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 relative to cash flow from operations.
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.
As part of benchmark interest rate reforms, the Group transitioned to new indices during the first half of 2022. Coupons are now being calculated on the basis of the new indices. The accounting impacts are not material since the transition regarding hedged instruments and hedging instruments is taking place in a synchronised manner and in accordance with industry standards. Lastly, the transition to the new indices has no impact on the Group’s risk management policy.
This table shows the breakdown at 31 December 2022 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 | 16,697 | 85% | 2.70% | 345 | 2% | 8.18% | 2,514 | 13% | 5.81% | 19,556 | 3.20% |
| VINCI Energies | 36 | 100% | 1.37% | 36 | 1.37% | ||||||
| Cobra IS | 8 | 1% | 4.08% | 695 | 99% | 3.47% | 702 | 3.48% | |||
| VINCI Construction | 71 | 85% | 2.52% | 12 | 15% | 5.32% | 83 | 2.93% | |||
| Holding companies | 6,791 | 99% | 1.95% | 75 | 1% | 0.00% | 6,866 | 1.93% | |||
| Total at 31/12/2022 | 23,602 | 87% | 2.49% | 345 | 1% | 8.18% | 3,296 | 12% | 5.18% | 27,243 | 2.88% |
| Total at 31/12/2021 | 24,684 | 90% | 2.50% | 291 | 1% | 7.50% | 2,432 | 9% | 1.39% | 27,407 | 2.45% |
| Breakdown between fixed and floating rate after hedging | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Fixed rate | Inflation-linked | Floating rate | Total | ||||||||
| (in € millions) | Debt | Proportion | Rate | Debt | Proportion | Rate | Debt | Proportion | Rate | Debt | Rate |
| Concessions | 7,830 | 40% | 3.82% | 360 | 2% | 7.94% | 11,366 | 58% | 3.78% | 19,556 | 3.87% |
| VINCI Energies | 36 | 100% | 1.37% | 36 | 1.37% | ||||||
| Cobra IS | 8 | 1% | 4.08% | 695 | 99% | 3.47% | 702 | 3.48% | |||
| VINCI Construction | 74 | 89% | 2.46% | 10 | 11% | 5.99% | 83 | 2.86% | |||
| Holding companies | 3,184 | 46% | 1.54% | 3,682 | 54% | 4.20% | 6,866 | 2.97% | |||
| Total at 31/12/2022 | 11,131 | 41% | 3.15% | 360 | 1% | 7.94% | 15,752 | 58% | 3.86% | 27,243 | 3.63% |
| Total at 31/12/2021 | 15,650 | 57% | 2.46% | 311 | 1% | 7.18% | 11,447 | 42% | 0.38% | 27,407 | 1.64% |
VINCI is exposed to the risk of fluctuations in interest rates, given:
On the other hand, fluctuations in the value of derivatives designated as cash flow hedges are recognised directly in equity and have no effect on profit or loss (for the effective portion).
