VINCI - 2005 annual report

A growth course set by the
concession-construction model
VINCI’s strategy is to ensure sustained growth of its business and its earnings.
To achieve this it builds on its historic integrated concession-construction model,
reinforced by the acquisition in 2006 of Autoroutes du Sud de la France.
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VINCI 2005 ANNUAL REPORT
Two fully complementary business lines
From the inception of the Group, VINCI’s growth pattern
has refl ected the triple complementarity between its concession
and construction business lines:
– fi rst, business complementarity: While business cycles are
measured in decades in concessions (70 years for the A86
West tunnels, 65 years for the A19 motorway), they are short
(a few months) in electrical works and of intermediate length
(several months to several years) in construction and roadworks.
– second, fi nancial complementarity: Concessions generate
recurring revenues and margins but are capital-intensive, while
construction is much less capital intensive but generates smaller
margins. Moreover, due to the characteristics of their operating
cycles, construction sector activities generate a cash surplus
that can be reinvested in business with longer cycles, such as
concessions.
– last but not least, operational complementarity: The concession
and construction business lines boost each other’s business.
The former contributes expertise in the fi nancial and legal aspects
of project development and then infrastructure operation.
The latter builds on the Group’s network of companies to facilitate
upstream marketing research and partner searches and then builds
and maintains the structures. Competencies and networks work
together in synergy to build major projects and complex structures
(motorways, bridges, tunnels, etc.) and carry out smaller scale
projects such as public facilities (schools, hospitals, prisons and
police buildings) under public-private partnerships.
The acquisition of Autoroutes du Sud de la France is fully
consistent with this strategic model.