VINCI - 2005 annual report

– Hedge of a net investment in a foreign entity.
A hedge of a net investment denominated in a foreign currency hedges
the foreign exchange risk relating to the net investment in a consolidated
foreign subsidiary. In a similar way as for cash flow hedges, the effective
portion of the changes in the value of the derivative instrument is recorded
in equity under translation reserves and the portion considered as ineffective
is recognised in profit or loss. The change in the value of the
derivative instrument recognised under translation differences must be
reversed in profit or loss when the foreign entity that was the object of
the initial investment is disposed of.
Financial instruments not considered as hedging instruments
Derivative financial instruments that are not considered as hedging instruments
are recognised in the balance sheet at fair value and changes in their
fair value are recognised in profit or loss.
Derivative instruments considered as hedges of which the maturity is
greater than one year are shown as non-current assets or liabilities. Other
financial instruments are classified as current assets or liabilities.
CONSOLIDATED FINANCIAL STATEMENTS
The market value of interest rate and foreign exchange transactions is
estimated on the basis of valuations provided by bank counterparties or
financial models commonly used in financial markets, using market data
at the balance sheet date.
Off balance sheet commitments
VINCI has defined and implemented a reporting procedure to list its off
balance sheet commitments and identify their nature and purpose. This
procedure provides for the submission by the consolidated subsidiaries
as part of the consolidation procedures, of information relating to the
following commitments given:
– personal sureties (securities, guarantees and other);
– collateral security (mortgages, pledges and other securities);
– joint and several guarantees covering unconsolidated partnerships;
– operating leases;
– purchase and capital expenditure obligations;
– other commitments.
205