VINCI - 2005 annual report
VINCI - 2005 annual report VINCI - 2005 annual report
19. WORKING CAPITAL REQUIREMENT 31/12/2005 31/12/2004 Changes (in € millions) connected receivables / payables Other with operations related to fixed assets changes (*) Inventories and work in progress (net) 540.7 542.8 (44.7) 0.0 42.6 Trade and other operating receivables 8,334.3 7,279.8 824.9 3.9 225.6 Other current assets 218.6 157.3 109.5 0.0 (48.2) Inventories and operating receivables (I) 9,093.5 7,979.9 889.8 3.9 219.9 Trade payables 5,002.3 4,619.2 389.5 0.0 (6.5) Other current payables 5,498.6 4,743.6 585.9 3.4 165.7 Trade and other operating payables (II) 10,500.8 9,362.8 975.4 3.4 159.2 Working capital requirement (before current provisions) (I-II) (1,407.3) (1,382.9) 85.7 (0.6) (60.7) Current provisions (1,445.4) (1,382.8) 34.2 0.0 (96.8) including part at less than one year of non-current provisions 257.4 247.4 0.0 0.0 10.0 Working capital requirements (after current provisions) (2,852.7) (2,765.7) 119.9 (0.6) (157.5) (*) mainly changes in consolidation scope and translation differences. The working capital requirement connected with operations comprises current assets and liabilities related to operations, except for current tax assets and liabilities and other current assets and liabilities of a financial nature. 228 VINCI 2005 ANNUAL REPORT The improvement in the working capital requirement connected with operations (+€120 million) arises principally in the Roads and Construction business lines. The component parts of the working capital requirement by maturity are: 31/12/2005 Maturity (in € millions) within 1 year between 1 and 5 years in more than 5 years Inventories and work in progress (net) 540.7 536.4 4.2 0.1 Trade and other operating receivables 8,334.3 8,296.3 35.0 2.9 Other current assets 218.6 209.9 5.9 2.8 Inventories and operating receivables (I) 9,093.5 9,042.7 45.1 5.8 Trade payables 5,002.3 4,994.8 5.6 1.8 Other current payables 5,498.6 5,396.8 69.8 32.0 Trade and other operating payables (II) 10,500.8 10,391.6 75.4 33.8 Working capital requirement (before current provisions) (I-II) (1,407.3) (1,349.0) (30.3) (28.0)
20. CONSTRUCTION CONTRACTS 20.1 FINANCIAL INFORMATION ON CONSTRUCTION CONTRACTS Cost incurred plus recognised profits less recognised losses and intermediate invoicing is 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. CONSOLIDATED FINANCIAL STATEMENTS Advances are the amounts received before the corresponding work has been performed. The terms of their repayment depend on the specific provisions of each contract. Most frequently, these advances are maintained throughout the contract regardless of the amount of work carried out or in progress. (in € millions) 31/12/2005 31/12/2004 Construction contracts in progress, assets 995.5 926.2 Construction contracts in progress, liabilities (914.9) (892.9) Construction contracts in progress, net 80.6 33.3 Costs incurred plus profits recognised to date less losses recognised to date 20,630.7 18,019.5 Less invoices issued (20,550.1) (17,986.2) Construction contracts in progress, net 80.6 33.3 Advances received from customers (432.6) (371.2) 20.2 COMMITMENTS GIVEN AND RECEIVED UNDER CONSTRUCTION CONTRACTS The Group gives and receives guarantees (personal surety) in connection with its construction contracts, which break down as follows: 31/12/2005 31/12/2004 (in € millions) Given Received Given Received Performance guarantees 1,777.9 271.8 1,682.2 165.4 Performance bonds 563.8 113.4 529.0 99.2 Retentions 1,518.2 298.0 1,411.7 277.3 Deferred payments to subcontractors 679.2 157.0 603.4 83.6 Deferred payments to suppliers 116.4 2.9 57.5 4.2 Bid bonds 33.1 11.7 35.5 10.9 Total 4,688.6 854.8 4,319.3 640.6 The increase in commitments given under these construction contracts (+8.5%) is linked to the increase in activity in the Construction, Roads and Energies business lines in 2005 (+11.3%). 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 results in a provision being recognised in the Group’s financial statements, under the rules in force. VINCI therefore considers that the off balance sheet commitments above are unlikely to have a significant impact on Group assets. It should also be remembered that, opposite the commitments given, the Group has an order book of firm orders accepted by customers which undertake, under the contract terms, to pay for work as it is carried out. In the context of their works activity, companies in the Group benefit from guarantees given by financial institutions on the instructions of their co-contractors or subcontractors or their parent company. Lastly, VINCI also grants two-year and ten-year warranties in its normal course of business. These warranties are covered by provisions estimated on a statistical basis having regard to expenses incurred in the past or on an individual basis in the case of any major problems identified. These commitments are therefore not included in the above table. 229
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19. WORKING CAPITAL REQUIREMENT<br />
31/12/<strong>2005</strong> 31/12/2004 Changes<br />
(in € millions) connected receivables / payables Other<br />
with operations related to fixed assets changes (*)<br />
Inventories and work in progress (net) 540.7 542.8 (44.7) 0.0 42.6<br />
Trade and other operating receivables 8,334.3 7,279.8 824.9 3.9 225.6<br />
Other current assets 218.6 157.3 109.5 0.0 (48.2)<br />
Inventories and operating receivables (I) 9,093.5 7,979.9 889.8 3.9 219.9<br />
Trade payables 5,002.3 4,619.2 389.5 0.0 (6.5)<br />
Other current payables 5,498.6 4,743.6 585.9 3.4 165.7<br />
Trade and other operating payables (II) 10,500.8 9,362.8 975.4 3.4 159.2<br />
Working capital requirement<br />
(before current provisions) (I-II) (1,407.3) (1,382.9) 85.7 (0.6) (60.7)<br />
Current provisions (1,445.4) (1,382.8) 34.2 0.0 (96.8)<br />
including part at less than one year of non-current provisions 257.4 247.4 0.0 0.0 10.0<br />
Working capital requirements<br />
(after current provisions) (2,852.7) (2,765.7) 119.9 (0.6) (157.5)<br />
(*) mainly changes in consolidation scope and translation differences.<br />
The working capital requirement connected with operations comprises<br />
current assets and liabilities related to operations, except for current tax<br />
assets and liabilities and other current assets and liabilities of a financial<br />
nature.<br />
228<br />
<strong>VINCI</strong> <strong>2005</strong> ANNUAL REPORT<br />
The improvement in the working capital requirement connected with<br />
operations (+€120 million) arises principally in the Roads and<br />
Construction business lines.<br />
The component parts of the working capital requirement by maturity are:<br />
31/12/<strong>2005</strong> Maturity<br />
(in € millions) within 1 year between 1 and 5 years in more than 5 years<br />
Inventories and work in progress (net) 540.7 536.4 4.2 0.1<br />
Trade and other operating receivables 8,334.3 8,296.3 35.0 2.9<br />
Other current assets 218.6 209.9 5.9 2.8<br />
Inventories and operating receivables (I) 9,093.5 9,042.7 45.1 5.8<br />
Trade payables 5,002.3 4,994.8 5.6 1.8<br />
Other current payables 5,498.6 5,396.8 69.8 32.0<br />
Trade and other operating payables (II) 10,500.8 10,391.6 75.4 33.8<br />
Working capital requirement<br />
(before current provisions) (I-II) (1,407.3) (1,349.0) (30.3) (28.0)
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