Accounting policies
Under the terms of IFRIC 12 “Service Concession Arrangements”, a concession operator may have two types of activities:
In return for its activities, the operator receives remuneration from either of two actors:
Users, in which case the intangible asset model applies. The operator has a right to receive tolls (or any other form of remuneration) from users (vehicles, airlines, etc.) depending on traffic levels and passenger numbers in consideration for the financing, construction and operation of the infrastructure. The intangible asset model also applies whenever the concession grantor remunerates the concession operator based on the extent of use of the infrastructure by users, but with no guarantees as to the amounts that will be paid to it (under “pass through” or “shadow toll” agreements).
Under this model, the right to receive toll payments (or any other form of remuneration), net of any investment grants received, is recognised in the concession operator’s balance sheet under “Concession intangible assets”. This right corresponds to the fair value of the asset under concession plus the borrowing costs capitalised during the construction phase. It is amortised over the term of the arrangement in a manner that reflects the pattern in which the economic benefit derived from the asset under concession is consumed by the entity, starting from the entry into service of the asset.
The intangible asset model applies to most infrastructure concessions, in particular the concessions of VINCI Autoroutes in France, the main airports managed by VINCI Airports, certain bridges and tunnels operated by VINCI Highways, and Cobra IS’s main concessions.
Motorway concession companies generally use the straight-line method of amortisation for concession intangible assets. With respect to rights to operate airports under concession, the Group opted to amortise them from 1 July 2020 using the unit of production method, based on passenger numbers, having taken the view that the straight-line method no longer reflected the rate at which the economic benefits produced by the assets under concession were being consumed.
The grantor, in which case the financial asset model applies. The operator has an unconditional contractual right to receive payments from the concession grantor, irrespective of the extent of use of the infrastructure.
Under this model, the operator recognises a financial receivable, attracting interest, in its balance sheet, in consideration for the services it provides (design and construction). This financial receivable is classified under “Other financial assets”. The receivable is settled by means of the grantor’s payments received. The income calculated on the basis of the effective interest rate is recognised under revenue from ancillary activities.
In the case of bifurcated models, the operator may be remunerated partly by users and partly by the grantor. The part of the investment that is covered by an unconditional contractual right to receive payments from the grantor (in the form of grants or rental) is recognised as a financial receivable up to the amount guaranteed. The unguaranteed balance, of which the amount is dependent on the extent of use of the infrastructure, is recognised under “Concession intangible assets”.
VINCI Airports fully owns certain airports, including London Gatwick and Edinburgh airports. Its rights to operate these airports are presented in Note H.17.1, “Other intangible assets”.
