRIC 12).”
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