VINCI : Report on the financial statements 2021

Report on the financial statements 2021

Report of the Board of Directors - sections A&B

A. Report on the financial statements for the year

1. Consolidated financial statements

In 2020, Covid-19 had a major impact, but VINCI showed its resilience and ability to adapt to an unprecedented situation. In 2021, we achieved a strong recovery, which is all the more impressive since the public health situation has not yet stabilised.

Our revenue was higher than in 2019 and our earnings rebounded, accompanied by record cash flow.

Business levels at VINCI Energies were very firm and its operating margin rose again, showing the wisdom of the company's market position and organisation. VINCI Energies is benefiting from a number of megatrends, including energy efficiency, increasing demand for electricity and the digital revolution.

At the start of the year, we combined VINCI Construction and Eurovia within a new business line. The benefits of that reorganisation are already being seen, with a tripartite structure focusing on specialty business areas, major projects and proximity networks in France and abroad. Both revenue and earnings beat 2019 figures and orders remain high due to strong momentum in our flow-business.

Order books, which in 2020 had been boosted by several exceptional contract wins, remained at record levels in 2021. This means that we have good visibility, allowing us to continue being selective and improving our margins.

At VINCI Autoroutes, we were pleased to see traffic levels rebound strongly after travel restrictions were lifted in the first half of 2021. Both light vehicle and heavy vehicle traffic figures are now higher than they were before the health crisis.

VINCI Airports, which was badly affected by the travel restrictions that remained in place in many countries for much of the year, saw a progressive improvement in passenger numbers from the summer onwards, although the situation continues to vary widely between regions. This business line also benefited from the initial impact of the drastic cost-cutting plans that had previously been introduced.

In terms of business development, the main event in 2021 was the closing of our acquisition of Cobra IS, the energy division of ACS. With this strategic deal, we intend to build a world leader in engineering, works and services in the energy field - where VINCI already has a strong presence - and accelerate our move into renewable energy concessions, a promising area in which Cobra IS has acknowledged expertise.

We also broadened our concessions portfolio, winning a 30-year contract for Manaus airport and six other airports in Brazil's North Region. We also added a fifth motorway public-private partnership (PPP) in Germany and the first motorway PPP in the Czech Republic.

I must also mention that VINCI, alongside partners including Air Liquide and TotalEnergies, has set up the world's largest investment fund dedicated to the development of clean hydrogen infrastructure.

The growth potential of VINCI's businesses, which are central to the issues facing tomorrow's world, has never been so great, with developments such as the transformation of cities and buildings to reduce their environmental impact, growing mobility needs that require lower-carbon transport infrastructure, and the digital revolution.

Given the urgent need for action, we have stepped up our environmental commitments, aware of the responsibility that we have as a market leader, while taking into account the workforce-related and social impact that our business activities have.

So VINCI - now based at l'archipel, our new head office in Nanterre that acts as a showcase for our expertise - is starting a new chapter in its long history with enthusiasm and determination.

Xavier Huillard

Chairman and Chief Executive Officer

VINCI - Report on the financial statements for the year 2021

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Report of the Board of Directors - sections A&B

Key figures

(in € millions)	2021		2020		2021/2020 change	2019
Revenue		49,396			43,234		+14.3%		48,053
(*)
Revenue generated in France (*)		26,319			22,912		+14.9%		26,307
% of revenue (*)		53.3%			53.0%				54.7%
Revenue generated outside France (*)		23,078			20,322		+13.6%		21,746
% of revenue (*)		46.7%			47.0%				45.3%
Operating income from ordinary activities		4,723			2,859		1,864		5,734
% of revenue (*)		9.6%			6.6%				11.9%
Recurring operating income		4,464			2,511		1,953		5,704
Operating income		4,438			2,459		1,979		5,664
Net income attributable to owners of the parent excluding non-recurring changes in		2,797			1,292		1,505		3,260
deferred taxes in the United Kingdom
Net income attributable to owners of the parent		2,597			1,242		+109.1%		3,260
% of revenue (*)		5.3%			2.9%				6.8%
Diluted earnings per share (in €)		4.51			2.20		2.31		5.82
Dividend per share (in €)		2.90 (**)			2.04		0.86		2.04
Cash flows from operations before tax and financing costs		7,884			5,919		1,965		8,497
% of revenue (*)		16.0%		13.7%				17.7%
Operating investments (net of disposals)		(1,077)			(994)		83		(1,249)
Operating cash flow		6,098			5,075		1,023		5,266
Growth investments (concessions and PPPs)		(815)			(1,085)		270		(1,065)
Free cash flow		5,282			3,990		1,293		4,201
Capital employed		48,792			46,258		2,534		50,058
Equity including non-controlling interests(***)		24,771			23,173		1,598		23,191
Net financial debt		(19,266)			(17,989)		-1,276		(21,654)

1. Excluding concession subsidiaries' revenue derived from works carried out by non-Group companies. (**) Dividend proposed at the Shareholders' General Meeting of 12 April 2022.
   (***) Adjusted as at 1 January 2020 following the IFRS IC's agenda decision of May 2021 clarifying how to calculate retirement benefit obligations. PPP: Public-private partnership.

Consolidated revenue totalled €49.4 billion in 2021, up almost 3% on an actual basis relative to 2019 and up 14.3% compared with 2020 (up 12.9% like-for-like).

Consolidated Ebitda totalled €7.9 billion (€5.9 billion in 2020), close to the 2019 figure of €8.5 billion, and equalled 16.0% of revenue.

Operating income from ordinary activities (Ebit) amounted to €4.7 billion. This was well above the 2020 figure of €2.9 billion but significantly lower than the €5.7 billion achieved in 2019. It equalled 9.6% of revenue compared with 6.6% in 2020 and 11.9% in 2019.

Recurring operating income amounted to €4.5 billion (€2.5 billion in 2020 and €5.7 billion in 2019). It includes the impact of share-based payments (IFRS 2) and a slightly positive contribution from companies accounted for under the equity method.

Consolidated net income attributable to owners of the parent was €2.6 billion in 2021, representing a 109% rebound compared with 2020 (€1.2 billion) but a 20% decrease relative to 2019 (€3.3 billion). Earnings per share, after taking into account dilutive instruments, was €4.51 (€2.20 in 2020 and €5.82 in 2019). The 2021 figure includes a non-recurring deferred tax expense in the United Kingdom, which had no cash effect. Excluding that non-recurring expense, consolidated net income attributable to owners of the parent was €2.8 billion in 2021, down 14% relative to 2019.

Free cash flow - after operating investments by the business lines - hit a record €5.3 billion (€4.2 billion in 2019 and €4.0 billion in 2020). This was much higher than expected, and partly resulted from a further significant reduction in the working capital requirement and current provisions.

Dividend payments and share buy-backs carried out in 2021, net of capital increases, represented a total outflow of €1.4 billion (€0.4 billion in 2020 and €1.7 billion in 2019).

2 Report on the financial statements for the year 2021 - VINCI

Report of the Board of Directors - sections A&B

Net financial debt at 31 December 2021 was €19.3 billion, a limited increase of €1.3 billion relative to end-2020. This was despite the acquisition of Cobra IS, which had a net impact of €4.2 billion.

VINCI still had a large amount of liquidity at 31 December 2021, i.e. €17.8 billion (€18.0 billion at 31 December 2020), breaking down into €9.3 billion of managed net cash (€10 billion a year earlier), and €8.5 billion of unused confirmed bank credit facilities (€8 billion a year earlier).

The Group carried out several bond issues and refinancing transactions totalling €1.8 billion. Debt repayments during the year amounted to €2.2 billion.

Order intake at VINCI Energies and VINCI Construction amounted to €42.4 billion in 2021, almost stable year on year (down 2%) despite a high base for comparison caused by some major project wins in 2020. The 4% increase in order intake in France partly offset the 7% decrease outside France. In addition, given the high level of demand in their markets and their historically large order books, these two business lines are maintaining a selective approach to taking on new business. At VINCI Energies, order intake rose 12%, while at VINCI Construction it fell 9% .

At 31 December 2021, VINCI Energies and VINCI Construction's combined order book amounted to €44.5 billion, up 5% year on year (up 9% outside France, down 1% in France). It grew at both VINCI Energies (up 11%) and VINCI Construction (up 3%), and represented 13 months of average business activity (nine months for VINCI Energies and 15 months for VINCI Construction). Business outside France made up 62% of the combined order book at end-December 2021.

1.1 Highlights of the period

1.1.1 Main changes in scope

Acquisition of Cobra IS

After announcing the agreement on 1 April 2021, VINCI completed its acquisition of ACS's energy business on 31 December 2021.

The acquisition gives VINCI several strong growth drivers:

• Cobra IS's business and geographical presence complement those of VINCI, through its acknowledged expertise in delivering turnkey EPC (engineering, procurement and construction) projects in the energy sector and with its strong local positions in the Iberian peninsula and in Latin America.
• VINCI's business model will benefit from Cobra IS's expertise in developing renewable energy concessions. The Group therefore intends to become a significant player in this sector, having identified new opportunities for the short and medium term eventually representing total capacity of around 15 GW, mainly in solar PV and onshore wind, in addition to several gigawatts of potential offshore wind projects. VINCI's financial strength will be a further advantage in accelerating the new unit's growth as a long-term manager and operator of renewable energy assets.

VINCI and ACS have also finalised a joint venture agreement, providing for the creation of a new entity that will have the right to buy, at market prices, renewable energy assets developed, financed, built and connected to the grid by Cobra IS. VINCI will own 51% of this entity, which will be fully consolidated in VINCI's financial statements.

The purchase price of €4.9 billion, which was financed entirely from VINCI's available cash, equates to an enterprise value of €4.2 billion plus €700 million relating to cash held by the new unit and various adjustments.

ACS will receive an earn-out payment of €40 million for each gigawatt (GW) of renewable power capacity added by ready-to-build projects developed by Cobra IS over a period of 8.5 years after closing and up to a limit of 15 GW, resulting in a maximum additional payment of €600 million.

In January 2022, José Maria Castillo Lacabex, CEO of Cobra IS, joined VINCI's Executive Committee.

VINCI - Report on the financial statements for the year 2021

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