VINCI : 2009 Interim Financial Statements

Regulatory News:

Key Figures

¹ The H1 2008 consolidated financial statements shown for comparison in this press release have been restated for the impact of the first application of Interpretation IFRIC 12 Service Concession Arrangements.
² Revenue including concession subsidiaries’ external construction revenue (work carried out by non-VINCI companies on behalf of concession grantors) in application of IFRIC 12.
³ Excluding concession subsidiaries’ external construction revenue.
⁴ Changes between 2008 and 2009 in operating profit from ordinary activities and net profit attributable to owners of the parent restated as (3.7%) and (1.2%), respectively, after restatement of an exceptional provision reversal in the interim financial statements at 30 June 2008.

VINCI’s (Paris:DG) Board of Directors, chaired by Yves-Thibault de Silguy, met on 31 August 2009 to finalise the interim financial statements at 30 June 2009. The Board also examined the outlook for 2009 and approved the payment of an interim dividend in respect of 2009.

In a difficult economic situation, the Vinci Group performed well overall in the first half of 2009, as reflected by the limited decline in activity levels and net earnings, thanks to the traffic recovery on the French motorways and the resilience of contracting operating margins. Despite the decrease in order intake compared with the first half of 2008, the order book remains at a high level, standing at more than €24 billion at 30 June 2009. Even though economic stimulus packages are not yet producing any tangible effects, the order book is benefiting from the dynamism in international markets of our major project and specialised business oriented enterprises.

VINCI’s consolidated revenue for the first half of 2009 was €15.2 billion, down 3.6% compared with the first half of 2008. This change is the result of a 5.6% organic decrease in activity, entirely attributable to the contracting business lines. The concessions operations recorded a slight increase as light vehicle traffic began to recover in the second quarter.

Regarding financing, VINCI has been able to obtain €1.2 billion of new long-term finance for ASF, contributing to the strengthening of the Group’s overall liquidity. Furthermore, two new project finance agreements for a total of nearly €1.4 billion, secured by revenue from operations, have enabled a motorway concession contract in Germany and, more recently, a PPP contract in Slovakia to be won. Both contracts generate contracting work for Group companies.

Overall, consolidated net financial debt has been reduced by nearly €1 billion over a twelve-month period.

In an environment that remains uncertain, VINCI is maintaining its course: new business selectivity, a rigorous approach to executing and operating projects, priority to cash and debt management.

Half-Year Results

Revenue

VINCI’s consolidated revenue for the first half of 2009 was €15.2 billion, down 3.6% compared with the first half of 2008. The factors explaining this slight reduction are a decline in business activity on a comparable structure basis (-5.6%), the positive impact of external growth (+3.3%) and the unfavourable impact of exchange rates (-1.3%).

In France, revenue amounted to €9.4 billion, down 6.3%, reflecting the stable situation at VINCI Concessions combined with a 7% decline in the contracting business lines.

Outside France, revenue increased 1.4% to €5.7 billion, a result of brisk business in major projects and at Entrepose Contracting, as well as the integration of Taylor Woodrow Construction in the UK. Revenue booked outside France represented 38% of total revenue for the first half of 2009 (43% in the contracting business lines).

Revenue by business line

Good resilience of operating margins – slight decline of net profit

Operating profit from ordinary activities amounted to €1,358 million for the first half, down 7.1% against 2008. Restated for non-recurring income recognised in 2008, the decrease in operating profit from ordinary activities was in line with that of revenue.

Operating profit from ordinary activities - by business line

* % of revenue, excluding concession subsidiaries’ external construction revenue.
**excluding non-recurring Escota provision reversal in 2008 (+€52m)

VINCI’s various business lines have performed satisfactorily overall, in view of the economic context in which they have been operating and a first quarter marked by unfavourable weather conditions in Europe.

VINCI Concessions was the main contributor to Group operating profit from ordinary activities (accounting for 63% of the total), with operating profit from ordinary activities of €856 million (compared with €901 million in the first half of 2008). Excluding the exceptional income booked by Escota in 2008, the concession subsidiaries’ operating profit from ordinary activities (€768 million) and their operating margin (40.9% of revenue) were stable compared with the first half of 2008.

The contracting business lines saw a 15% reduction in their operating profit from ordinary activities in the first half year to €466 million, with an operating margin of 3.6% of revenue (4.1% in the first half of 2008).

VINCI Energies saw a limited decline in its operating profit from ordinary activities, to €106 million, identical to the decline in its activity, maintaining its operating margin at 5%.

The decrease in Eurovia’s operating profit from ordinary activities should be kept in context, in view of the strong seasonal nature of road-building operations, both in France and abroad, as well as the unrepresentative nature of first half-year results in this business. Operating profit from ordinary activities was €36 million, a 1% margin (compared with €76 million and a 2.1% margin in the first half of 2008).

VINCI Construction’s operating profit from ordinary activities was €325 million, 4.4% of revenue, down 10% compared with the first half of 2008 (€362 million, 4.8% of revenue). Given the context, operating margins have remained at a good level in most divisions, both in France and abroad, in particular in specialised subsidiaries and those engaged in major projects.

The cost of net financial debt decreased by €16 million (4%) to €380 million under the combined effect of the reduction in the debt level, and, to a lesser extent, the fall in the average cost of finance, which was partly offset by lower returns on cash investments.

Consolidated net profit attributable to owners of the parent at 30 June 2009 was €690 million (compared with €733 million at 30 June 2008).

The changes in net profit by business line reflect the trends seen in operating profit from ordinary activities.

Net profit by business line

* excluding non-recurring Escota provision reversal in 2008: €34m after tax

Finance and balance sheet

Cash flow from operations (before tax and financing costs) remained relatively stable at €2,147 million (€2,179 million in the first half of 2008) and represented 14.2% of revenue at 30 June 2009, compared with 13.9% at 30 June 2008.

VINCI Concessions, the main contributor within the Group, increased its cash flow from operations by 2% to €1,396 million. VINCI Autoroutes France’s cash flow from operations improved to stand at €1,252 million, representing 66.7% of these companies’ revenue (compared with 66.4% in the first half of 2008).

The contracting divisions’ cash flow from operations was down by approximately 8% at €732 million representing 5.7% of revenue (€799 million and 6% of revenue at 30 June 2008).

The change in working capital requirement and current provisions, usually an outflow due to seasonal factors during the first half of the year, was a net outflow of €757 million in the first half of 2009 (compared with a net outflow of €390 million in the first half of 2008). This increased change in working capital requirement observed in the first half of 2009 was principally the consequence of application in France as from 1 January 2009 of the Loi de modernisation de l’économie, or LME (Economy Modernisation Act) which stipulates shorter third party payment terms, and, to a lesser extent, to the drawdown of advance payments on several major construction sites, in particular outside France.

Investments in operating assets (net of disposals) were down 7% at €442 million, compared with €473 million in the first half of 2008, reflecting the first effects of cost-cutting plans in the contracting business lines.

Free operating cash flow * was as a result positive at €272 million (compared with €503 million in the first half of 2008).

* Cash flow from operations after tax and finance costs, changes in working capital requirement and current provisions, and net investments in operating assets.

Growth investments in concessions amounted to €585 million (€531 million in the first half of 2008) and included €264 million at ASF and Escota under their current master plans, €160 million at Cofiroute (including in particular completion of work on the first section of the ‘Duplex A86’ opened at the end of June) and €80 million at Arcour to complete the new A19 motorway which entered service on 16 June of this year.

Dividends paid amounted to €553 million in total, including €524 million in respect of VINCI’s 2008 final dividend, of which 70% was paid in shares.

Consolidated capital employed amounted to €26.7 billion at 30 June 2009, up by €1.1 billion from the end of 2008 and by €0.4 billion from 30 June 2008. The concessions companies accounted for 95% of the total.

Consolidated equity stood at €9.7 billion at 30 June 2009, compared with €9 billion at 31 December 2008 and €8.5 billion at 30 June 2008.

Net financial debt amounted to €15.7 billion at the end of June 2009 (compared with €15.4 billion at 31 December 2008 and €16.7 billion at 30 June 2008), a decrease of €1 billion over the last twelve months. At €15.5 billion, the concession operating companies’ debt, of which repayment is ensured by receipts from operations, accounts for the entire consolidated debt.

The Group’s liquidities amounted to more than €12 billion at 30 June 2009 and comprised net cash and cash equivalents managed for €5.2 billion and unused confirmed medium-term bank credit facilities for €7.2 billion. This position allows VINCI to calmly approach its upcoming debt maturities (€1.7 billion in the second half of 2009 and €1.1 billion planned for 2010).

The Group’s financial structure has strengthened, with the net debt-to-equity ratio falling from 2 at 30 June 2008 to 1.6 at 30 June 2009.

Parent company’s results

The parent company’s net profit for the first half of 2009 was €545 million (€434 million in the first half of 2008).

Dividend payment

The Board of Directors has decided to pay an interim dividend in respect of 2009 of €0.52 per share, which will be paid in cash on 17 December 2009 (ex-date 14 December).

2009 outlook

After traffic levels continued to fall at the beginning of the year, prolonging the trend existing at the end of the previous year, VINCI Autoroutes France saw a rebound in the second quarter of 2009, limited to light vehicle traffic for the moment. This recovery continued during the summer.

Despite the decrease in order intake, the order book at the end of June 2009 of the contracting business lines (VINCI Construction, Eurovia and VINCI Energies) remains at a high level: standing at more than €24 billion, it is up by 6% compared with 30 June 2008 and by 4% compared with the end of December 2008. Benefitting little so far from economic recovery plans, this reflects both the diversification of the Group’s activities and its good positioning in the market for infrastructure and complex equipment, particularly in international markets.

On these bases, VINCI expects for 2009 of a slight increase of its motorway operating companies’ receipts and a 6% to 7% decline of revenue in its contracting businesses, where preference given to margin protection rather than maintenance of volumes.

Calendar

An analyst meeting and investor conference call will be held on Tuesday 1 September at 8.30 a.m. at the Pavillon Ledoyen, 1 avenue Dutuit, 75008 Paris.

The simultaneous telephone conference will be available on the following numbers:
+33 (0)1 72 28 01 54 (in French)
+44 (0) 161 601 8912 (in English)

This press release along with an analyst presentation (both in French and English) as well as the interim financial report (in French only) are available on VINCI’s web site: www.vinci.com

ANNEXES

Comment:

VINCI’s published consolidated financial statements at 31 December 2008 included the impact of the first application of Interpretation IFRIC 12 Service Concession Arrangements. This change in accounting method has also been applied to the consolidated financial statements for the first half of 2008, presented in this press release for comparison purposes.

INCOME STATEMENT

(1) % calculated on revenue excluding concession operators’ construction revenue
(2) Includes impact of dilutive instruments.

CONSOLIDATED BALANCE SHEET

CASH FLOW STATEMENT

ORDER BOOK

€ in billion