VINCI - 2008 annual report

Consolidated fi nancial statements
17. Construction contracts (contracting divisions)
17.1 Financial information on construction contracts
Costs incurred plus profi ts recognised less losses recognised, and intermediate invoicing are determined on a contract-by-contract basis. If this
amount is positive it is shown on the line “Construction contracts in progress – assets”. If negative, it is shown on the line “Construction contracts
in progress – liabilities”.
(in € millions) 31/12/2008 31/12/2007
Balance sheet data
Advances and payments on account received (704.9) (641.1)
Construction contracts in progress - assets 1,012.8 917.2
Construction contracts in progress - liabilities (1,997.8) (1,709.3)
Construction contracts in progress, net (985.0) (792.1)
Total income and expenses to date recognised on contracts in progress
Costs incurred plus profi ts recognised, less losses recognised to date 36,062.4 29,435.9
Less invoices issued (37,047.4) (30,228.0)
Construction contracts in progress, net (985.0) (792.1)
17.2 Commitments given and received in connection with construction contracts
The Group gives and receives guarantees (personal surety) in connection with its subsidiaries’ construction contracts, which break down by type
as follows:
31/12/2008 31/12/2007
(in € millions) Given Received Given Received
Performance guarantees 3,326.7 368.1 2,381.0 367.9
Performance bonds 807.7 62.8 926.9 70.3
Retentions 2,359.8 426.9 2,121.5 398.9
Deferred payments to subcontractors 1,344.1 138.3 1,101.3 122.0
Bid bonds 220.9 0.1 192.5 25.6
Deferred payments to suppliers 61.9 157.3 56.9 79.4
Total 8,121.1 1,153.5 6,780.1 1,064.1
The 19.8% increase in commitments given should be seen in the light of the substantial increase in the activity of the contracting divisions, in
particular the construction division in 2008.
The guarantees given are mainly issued to guarantee construction work in progress. Whenever events such as late completion or disputes concerning
the execution of a contract make it likely that a liability covered by a guarantee will materialise, a provision is taken in respect of that
liability.
In general, any risk of loss in connection with performance under a commitment given by VINCI or its subsidiaries would result in a provision
being recognised in the Group’s fi nancial statements, under the rules in force. VINCI therefore considers that the off -balance sheet commitments
above are unlikely to have a material impact on Group assets.
It should be remembered that, opposite the commitments given, the Group has an order book of fi rm orders accepted by customers which
undertake, under the contract terms, to pay for work on the basis of progress of work. In connection with their civil engineering and construction
activity, Group companies benefi t from guarantees given by fi nancial institutions on instruction of their co-contractors or subcontractors or by
their parent company.
Lastly, VINCI also grants warranties covering several years in its normal course of business. These warranties, when set up, lead to provisions
estimated on a statistical basis having regard to past experience or on an individual basis in the case of any major problems identifi ed. These
commitments are therefore not included in the above table.
214 VINCI __ 2008 ANNUAL REPORT