VINCI - 2005 annual report

promissory notes issued by Intertour and discounted on a non-recourse
basis by CBC with a French bank, which had counter-guarantees from
foreign financial institutions. Following the payment default by Intertour,
these financial institutions initiated various legal proceedings, including
one before the Paris Commercial Court, in which CBC was charged with
guaranteeing the principal amount of €41 million. This case was withdrawn
in 2004 following a settlement between the claimants and the
French bank. CBC was also sued in December 2003 in the Paris Commercial
Court by the same French bank, which is claiming €24 million on
the basis of alleged responsibility in connection with the invalidity of
the guarantees issued by the foreign financial institutions in the French
bank’s favour. Given the current state of affairs, VINCI does not expect
this dispute to have a material impact on its financial situation.
– Following recourse to the French Council of State by various roadtransport
companies, the Council delivered a ruling on 29 June 2005
cancelling the letter of 15 January 2003 in which the Director of tax
legislation informed the chairman of the committee for SEMCAs (publicprivate
motorway concession companies) that motorway concession
companies did not have good reason to provide amended invoices showing
the value added tax paid by users between 1 January 1996 and 31
December 2000.
As a result of this ruling – which nevertheless is only in respect of the
relations between the French Government and the transport companies
– motorway concession companies would be under the obligation
to provide amended invoices when requested to do so by transport
companies for the period from 1996 to 2000. Formally and by virtue
of Article 283-3 of the French General Tax Code, the companies could
therefore have been liable for payment of the VAT specified on the
amended invoices.
CONSOLIDATED FINANCIAL STATEMENTS
The Council of State’s decision has been the subject of third-party applications
to set aside from Cofiroute and all the other companies in the
sector. Cofiroute has since received a letter from the Ministry for the
Economy, Finance and Industry dated 19 October 2005, confirming that
“settlement of this matter will entail no new financial expenses for the
motorway concession operating companies” followed by a letter from
the Minister Delegate for the Budget and Administrative Reform dated
7 February 2006 stating “I can confirm to you that the concession
operating companies will not be rendered liable for payment of the Value
Added Tax mentioned on the amended invoices that they will issue to
their customers in respect of the tolls paid between 1 January 1996 and
31 December 2000.”
Given this guarantee from the French Government, the Company maintained
at 31 December 2005 the solution of not taking any provision.
– Lastly, several VINCI Group companies are being investigated under
competition law, and certain employees of VINCI Group subsidiaries
are subject, on a personal basis, to judicial enquiry procedures that aim
to determine whether they have participated in practices restricting
competition or made inappropriate use of corporate assets for the direct
or indirect benefit of political figures or parties. In this connection, the
Company received notification on 27 July 2005, of a report drawn up
by the competition authority regarding the signing of various public
sector contracts in the Ile de France region between 1989 and 1996.
VINCI does not expect these procedures to have a material negative
impact on its financial situation in the event of an unfavourable
outcome.
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