VINCI - 2005 annual report

The income arising in the period from the recognition of previously
unrecognised deferred tax assets, such as carryforward tax losses and tax
credits, was €34.3 million.
The permanent differences shown in the reconciliation of the effective
tax rate include in particular:
– the effect of the non-deductibity for tax purposes of the major components
of the expense relating to share-based payments. This amounts
to - €19 million at 31 December 2005 (- €8 million at 31 December
2004).
8.3 BREAKDOWN OF DEFERRED TAX ASSETS AND LIABILITIES
CONSOLIDATED FINANCIAL STATEMENTS
– the impact of the changes made in 2004 to tax legislation relating to
the taxation of profits at the reduced rate of tax. This led to VINCI
reducing its deferred tax liabilities in this respect and recognising
income of €47 million.
The rise in the effective rate of tax (33.6% against 31.6% at 31 December
2004) is mainly the result of the change in permanent differences
described above. Conversely, the tax rate in 2004 incorporated an extra
charge connected with the capping of deferred tax assets, particularly
relating to airport services in the US (- €22.5 million).
Changes
(in € millions) 31/12/2005 31/12/2004 Profit or loss Other
Expenses deductible later 56.4 42.1 14.5 (0.1)
Retirement benefit obligations 117.6 138.7 (25.6) 4.5
Other provisions not deducted for tax purposes 208.9 213.0 (4.1) (0.1)
Differences between carrying amounts and taxable amounts,
assets and liabilities 13.1 5.3 7.3 0.5
Temporary differences connected with consolidation restatements 113.6 131.8 29.8 (48.0)
Sub-total temporary differences 509.6 530.9 21.9 (43.2)
Capping of temporary differencess (113.3) (125.5) 13.1 (0.9)
Temporary differences after capping 396.3 405.4 35.0 (44.1)
Unused tax losses and tax credits after capping 35.2 20.0 17.1 (1.9)
Netting of deferred tax assets and liabilities (221.0) (258.2) 37.2
Total deferred tax assets 210.5 167.2 52.1 (8.7)
Differences between carrying amounts and taxable amounts,
assets and liabilities (48.0) (59.7) 15.8 (4.1)
Temporary differences connected with consolidation restatements (204.2) (228.3) 8.0 16.2
Other taxable temporary differences (179.5) (139.8) (43.2) 3.6
Netting of deferred tax assets and liabilities 221.0 258.2 (37.2)
Total deferred tax liabilities (210.6) (169.6) (19.4) (21.6)
8.4 UNRECOGNISED DEFERRED TAXES
At 31 December 2005, deferred tax assets that are not recognised on the
grounds that their recovery is not certain amounted to €380.3 million. These
mainly relate to the German subsidiaries (of which €118.6 million related
to their carryforward tax losses). Given the return to profits and the changes
in 2005 to German tax legislation, VINCI has recognised a deferred tax asset
of €9 million corresponding to one year’s forecast tax charge, on the basis of
tax forecasts made in 2006.
The total temporary differences relating to shareholdings in Group entities
(associates, joint enterprises and investments in branches), for which no
deferred tax liabilities have been recognised, related mainly to ASF for
€9.4 million (being the difference between the taxable amount and the
carrying value of the ASF shares in VINCI’s consolidated financial statements).
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