VINCI - 2005 annual report

3. EXPOSURE TO RAW MATERIAL PRICES
VINCI is potentially exposed to a rise in the prices of some raw materials
used in the construction and road activities of VINCI Construction, Eurovia
and VINCI Energies. However, the Group believes that such rises are unlikely
to have a material unfavourable impact on its earnings. This is because
many of the Group’s construction contracts include clauses providing for
price revision to allow selling prices to be adjusted during the course of
the contract as commodity prices change. Furthermore, the Group’s
construction activities are carried out via a large number of contracts,
mostly short-term. Even if they do not include price revision clauses, their
short duration limits the impact of a rise in raw material prices.
4. LEGAL AND REGULATORY RISKS
Given the great diversity of its activities and geographical locations, the
Group operates within a complex legal and regulatory environment
governed by the place where the service is provided and the sector involved.
In particular, rules relating to public- and private-sector contracts and
tenders, competition and market concentration, commercial, fi nancial and
stock market law are applicable. These activities could lead to the Group
incurring civil or criminal liabilities in France and in foreign countries.
Civil liability risks relate in particular to construction companies. The
fi nancial risks relating to any invoking of Group companies’ civil liability
are covered by insurance policies described in paragraph C.
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VINCI 2005 ANNUAL REPORT
The large rise in oil prices therefore did not have a material unfavourable
impact on the Group’s results in 2005. This rise mainly affected Eurovia,
which uses bitumen, fuel oil in its industrial plants and petrol and diesel
oil in its vehicles and machinery. It proved possible to limit the estimated
impact on Eurovia’s 2005 operating profi t to about €30 million, as most
of the extra costs were passed on through selling prices, either when fi rst
agreed or during the execution of contracts by virtue of price revision
clauses.
It should also be noted that, with respect to concession operations in
France, the Group fi nds itself dependent on the authorities, which, in
accordance with French law applicable to government bodies, can alter
the terms and conditions of public service outsourcing contracts during
their execution, subject to compensation.
Detailed information on the principal disputes in which the Group is
involved is given in section G of the Notes to the consolidated fi nancial
statements, page 260.
5. INDUSTRIAL AND ENVIRONMENTAL RISK
See the “A responsible company” section, page 140.
6. TECHNOLOGICAL RISK
See the “A responsible company” section, page 140.