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2008 Annual results
2008 Annual results
2008 Annual results
2008 Annual results
2008 Annual results
2008 Annual results
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2008 Annual results
2008 Annual results
2008 Annual results
2008 Annual results
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2008 Annual results
2008 Annual results
2008 Annual results
2008 Annual results
2008 Annual results
2008 Annual results
2008 Annual results
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2008 Annual results
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2008 Annual results
2008 Annual results
2008 Annual results
2008 Annual results
2008 Annual results
2008 Annual results
2008 Annual results
2008 Annual results
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2008 Annual results
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2008 Annual results
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2008 Annual results
2008 Annual results
2008 Annual results
2008 Annual results
2008 Annual results
2008 Annual results
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2008 Annual results
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2008 Annual results

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2009-03-05

2009-03-05

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  • 1. 2008 ANNUAL RESULTS
  • 2. Investor Relations – 2008 Annual Results – March 6, 2009Disclaimer 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 forward looking statements are not guarantees of future performance Actual results may differ materially from the performance. 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 project, 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 Environnement s 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 i f Thi d t t i t i information relating t th valuation of certain of V li E i ti l ti to the l ti f t i f Veolia Environnement’s recently t’ tl 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 above. 2
  • 3. Investor Relations – 2008 Annual Results – March 6, 2009Table of Contents Veolia Environnement overview li i i Key figures 2008 results Financing Growth 2009 challenges and outlook Conclusion 3
  • 4. Investor Relations – 2008 Annual Results – March 6, 2009Veolia Environnement overview  Operating cash flow: €4,137m  Slowdown in Veolia’s waste management operations in the i th 4th quarter t 2008 operating performance:  Sustained performance of other business lines and In line with the most recent guidance strong growth in operating cash flow in Energy (up15.5% at constant exchange rates)  Improve profitability to the Group’s standard for assets acquired in 2007 and 2008 Our priority:  Plan to adapt Veolia’s waste management division to the current business climate: cost reduction plan Profitability improvement of €100m in 2009  2010 Efficiency Plan: €280m impact in 2009 2009, including Veolia waste management adaptation plan  Investments net of disposals: €2 billion in 2009  Investment program adapted t th current I t t d t d to the t Our commitment: economic environment Positive Free Cash Flow in 2009 after  Strategic review of assets and countries payment of the dividend  To generate internally the resources required to fund f f d future growth h 4
  • 5. Investor Relations – 2008 Annual Results – March 6, 2009 2008 key figures Variation 2007 €m 2008 at constant restated (1) FX Revenue 31,932 36,205 +15.8% Operating cash flow p g 4,164 , 4,137 , +2.0% Recurring operating income before 2008 writedown of 2,455 2,346 (2) -1.4% Veolia’s waste management division in Germany Operating income 2,482 1,951 (3) Recurring net income attrib. to equity holders of parent 926 703 (2) before impact of 2008 writedown of Veolia’s waste management division in Germany Recurring net income attrib. to equity holders of parent 926 659 Net income attrib. to equity holders of parent 928 405 (3) Net financial debt 15,125 , 16,528 , Dividend per share €1.21 €1.21 (4)(1) To ensure the comparability of financial years, the accounts at 31 December 2007 have been restated by the amount of income from the disposals in 2008 (in particular for Clemessy & Crystal in the Energy division) according to IFRS 5 and are presented in the income statement in the line item “net income from discontinued operations”. The 2007 revenue for Clemessy and Crystal was €696m.(2) Before the writedown of intangible assets in Veolia’s waste management division in Germany: -€63m in recurring operating income and -€44m in net income (Group’s share).(3) Impact of writedown of Veolia’s waste management division in Germany: -€406m on operating income (including -€343m impairment of goodwill);-€430m on net income.(4) Subject to approval by the Annual Shareholders Meeting on May 7, 2009. 5
  • 6. Investor Relations – 2008 Annual Results – March 6, 2009 Dividend policy Following an average increase of 22% per year over the last 4 years, the 2008 dividend is maintained as compared with 2007 2007. €1.21 €1.21 (1) €1.05 €0.85 €0.68 €0.55 €0 55 €0.55 €0 55 €0.55 €0 55 2001 2002 2003 2004 2005 2006 2007 2008 2008 dividend per share maintained at €1.21 (1)(1) Subject to approval by the Annual Shareholders Meeting on May 7, 2009 6
  • 7. Investor Relations – 2008 Annual Results – March 6, 2009 2008 results Financing Growth 2009 challenges and outlook 7
  • 8. Investor Relations – 2008 Annual Results – March 6, 2009 2008 key figures 2007 Variation 2008 €m restated (1) constant FX Revenue 31,932 36,205 +15.8% Operating cash flow 4,164 4,137 +2.0% Recurring operating i R i ti income b f before 2008 writedown of it d f 2,455 2 455 2,346 2 346 (2) -1.4% 1 4% Veolia’s waste management division in Germany Operating income 2,482 1,951 (3) Recurring net i R i t income attrib. t equity h ld tt ib to it holders of parent f t 926 703 (2) before impact of 2008 writedown of Veolia’s waste management division in Germany Recurring net income attrib. to equity holders of p g q y parent 926 659 Net income attrib. to equity holders of parent 928 405 (3) Net financial debt 15,125 16,528 Net recurring income per share (non-diluted) (non diluted) 2.15 2 15 1.44 1 44 Dividend per share €1.21 €1.21 (4)(1) To ensure the comparability of financial years, the accounts at 31 December 2007 have been restated by the amount of income from the disposals in 2008 (in particular for Clemessy & Crystal in the Energy division) according to IFRS 5 and are presented in the income statement in the line item “net income from discontinued operations”. The 2007 revenue for Clemessy and Crystal was €696m €696m.(2) Before the writedown of intangible assets in Veolia’s waste management division in Germany: -€63m in recurring operating income and -€44m in net income (Group’s share).(3) Impact of writedown of Veolia’s waste management division in Germany: -€406m on operating income (including -€343m impairment of goodwill);-€430m on net income.(4) Subject to approval by the Annual Shareholders Meeting on May 7, 2009. 8
  • 9. Investor Relations – 2008 Annual Results – March 6, 2009 Revenue: internal growth of nearly 10% (778) 36,205€m 1,978 3,073 31,932 2007 Internal External Impact of foreign p g 2008 restated (1) growth growth exchange +9.6% +6.2% -2.4% +13.4% (1) To ensure the comparability of financial years the accounts at 31 December 2007 have been restated by the amount of income from the years, disposals in 2008 (in particular for Clemessy & Crystal in the Energy division) according to IFRS 5 and are presented in the income statement in the line item “net income from discontinued operations”. The 2007 revenue for Clemessy and Crystal was €696m. 9
  • 10. Investor Relations – 2008 Annual Results – March 6, 2009 Breakdown of revenue by geographic zone 36,205€m€  current  constant Internal 31,932 FX rates FX rates growth ■ France +6.9% +6.9% +4.7% 14,523 ■ Europe ex France p +13.0% +16.1% +6.5% 13,587 ■ North America +16.3% +23.5% +10.3% ■ Asia/Pacific +19.3% +26.2% +18.5% ■ Rest of the world +57.0% +61.0% +59.8% VE Group +13.4% +15.8% +9.6% 13,175 11,658 3,243 2,790 2,269 2 269 2,708 1,628 2,556 2007 restated (1) 2008 (1) To ensure the comparability of financial years the accounts at 31 December 2007 have been restated by the amount of income from the years, disposals in 2008 (in particular for Clemessy & Crystal in the Energy division) according to IFRS 5 and are presented in the income statement in the line item “net income from discontinued operations”. The 2007 revenue for Clemessy and Crystal was €696m. 10
  • 11. Investor Relations – 2008 Annual Results – March 6, 2009 Breakdown of revenue by division€m 36,205 36 205  current  constant Internal FX rates FX rates growth 31,932 ■ Water +14.9% +16.7% +13.4% 12,558 ■ Waste +10.1% +14.6% +4.5% 10,928 ■ Energy services +20.1% +20.7% +12.0% ■ Transportation +8.3% +10.6% +7.9% VE Group +13.4% +15.8% +13 4% +15 8% +9.6% +9 6% 10,144 9,214 6,200 7,449 5,590 6,054 2007 restated (1) 2008(1) To ensure the comparability of financial y p y years, the accounts at 31 December 2007 have been restated by the amount of income from the y disposals in 2008 (in particular for Clemessy & Crystal in the Energy division) according to IFRS 5 and are presented in the income statement in the line item “net income from discontinued operations”. The 2007 revenue for Clemessy and Crystal was €696m. 11
  • 12. Investor Relations – 2008 Annual Results – March 6, 2009 Veolia’s waste management division consolidated revenue 2008 revenue by activity 8%  Urban collection and cleaning 8% 21% services  Non-haz industrial waste collection 2007 2008 6% and related services  Industrial services and haz waste (€m) (€m) collection  Sorting-Recycling-Trade 9,214 10,144 15%  Haz waste treatment 23%  Incineration of non-haz waste  Non-haz and inert waste landfill 19%2008/2007 variation +10.1%Internal growth +4.5% 2008 quarterly internal growthExternal growth +10.1% 12% 10% +9.1%Impact of foreign -4.5% +7.7% +7.1%exchange 8% 6% 4% 2% Q4 2008 / Q4 2007 0% Q1 2008 Q2 2008 Q3 2008 -2% / Q1 2007 / Q2 2007 / Q3 2007 -4% -6% -4.5% 12
  • 13. Investor Relations – 2008 Annual Results – March 6, 2009 Operating cash flow (1) 2007 2008 FX Impact  constant restated €m FX rates €m €m Water 1,851 1,821 (41) +0.6% Waste 1,461 1,362 (76) -1.6% Energy services 642 (2) 755 14 +15.5% p Transportation 279 292 ( ) (4) +5.7% Other (69) (93) - - Total Group 4,164 (2) 4,137 (107) +2.0%(1) Operating cash flow = cash flow from continuing operations before tax and interest expenses( )(2) Operating cash flow restated to exclude €15m in cash flow from discontinued operations (Clemessy & Crystal in particular) 13
  • 14. Investor Relations – 2008 Annual Results – March 6, 2009 What occurred in 2008? Main impacts to operating cash flow Transpor- T€m Water Waste Energy tation Other TotalImpact of foreign exchange (41) (77) 14 (3) (107)Economic conditions (37) (1) (89) 32 (28) (122)Acquisitions 30 50 79 11 170Structural and development (27) (35) (20) (23) (105)costsBerlin (41) (41)Growth and Productivity 86 51 8 33 178Total Group (30) (100) 113 13 (23) (27) 2008 operating cash flow: €4,137m versus €4,164m in 2007(1) Impact of volume distributed 14
  • 15. Investor Relations – 2008 Annual Results – March 6, 2009 Impact of foreign exchange on 2008 operating cash flow 2007 2008Currency Local Currency Exchange Impact on (in millions) €/X 2008 2008 Oper. Oper Cash Variation Variation 2008/2007 2008/2007 Flow (€m)US Dollar zone (USD) 416 496 1.475 -20 +19% +7%Pound Sterling zone (GBP) 353 401 0.804 -85 +14% +17%Czech Crown zone (CZK) 6 315 6 193 25.083 25 083 +23 -2% -10%Korean Won zone (KRW) 76 295 93 653 1,634.427 -16 +23% +28%Polish Zloty zone (PLN) 287 331 3.5456 +5 +15% -6% 15
  • 16. Investor Relations – 2008 Annual Results – March 6, 2009Writedown of intangible assets and goodwill in Veolia’swaste management division in Germany Efforts launched to restructure the business…  New management team  Two regional offices have been closed  Restructuring plan …to offset operational problems…  Administrative shutdown of a landfill in April 2008  Substantial market share losses in 2008 during the renewal of waste collection contracts (DSD) …due to the severe deterioration in the economic environment…  Downturn in the industrial waste market in the first half of 2008 which gathered pace at g p the end of the year  Paper and cardboard prices have dropped since October and volumes have contracted …have failed to achieve the value creation expected at the time of the acquisition  Assets have had to be written down Impact Writedown of intangible assets (€63m) Recurring operating income Writedown of goodwill g ( (€343m) ) Non-recurring operating income g p g Tax impact on writedowns +€18m Deferred tax asset writedown Tax expense linked to the revised business plan (€42m) Total impact on net income (€430m) 16
  • 17. Investor Relations – 2008 Annual Results – March 6, 2009 Recurring operating income by division€m 2007 FX impact  constant 2008 restated (1) (€m) FX ratesWater 1,266 1,196 (33) -2.9%Waste (ex. €63m writedown of 803 703 (52) -6.0%intangible assets in German waste)Energy services 374 425 +9 +11.3%Transportation 115 130 +2 2 +10.9% 10.9%Holding (103) (108) - -Recurring operating income ex. 2,455 2,346 (74) -1.4%impact from the writedown inGerman wasteWritedown of intangible assets ex. - (63)goodwillRecurring operating income 2,455 2,283 (74) -4.0%(1) T ensure the comparability of financial years, the accounts at 31 December 2007 h To h bili f fi i l h D b have bbeen restated b the amount of i d by h f income f from the h disposals in 2008 (in particular for Clemessy & Crystal in the Energy division) according to IFRS 5 and are presented in the income statement in the line item “net income from discontinued operations”. 17
  • 18. Investor Relations – 2008 Annual Results – March 6, 2009 From operating income to net income 2007 restated (1) 2008€m Recurring Non- Total Recurring Non- Total recurring recurringOperating income 2,455 +28 2,483 2,283 (332) 1,951Cost of net financial debt (819) - (819) (925) - (925)Other financial income & expense p +9 ( ) (5) +4 ( ) (51) - ( ) (51)Corporate tax expense (429) +11 (418) (427) (42) (469)Equity in net income of affiliates +17 - +17 +19 - +19Net income from discontinued - (12) (12) - +184 +184operationsNet income attributable to minority (307) (20) (327) (240) (64) (304)interestsNet income – attrib. to equity holders of parent 926 2 928 659 (2) (254) 405(1) To ensure the comparability of financial years, the accounts at 31 December 2007 have been restated by the amount of income from the disposals i 2008 (i particular f Cl di l in (in ti l for Clemessy & C t l i th E Crystal in the Energy di i i ) according t IFRS 5 and are presented i th i division) di to d t d in the income statement t t t in the line item “net income from discontinued operations”. The 2007 revenue for Clemessy and Crystal was €696m.(2) €703m before the writedown of Veolia’s waste management operations in Germany. 18
  • 19. Investor Relations – 2008 Annual Results – March 6, 2009 Cost of borrowing 31/12/08 €m 2007 2008 31/12/07 Cost of net financial debt -819 -925 -106 Impact from variation of the average debt -86 Impact from variation on interest rates -16 16 Impact from variation of the revaluation -4 of non-qualified hedging derivative instruments Cost of borrowing at 5 61% (1) 5.61% as compared with 5.49% at December 31, 2007(1) Adjusted for the impact of the unwinding of hedging transactions, the cost of borrowing stood at 5.78% at December 31, 2008 as compared with 5.53% at December 31, 2007 19
  • 20. Investor Relations – 2008 Annual Results – March 6, 2009 Tax % 70 +12% -15% 15% 60 +16% 50 48% 40 +10% 30 25% 20 10 0 2007 actual Change in tax Non-activated Goodwill Planning and 2008 actual (1) (1) tax rate law tax losses and writedown risks tax rate deferred tax asset prov. The normalized rate increased to 33% in 2008 from 28% in 2007(1) Actual tax rate: relationship between the tax expense and the net income from continuing operations, restated by the same tax expense and income from affiliates. 20
  • 21. Investor Relations – 2008 Annual Results – March 6, 2009 Cash flow statement €m 2007 2008 Net financial debt at opening (14,675) (15,125) Operating cash flow from continuing operations 4,164 4,137 Financial cash flow & operating cash flow from discontinued operations 55 41 Cash flow from operations 4,219 4,178 Tax paid (417) (348) Change in operating WCR (167) (80) Total cash flows generated from the businesses 3,635 3,750 Gross i G investments (1) t t (6,936) (6 936) (4,701) (4 701) Repayment of operating financial assets 395 358 Industrial and financial divestments, net of the debt of divested companies 453 761 Change in receivables & other financial assets (30) (312) Total net cash flows from investments (6,118) (3,894) Dividends paid (2) (564) (753) Net interest expenses paid (786) (849) Capital increase (VE & minority interests) 3,058 (3) (77) Currency impacts & other 325 420 Change in net financial debt g ( (450) ) ( , (1,403) ) Net financial debt at closing (15,125) (16,528)(1) Including net financial debt from acquired companies.(2) €420m in 2007 and €553m in 2008 for VE(3) Including €2.6bn for the capital increase completed as of July 10, 2007 21
  • 22. Investor Relations – 2008 Annual Results – March 6, 2009Gross investments €m 2007 2008 Maintenance capital expenditures 1,590 1,860 As % of consolidated revenue 5.0% 5.1% Investments in growth/existing operations (ex 1,039 1,169 operating financial assets) New operating financial assets 334 336 New projects 3,973 1,336 Total investments (including net financial debt 6,936 4,701 from discontinued operations)( ) (1) (1) +€38m in 2007 and -€72m in 2008. 22
  • 23. Investor Relations – 2008 Annual Results – March 6, 2009Divestments completed€m 2007 2008Industrial divestments 213 330Financial divestments 202 503Total divestments 415 833(Cash) / debt of divested companies +38 38 (72)Total divestments, net of the net financial debt of 453 761divested companies 23
  • 24. Financing
  • 25. Investor Relations – 2008 Annual Results – March 6, 2009 Veolia Environnement has a sound financial structure  Confirmed, undrawn lines of credit of Liquidity exceeding €7.6bn nearly €4 billion, without any disruptive at D December 31, 2008 b 31 covenants  Net liquidity of €3,980 million versus €3,876 million at December 31, 2007  Bonds: 68% of net debt Debt with a long maturity profile, primarily i b d i il in bonds  Average maturity of net debt: 9.3 yrs  No significant debt repayments until 2012  €2.6 billion capital increase in JulyAcquisitions had been refinanced in 2007 2007 for the major acquisitions completed for approximately €2.4 billion (Veolia waste in Germany, TMT in Italy d It l and TNAI in th USA) i the 25
  • 26. Investor Relations – 2008 Annual Results – March 6, 2009 Within the framework of long-term contracts, Veolia Environnement may finance certain infrastructures for its clients Industrial outsourcing contracts (IFRIC4) € Bl Bln Counterparty C and concession contracts comprising a public services obligation/BOT Water-Berlin 2.8 Land of Berlin (IFRIC12), with the transfer of volume and price risks t th client d i i k to the li t Cogenerations 0.5 05 EDF France Assets treated as financial receivables: Waste-UK 0.3 Municipalities operating financial assets (OFA) Water-Belgium 0.3 03 City of Brussels The most significant give rise to dedicated external funding Other 1.9 Total 5.8 Average return at market conditions (2008 average return): 7.0% Repayment of principal: €358m in 2008 26
  • 27. Investor Relations – 2008 Annual Results – March 6, 2009 What finances our debt?Financing Op. Fin. Op Fin Assets (OFA) Net debt - OFAs Total net debt + = €5,751m €10,777m €16,528mCash flows Revenue (interest EBITDA(1) Cash flow from ops: €4,178mfrom ops income): €400m + = €3,778m + OFA Repayment: €358m Repayment ofOFA flows principal: €358m €4,536m = = 2.9x 2 9x EBITDA (1) ( ) 3.6x 3 6x Objective: 3.5 to 4x (1) EBITDA = Cash flow from operations excluding operating financial assets 27
  • 28. Growth
  • 29. Investor Relations – 2008 Annual Results – March 6, 2009 Which growth model?  Bringing up to par the external growth Veolia Environnement has an developments f d l t from th past 3 years ( the t (more embedded improvement in profits than €5 billion in revenue) resulting from already financed  Internal growth from existing contracts growth  Reduction of costs and shared services  Presence in non-priority countries which are non priorityVeolia Environnement has significant attractive for local operators leverage from the sale of non- strategic assets or from possible  Strategic positions allowing us to establish partnerships (€2 2 billion) (€2.2 development partnerships Veolia Environnement does not  Service contracts intend to finance the majority of  Partnerships infrastructures on behalf of its clients 29
  • 30. Investor Relations – 2008 Annual Results – March 6, 2009 Our challenge: To bring the profitability of past and already refinanced growth developments to the Group’s profitability standard Change in after-tax ROCE from 2007 to 2008%13 Example: Pre-tax ROCE for 10.8 Veolia waste in the UK11 -0.6 10.2 -0.4 -1.4 10.0 2008 Main9 business acquisitions i iti 8.4 % in 2008 Main 15.7 13.17 acquisitions in 2007 10.153 2007 2008 ROCE 2008 Medium- 2006 2007 2008 ROCE (1) before main ROCE term acquisitions in objective 2007 and 2008(1) To ensure the comparability of financial years, the accounts at 31 December 2007 have been restated by the amount of income from the disposals in 2008 (in particular for Clemessy & Crystal in the Energy division) according to IFRS 5 and are presented in the income statement in the line item “net income from discontinued operations”. 30
  • 31. Investor Relations – 2008 Annual Results – March 6, 2009A 2010 Efficiency Plan underway 2009 2010 Total Criteria ■ Savings to recurringPurchasing 45 55 100 operating income on the basis of n-1 netOperations 65 65 130 of non-recurring OPEX costs OSupport functions 50 70 120 ■ Overall 2008 consolidation scopeAssets 20 30 50 to be taken into account ■ Share ofWater 60 73 133 consolidated savingsEnergy 41 49 90 ■ Excluding business climate adaptationWaste 49 60 109 plan for Veolia waste managementTransportation 30 38 68 division: €100 million in 2009 €180m €220m €400m 31
  • 32. Investor Relations – 2008 Annual Results – March 6, 2009 Veolia Environnement increases its disposal program to nearly €3 billion between 2009 and 2011 Total assets on the balance  Non-strategic assets or possible sheet as of December 3131, partnerships 2008 €2.2 billion divested over 3 years €49.2 billion  And recurring industrial disposals Capital employed as of (€250 million/yr) December 31, 2008  Thus nearly €3 billion total over €18.9 billion the 3 year-period  In addition to €761 million already completed in 2008 32
  • 33. 2009 challenges and outlook
  • 34. Investor Relations – 2008 Annual Results – March 6, 2009 2009 challenges and outlookVeolia Water Veolia ES (Waste) Capture growth embedded within the  Recovery of Veolia waste management existing p g portfolio of contracts operations in Germany p y Obtain price increases  Plan to adapt division to new business Stringent refocusing of growth combining conditions selection of geographic region, technological content and value of projects Group  Intense selectivity of investments  Cost-cutting l C t tti g plan  Asset disposal planVeolia Energy Veolia Transport Response to the increased demand for  Pursuit of “full potential” plan: refocusing services, relative to on countries with large presence and - The volatility of energy prices reduction of overhead expenses - Needs of cost optimization  Improvement in results in key countries - And the reduction of CO2 abroad (Netherlands) Growth in partnerships  Increased profitability in the USA Priority given to the strengthening of  Development in Asia: RATP partnership service contracts  Priority given to free cash flow 34
  • 35. Investor Relations – 2008 Annual Results – March 6, 2009 Veolia’s waste management division: Measures aimed at adapting to the current economic conditions  Industrial investments reduced to the strict minimum  Reduction in fixed costs  R id curtailing of our resources to meet the reduction i b i Rapid ili f h d i in business France - Central and Southern UK - Northern Europe North America Europe France  UK  US Optimization of industrial assets  Restructuring of C&I business  Price increases in recyclable Shared services - Pooling (change from 4 to 3 regions regions, waste collection, for Industrial collection Internalization of tonnages overhaul of technical Services and Hazardous Waste department)  Reduction in maintenance costs Germany  Assets to be regrouped (landfills  Reduction in overheads Restructuring plan and regional gp g around London etc.) London, etc ) reorganization (reduction in positions with  Reduction in overheads (offices hiring and pay freeze, Recovery of the industrial to be pooled, fees, etc.) communication, consulting segment & legal fees, etc.) 2009 Additional Cost Reduction: €100 million 35
  • 36. Investor Relations – 2008 Annual Results – March 6, 2009Veolia’s waste management division adapting to economicconditions and improving it strategic positioning Strategic review of countries and assets and refocusing the teams on th markets and b i t the k t d business li lines offering th b t ff i the best outlook — Continental Europe p — Great Britain — North America — Australia Reduction in fixed costs Presence throughout the value chain Through these reorganization efforts and its unique strategic positioning, Veolia’s waste management division will be in a position to strongly rebound once the economy begins to improve 36
  • 37. Investor Relations – 2008 Annual Results – March 6, 2009Measures to improve cash flow generation in 2009versus 2008€m 2008 Actual 2009 Objective Scenario 1 Scenario 2Gross investments 4,701 4 701 3,400 3 400 3,800 3 800Divestments (inc. Industrial) 761 1,000 1,400Repayment of operating 358 400 400financial assetsNet investments 3,582 3 582 2,000 2 000 2,000 2 000 Decrease in net i D i t investments b €1 600 million t t by €1,600 illi Freeze of €400 million in growth investments until completion of di l ti f divestment program t t 37
  • 38. Investor Relations – 2008 Annual Results – March 6, 20092009 objectives Positive free cash flow after payment of the dividend How do we achieve this? Operating cash flow - Net investments (1) = ~€2 billion (2)(1) Gross investments – [disposals + repayment of operating financial assets](2) At constant exchange rates 38
  • 39. ConclusionHenri PROGLIO
  • 40. Investor Relations – 2008 Annual Results – March 6, 2009 Markets with very strong growth potential linked to urban development The environmental challenges will crystallize in and around cities which have undergone significant growth over the past century and in which population will increase 27% in the next 30 years. 2007: 19 megapoles with more than 10m inhabitants, including 6 with more than 15m 2025: 26 megapoles with more than 10m inhabitants, including 13 with more than 15mMegapoles more than:15 m inhabitants10 m inhabitants 40
  • 41. Investor Relations – 2008 Annual Results – March 6, 2009High growth potential markets: water +27 % +25 % +41 % Wastewater recycling capacity throughout the world: +10-12% per year by 2015 (55 million m3 per day) Seawater desalination: from 51 million m3 to 109 million m3 per day by 2016. Potential market: €5bn per year 41
  • 42. Investor Relations – 2008 Annual Results – March 6, 2009 High growth potential markets: waste treatment, recycling and recoveryGeneration of household waste:• OECD countries: from 500 kg p.a. per capita currently to 650 kg by 2020• Rest of the world: from 770 million tons p.a. to 2,000 million tons in 15 yearsRecycling rate of household waste in France: from 18% in 2007 to 35% in2015Europe: 90% of electronic waste (14 kg p.a. per capita) is not recycled,although regulations are stringent 42
  • 43. Investor Relations – 2008 Annual Results – March 6, 2009 High growth potential markets: energy efficiency and the outsourcing of servicesHospitals / outsourcing of non-medical activities: €8 5B market in 2008 (Europe: non medical €8.5B5.1 / other countries: 3.4), reaching €13.6B in 2020 (9.4/4.2)Management of Energy Demand for buildings: between now and 2020, reduction of38% in energy consumption from existing buildings (France).Potential markets: €6.4B in France, €51B in EuropeIndustrial services in Europe: €13.5B market in 2008 and €21B in 2020.Outsourcing rate increasing from 20-30% to 40% g gUrban heating networks :• Russia: upgrading existing networks, local electric production•China: growth potential linked to development and urbanization of the country China:• Central and Eastern Europe and Germany: complementary privatizations andbiomass: €2.6B 43
  • 44. Investor Relations – 2008 Annual Results – March 6, 2009 High growth potential markets: mobilityUSA: Total market of $15B for transit (including $3B currently tothe private market) and $18B for passenger rail. A « conversion »movement trend in cities.Asia: Adapted regulation, enormous urban development•China: metro lines built between now and 2015 larger in km than rest of the world•South Korea: project of 54 metro lines (740 km)Privatization of rail in Europe:•France: opening of competition underway: regional rail (€3B) and l F i f ii d i l il d long distance di(€6.8B)•Privatized regional rail market in Germany: from €1.6 to €3.2B by 2014 44
  • 45. Investor Relations – 2008 Annual Results – March 6, 2009Veolia Environnement is the best positioned group torespond to growing markets  Adapted to two types of clients: The only comprehensive and Municipalities/Industrials consistent response  Offering synergies between business lines  N°1 in France in its 4 business lines  In the top 3 in all the other key Leadership in its markets markets The Group p p possesses true and  High contract renewal rate recognized contractual and technological know-how 45
  • 46. Investor Relations – 2008 Annual Results – March 6, 2009 Heightened financial discipline for long-term, profitable growth  Bring the profitability of the past 2 years growth developments to the correct level The Group has many internal  Simplification of structures/revenue and profit growth drivers. . drivers.…. Shared Service Centers  Technological innovation  Contractual innovation  More than 70% of contracts are… with a secure base of cash flows… with municipalities… municipalities …that will enable the Group to p  Our priority: improved p y pweather this crisis with confidence profitability and cash flow while remaining prudent 46
  • 47. Investor Relations – 2008 Annual Results – March 6, 2009Table of Contents of Appendices Full-year impacted by moves in currencies Appendix 1 Veolia Water’s consolidated revenue Appendix 2 pp Investments by division Appendix 3 Main contracts won or renewed in 2008 Appendix 4 Veolia Environnement in North America Appendix 5 Operating cash flow margins Appendix 6 Recurring operating income margins g p g g Appendix 7 pp Impact of the rise in fuel costs on operating income Appendix 8 Debt ratios Appendix 9 Debt characteristics Appendix 10 Bond maturities Appendix 11 Net Liquidity q y Appendix 12 pp Overview of operating financial assets Appendix 13 Definition of ROCE Appendix 14 Change of pre-tax ROCE by division Appendix 15 48
  • 48. Investor Relations – 2008 Annual Results – March 6, 2009Appendix 1: Moves in currencies Main currencies 2007 2008  2008 / 2007 (1 unit of foreign currency = €…) US dollar Average rate 0.7248 0.6782 -6.4% Closing rate 0.6793 0.7185 +5.8% Pound sterling Average rate 1.4550 1.2433 -14.5% Closing rate 1.3636 1.0499 -23.0% Korean won Average rate 0.0008 0.0006 -21.7% Closing rate 0.0007 0.0005 -25.1% Australian dollar Average rate 0.6110 0.5691 -6.8% Closing rate 0.5968 0.4932 -17.3% Czech crown Average rate 0.0361 0.0399 +10.6% Closing rate 0.0376 0.0372 -0.9%The average rate applies to the income statement and cash flow statementThe closing rate applies to the balance sheet 49
  • 49. Investor Relations – 2008 Annual Results – March 6, 2009Appendix 2: Veolia Water’s consolidated revenue €m +14.9% 12,558 VEOLIA WATER Total  Annual variation +14.9% 10,928 — Internal growth +13.4% +13 4% — External growth +3.3% — Impact of foreign exchange -1.8% +8.6% +8 6% 7,720 7 720 Operations 7,110 +26.7% 4,838 Works and E&C 3,818 3 818 2007 2008 50
  • 50. Investor Relations – 2008 Annual Results – March 6, 2009 Appendix 3: Investments by division Growth Financial New €m incl. change Industrial New operating Maintenance in Total investments projects (1) financial consolidation assets scope Water 536 32 409 399 214 1,590 Waste 731 63 135 489 - 1,418 Energy services 278 70 237 240 111 936 Transportation 294 95 48 123 11 571 Other 21 10 70 85 - 186 Total 2008 1,860 270 899 1,336 336 4,701 Total 2007 1,590 322 717 3,973 334 6,936(1) Including the acquisition of a complementary stake in Ashkelon in Israel, in Tianjin Shibei in China & the acquisition of Biothane (Solutions and technologies in Water, of the Bartin Recycling Group in France and other investments in Europe in Waste, that of Praterm in Poland and of Rail4Chem in Germany & the complementary stake in SNCM in France in Transportation 51
  • 51. Investor Relations – 2008 Annual Results – March 6, 2009 Appendix 4: main contracts renewed or won in 2008 INTERNAL GROWTH- Renewals: 175 main contracts renewed in France in 2008 in Water (o/w 86 in drinking water & 89 in wastewater), 133 in Waste collection (o/w 59 from local authorities & 74 from companies), Lille 18 in Transportation Cergy Pontoise area (water) – Length: 18 years – Cumul rev : €242 m Cumul. rev.: Beauvais-Tillé Extension of the Jersey public transportation contract (transportation) – Length: 3 years – Cumul. rev.: €18 m Jersey Cergy Bazancourt School bus transportation contract for Sarthe District (transportation) – Length: 7 years – Cumul. rev.: €42 m Seine Aval Oise- Outsourcing / Privatization: Seine Grésillons B Beauvais-Tillé airport services (t i Tillé i t i (transportation) t ti ) Air France – Length: 15 years – Cumul. rev.: €630 m in partnership with the CCI of Oise district Sarthe (TGV) Lille-Lesquin & Merville airport services (transportation) – Length: 10 years Nantes – Cumul. rev.: €308 m in partnership with the CCI of Grand Lille & Sanef Métropole Regional système, Oise district (transportation) – Length: 12 years – Cumul. rev.: €333 m Bartin Tavaux Veloway Nice (transportation) Veloway, – Length: 15 years – Cumul. rev.: €45 m Recycling Gp Hauts de Garonne waste-to-energy plant & heating network (energy) – Length: 12 years – Cumul. rev.: €180 m- Engineering / Design & Build: Contract for wastewater authority for the Paris area (SIAAP), Seine Aval plant in Achères Hauts de (construction) (water) – Cumul rev : €135 m Cumul. rev.: Garonne Biganos Contract for the SIAAP, Seine Grésillons plant in Triel sur Seine (construction) (water) – Cumul. rev.: €89 m Nantes Métropole, the Nantes urban authority (construction) (water) – Cumul. rev.: €14 m- Industry & services: 3 projects to build, supply & operate biomass plants (energy) Nice –LLength: 20 years – C th Cumul. rev.: €1 7 b l €1.7 bn - Facture plant in Biganos (69 MW capacity); - Solvay chemicals & plastics site in Tavaux (30 MW); - Bazancourt agro-industrial site (C5D project) (22 MW)  Renewals EXTERNAL GROWTH  Outsourcing / Privatization Bartin Recycling Group (waste) – 2008 revenue: €247 m (10 ½ months) y g p( ) ( )  Engineering / Design & Build g g g  Industry & services PARTNERSHIP  Company acquisition Partnership with Air France to launch private high-speed TGV trains in France (transportation)  Partnership with another company 52
  • 52. Investor Relations – 2008 Annual Results – March 6, 2009 Appendix 4: main contracts renewed or won in 2008 INTERNAL GROWTH- Renewals: Novartis (1) (multi-services) – Length: 7 years – Cumul. rev.: €980 m S-Bahn (RER), in Leipzig East (transportation) – Length: 3 years – Cumul rev €96 m Cumul. rev. Lightrail, Dublin (transportation) – Length: 5 years – Cumul. rev.: €175 m Poland London Borough of Croydon (waste) – Length: 4 years – Cumul. rev.: €80 m Sweden Czajka- Outsourcing / Privatization: Praterm Setra Southwark Council (waste) – Length: 25 years – Cumul. rev.: €700 m Brehmen West Berkshire Council (waste) – Length: 25 years – Cumul rev : €533 m Cumul. rev.: Castlebar Bus system, Haaglanden (transportation) Lightrail – Length: 8 years – Cumul. rev.: €280 m Mullingar Rail contract in North Rhine – Westphalia (transportation) Leipzig Ireland Westphalia – Length: 16 years – Cumul. rev.: €520 m United Kingdom S-Bahn (RER) in Brehmen (transportation) Netherlands Germany – Length: 11 years – Cumul. rev.: €500 m Southwark Bilbao (transportation) – Length: 8 years – Cumul rev : €305 m Cumul. rev.: West B k hi W t Berkshire Marienbad networks (energy) – Cumul. rev.: €6 m Diageo Haaglanden Czech Republic London Mafra (water) – Length: 15 years – Cumul. rev.: €93 m Borough Marienbad of Croydon Novartis Skanska- Engineering / Design & Build: Switzerland Czajka (construction) (water) – Cumul. rev.: €150 m Mullingar (construction & operation) (water) – Length: 22 years – Cumul rev : €48 m Cumul. rev.: Castlebar (construction & operation) (water) – Length: 22 years – Cumul. rev.: €26 m Bilbao Bulgaria Portugal- Industry & services: Figueruelas rooftop Varna Mafra Artenius, La Seda de Barcelona subsidiary (multi-services) solar power station Artenius – Length: 15 years – Cumul. rev.: €850 m Spain Bulgaria’s largest shopping mall in Varna (energy) Bulgaria s – Length: 6 years – Cumul. rev.: €1 m Skanska (energy) – Length: 15 years – Cumul. rev.: €150 m Setra (energy) – Length: 10 years – Cumul. rev.: €30 m Diageo (energy) – Length: 15 years – Cumul. rev.: £60 m Figueruelas rooftop solar power station near Zaragoza (construction) in partnership  Renewals with General Motors Europe, Clairvoyant & the Government of Aragon  Outsourcing / Privatization (multi-services) ( lti i )  Engineering / Design & Build (1) Renewed in December 2007 EXTERNAL GROWTH  Industry & services Praterm (energy) – 2008 revenue: €37 m (11 months)  Company acquisition 53
  • 53. Investor Relations – 2008 Annual Results – March 6, 2009 Appendix 4: main contracts renewed or won in 2008 INTERNAL GROWTH- Renewals: Las Vegas urban contract (transportation) – Extended to 3 years – Additional rev.: €59 mCustomized transportation services i S FC t i d t t ti i in San Francisco (t i (transportation) t ti ) – Length: 2 years – Cumul. rev.: €24 mParatransit, Baltimore (transportation) – Length: 3 years – Cumul. rev.: €39 mBoston (1) rail commuter contract (transportation) – Extended to 3 years – Additional rev.: €137 m yCustomized transportation services in Seattle (transportation) Canada– Length: 5 years – Cumul. rev.: €74 mOrange County (waste) – Length: 7 years – Cumul. rev.: €35 mPalm Beach (waste) – Length: 5 years – Cumul. rev.: €10 m Ridgeline- Outsourcing / Privatization: Energy E Seattle S l Oklahoma (water) – Length: 4 years – Cumul. rev.: €33 m United States New London New London (Connecticut) (water) – Length: 10 years – Cumul. rev.: €42 m Boston Radcliff (water) – Length: 17 years – Cumul rev : €31 m Cumul. rev.: San Baltimore Francisco F i Las Vegas Golden Touch MTA bus service in the suburbs of Los Angeles (transportation) Los Angeles Radcliff Transportation – Length: 5 years – Cumul. rev.: €72 m Orange County Phoenix Oklahoma of New York Airport Shuttle, Phoenix (transportation) Calvert – Length: 10 years – Cumul. rev.: €123 m Mexico Palm Beach- Engineering / Design & Build: Calvert –TK (Alabama) (construction & operation) (water) – Cumul. rev.: €61 m Tamaulipas- Industry & services: PPP for hospital in Tamaulipas (energy) – Length: 25 years – Cumul. rev.: €200 m  Renewals  Outsourcing / Privatization EXTERNAL GROWTH  Engineering / Design & Build (1) Renewed in December 2007  Golden Touch Transportation of New York (transportation)  Industry & services – Annual revenue: €22 m  Company acquisition  Ridgeline Energy (windmill projects) (energy) 54
  • 54. Investor Relations – 2008 Annual Results – March 6, 2009 Appendix 4: main contracts renewed or won in 2008 ADB INTERNAL GROWTH- Renewals: China South Korea Sydney tram & monorail (transportation) Dongbu – Length: 5 years – Cumul rev : €30 m Cumul. rev.: Commuter rail, Auckland (transportation) Nanjing - Length: 4 years – Cumul. rev.: €110 m Japan Changle- Outsourcing / Privatization: Nagpur (DBO) (water) Nishihara – Operating period: 15 years India I di Environment – Cumul. rev.: €24 m (incl. construction) Technology Dai Nippon Eco Engineering Mumbai Metro One (operating contract) (transportation) - Operating period: 35 years – Cumul. rev.: €53 m Changle (operating contract) (water) Nagpur – Length: 30 years – Cumul rev : €294 m Cumul. rev.: Mumbai YongKang (waste) Metro One – Length: 20 years – Cumul. rev.: €62 m Taiwan- Industry & services: YongKang Rosehill & Camellia (in partnership with Aquanet) (water) – Operating period: 20 years – Cumul rev : €99 m Cumul. rev.: Dongbu (construction & operation) (water) Auckland – Length: 15 years – Cumul. rev.: €180 m EXTERNAL GROWTH New Zealand Australia Nishihara Environment Technology (water) – 2008 rev.: €82 m Dai Nippon Eco Engineering (water) – 2008 revenue: €9 m Rosehill & Camellia Sydney 6 transportation networks of Nanjing Zhongbei (transportation) - Length: 30 years – 2009 estimated rev.: €20 m  Renewals  Outsourcing / Privatization PARTNERSHIP  Industry & services  Company acquisition Partnership with ADB (Asian Development Bank)  Partnership with another company in China (energy) 55
  • 55. Investor Relations – 2008 Annual Results – March 6, 2009 Appendix 4: main contracts renewed or won in 2008 INTERNAL GROWTH- Outsourcing / Privatization: Riyadh (contract on the basis of an incentive system linked to performance & savings achieved) (water) – Length: 6 years – Cumul. rev.: €43 m- Engineering / Design & Build: Ras Laffan (construction) (water) – Cumul. rev.: €305 m Palm Jumeirah Island (construction) (water) – Cumul. rev.: €12 m Qatar Ras Laffan R L ff Sipchem Burj Dubai Tower (DBO) (water) United Arab Burj Dubai Tower – Operating period: 3 years (excl. construction) Palm Jumeirah Island Emirates – Cumul. rev.: €12 m Riyadh Abu Dhabi Al Ain Abu Dhabi & Al Ain (BOT) (water) Mubadala – Operating period: 22 years – Cumul. rev.: €461 m (incl. construction) Saudi Arabia- Industry & services: Saudi International Petrochemical (Sipchem) (1) (operating contract) (water) – Length: 5 years – Cumul. rev. €6 m PARTNERSHIP  Outsourcing / Privatization  Engineering / Design & Build (1) Won in January 2009 Partnership with Mubadala in the Middle East  Industry & services and North Africa (water)  Partnership with another company 56
  • 56. Investor Relations – 2008 Annual Results – March 6, 2009 Appendix 5: Veolia Environnement in North America No.1 in municipal  Top 1-3 in various  Recent launch in  No.1 in U.S.partnerships and categories of waste North America surface passengerindustrial outsourcing management • $450m revenue transportation• $900 m revenue • $2.1 Bn revenue • 575 employees • $1.1 Bn revenue• 3,600 employees • 11,000 employees • acquisition of •15,000 employees Thermal North America 2008: ~$4.5 billion revenue in North America $4.5 57
  • 57. Investor Relations – 2008 Annual Results – March 6, 2009Appendix 5: Veolia Water North America - Leader in WaterServices & Solutions. 2008 Revenue: $900 million  No. 1 market leader with ~38% share in U.S., Canada and Caribbean* Tampa Bay Water Significant DBO  Approximately 600 communities served in project 38 states; 300 municipal facilities  Manage largest U.S. water and wastewater public private partnership (Indianapolis and Milwaukee, respectively)  Provide industrial/commercial water P id i d t i l/ i l t partnerships and operating services at 100+ Milwaukee – largest facilities U.S. U S wastewater  Largest number of U.S. industrial projects US agreement (customer base includes many of the Fortune 500)  Technological and design expertise — Engineering, design, construction, service  Manage largest U.S. DBO (Tampa Bay) Indianapolis – nation’s *Source: Public Works Financing, April 2008 largest, most innovative partnership 58
  • 58. Investor Relations – 2008 Annual Results – March 6, 2009 Appendix 5: Veolia Environmental Services North AmericaMost comprehensive provider of integratedwaste services2008 Revenue: $2.1 billion Breakdown of 2008 Revenue $2.1 billion  Solid waste locations in 12 states with more than 500 municipal solid waste Waste-to-Energy contracts and over 150,000 commercial 11% Solid Waste and industrial customers di d t i l t 38%  Second largest hazardous waste service Hazardous provider in the U.S. Services  Industrial services (hydro blasting blasting, 19% industrial cleaning, chemical cleaning, etc.) to most major industries, emergency response 24/7 and marine services  Operating 9 waste-to-energy facilities Industrial Services with a capacity of over 14,000 tons per 32% day d 59
  • 59. Investor Relations – 2008 Annual Results – March 6, 2009Appendix 5: Veolia Energy North America - Providingleadership in Energy Services. 2008 Revenue: $450 million Owns and operates the largest portfolio of energy distribution networks (steam, (steam hot water chilled water electricity) in the USA water, water, — Steam capacity of 11 million pounds/hour — Chilled water capacity of 169,000 tons — Electric generating capacity of over 1,100 MW Facilities in F iliti i 11 states, serving more th 1 200 customers i 31 St t t t i than 1,200 t in 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 ( p g y g (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 — Recognized by the EPA and other agencies for greenhouse gas reduction and energy efficiency 60
  • 60. Appendix 5: Veolia Transportation North America Investor Relations – 2008 Annual Results – March 6, 2009Leading private transportation provider in North America2008 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 serving 27 leading airports and over 8 million passengers per year 61
  • 61. Investor Relations – 2008 Annual Results – March 6, 2009 Appendix 6: Operating cash flow margins Operating cash flow margins €m 2007 2007 2008 2008 margin restated (1) margin restated Water 1,851 1,821 16.9% 14.5% Waste 1,461 1 461 1,362 1 362 15.9% 15 9% 13.4% 13 4% Energy services 642 (2) 755 10.4% 10.1% Transportation 279 292 5.0% 4.8% Holding company (69) (93) - - Total Group 4,164 4,137 13.0% 11.4%(1) Accounts at December 31, 2007 were restated, to ensure comparability between accounting periods, by the amount of the income from assets divested in 2008 (Clemessy & Crystal in Energy in particular), according to the IFRS 5 standard and shown in the income statement in the “Net income from discontinued operations” line. operations line(2) Operating cash flow: €657m - €15m in cash flow from discontinued operations (Clemessy & Crystal in particular) 62
  • 62. Investor Relations – 2008 Annual Results – March 6, 2009 Appendix 7: Recurring operating income margins Recurring operating income margins 2007 2007 2008 €m restated (1) 2008 margin margin restated Water , 1,266 1,196 , 11.6% 9.5% Waste 803 640 8.7% 6.3% Energy services 374 425 6.0% 5.7% Transportation T i 115 130 2.1% 2 1% 2.1% 2 1% Holding (103) (108) - - Total Group 2,455 2 455 2,283 2 283 7.7% 7 7% 6.3% 6 3%(1) Accounts at December 31, 2007 were restated, to ensure comparability between accounting periods, by the amount of the income from assets divested in 2008 (Clemessy & Crystal in Energy in particular), according to the IFRS 5 standard and shown in the income statement in the “Net income from discontinued operations” line. 63
  • 63. Investor Relations – 2008 Annual Results – March 6, 2009Appendix 8: Impact of the rise in fuel costs onoperating income: €48m Hedging Mechanisms & Comments Net impact Around two thirds of costs are indexed 2008/2007Water NS ■ ~66% of costs are indexed or hedged primarily impacting waste collection 66% hedged, and transfer operations ■ European municipal clients: Contractual indexing formulas on either monthly, quarterly or annual basisWaste (€20m) ■ European industrial clients: Major long-term industrial contracts are long term indexed (in particular in the United Kingdom); more pronounced impact on short-term contracts partly offset by fees ■ North America Solid Waste: Fuel surcharge generally with a 30-day delayEnergy NS ■ 70% of total costs are indexed ■ French passenger transportation: Most contracts are indexedTransport ■ Germany, Netherlands, Scandinavia (ex-Sweden), Pacific: Total or partial indexing ( i d i (e.g. Germany) t i ll with annual revision G ) typically ith l i i (€28m)ation ■ Sweden: No indexing ■ North America: managed by municipality or indexed by contract 64
  • 64. Investor Relations – 2008 Annual Results – March 6, 2009 Appendix 9: Debt ratios(1) €bn 17 4x 16.5 16.5 16 15.5 3.6x 15.1 3.6x 15 14.7 14.5 3.5 x 3.4x 14 13.9 3.3x 13.5 13 12.5 12 3x 31-Dec-05 31-Dec-06 31-Dec-07 31-Dec-08  Net financial debt Net financial debt/(Cash flow from operations + Repayment of operating financial assets)(1) 12-month moving average ratios 65
  • 65. Investor Relations – 2008 Annual Results – March 6, 2009Appendix 10: Debt characteristics Ratings — Moody’s: y A3/P-2 Stable (confirmed on December 23, 2008) ( , ) — Standard & Poor’s: BBB+/A-2 Stable (confirmed on November 12, 2008) 2008 bond issues: €1.8bn, maturity ranging from 5 to 30 years Bond redemption: €68m in 2009 (€1.2bn in 2008) Average maturity of net debt: 9.3 years vs. 9.2 years in 2007, without any disruptive covenants Group liquidity: €7.7bn including €3.8bn in undrawn credit lines p q y g Net Group liquidity: €4.0bn Net financial debt Currencies (gross debt after hedges) after hedges Other O h 19% (1)Fixed rate: 59% Euro 63% GBP 8% o/w euro: 75% o/w US dollar: 45% USD 10% o/w pound sterling: 48%Variable rate: 41% (1) o/w Zloty: 2% and HKD: 3% 66
  • 66. Investor Relations – 2008 Annual Results – March 6, 2009Appendix 11: Bond maturities Amount of bond redemption €m1600140012001000800600400200 0 2009 2013 2017 2021 2025 2029 2033 2037 67
  • 67. Investor Relations – 2008 Annual Results – March 6, 2009Appendix 12: Net liquidity €m 12/31/2007 12/31/2008 Veolia Environnement Syndicated loan(1) 4,000 2,890 Bilateral credit lines 1,025 925 Cash and cash equivalents 1,551 1 551 2,284 2 284 Total Veolia Environnement 6,576 6,099 Subsidiaries Cash and cash equivalents 1,565 1,566 Total subsidiaries 1,565 1,566 Total Group liquidity 8,141 8 141 7,665 7 665 Current liabilities and bank overdrafts (4,264) (3,685) Total net Group liquidity 3,877 3,980(1) Maturing in April 2012 68
  • 68. Investor Relations – 2008 Annual Results – March 6, 2009Appendix 13: Overview of operating financial assets€m 12/31/2007 12/31/2008Balance sheet (current and non-current operating financial assets): 5,628 5,751recorded at amortized costs on balance sheet with a correspondingliability booked in Veolia’s consolidated net financial debtIncome statement: Remuneration (i.e. interest payments) are a sub- 345 400line to revenue from ordinary activities “o/w revenue from operatingfinancial assets” and are also included in operating cash flow before assetschanges in working capitalCash flow statement (inflows): Principal repayments associated with 361 358the operating financial assets are not recognized in the incomestatement b t recorded within “ h fl t t t but d d ithi “cash flow ffrom i investing activities” on ti ti iti ”the cash flow statementCash flow statement (outflows): “New operating financial assets” 404 507which are the current year’s investments in operating financial assets year sare also recorded within “cash flow from investing activities” on thecash flow statement 69 69
  • 69. Investor Relations – 2008 Annual Results – March 6, 2009Appendix 14: Definition of ROCE Net income from operations ROCE = Average capital employed during the yearNet income from operations = Recurring operating income + Share of net income of associates– Income tax expense – Revenue from operating financial assets + Income tax expense allocatedto operating financial assets gCapital employed = Intangible assets and property, plant and equipment, net + Goodwill, net of impairment + Investments in associates + Operating and non-operating working capitalrequirements, net + Net derivative instruments – Provisions – Other non-current debtAverage capital employed during the year: average of the opening and closing capital employed Capital employed consists in capital “earning” a return: equity capital, earning capital minority interests, net financial debt less operating financial assets 70
  • 70. Investor Relations – 2008 Annual Results – March 6, 2009 Appendix 15: Changes in pre-tax ROCE by division Average capital employed Pre-tax ROCE (€m) (as %) 2007 2008 2007 2008 restated(1) restated(1) Water 5,688 6,239 18.1% 14.6% Waste 5,891 6,522 12.5% 8.7% Energy services 2,971 3,741 11.4% 10.5% Transportation 1,505 1,646 7.6% 7.9%(1) Accounts at December 31, 2007 were restated, to ensure comparability between accounting periods, by the amount of the income from assets divested in 2008 (Clemessy & Crystal in Energy in p ( y y gy particular), according to the IFRS 5 standard and shown in the income statement in the “Net ), g income from discontinued operations” line. Clemessy & Crystal 2007 revenue: €696m 71
  • 71. Investor Relations – 2008 Annual Results – March 6, 2009Investor 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 200 East Randolph Street Suite 7900 Chicago, IL 60601 Tem +1 (312) 552 2847 Fax +1 (630) 282 0423 e-mail b i il brian.sullivan@veoliaes.com lli @ li Web site http://www.veolia-finance.com 72

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