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2007 Annual results

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2007-09-06

2007-09-06

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  • 1. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 2007 ANNUAL ACCOUNTS
  • 2. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Disclaimer Veolia Environnement is a corporation listed on the NYSE and Euronext Paris. This document contains "forward-looking statements" within the meaning of the provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward- looking statements are not guarantees of future performance. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside our control, including but not limited to: the risk of suffering reduced profits or losses as a result of intense competition, the risks associated with conducting business in some countries outside of Western Europe, the United States and Canada, the risk that changes in energy prices and taxes may reduce Veolia Environnements profits, the risk that we may make investments in projects without being able to obtain the required approvals for the project, the risk that governmental authorities could terminate or modify some of Veolia Environnements contracts, the risk that our long-term contracts may limit our capacity to quickly and effectively react to general economic changes affecting our performance under those contracts, the risk that acquisitions may not provide the benefits that Veolia Environnement hopes to achieve, the risk that Veolia Environnements compliance with environmental laws may become more costly in the future, the risk that currency exchange rate fluctuations may negatively affect Veolia Environnements financial results and the price of its shares, the risk that Veolia Environnement may incur environmental liability in connection with its past, present and future operations, as well as the risks described in the documents Veolia Environnement has filed with the U.S. Securities and Exchange Commission. Veolia Environnement does not undertake, nor does it have, any obligation to provide updates or to revise any forward-looking statements. Investors and security holders may obtain a free copy of documents filed by Veolia Environnement with the U.S. Securities and Exchange Commission from Veolia Environnement. This document contains "non-GAAP financial measures" within the meaning of Regulation G adopted by the U.S. Securities and Exchange Commission under the U.S. Sarbanes-Oxley Act of 2002. These "non-GAAP financial measures" are being communicated and made public in accordance with the exemption provided by Rule 100(c) of Regulation G. This document contains certain information relating to the valuation of certain of Veolia Environnement’s recently announced or completed acquisitions. In some cases, the valuation is expressed as a multiple of EBITDA of the acquired business, based on the financial information provided to Veolia Environnement as part of the acquisition process. Such multiples do not imply any prediction as to the actual levels of EBITDA that the acquired businesses are likely to achieve. Actual EBITDA may be adversely affected by numerous factors, including those described under “Forward-Looking Statements” above. 2
  • 3. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 2007: another year of profitable growth, in line with objectives Sustained business momentum: revenue up 14.9% (1) Strong internal growth (+7.8%) Strategy of targeted external growth (+ 7.1%) Further improvement in recurring operating income (+11.9% (1)) Strong rise in net income (+22.3%) and net earnings per share (+13.7% (2) ) Capital position reinforced by a €2.6 billion capital increase in July 2007 [net financial debt/(cash flow from operations + repayment of operating financial assets)] = 3.3x Free cash flow before new projects (€906 million in 2007) After-tax ROCE: 10.9% Increase of 15.2% in the dividend from €1.05 per share to €1.21 per share (3) To be paid on May 27, 2008 (1) At constant exchange rates (2) Non-diluted from options but diluted from the increase in capital completed on July 10, 2007 (3) Subject to approval by the Annual Shareholders’ Meeting on May 7, 2008 3
  • 4. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 2007 Key Figures(€m) 35 000 32,628 4,219 28,620 30 000 25,570 4000 3,844 25 000 22,792 3,542 20 000 3500 3,336 15 000 10 000 3000 5 000 0 2500 2004 (1) 2005 (1) 2006 2007 2004 (1) 2005 (1) 2006 2007 Consolidated revenue +14.9% (2) Cash flow from operations +9.8% 2,469 2 500 2,222 1 000 933 1,904 762 2 000 800 1,629 630 1 500 600 477 1 000 400 500 200 0 0 2004 (1) 2005 (1) 2006 2007 2004 (1) 2005 (1) 2006 2007 Recurring operating income +11.9% (2) Recurring net income +22.5% (1) Accounts at December 31, 2005 & at December 31, 2004 were restated, to ensure comparability between accounting periods in the application of the IFRIC12 interpretation relating to the accounting treatment of concessions and the results booked in 2006 under the IFRS5 standard and shown in the income statement in the “Net income from discontinued operations” line. 4 (2) At constant exchange rates
  • 5. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Key figures at December 31, 2007 (€m) 12/31/06 12/31/07 Growth Consolidated revenue 28,620 32,628 +14.0% Cash flow from operations 3,844 4,219 +9.8% Operating income 2,133 2,497 +17.1% Net income 759 928 +22.3% Net income per share (€) (1) 1.90 2.16 +13.7% Net financial debt 14,675 15,125 - (1) Non-diluted from options but diluted from the increase in capital completed on July 10, 2007 5
  • 6. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Further increase in the dividend 2007 dividend (1) €1.21 per share (+15.2%) €1.21(1) €1.05 €0.85 €0.68 €0.55 €0.55 €0.55 2001 2002 2003 2004 2005 2006 2007 2007 pay-out ratio = 59.5% (1) Subject to approval by the Annual Shareholders Meeting on May 7, 2008 (2) After taking into account the dividend payment relative to the 2007 accounts. 6
  • 7. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Balanced contribution to growth from all 4 divisions By division By geographic zone Transportation Asia-Pacific Rest of the world Water 34% 17% 7% 5% North America 8% Europe Energy ex France France Waste 28% 36% 44% Services 21% Consolidated revenue at December 31, 2007: €32,628m 7
  • 8. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Balanced contribution to growth from all 4 divisions (€m) 10,928 10,088 Chg. at constant Internal growth exchange rates Water +9.0% +7.9% 9,214 Waste +25.5% +7.5% 7,463 Energy Services +12.5% +7.9% Transportation +14.0% +8.1% 6,896 6,118 VE Group +14.9% +7.8% 4,951 5,590 12/31/2006 12/31/2007 Consolidated revenue at December 31, 2007: €32,628m 8
  • 9. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Significant presence in growth markets (€m) Chg. at constant 14,256 exchange rates 13,403 France +6.4% Europe ex France +22.6% North America +7.6% Asia-Pacific +34.8% 11,682 Rest of the world +38.5% 9,498 VE Group +14.9% 2,817 2,790 2,269 1,702 1,200 1,631 12/31/2006 12/31/2007 Consolidated revenue at December 31, 2007: €32,628m 9
  • 10. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Solid growth in cash flow from operations (1) (€m) Δ current FX CFO margin 12/31/06 12/31/07 (1) 12/31/07 rates Water (2) 1,814 1,851 +2.1% 16.9% Waste (2) 1,190 1,461 +22.8% 15.9% Energy Services (2) 611 657 +7.4% 9.5% Transportation (2) 290 279 -3.8% 5.0% Other (53) (27) - - - Total from continuing operations 3,852 4,221 +9.6% Discontinued operations (8) (2) - - Total Group 3,844 4,219 +9.8% 12.9% (1) Cash flow from operations as defined by the Conseil National de Comptabilité’s (CNC) recommendation dated October 27, 2004 (2) Cash flow from operations 10
  • 11. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Double-digit growth in recurring operating income: up 11.9% (1) (€m) Recurring operating income margin Δ constant 12/31/06 12/31/07 12/31/06 12/31/07 FX rates Water 1,163 1,266 +9.3% 11.5% 11.6% Waste 648 803 +26.4% 8.7% 8.7% Energy Services 378 388 +1.8% 6.2% 5.6% Transportation 100 115 +13.9% 2.0% 2.1% Holding (67) (103) - - - Total Group 2,222 2,469 +11.9% 7.8% 7.6% (1) At constant exchange rates. +11.1% at current change exchange rates 11
  • 12. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Operating income up 17.9% (1) (€m) Operating Operating income income margin Δ current FX 12/31/06 12/31/07 12/31/07 rates Water 1,160 1,268 +9.2% 11.6% Waste 648 803 +23.9% 8.7% Energy Services 378 399 +5.6% 5.8% Transportation 14 130 +858.1% 2.3% Holding (67) (103) - - Total Group 2,133 2,497 +17.1% 7.7% (1) At constant exchange rates 12
  • 13. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Overview of year-over-year growth at half-year periods En M€ H1 2007 H2 2007 2007 Consolidated revenue 15,462 17,166 32,628 +10.9% +16.9% +14.0% Cash flow from operations 2,009 2,210 4,219 +5.2% +14.2% +9.8% Recurring operating income 1,236 1,233 2,469 +9.5% +12.8% +11.1% 13
  • 14. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Reconciliation of recurring operating income to operating income (€m) Δ current FX 12/31/06 12/31/07 rates Recurring operating income 2,222 2,469 +11.1% Non-recurring items Provisions & write-downs booked in transportation in Germany (86) - Transportation - +15 Other (incl. Energy Poland in 2007) (3) +13 Operating income 2,133 2,497 +17.1% 14
  • 15. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Water: Recurring operating income: €1,266m, +8.8% Operating income: €1,268m +9.2% 1350 1,268 1250 1,160 (€m) 1150 1050 1,002 950 850 750 650 31/12/2005 31/12/2006 31/12/2007 Operating income Satisfactory contribution of operations in France: decline in volumes due to the climate conditions during summer offset by the good level of contribution from the works business, new services, and improved productivity In Europe, Very good operating performance in the Czech Republic and Romania Positive outcome of a litigation in Berlin Equity interest of the EBRD in Veolia Voda Good improvement in results in North America: expansion of the Tampa Bay contract In Asia, continued growth: In China, expansion of the Shenzhen contract and full-year effect of Kunming, Sinopec, Urumqi and Changzhou contracts) In the Africa-Middle East region, strong results overall despite circumstantial difficulties in Gabon Technological Solutions: further growth in operating income 15
  • 16. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Waste: Recurring operating income: €803m, +23.9% Operating income: €803m 803 800 +23.9% (€m) 700 648 600 544 500 31/12/2005 31/12/2006 31/12/2007 Operating income In France, very good performance (development of higher value added services, increase in volumes treated in urban and industrial waste) and double-digit growth in operating income in hazardous waste In Europe (ex-France), very strong improvement in contribution to operating income (+55% increase in operating income), United Kingdom (+60%) thanks to internal growth and the full-year contribution from the acquisition of Cleanaway Germany, integration of Veolia Umwelt Services (formerly Sulo) in the 2nd half Good contribution of operations in Scandinavia and Central Europe In North America, double-digit growth in operating income (very favorable impact due to the contributions from hazardous waste and industrial services ) In Asia-Pacific, robust performance particularly in Australia 16
  • 17. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Energy: Recurring operating income: €388m, up 2.8% Operating income: €399m +5.6% (€m) 399 400 378 315 300 200 31/12/2005 31/12/2006 31/12/2007 Operating income Impact of mild weather Smaller contribution of sales of excess CO2 quotas France: Growth in contribution of specialized subsidiaries Outside France: double digit growth in business and operating income Very strong increase in the contribution of the Central European zone (Czech Republic, Poland) Continued good level of business activity in the Southern European zone 17
  • 18. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Transportation: Recurring operating income: €115m, up 15% Operating income: €130m vs. €14m at December 31, 2006 130 (€m) 117 +858% 100 14 0 31/12/2005 31/12/2006 31/12/2007 Operating income In France, satisfactory increase in business and results, effect of the full-year consolidation of SNCM In Europe: Favorable progression in Marschbahn and upturn in the contribution from Germany Impact of the start-up of new contracts in the Netherlands In North America, improved contribution from transit and increased results in transportation on demand In Australia, further growth in business and results 18
  • 19. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 €3,973m allocated to new projects & acquisitions (€m) Good control of maintenance capital spending (4.9% of revenue) 1,590 Further growth in existing operations 1,335 Increase in new projects and acquisitions 3,973 Total capital expenditures 6,898 Asset disposals (366) Minority interest impacts linked to new acquisitions (49) Repayment of operating financial assets (395) Net capital expenditures and investments 6,088 19
  • 20. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 €3,973m allocated to new projects & acquisitions (€m) Growth Financial Operating incl. Industrial New Maintenance change in projects financial Total consolidation assets capex scope Water 531 58 335 939 207 2,070 Waste 554 84 128 1,974 18 2,758 Energy Services 263 81 131 819 73 1,367 Transportation 226 35 97 223 36 617 Other 16 26 26 18 - 86 Total at 12/31/07 1,590 284 717 3,973 (1) 334 6,898 Total at 12/31/06 1,411 270 740 1,424 361 4,206 (1) Of which €954m linked to internal growth and €3,019m related to acquisitions. 20
  • 21. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 4 significant acquisitions made in 2007 Germany Veolia Umwelt Services (formerly Sulo), the n°2 waste treatment company Consolidation date: July 2, 2007 – Contribution to Veolia’s 2007 revenue : €628m Enterprise value: €1,310m (estimated amount after the disposal of Sulo Technology (a container manufacturer) to Plastic Omnium) Disposal on July 29, 2007 of Sulo Environmental Technology to Plastic Omnium (revenue of around €200m) Italy VSA Tecnitalia (Veolia Servizi Ambientali Tecnitalia) (formerly TMT), the largest private operator in the Italian thermal waste treatment market (estimated revenue in 2011: €200m) Consolidation date: October 3, 2007 – Contribution to Veolia’s 2007 revenue : €26m Enterprise value: €338m North America TNAI, the largest portfolio of district heating and cooling networks in the United States Consolidation date: December 31, 2007 – No contribution to Veolia’s 2007 revenue Entreprise value: $788m United Kingdom Several unregulated businesses of Veolia Water Outsourcing Ltd (former Thames Water) Consolidation date: November 28th, 2007 – Contribution to Veolia’s 2007 revenue: €15m Enterprise value: €233m 21
  • 22. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 More than €3.9bn allocated to new projects or acquisitions By division By geographic zone Transportation Rest of the World 6% (4) Water Asia-Pacific 24% (1) 2% 14% Energy Services 20% (3) Waste Europe North America 63% 50% (2) 21% (1) Including Lanzhou, Haikou, Tianjin Shibei (China), Oman Sûr (Sultanate of Oman), Hynix (South Korea), non-regulated water businesses at Thames Water (U-K) (2) Including integrated contracts (United Kingdom), certain assets of Allied Waste Industries, Marisol (United States), Cleanaway Asia (China), TMT (Italy) and Sulo (Germany) (3) Including Pannon Power & Sinesco (Hungary), Kolin (Czech Rep.), Varna (Bulgaria), Harbin & Jiamusi (China), TNAI (North America), 22 (4) Including People Travel Group (Sweden), SNCM ship (France)
  • 23. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 From revenue to net income (€m) 12/31/06 12/31/07 Δ12/31/07 12/31/06 Revenue 28,620 32,628 +14.0% Operating income 2,133 2,497 Cost of net financial debt (701) (817) Other financial income (expenses) (34) +1 Tax (410) (420) Equity in net income of affiliates +6 +17 Net income from continuing operations 994 1,278 +28.5% Net income attributable to minority interests (236) (327) Net income from continuing operations 758 951 Net income 759 928 +22.3% Recurring net income 762 933 +22.5% 23
  • 24. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Change in cost of borrowing In €m Δ12/31/07 12/31/06 12/31/07 12/31/06 Cost of net financial debt (701) (817) (116) Impact from the variation in the average debt - - (35) Impact from the variation in interest rates - - (59) Impact from the revaluation of non-hedging derivative instruments (22) Cost of borrowing: 5.49% vs. 5.07% in 2006 24
  • 25. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 From recurring net income to net income (€m) 2007 Recurring net income 933 Non-recurring operating income impact +28 Disposal of discontinued operations (Transport in Denmark…) (23) Non-recurring tax +11 Other (including minority interests on items above) (21) Net income 928 25
  • 26. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Change in net financial debt (NFD) at December 31, 2007 New projects 3,973 (€m) Dividends paid (2,852) 564 Interest VE S.A. (329) Investments paid capital Currency 14,675 excl. new increases(2) effect 15,125 projects 786 (221) & other Capital increase (3,635) (157) excl. VE & other 14,675 Disposals 2,925 14 889 Cash flow (366) generated (395) (1) by the Repayment of operations operating financial assets NFD at Dec. 31, 2006 NFD at Dec. 31, 2007 Free cash flow before new projects = €906m (1) Including the recovery by the municipality of the Orvade financing contract for €34m (2) Including the €2.6 billion capital increase completed on July 10, 2007. 26
  • 27. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Debt ratio and ratings 4x 3.9 x 3.6 x 3.4 x 3.5x (1) 3.3 x Net financial debt/(cash flow from operations ex operations + Repayment of operating financial assets) 3x 12/31/2004 12/31/2005 12/31/2006 12/31/2007 Adjusted Adjusted Debt ratio target: between 3.5 x and 4 x (1) 3.83 x before taking into account the capital increase announced on June 12, 2007 Moody’s A3/P-2 Stable (cf. October 2007 report) Standard & Poor’s BBB+/A-2 Stable (cf. June 2007 report) 27
  • 28. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Further increase in after-tax ROCE Strong improvement in after-tax ROCE since 2002 10.9% 10.8% 10.2% 9.1% 8.3% 8.3% 7.0% 6.4% 2002 2003 2004 2004 2005 2005 2006 2007 French GAAP IFRS standards before IFRS standards with application of IFRIC 12 application of IFRIC 12 on concessions on concessions 28
  • 29. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 STRATEGY & OUTLOOK
  • 30. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Veolia Environnement: A compelling business model Leadership in integrated environmental services across all businesses Complementary services with strong synergies among the four divisions Commitment to sustainable development in all of our operations Improved environmental and economic efficiency, conservation and reuse, recycling and recovery, reduction of greenhouse gas emissions and other harmful environmental impacts Long-term contracts demonstrating long-term and secure visibility of cash flows Customer base = 67% municipal; 33% industrial and commercial Geographic presence in regions which represent strong growth opportunities in environmental services with limited or well managed risk: Europe, North America and select countries in the Asia-Pacific region and the Middle East Outlook continues to point to robust and profitable growth 30
  • 31. Veolia Environnement France : revenue up 6.4% to €14,256m FRANCE Hydropale Leslys (transportation) - Length: 30 years – Cumul. revenue: €459m Dunkirk Lille Morbihan departmental council (transportation) – Length: 7 years – Cumul. revenue: €143m Lafarge Ciments (transportation) Abbeville Charleville-Mézières - Freight train between Bordeaux & Toulouse - Length: 4 years – Cumul. revenue: €10m SNCM (transportation) - Length: 6.5 years – Cumul. revenue: €1bn Gonesse Achères Renault Tram in Nice (transportation) - Length: 7 years – Cumul. revenue: €595m Bartin Recycling Group (1) (waste) – 2006 revenue: €249m SIOM Claye-Souilly Dunkirk waste-to-energy plant (waste) Chevreuse – Length: 11 years – Cumul. revenue: €50m Morbihan Valley Hydropale (port of Dunkirk) – Marpol waste treatment plant (waste) Grand Ouest WEEE Bartin Grand Ouest WEEE recovery plant (waste) Recycling Gp Mâcon New equipment (additional 16 MW) of the « « Biomass Biogas » project in Claye-Souilly (waste) – Length: 15 years – Cumul. revenue: €160m Leslys SIOM Chevreuse Valley (waste) – Length: 5 years – Cumul. revenue: €25m Greater Mâcon region (water & wastewater) (water) - Length: 10 years – Cumul. revenue: €59m ST Micro Lafarge Ciments Abbeville (water) – Length: 15 years – Cumul. revenue: €22m Gonesse (water) – Length: 15 years – Cumul. revenue: €27m Nice Sainte-Maxime (water) – Length: 12 years – Cumul. revenue: €32m Achères nitrogenous pollution treatment plant (water) Ste- Maxime Lille urban community –Organic recovey center – Séquedin (energy) Socata Cap dAgde SNCM – Length: 11 years – Cumul. revenue: €7m STMicroelectronics - Crolles (energy) - Length: 6 years – Cumul. revenue: €27m Charleville-Mézières – DSP (energy) - Length: 20 years – Cumul. revenue: €41m Contract start-up Cap dAgde – DSP (energy) - Length: 18 years – Cumul. revenue: €41m Contract won or renewed Socata (EADS)- Tarbes site (multi-services) Company acquisition - Length: 3 years – Cumul. revenue: €10m Renault – Ile-De-France sites (multi-services) (1) Finalized in Feb. 2008 – Length: 5 years – Cumul. Revenue: €600m
  • 32. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Europe (outside France): revenue up 22.6%(1) to €11,682m Finnmark UNITED KINGDOM London Borough of Lambeth (waste) – Length: 7 years – Cumul. revenue: €156m Southwark council (2) (waste) – Length: 25 years – Cumul. revenue: €900m Shropshire (waste) – Length: 27 years – Cumul. revenue: €1bn Norway United Utilities (construction) (water) – Cumul. revenue: €62m Thames Water’s unregulated business (water) – 2008 estimated revenue: €149m BELGIUM De Lijn (transportation) – Length: 5 years – Cumul. revenue: €165m GERMANY SULO (waste) – 2008 estimated revenue: €1.2bn Rogaland Netherlands SULO Landkreis Bautzen (waste) – Length: 7 years – Cumul. revenue: €17m The Hague Brabant Bautzen NETHERLANDS De Lijn The Hagues – Harnaschpolder plant (DBFO) (water) Thames Water’s United Utilities Germany - Global operating period: 30 years – Global cumul. revenue: €1.2bn unregulated business Slovakia Belgium Bratislava Brabant (transportation) – Length: 8 years – Cumul. revenue: €480m Shropshire Lucenec SWITZERLAND United Kingdom London Borough Hungary Novartis (multi-services) – Length: 7 years – Annual revenue: €140m Southwark of Lambeth Pannon Power Sinesco NORWAY Novartis Finnmark (transportation) – Length: 8 years – Cumul. revenue: €168m Switzerland Rogaland (transportation) – Length: 5.5 years – Cumul. revenue: €226m SLOVAKIA ST Micro Espool - Lucenec & Rekotak – Bratislava (energy) TMT - Espool : length of acquired contracts: 30 years – Cumul. revenue: €300m Bulgaria - Rekotak : length of acquired contracts: 29 years – Cumul. revenue: €160m Varna HUNGARY Spain Italy Pannon Power - biomass (energy) – Rev. from acquired contracts: €600m Sinesco (energy) – 2007 revenue: €31m BULGARIA Toplofikacja Varna EAD (energy) – Annual revenue: €8m Campo de Dalias ITALY TMT (waste) – 2008 estimated revenue: €140m Contract start-up STMicro – Agrate (energy) – Length: 6 years – Cumul. revenue: €20m Contract won or renewed SPAIN Company acquisition Campo de Dalias (DBO) (water) – Operating period: 15 years – Cumul. revenue: €78m (incl. construction) (1) At constant exchange rates 32 (2) Announced in Feb. 2008
  • 33. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 North America: revenue up 7.6%(1) to €2,790m NORTH AMERICA Milwaukee Metropolitan Sewerage District (water) – Length: 10 years – Cumul. revenue: €272m Tampa Bay (DBO) (water) - Operating period: 13 years – Cumul. revenue: €108m (incl. construction) Canada Partnership with Enpar technologies (water) Pinellas county (waste) - Length: 17 years – Cumul. revenue: €356m (incl. works) Assets (solid waste) of Allied Waste Enpar Industries, Inc. (waste) Milwaukee TNAI Boston Marisol (waste) – 2006 revenue: €18m Marisol United States Greentree Greentree landfill (Pennsylvania) – biogas collection & treatment (waste) Las Vegas Assets of Allied Waste Industries Thermal North America, Inc. (energy) – 2007 revenue: $368m Tampa Bay Boston (2) (transportation) – Length: 3 years Pinellas Las Vegas(2) (transportation) – Length: 2 years Contract start-up Contract won or renewed Company acquisition Partnership with other company (1) At constant exchange rates (2) Announced in Jan. 2008 33
  • 34. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Asia – Pacific: revenue up 34.8%(1) to €2,269m CHINA Tianjin-Shibei (water) – Length: 30 years – Cumul. revenue: €2.5bn Jiamusi Lanzhou (water) Seoul - Length: 30 years – Cumul. revenue: €1.6bn Harbin Soonchunhyang Haikou (water) - Length: 30 years – Cumul. revenue: €776m South Korea Jiamusi (energy) - Length: 25 years – Cumul. revenue: €650m Tianjin Harbin (energy) – 2007 revenue: €5m China Jiujiang (BOT) (waste) – Length: 29 years – Cumul. revenue: €92m Lanzhou Cleanaway Asia (waste) – Length of acquired contracts: 22 years – Cumul. revenue: €200m Cleanaway Asia Japan TAIWAN Jiujiang Bali – Taipei County (waste) Bali Chiba - Length: 15 years – Cumul. revenue in JV: €154m Singapore Haikou Taiwan SOUTH KOREA Seoul (transportation) – Length: 10 years – Cumul. revenue: €460m Cleanaway Asia Soonchunhyang teaching hospital (energy) National – Length: 5 years – Cumul. revenue: €11m Environmental Agency SINGAPORE Cleanaway Asia (waste) – Length of acquired contracts: 22 years – Cumul. revenue: €715m Australia National Environmental Agency (waste) – Length: 5 years – Cumul. revenue: €28m Brookers AUSTRALIA Sydney Sydney (DBO) (water) Transit First – Operating period: 20 years – Cumul. revenue: €540m (incl. construction) Melbourne (transportation) – Length: 1 year – Cumul. revenue: €422m Transit First & Brookers (transportation) – 2007 overall revenue: €11m Melbourne Contract won or renewed JAPAN Company acquisition Chiba (water) – Length: 3 years – Cumul. revenue: €18m (1) At constant exchange rates 34
  • 35. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Middle East: a new source of growth in the medium term SULTANATE OF OMAN Israel Sûr (BOO) (water) Delek Group – Length: 22 years – Cumul. revenue: €434m (incl. construction) Kingdom of Bahrain UNITED ARAB EMIRATES Arcapita Fujairah (construction) (water) – Cumul. revenue: €547m Fujairah F2 O&M Company (water) – Length: 12 years – Cumul revenue: €71m Palm Jumeirah (1) (construction) (water) - Cumul. revenue: €12m Burj Dubai Tower (1) (DBO)(water) – Length: 3 years (excl. construction) – Cumul. revenue: €10m United Arab Emirates Burj Dubai Tower Fujairah SAUDI ARABIA Palm Jumeirah Fujairah F2 Marafiq – Jubail & Yanbu (construction) (water) Marafiq – Cumul. revenue: €647m O&M Cy KINGDOM OF BAHRAIN Sûr Partnership with Arcapita (energy) Saudi Arabia ISRAEL Delek Group – Cogeneration plant on the Ashkelon site (energy) – Length: 23 years Sultanate of Oman – Cumul. revenue: €83m Contract start-up Contract won or renewed (1) Announced in Jan. 2008 Partnership with other company 35
  • 36. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Water: global leadership position supported by… Long-term Public-Private-Partnership (concession) type contracts Continued trend toward outsourcing (less than 20% of the European market and less than 10% of the US market are privatized while operations of private companies are not yet significant given the size of markets in Asia and the Middle East) Increasingly stringent environmental standards Concentration of the population in urban zones Strong technological positioning Veolia Water Solutions and Technologies: average revenue growth of around 20% per year between 2003-2007 Wide range of technological offerings (re-use, scarcity of water as a resource) Technological offerings to meet demand for (thermal & membrane) desalination Technological offerings minimizing environmental impact (zero discharge: Z.L.D.) Simultaneous development of D&B and Technological Solutions (breakdown: 60%/40%) 36
  • 37. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Waste: making waste into a resource Leadership position across the full value chain Acceleration of development in major integrated contracts (PFI type, Shropshire, Southwark, etc.) Well-managed external growth strategy Example: United Kingdom - Cleanaway: a successful integration (~15% market share, etc.) Strengthened operations in the fast growing recycling business line In France, in metals with the acquisition of Bartin Recycling Group In Germany, in paper and plastics with the acquisition on July 2, 2007 of Veolia Umwelt Services (formerly Sulo) Accelerated development in waste recovery (biogas, biofuels, recycling of oily waste) Balanced contribution of operations, well managed risk profile Example: in the United States: 40% of revenue in solid waste, 30% in industrial services, 20% in toxic waste and 11% in Waste-to-Energy (incineration) 37
  • 38. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Energy: a development model based on energy & environmental efficiency and an excellent fit with the global offering of solutions Leadership position in Europe and North America in energy services An answer to environmental challenges based on the optimization of local energy management and the diversification of energy sources, including renewables An important complement to the Group’s range of global offerings A balanced client mix: municipal customers (58% of revenue) industry and service sector customers (42% of revenue) Geographic coherence: significant operations in France, Western, Southern and Central Europe, North America and developing markets in China and Australia Strong contribution to multi-service contracts 38
  • 39. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Transportation: a key player in a growing market An answer to a crucial environmental challenge and to the needs of large urban areas Leading position in the global public transportation market (€460bn (1)) that is still in the early stages of outsourcing (15%) An offering of multi-modal and international services Tailored delegated management contracts (transportation on demand, etc.) Development of value added services for the client combined with greater efficiency (1) 2008 estimated ex Russia, Africa and Middle East 39
  • 40. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Solid fundamentals to meet the cyclical uncertainties prevailing in 2008 A development model primarily based on long-term contracts synonymous with ongoing cash flow generation A positive evolution in the business and geographic mix in the last few years (disposal of water equipment businesses in the United States in 2002 and 2003) Balanced geographic exposure 44% of revenue in France, 36% in Europe outside France, nearly 10% in North America (including the contribution from TNAI in 2007 proforma full-year revenue) Growing importance of new development zones (Africa, Middle East, Asia-Pacific) Significant evolution of waste operations: Accelerated geographic diversification: Consolidation in the United Kingdom, acquisition in Germany Significant development of new and stable value-creating business lines Balance between the various business lines (examples: solid waste, industrial services, etc.): Integrated contracts, biogas and waste-to-energy operations, recycling, with a strong position in paper and metals In the United States, diversification of the client base, with municipal customers, the oil industry and the military/civil service. 40
  • 41. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 2008 objectives Confirmation of at least 10% revenue growth Double-digit growth in cash flow from operations Double-digit growth in net income 41
  • 42. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Medium-term objectives Robust growth to be maintained Average annual revenue growth of 8% to 10% After-tax ROCE : 10% (ex potential effect related to timing of acquisitions) Continued commitment to balance sheet objectives: net financial debt/(cash flow from operations + repayment of operating financial assets) to range between 3.5x and 4x Dividend policy to be maintained : payout to range between 50% & 60% of recurring net income 42
  • 43. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 APPENDICES
  • 44. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 FINANCIAL APPENDICES
  • 45. Veolia Environnement Cash flow (€m) 2006 2007 Cash flow from operations (1) 3,844 4,219 Repayment of operating financial assets +438 +395 (2) Total cash generation 4,282 4,614 Investments ex. new projects (2,782) (2,925) Change in WCR (112) (167) Asset disposals +355 +366 Rights issue reserved for minority shareholders +82 +206 Tax paid (343) (417) Interest paid (596) (786) Other +15 +15 = Free cash flow before new projects = 901 = 906 (1) o/w cash flow from discontinued operations: (€2m) in 2007 & (€8m) in 2006 (2) o/w the recovery by the municipality of the Orvade financing contracts for €34m
  • 46. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Changes in net financial debt (€m) 2006 2007 Net financial debt at January 1st 13,871 14,675 Free cash flow (901) (906) Investments in new projects +1,424 +3,973 Dividends paid +479 +564 Capital increase - VE (165) (2,852) (1) Impact of exchange rates and other (33) (329) Net financial debt at December 31 14,675 15,125 Change in debt +804 +450 (1) Including €2.6 bn capital increase completed as July 10, 2007 46
  • 47. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Debt management: the Group has further strengthened its financial stability Ratings Moody’s: A3/P-2 Stable Standard & Poor’s: BBB+/A-2 Stable Elimination of the structural subordination status 2007 bond issues: February: €200m maturity August 2008 May: €1bn maturity 2022 (15 years) October: £500m maturity 2037 (30 years) Further extension of average maturity: gross debt (€18.2bn): 7.7 years [vs. 6.6 years in 2006] net financial debt (€15.1bn): 9.2 years [vs. 7.8 years in 2006] 74% of net debt is at a fixed rate or a capped floating rate 66% of gross debt (after swaps) is denominated in euros (10% in USD and 10% in GBP) Group liquidity: €8.1bn including €5.0bn in undrawn credit lines 47
  • 48. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Structure of debt By interest rate By currency Other 14% Floating rate 26% GBP 10% USD 10% Euro 66% Fixed rate 74% (net financial debt after hedges) (gross debt after hedges) 48
  • 49. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Pre-tax ROCE by division Average capital employed (€m) Pre-tax ROCE (%) 2006 2007 2006 2007 Water 4,905 5,688 18.6% 18.1% Waste 4,729 5,890 12.4% 12.5% Energy Services 2,395 3,013 14.1% 11.7% Transportation 1,310 1,505 7.4% 7.6% 49
  • 50. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 APPENDICES: OPERATIONAL
  • 51. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Significant operations in fast growing desalination market New major desalination references More than 100 years experience in desalination Construction and/or operation of around 13% of the world’s seawater desalination capacity (1,600 plants with 5.3 million m3/d) capacity * Chosen to design & build one of the largest desalination plants that uses Multiple Effect Distillation (MED) for the city of Jubail and the Eastern province of Saudi Arabia (800,000 m3//d ) Construction and operation of the world’s largest seawater reverse osmosis (SWRO) plant in Ashkelon, Israel (capacity of 320,000 m3/d) An estimated 80% market share in Multiple Effect Distillation (MED) Ashkelon desalination plant Demonstrating technological leadership Leader in thermal and reverse osmosis desalination processes Focused on technological programs (e.g. ARAMIS –Veolia’s Membrane Center of. Expertise (choice of the appropriate solution via the characterization of performances of the membranes in the market, identification of deposits and proposition of solutions in terms of pretreatment) And proactive in a growing market Robust growth expected in global production capacity, up from 39.9 million m3/day in 2006 to 97.5 million m3 per day by 2015* Gulf countries account for about 46% of today’s production capacity Saudi Arabia and the United Arab Emirates are currently the 2 largest markets, followed by the United States, Spain and China Steady trend towards desalination plants with increasingly large production capacity, both in membrane and thermal processes Main competitors: Doosan (South Korea), Impreglio (Italy), GE, Suez and Abengoa/Befesa (Spain) 51 *Estimation of global desalination capacity: Global Water Intelligence “Desalination Markets 2007”
  • 52. Veolia Environnement Water Recycling and Reuse More than 3 million m3/day of total installed capacity More than 140 references worldwide MF/UF/RO membrane technologies/dedicated technologies Australia, Kwinana : Water Recycling : 16,700 m3/d Membrane technologies Singapore, Kranji plant : Membranes Water Recycling : 40,000 m3/d Membrane technologies South Africa, Durban : Industrial Reuse : 40.000 m3/d Dedicated filtration steps Actidisk® Spain, Barcelona : Water Reuse for irrigation and aquifer recharge : 302,400 m3/d Dedicated filtration technology Actidisk®
  • 53. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Veolia Environnement North America Providing leadership in environmental management • Market leadership in Fully integrated waste • Leading energy services • Leading private water services through management company company, including the transportation operator in municipal Public-Private and a leader in industrial largest portfolio of heating North America, including Partnerships, industrial waste services with key and cooling systems in the bus and rail commuter outsourcing and design- market positions across US and comprehensive services, shuttle, build solutions and the entire waste energy and facility paratransit and technologies management chain management for buildings customized transportation and industrial operations on demand Revenue: $850 million Revenue: $2 billion Revenue: $400 million* Revenue: $1.1 billion 2007 Revenue: Approximately $4.4 billion* Total Employees 31,000 * Includes full-year 2007 contribution from TNAI acquisition on a proforma basis. 53
  • 54. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Veolia Water North America – North American Water Industry Leader 2007 Revenue: $850 million Municipal leadership Industrial leadership Market leader with 34% share* of Public-Private Market leader in industrial outsourcing with 70% Partnership (PPP) market market share* Serving 600 communities in 38 states, including 100+ industrial facilities managed for various management of largest PPP water distribution Fortune 500 companies and largest global (Indianapolis) and wastewater (Milwaukee: start- manufacturers, including Air Products, BP-Amoco, up in March ‘08) contracts Cargill, General Motors, IBM, Nestle, PepsiCo, US Approximately 300 facilities operated Steel, Valero, Exxon Mobil, Marthon Oil etc. Nearly 6,000 miles of water distribution lines and 300+ MGD daily flow 4.500 miles of wastewater lines All facets of water and wastewater management for 30 effluent reuse & 5 biosolids facilities multiple industries High-security federal facilities * Source: Public Works Financing, March 2007 54
  • 55. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Veolia Environmental Services North America - An Integrated Offering 2007 Revenue: $2 billion Solid Waste – 39% of Revenue Industrial Services – 31% of Revenue Services: Services: Collection, Transfer, Recycling, Disposal, On-Site Industrial Cleaning, Mechanical Services, Sewer Management Cleaning and Inspection, Dredging and Dewatering, Tank and Basin Cleaning, Emergency Response 24/7, Marine Market: Services 3,730 Employees and Locations in 12 US states, Market: the Bahamas and Quebec US Market Leader for Industrial Services 32 Landfills 5,090 Employees and Over 100 Locations 511 municipal solid waste contracts and serving Serving most major industries, including clients such as most major industries Bayer, Exxon Mobil and Innovene Hazardous Waste - 19% of Revenue Waste-To-Energy – 11% of Revenue Services: Services: Hazardous Waste Disposal, Environmental Waste Combustion, Energy Recovery, Facility Program Management, Incineration, Fuels Operation, Facility Maintenance, Design, Retrofit, Blending and Solvent Recovery, Electronics Construct Recycling, Lab Packing, Emergency and Special Waste, Low Level Radioactive Waste Market: 630 Employees and 10 WTE Plants with a capacity Market: of over 14,000 tons per day 1,700 Employees Operates Largest Refuse Derived Fuel (RDF) facility 45 Service Locations in the world - Miami-Dade 15 Transfer, Storage, Disposal Facilities (TSDF’s) Electrical Generation for 350,000 households Bringing innovative services and technologies to customers that turn over 200,000 tons of waste 55 into a resource
  • 56. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Veolia Energy North America - Providing leadership in Energy Services 2007 Revenue (proforma*): Approx. $400 million Owns and operates the largest portfolio of energy distribution networks (steam, hot water, chilled water, electricity) in the USA Steam capacity of 11 million pounds/hour Chilled water capacity of 169,000 tons Electric generating capacity of over 1,100 MW Facilities in 11 states, serving more than 1,200 customers in 31 States and the District of Columbia Key Capabilities: Operation of heating and cooling networks Cogeneration Central plant maintenance and operations Multi-technical maintenance and services Comprehensive building and facility management (Houston Galleria, Caesar’s Palace, Copley Place Boston, Biogen-Idec in Cambridge) Management of complex energy issues and planning in areas related to power generation, transmission and distribution Committed to Sustainable Development In San Diego, CA, operate 25 MW biomass “wood” generating station In Baltimore, 60% of steam is delivered from a Waste-to-Energy plant Operate trigeneration (chilled water, steam and electrical power) in Oklahoma City and Tulsa operations * Includes full-year 2007 contribution from Recognized by the EPA and other agencies for greenhouse gas reduction and TNAI acquisition on a proforma basis. energy efficiency 56
  • 57. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Veolia Transportation North America – Leading private transportation provider in North America 2007 Revenue: $1.1 billion Operating over 10,000 vehicles across more than 130 contracts Operations in 22 States and 2 Canadian provinces Services include bus operations (fixed route and express/commuter buses), BRT (bus rapid transit), commuter rail, para-transit, airport shuttle and taxi. Operate the largest contracted fixed-route bus service in North America (Las Vegas) Operate the largest contracted commuter rail system (Boston) Operations include SuperShuttle, the largest U.S. airport shuttle company (transportation-on- demand), serving 27 leading airports and over 8 million passengers per year 57
  • 58. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Growth supported by the success of the company’s offering to industrial clients Backlog of signed contracts in 2007 with large industrial accounts: €3,160m €109m €251m €1,264m €612m €924m Water Multi Services Energy Services Waste Transportation 58
  • 59. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Industrial offering: business growth since 2001 €m 1800 1600 1400 1200 1000 800 600 400 200 0 2001 2002 2003 2004 2005 2006 2007 2001 – 2007: Cumulative total of new contracts signed with large European industrial accounts: €1,683m in annual revenue. Average duration of contracts: 6.9 years, with a backlog of around €11.6bn. One third of the contracts signed are multi-divisional contracts: €503m in annual revenue. 59
  • 60. Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008 Investor Relations contact information Nathalie Pinon, Head of Investor Relations and Financial Communication 38 Avenue Kléber – 75116 Paris - France Telephone +33 1 71 75 01 67 Fax +33 1 71 75 10 12 e-mail nathalie.pinon@veolia.com Brian Sullivan, Vice President, US Investor Relations 700 E. Butterfield Road -Suite 201 Lombard, IL 60148 - USA Telephone +1 (630) 371 2749 Fax +1 (630) 282 0423 e-mail brian.sullivan@veoliaes.com Web site http://www.veolia-finance.com 60