2025 Universal Registration Document

General and financial elements

1.1.1 Business risks
ENERGY SOLUTIONS AND CONSTRUCTION

The Group’s Energy Solutions and Construction businesses serve a large number of public and private entities in 100 or so countries and operate under fixed-term contracts covering periods varying from a few weeks to several years. Performance under these contracts includes a design phase and then a construction phase, which ends with the project’s handover, followed by a warranty period.

Through its subsidiary Cobra IS, the VINCI Group has become a significant player in the production of renewable energy, mainly solar photovoltaic energy, in Brazil, Spain and the United States. This new business, at present involving financial amounts that are not material at Group level, may give rise to specific risks.

ENERGY SOLUTIONS AND CONSTRUCTION
Risk identification Risk management procedures

Before the contract is signed

  • Poor evaluation of the project, customer or country
  • Errors in design and cost estimates; inadequate calibration of price adjustment formulas
  • Unfavourable contractual terms and errors in interpreting contract clauses
  • Overestimation of available internal resources
  • Poor evaluation of partners, subcontractors and critical supplies
  • Poor technical evaluation of land contamination and pollution risks

Possible consequences:

Organisational, technical, contractual, logistical, administrative or regulatory difficulties affecting performance under the contract that could impact lead times, costs, cash flow, quality or the Group’s reputation

Before the contract is signed

  • Poor evaluation of the project, customer or country
  • Errors in design and cost estimates; inadequate calibration of price adjustment formulas
  • Unfavourable contractual terms and errors in interpreting contract clauses
  • Overestimation of available internal resources
  • Poor evaluation of partners, subcontractors and critical supplies
  • Poor technical evaluation of land contamination and pollution risks

Possible consequences:

Organisational, technical, contractual, logistical, administrative or regulatory difficulties affecting performance under the contract that could impact lead times, costs, cash flow, quality or the Group’s reputation

Risk management procedures
  • Prior analysis as part of a project selection meeting
  • Presentation to the VINCI Risk Committee before a bid is submitted (see paragraph 2.4.3, page 183) with risk scorecards
  • Checking of contractual price adjustment formulas and compensation of the impact of price fluctuations not covered by these formulas
  • Hardship or review clauses
  • Negotiation with the customer for a balanced sharing of risk
  • Assessment of the proper size and the profile of the teams in charge
  • Taking into account of feedback from previous projects during the design phase
  • Evaluation of the financial health of key customers, partners, subcontractors and suppliers
  • Analysis and qualification of land contamination and pollution risks
  • In-depth legal analysis of the legal framework and contract clauses

After the contract is signed

  • Insufficient preparation time
  • Errors in the selection of equipment and methods
  • Insufficient or poorly adapted human resources or supplies
  • Difficulty retaining employees (high turnover rates) and labour shortages
  • Difficult relationship with the customer, challenges to project acceptance by the customer, unfair calling of bonds
  • Communication problems between the various parties active on a worksite (contractor, partners, subcontractors, etc.)
  • Unexpected events and obstacles
  • Pollution or environmental accidents
  • Changes imposed by the customer during construction
  • Poor contract management
  • Significant changes in materials and supply costs that cannot be passed on to customers, tariff increases, free trade agreements brought into question
  • Disruption in the supply chain and raw material shortages
  • Default of partners (co-contractors, suppliers, subcontractors) or customers
  • Customer disagreement on invoicing and the final breakdown of expenses
  • Lower-than-expected wholesale electricity prices for renewable energy production assets
  • Risk of natural disasters
  • Damage to renewable energy production assets and associated business interruption loss

Possible consequences:

  • Organisational, technical, contractual, logistical, administrative or regulatory difficulties affecting performance under the contract that could impact lead times, costs, cash flow, quality or the Group’s reputation
  • Damage caused to third parties
  • Damage to the Group’s reputation
  • Fiscal instability

After the contract is signed

  • Insufficient preparation time
  • Errors in the selection of equipment and methods
  • Insufficient or poorly adapted human resources or supplies
  • Difficulty retaining employees (high turnover rates) and labour shortages
  • Difficult relationship with the customer, challenges to project acceptance by the customer, unfair calling of bonds
  • Communication problems between the various parties active on a worksite (contractor, partners, subcontractors, etc.)
  • Unexpected events and obstacles
  • Pollution or environmental accidents
  • Changes imposed by the customer during construction
  • Poor contract management
  • Significant changes in materials and supply costs that cannot be passed on to customers, tariff increases, free trade agreements brought into question
  • Disruption in the supply chain and raw material shortages
  • Default of partners (co-contractors, suppliers, subcontractors) or customers
  • Customer disagreement on invoicing and the final breakdown of expenses
  • Lower-than-expected wholesale electricity prices for renewable energy production assets
  • Risk of natural disasters
  • Damage to renewable energy production assets and associated business interruption loss

Possible consequences:

  • Organisational, technical, contractual, logistical, administrative or regulatory difficulties affecting performance under the contract that could impact lead times, costs, cash flow, quality or the Group’s reputation
  • Damage caused to third parties
  • Damage to the Group’s reputation
  • Fiscal instability

Risk management procedures
  • Detailed worksite preparation
  • Specific risk management systems tailored to the business line (e.g. Codex at VINCI Energies, Connect at VINCI Construction)
  • Remuneration policy in line with labour market constraints, depending on the sector, the region and the project’s location
  • Application of contractual price adjustment clauses
  • Transfer of risk to subcontractors and suppliers; contingency plans in the event of default
  • Campaigns to raise awareness about environmental risks, monitoring and follow-up of environmental performance indicators
  • Upstream supply chain secured when the bid is submitted and advances paid to subcontractors and suppliers to ensure the availability of materials
  • Contractual terms protecting against tariff changes and the resulting inflation
  • Prior selection of robust solutions or equipment to deal with uncertainties
  • Discussions with the customer, amicable settlement committees and legal action if necessary
  • Contract management
  • Payment guarantees, contract clauses
  • Suitable insurance policies (see paragraph 2.5, pages 184 to 186)
  • Regarding renewable energy production: securing the price set in the financial model through various contract types and combinations (long- or medium-term fixed-price contracts in the form of power purchase agreements, or PPAs); insurance policies to cover the specific risks of renewable energy production assets
CONCESSIONS

The risks of a concession contract, whose duration can vary from a few years to several decades, and which may even be entered into on a freehold basis, are carefully evaluated before bid submission during the design phase, which is generally much longer than it is in the Energy Solutions and Construction businesses, and through the competitive bidding process with the contracting authority.

The main risks relating to the operation of concession assets involve changes in motorway traffic levels or airport passenger numbers; the level of toll charges and of general fees or fees specific to the type of infrastructure (motorways, airports, etc.) and their collection; operating, maintenance and repair costs; and legal or regulatory developments during contract performance.

Price increases are usually determined by contractual formulas, the main aim of which is to offset at least some of the inflation risk.

Traffic levels on motorway concessions are correlated to economic activity and are generally affected by changing fuel prices and/or potential fuel shortages. Experience has shown that social incidents can also disrupt concession operations and lead to acts of vandalism, as was the case in France in 2018 and 2019 with the “yellow vests” movement, and in 2024 and 2025 due to road blockades by farmers affecting a portion of the network.

For airport concessions, passenger numbers may be impacted by the macroeconomic situation or by a variety of other events, including natural disasters or severe weather, as well as terrorist attacks or threats. Rates are set in accordance with the regulations applicable to the contract, which may or may not make reference to a return on invested capital.

Lastly, a health crisis like the one caused by Covid-19 could also have a very significant impact on traffic levels for transport infrastructure concessions, due to travel restrictions. Similarly, a major geopolitical crisis could result in bans on flights to and from countries on which sanctions have been imposed (currently the case for Russia) or that are engaged in conflicts (Israel, Lebanon and Iran, for example).

For all concession infrastructure under operation, provisions are taken to cover the cost of renovating installations – particularly motorway road surfaces and airport runways – as well as the cost of building maintenance, based on maintenance expense plans (see Note H.19.3 to the consolidated financial statements, pages 376 to 377).