The asset-related exchange rate risk related to ownership of assets in foreign currencies is generally, where possible, hedged by financial debt denominated in the same currency.
Interest rate risk is managed within the Group, making a distinction between the Concessions business, the activities of the Energy and Construction businesses, and the holding companies as their respective financial profiles are not the same.
For concession subsidiaries, interest rate risk is managed with two timescales: the long term, aiming to ensure and maintain the concession’s economic equilibrium, and the short term, with an objective of limiting the impact of the cost of debt on earnings for the period.
Over the long term, the objective is to ensure that the breakdown between fixed and floating rate debt is adjusted according to the level of debt, with a greater proportion at fixed rate when the level of debt is high.
The Energy and Construction businesses and the holding companies have a structural net operating cash surplus. For these activities, the objective is to ensure that financial assets and financial liabilities are well matched in terms of maturity.
To hedge its interest rate risk, the Group uses derivative financial instruments in the form of swaps or options of which the start may be deferred. These derivatives may be designated as hedges for accounting purposes or not, in accordance with the IFRSs. The Group takes care to ensure that the ineffective portion of hedges is not material.
At 31 December 2021, the Group used the approach permitted by the amendment to IFRS 7 and IFRS 9 “Interest Rate Benchmark Reform – Phase 1”, allowing it to not take into account the effects of the interest rate reform, including when assessing the highly probable nature of hedged interest flows, until the transition to the new reference rates becomes effective. As a result, interest rate swaps are still subject to hedge accounting.
To prepare for Phase 2 of the amendment, the Group has set up a dedicated working group that brings together all the stakeholders concerned, in order to anticipate the transition to the new rates as effectively as possible.
The main benchmarks used by the Group and concerned by the reform are Libor GBP and Libor CHF. The Group is in the process of signing various amendments implementing the transition for the reference rates due to be discontinued on 1 January 2022. The new benchmarks will apply from the first interest period in 2022. The Group has not yet finalised its transition method concerning Libor USD.
This table shows the breakdown at 31 December 2021 of long-term debt between fixed rate, capped floating rate or inflation-linked debt, and the part at floating rate before and after taking account of hedging derivative financial instruments:
| Breakdown between fixed and floating rate before hedging |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Fixed rate | Inflation-linked | Floating rate | Total | ||||||||
| (in € millions) | Debt | Proportion | Rate | Debt | Proportion | Rate | Debt | Proportion | Rate | Debt | Rate |
| Concessions | 17,658 | 89% | 2.82% | 291 | 1% | 7,50% | 1,978 | 10% | 1.20% | 19,928 | 2.73% |
| VINCI Energies | 38 | 100% | 1.42% | 38 | 1.42% | ||||||
| Cobra IS | 38 | 10% | 1.33% | 365 | 90% | 2.44% | 404 | 2.34% | |||
| VINCI Construction | 90 | 87% | 2.59% | 13 | 13% | 1.38% | 104 | 2.43% | |||
| Holding companies | 6,860 | 99% | 1.67% | 75 | 1% | 1.18% | 6,935 | 1.67% | |||
| Total at 31/12/2021 | 24,684 | 90% | 2.50% | 291 | 1% | 7.50% | 2,432 | 9% | 1.39% | 27,407 | 2.45% |
| Total at 31/12/2020 |
23,655 | 88% | 2.59% | 291 | 1% | 4.43% | 2,962 | 11% | 1.02% | 26,907 | 2.44% |
| , | Breakdown between fixed and floating rate before hedging | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Fixed rate | Inflation-linked | Floating rate | Total | ||||||||
| (in € millions) | Debt | Proportion | Rate | Debt | Proportion | Rate | Debt | Proportion | Rate | Debt | Rate |
| Concessions | 11,996 | 60% | 2.77% | 311 | 2% | 7.18% | 7,621 | 38% | 0.44% | 19,928 | 1.94% |
| VINCI Energies | 38 | 100% | 1.42% | 38 | 1.42% | ||||||
| Cobra IS | 38 | 10% | 1.33% | 365 | 90% | 2.44% | 404 | 2.34% | |||
| VINCI Construction | 90 | 87% | 2.59% | 13 | 13% | 1.38% | 104 | 2.43% | |||
| Holding companies | 3,488 | 50% | 1.42% | 3,447 | 50% | 0.04% | 6,935 | 0.74% | |||
| Total at 31/12/2021 |
15,650 | 57% | 2.46% | 311 | 1% | 7.18% | 11,447 | 42% | 0.38% | 27,407 | 1.64% |
| Total at 31/12/2020 |
15,553 | 58% | 2.67% | 315 | 1% | 4.29% | 11,039 | 41% | 0.43% | 26,907 | 1.77% |
VINCI is exposed to the risk of fluctuations in interest rates, given:
