Published: November 01, 2009
Lettre du Trésorier
Marie Bastart
The company is distinguished by the very different nature of our two principal activities. Firstly, we have the contracting activities, consisting of construction, roadbuilding and energy and information technology services, which require little capital and which generally, have a positive cash flow. Secondly, we have the concessions activities which consume equity capital and require loans but generate steady and recurring long-term revenues. We are therefore simultaneously concerned with significant cash surpluses to be placed on the market and by long-term debt that has to be managed in order to finance investment programmes for the concessions. The system itself is a hybrid one. On the one hand, around a dozen segments or sub-segments cover a set of operating entities that work in the same area of activity and whose treasurers have a high degree of autonomy in managing their flows and their guarantees within the framework of the procedures set by us and approved by the group’s general management. On the other hand, we have a central treasury function made up of around nine people - three in the front office, three in the back office and three in finance - which acts in the following areas: management of market transactions in the broad sense – this means cash management with a cash pool that currently combines Germany and France - management of the centralised placement portfolio, the Vinci treasury notes programme and confirmed credit lines, the processing of foreign exchange, interest rate and commodities transactions on behalf of the holding company and the subsidiaries, processing of stock market transactions and the own share redemption programme, the negotiation of medium- and long-term finance with the particular feature that three of our companies – ASF, Cofiroute and the holding company – issue rated bonds. We also oversee the management of ongoing relations with the ratings agencies and bond investors, the monitoring of group business plans, which in particular allows us to monitor the development of our long-term risks and the financial structure ratios normally looked at by the ratings agencies, and lastly the negotiation of the catalogue of group banking terms.
MB: After college, where I studied a combination of arts, history and economics, I interrupted my DESS studies in banking and finance to take up the post of group treasurer in a large family-run civil engineering company where I had done a work placement, an offer which I found difficult to refuse at the time. I occupied the same post and then the post of export finance and structured finance manager for international operations at ETDE, a subsidiary of Bouygues, which had bought up the company in the mid-1990s, before being headhunted in early 2000 by the GTM Group for the post of group treasurer. I took up the post of assistant finance and treasury manager at Vinci following the merger between the GTM Group and Vinci during a particularly intense period when the group’s concessions activity was growing rapidly. I have been running this department since September 2004.
We are simultaneously concerned with significant cash surpluses to be placed on the market and by long-term debt that has to be managed in order to finance investment programmes for the concessions.
MB: The challenge for us has principally consisted of making continuous adjustments to some of our management policies in order to adapt to the changes in the economic climate. For example, in terms of placements, which for a long time we have been managing in a highly conservative manner with the objective of a performance linked to the EONIA, as early as July 2007 we gradually reduced the number of monetary UCITS to around 12 units, giving preference to funds invested in very short maturities which had little exposure to the securitisation market and structured credit products, whilst from September and October of the same year certificates of deposit occupied a dominant position. There have also been changes to the management of our treasury notes programme, the usage of which initially became limited due to the drying up of the market and then due to the increase in spreads, and then came to a complete halt following the collapse of Lehman Brothers, in order not to increase our placements in counterparty risk. In the same way, as regards the interest-rate risk, which is our principal risk, because we have a net debt of €16bn, all of which is within the group’s concessionary companies, we were highly active at the end of 2007 and throughout 2008 in order to protect ourselves from the rise and the volatility of the EURIBOR rate in the context of the inter-bank market crisis. We do this in an active but highly conservative way. As regards long-term interest rate risk, we set a minimum percentage of fixed-rate debt, which is maintained over time and which depends on the level of leverage of the respective concessions, this level being measured by the ratio of the net debt to the gross operating surplus. [[[PAGE]]]
MB: This is a difficult question. We are talking about a period of intense imbalance and with many imponderables. As regards the timing, and in particular the continuity of a future economic upturn, there are several possible scenarios: V, W and L shaped recessions. In terms of interest rates, we reckon that short rates should remain very low in 2009 in view of the economic climate but during the year we are not ruling out the risk of a strong increase in tensions in inflationary trends and long rates following the transfer of the private-sector debt to the public sector through massive relaunch plans. Generally speaking, the role of the treasurer as I see it is primarily to manage risks to maintain a certain degree of stability in the results regardless of the economic backdrop without any speculation. Accordingly, we always take care in our management policies to ensure that if our expectations are realised, we are able to make some opportunistic gains, but in the opposite case that our primary objective to secure results is not called into question.
MB: Up to now we have not had any significant problems with our banks. It is true that we have not really had to test them as regards, for example, the usage of our existing credit lines but we are quite calm about liquidity with over €11bn in cash and revolving credit available. For example, we can see in our new concessions projects the structured finance department of our subsidiary Vinci Concessions has managed to raise €3.8bn in finance over 2008, €2.9bn of which was from the banking system. Generally speaking, we are extremely careful about the quality of our relationship with our banks, especially those that form the inner circle. During a period of extreme crisis like the one we are going through, this consists of trying, as far as possible, not to aggravate their difficulties and to avoid panic even at the deepest point of the systemic crisis. In return, we expect they will continue to consider companies in the Vinci group as privileged clients with whom they have a global relationship. We think that this policy has worked quite well until now.
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