The following three-level hierarchy of fair values is used:
Every quarter, the internally calculated values of derivative instruments are checked for consistency with those sent to VINCI by the counterparties.
Measurement of retirement benefit obligations
The Group is involved in defined contribution and defined benefit retirement plans. For defined benefit plans, obligations are measured using the actuarial projected unit credit method based on assumptions such as the discount rate, future increases in wages and salaries, employee turnover, mortality rates and the rate of increase of health expenses. Those obligations may change if assumptions change, most of which are updated annually. Details of the assumptions used and how they are determined are given in Note K.29, “Provisions for employee benefits”. The Group considers that the actuarial assumptions used are appropriate and justified in the current conditions.
Measurement of share-based payment expense
The Group recognises a share-based payment expense relating to performance share plans and Group savings plans offered to employees or some of its employees. This expense is measured on the basis of actuarial calculations. The main actuarial assumptions (volatility, return on shares, etc.) adopted by the Group are described for each plan in Note K.30, “Share-based payments”.
Climate risks
The Group takes climate risks into consideration, based on its best knowledge, as part of its accounts closing assumptions and reflects their potential impact in the financial statements. The process used is described in Note A.3, “Specific arrangements”.
The Group has adopted a climate transition plan aligned with the Paris Agreement’s goal of limiting global warming to well below 2°C by the end of the century. The Group thus aims to:
In the face of the growing challenges posed by climate change and increasing pressure from society and regulators to adopt sustainable practices, VINCI has identified three major environmental risk categories: physical risks related to climate change impacts, transition risks due to the advent of more stringent regulations, and the risk of higher energy costs as a result.
Physical risks are usually covered by property/casualty insurance policies or taken into account in estimates of margins on completion. In general, when a loss occurs, the negative impact (the part of the risk that is not covered) is recognised in expenses for the period in question or, where applicable, is taken into account in profit or loss on completion for construction contracts. Certain physical risks may also result in opportunities or an increase in business levels, since some subsidiaries specialise in site clean-up work and/or repairs to damaged infrastructure following major climate-related events, such as hurricanes, storms and floods, or in risk prevention.
The main transition risks relating to developments in the markets in which VINCI operates have also been reviewed to the best of the Group’s knowledge. The Group’s ability to respond to these changes with sufficient speed could determine its success in winning new contracts.
The short-term risk of higher energy costs is factored into cash flows. Over the longer term, the Group is working to optimise the energy use of its buildings and infrastructure with a focus on energy sufficiency while decarbonising its energy mix, in particular by expanding self-consumption.
Certain expected market developments, such as the faster pace of energy retrofits of existing buildings and the growth of low-carbon forms of transport, are also opportunities for the Group. Information on these opportunities is provided in the Sustainability report.
Lastly, VINCI’s acquisitions process includes a review of environmental risks, which is presented to the Risk Committee when it meets to consider acquisition opportunities.
