2009 Annual results

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2010-04-27

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2009 Annual results

  1. 1. 2009 ANNUAL RESULTS
  2. 2. Investor Relations – 2009 Annual Results – 05.03.10Disclaimer 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. 3. Antoine FrérotChief Executive Officer
  4. 4. Investor Relations – 2009 Annual Results – 05.03.10Table of Contents 2009 highlights 2009 results Outlook 4
  5. 5. Investor Relations – 2009 Annual Results – 05.03.10 2009 highlights: commitments met  Asset divestment program carried out — 2009 divestments: €1,291m*, exceeding the €1,000m commitment  Net financial debt — Significant drop in net financial debt to €15.1bn from €16.5bn at December 31, 2008 — Improvement in credit ratio  Sharp increase in free cash flow at €1,344m — Positive free cash flow after dividend payment and before divestments  Operating cash flow – net investments — €2,357m versus €601m in 2008, exceeding the commitment of €2,000m  Investments tightly controlled — Down nearly 30% to €3,331m from €4,702m in 2008 — Stopped acquisitions — Maintenance investments held at nearly 5% of revenue* Including €138m in capital increase of minority shareholders 5
  6. 6. Investor Relations – 2009 Annual Results – 05.03.102009 highlights: rapid adaptation to the businessenvironment Cost reduction plans — General efficiency Plan: contributed €255m in 2009, topping an initial objective of €180m — Veolia Waste Adaptation Plan: €126m in cost savings compared to €100m objective Total cost savings: €381m Revenue contracted 2.5% at constant FX rates to €34,551m with stabilization of the economic environment in the second half Operating cash flow: Favorable trend in Q4 09 — €3,956m, generating a stable operating cash flow margin in 2009 of 11.5% 2008 Operating cash flow Operating cash flow margin 2009 (€m) 6
  7. 7. Investor Relations – 2009 Annual Results – 05.03.10 Dividend policy €1.21 €1.21 €1.21 (1) €1.05 €0.85 €0.68 €0.55 €0.55 €0.55 2009 dividend at €1.21 (1) per share(1) Subject to approval by the Annual Shareholders Meeting on May 7, 2010 7
  8. 8. Pierre-François RiolacciChief Financial Officer
  9. 9. Investor Relations – 2009 Annual Results – 05.03.10 2009 key figures €m 2008 2009 adjusted (1) Revenue 35,765 34,551 Operating cash flow 4,105 3,956 Recurring operating income 2,275 1,932 Operating income 1,961 2,020 Recurring net income attrib. to equity holders of parent 687 538 Net income attrib. to equity holders of parent 405 584 Net financial debt 16,528 15,127 Net financial debt / (Cash flow from operations + 3.64 X 3.44 X repayment of operating financial assets) Net earnings per share (€) 0.88 1.24 Recurring net earnings per share (€) 1.49 1.14 Dividend per share (€) 1.21 1.21 (2)(1) To ensure the comparability of financial years, 2008 financial statements have been adjusted: - by the divestment of Freight operations in the Transport division in December 2009 and of Waste-to-Energy operations in the Waste Division in the United States in August 2009; which are presented in the income statement in the line item “net income from discontinued operations” according to IFRS 5; - by the reclassification into “net income from discontinued operations” of UK operations in the Transport division and of the Renewable Energies business; the balance of assets and liabilities of these two cash-generating units was reclassified under the assets and liabilities held for sale lines.(2) Subject to approval by the Annual Shareholders Meeting on May 7, 2010(3) Audit processes are ongoing by auditors 9
  10. 10. Investor Relations – 2009 Annual Results – 05.03.10 Breakdown of revenue by division€m 35,765  current  constant Exc. scope 34,551 FX rates FX rates & FX ■ Water +0.0% +0.2% -0.4% ■ Environmental Services -9.2% -7.9% -7.8%35% 12,558 12,556 36% ■ Energy services -4.9% -3.0% -2.2% ■ Transportation +1.3% +1.9% +0.4% VE Group -3.4% -2.5% -2.7%28% 9,973 26% 9,05621% 7,446 21% 7,07916% 5,788 17% 5,860 2008 adjusted (1) 2009 (1) To ensure the comparability of financial years, 2008 financial statements have been adjusted: Refer to footnote (1) slide 9 for details 10
  11. 11. Investor Relations – 2009 Annual Results – 05.03.10 Breakdown of revenue by geographic zone€m  current  constant Exc. scope 35,765 34,551 FX rates FX rates & FX ■ France -4.9% -4.9% -4.9% ■ Europe ex France -5.5% -1.3% -1.1%40% 14,465 40% 13,756 ■ North America +2.4% -2.9% -3.7% ■ Asia/Pacific +3.4% +0.9% -1.0% ■ Rest of the world +1.4% +2.2% +0.8% VE Group -3.4% -2.5% -2.7%36% 12,964 35% 12,2579% 3,072 9% 3,1448% 2,708 8% 2,8017% 2,556 8% 2,593 2008 adjusted (1) 2009 (1) To ensure the comparability of financial years, 2008 financial statements have been adjusted: Refer to footnote (1) slide 9 for details 11
  12. 12. Investor Relations – 2009 Annual Results – 05.03.10 Operating cash flow (1) €m 2008 2009  current  constant FX effect adjusted (2) FX rates FX rates Water 1,821 1,837 0.8% (31) +2.6% Environmental Services 1,331 1,194 -10.3% (19) -8.8% Energy services 759 740 -2.5% (25) +0.8% Transportation 287 327 +13.8% (3) +14.7% Other (93) (142) - Total Group 4,105 3,956 -3.6% (78) -1.7%(1) Operating cash flow = cash flow from continuing operations before tax and interest expense(2) To ensure the comparability of financial years, 2008 financial statements have been adjusted: Refer to footnote (1) slide 9 for details 12
  13. 13. Investor Relations – 2009 Annual Results – 05.03.10 Stable operating cash flow margin 2008 margin 2009 margin adjusted (1) Water 14.5% 14.6% Environmental Services 13.4% 13.2% Energy services 10.2% 10.5% Transportation 5.0% 5.6% Other - - Total Group 11.5% 11.5%(1) 2008 operating cash flow margins were adjusted, in order ensure the comparability of financial years: Refer to footnote (1) slide 9 for details 13
  14. 14. Investor Relations – 2009 Annual Results – 05.03.10 Efficiency Plan: Initial 2009 objectives exceeded, €255m versus €180m €m Achieved in 2010 Total 2009 objectives 2009 & 2010 Water 87 80 - 90 170 Environmental Services 72 (1) 60 - 70 140* Energy services 56 50 - 60 110 Transportation 40 40 - 50 80 Efficiency Plan €255m €230 - 270m ~€500m Veolia Environmental €126m Services Adaptation Plan(1) excluding Veolia Environmental Service’s 2009 Plan to Adapt to the Business Environment 14
  15. 15. Investor Relations – 2009 Annual Results – 05.03.10 Veolia Water: Revenue stable at €12,556m (+0.2% at constant FX) Quarterly revenue €m  Veolia Water Solutions & Technologies reported a slight decline in revenue, down to €2,470m (-1.8% at constant consolidation scope & FX rates) — Several large contracts outside France near completion — Less sustained business in industrial markets  In France, revenue inched down 0.3%, excluding consolidation scope effects — 0.2% decrease in volumes of water distributed — 2% slowdown in Works businesses Absolute change in Works and Engineering €m & Construction revenue  Outside France(1) , 0.4% growth (0.2% at constant consolidation scope & FX rates) — Stability in Europe (at constant consolidation scope & FX rates), as the satisfactory performance of business in Central Europe offset less activity in the United Kingdom — Robust growth in Asia (up 12% at constant consolidation scope & FX rates) due to the extension of certain chinese contracts Q1 09/Q108 Q2 09/Q2 08 Q3 09/Q3 08 Q4 09/Q4 08(1) excluding VWST 15
  16. 16. Investor Relations – 2009 Annual Results – 05.03.10 Veolia Water: Operating cash flow at €1,837m versus €1,821m  Resilient operating cash flow, up 2.6% at constant FX rates to €1,837m  Stable operating cash flow in France — Lower volumes of water distributed and changes in the Works business — Contractual developments offset by productivity gains and the positive indexing effect  Marked decline in operating cash flow at Veolia Water Solutions & Technologies — Impact of the slowdown in the Works business — Decrease in industrial services margins  Outside France(1) , operating cash flow grew — Substantial increase in Asia-Pacific (mainly in China) — Virtually stable in Europe due to the satisfactory contribution of Germany, despite volume declines and the tough economic conditions  Negative €24m impact related to the extinction of the “Vivendi Universal compensation”  Efficiency Plan: €87m in 2009  Operating income stable at constant FX rates at €1,164m(1) excluding VWST 16
  17. 17. Investor Relations – 2009 Annual Results – 05.03.10 Veolia Environmental Services : 9.2% revenue decline to €9,056m (-7.9% at constant FX rates) Quarterly revenue (€m) 2008Change in 2009/2008 revenue -9% 2009 Decline in waste volumes -5% — I&C non-hazardous waste: –8% — Municipal: -2.3% Price and volumes of recycled materials - 4 % — Average prices fell by 40% in 2009 Rise in service prices +1% FX effects -1% Stable revenue at constant consolidation Breakdown of revenue by activity scope and FX rates in Q4 09 2008 2009 Urban cleaning and collection Non hazardous industrial waste collection and services Hazardous industrial waste collection and services Sorting and recycling Hazardous waste treatment Waste-to-energy from non hazardous waste Landfilling of non hazardous and inert waste 17
  18. 18. Investor Relations – 2009 Annual Results – 05.03.10Veolia Environmental Services : Breakdown of revenue bygeographic zone % of 2009  at constant revenue scope & FX ratesFrance 37% -9% Decline in waste volumes and price of recycled materialsGermany 11% -11% Decline in waste volumes and price of paperUnited Kingdom 15% -4% Decline in industrial waste volumes partially offset by price increases Positive contribution from integrated PFI contractsNorth America 14% -9% Decline in waste volumes partly offset by price increases Decline in industrial servicesRest of the world 23% -7% 18
  19. 19. Investor Relations – 2009 Annual Results – 05.03.10 Veolia Environmental Services: Recovery in profitability during 2009 Decline in operating cash flow to €1,194m (-8.8% at constant FX rates) Operating cash flow (€m) and margin (%) Stabilization of operating cash flow margin at 13.2% vs. 13.4% Substantial profitability improvement throughout the year — Efficiency Plan: €72m in 2009 — 2009 Waste Adaptation Plan: €126m — In Germany, profitability improved since Q2 — Positive impact of lower fuel prices 4th quarter of 2009 — Sharp increase in operating cash flow: +19.7% — Operating cash flow margin rate: 14.7% Operating income of €454m (including €99m from 2008 2009 non-recurring capital gains on divestments) — includes a negative impact of (€56m) in 2009 compared to a positive contribution of €21m in 2008, resulting from the fall in discount rates on landfill site rehabilitation provisions 19
  20. 20. Investor Relations – 2009 Annual Results – 05.03.10Veolia Energy: Revenue declined 4.9% to €7,079m (-3%at constant FX rates) Revenue declined 2.2% at constant consolidation scope and FX rates Quarterly revenue (€m) Negative FX effect of €139m (-1.9%) mainly due to movement of Eastern European currencies and the pound sterling Energy prices — Negative impact of €140m — Declined in France and North America — Increased in Central Europe and Baltic countries Slowdown in Works business and in services for industrial customers Weather conditions had no significant France Outside France impact 20
  21. 21. Investor Relations – 2009 Annual Results – 05.03.10Veolia Energy: Operating cash flow Operating cash flow declined 2.5% to €740m but grew 0.8% at constant FX rates Slowdown in the Works business and in services for European industrial customers, notably in Southern Europe Negative effect of CO2 and energy prices in France Efficiency Plan: €56m Operating income of €416m 21
  22. 22. Investor Relations – 2009 Annual Results – 05.03.10Veolia Transport: Revenue increased 1.3% to €5,860m(+1.9% at constant FX rates) In France, business resiliance and 0.5% Quarterly revenue (€m) growth 2008 2009 — Contracts won in mid-sized cities and the updating of indexed prices offset the loss of the Bordeaux contract (May 2009) Outside France, 1.7% growth — Bolstered by North America and Germany — Loss of the Melbourne (December 2009) and Stockholm (November 2009) contracts had a limited impact of (€34 m) in 2009 — Development of the JV with RATP (Hong Kong tramway) Slowdown in airport operations 22
  23. 23. Investor Relations – 2009 Annual Results – 05.03.10Veolia Transport: Operating cash flow Strong growth in operating cash flow (+14.7% at constant FX rates) to €327m from €287m in 2008 Efforts to renegotiate contracts and boost productivity led to a significant improvement in operating cash flow in Germany, the Netherlands and North America Efficiency Plan contributed €40m to the improvement in operating cash flow in 2009 Positive impact of the decline in fuel prices Slowdown affecting airport operations Operating income of €153m 23
  24. 24. Investor Relations – 2009 Annual Results – 05.03.10 Recurring operating income€m  At  At 2008 FX 2009 current constant adjusted (1) effect FX rates FX ratesWater 1,196 1,164 -2.7% (31) -0.1%Environmental Services 620 360 -42.0% (12) -40.1%Energy services 430 416 -3.0% (17) +1.0%Transportation 137 158 15.6% (1) +16.2%Holding (108) (166)Recurring operating income 2,275 1,932 -15.1% (61) -12.4% of which change in fair value of 21 (56)provisions for landfill rehabilitation(1) To ensure the comparability of financial years, 2008 financial statements have been adjusted: Refer to footnote (1) slide 9 for details 24
  25. 25. Investor Relations – 2009 Annual Results – 05.03.10 From operating income to net income 2008 adjusted (1) 2009€m Recurring Non- Total Recurring Non- Total recurring recurringOperating income 2,275 (314) 1,961 1,932 88 2,020Cost of net financial debt (2) (948) (948) (894) (894)Corporate tax expense (420) -42 (462) (242) (242)Equity in net income of affiliates 19 19 1 1Net income from discontinued - 139 139 - (43) (43)operationsNet income attributable to minority (239) (65) (304) (259) 1 (258)interestsNet income attributable to equity holders of parent 687 (282) 405 538 46 584 (1) To ensure the comparability of financial years, 2008 financial statements have been adjusted: Refer to footnote (1) slide 9 for details (2) Including “other financial income and expenses”, of which €83m in accretion expenses on provisions in 2009 25
  26. 26. Investor Relations – 2009 Annual Results – 05.03.10Cost of borrowing 12/31/09 €m 2008 2009 12/31/08 Cost of net financial debt (909) (784) 125 Impact of change in average debt (13) Impact of changes in interest rates 140 Other (2)€m Average net financial debt €16,466m versus €16,142m in 2008 Cost of borrowing stood at 4.76% as compared with 5.61% at December 31, 2008 31-mar-09 30-june-09 30-sept-09 31-dec-09 26
  27. 27. Investor Relations – 2009 Annual Results – 05.03.10 Taxes Mainly related to 2008 elements % 46% -3% -4% -13% 25% -6%(2) +2% 22% (3) (1) (1) The normalized rate was 31%(1) Actual tax rate: relationship between tax expense and net income from continuing operations, adjusted by the same tax expense and income from affiliates(2) Mainly related to 2009 items(3) 2007 reported figure 27
  28. 28. Investor Relations – 2009 Annual Results – 05.03.10 Net Investments: €1,585m Stop to acquisitions Optimization of current investments €m 2008 2009 Maintenance capital expenditures 1,860 1,632 As % of consolidated revenue 5.2% 4.7% Investments in growth/existing operations 1,033 861 (ex. operating financial assets) Financial investments in growth incl. change in 1,280 338 consolidation scope New operating financial assets 529 500 Gross investments 4,702 3,331 -€1.4bn Industrial and financial divestments(1) (789) (1,291) >€1bn Repayment of operating financial assets (358) (455) Net investments 3,555 1,585 <€2bn(1) Including the capital increase subscribed to by minority interests of €138m in 2009 and €27m (excluding the capital reduction in Berlin) in 2008 and including the net financial debt of divested companies 28
  29. 29. Investor Relations – 2009 Annual Results – 05.03.10Completed divestments €m 2008 2009 Industrial divestments 330 259 Financial divestments and change in consolidation scope 432 894 Capital increase subscribed to by minority interests 27 138 Total divestments 789 1,291 More than €2bn in divestments completed in two years 29
  30. 30. Investor Relations – 2009 Annual Results – 05.03.10 Completed divestments 2009 financial divestments (1) €1,032m  Divest mature assets €230m — o/w Montenay International (USA) €220m (2) Valuation multiple,  Non-strategic assets €420m ex capital increases — o/w VPNM (France) €111m subscribed to by — o/w Veolia Cargo (France) €94m minority interests: — o/w Dalkia Facility Management (UK) €90m 11 x EBITDA 2008 — Other €125m  Development partnerships €382m — o/w EBRD (Veolia Voda, Central Europe) €70m — o/w JV with Mubadala (Africa – Middle East) €189m(1) Including changes in consolidation scope and capital increases subscribed to by minority interests(2) Includes only divestments completed in 2009. The divestment of the operating contract for the Miami-Dade County Waste-to-Energy plant, announced on February 2, 2010 will be included in 2010 divestitures 30
  31. 31. Investor Relations – 2009 Annual Results – 05.03.10 Operating cash flow – net investments (1) €m 2008 2009 Operating cash flow (2) + repayment of operating 4,514 4,397 financial assets Gross investments (4,702) (3,331) Divestments 789 1,291 Operating cash flow (2) – net investments (1) 601 2,357 Reminder of 2009 objective 2,000(1) Net investments = gross investments– (divestments + repayment of operating financial assets + capital increases subscribed to by minority interests)(2) Operating cash flow including cash flow of discontinued operations 31
  32. 32. Investor Relations – 2009 Annual Results – 05.03.10 Cash flow statement €m 2008 2009 Cash flow from operations (1) 4,178 3,939 Repayment of operating financial assets 358 455 Total cash generation 4,536 4,394 Gross Investments (4,702) (3,331) Change in WCR (81) 432 Tax paid (348) (408) Interest expenses paid (849) (802) Dividend (2) (754) (434) Other (3) (400) 202 Divestments 789 1,291 Free cash flow (1,809) 1,344(1) Of which financial cash flow and cash flow from discontinued operations (-€14 m in 2009 and €50 m in 2008)(2) Dividend paid to shareholders and minority shareholders(3) Includes in particular changes in receivables and other financial assets totalling (€312 m) in 2008 and €163 m in 2009 32
  33. 33. Investor Relations – 2009 Annual Results – 05.03.10 Changes in net financial debt€m 2008 2009Net financial debt at January 1st 15,125 16,528 Free cash flow before divestments and dividends (1,713) 487 Dividends paid (754) (434) Free cash flow before divestments (2,467) 53 Divestments 762 1,153 €1,291m Capital increase reserved for minority shareholders (104) (1) 138 Free cash flow (1,809) 1,344 FX effects and other 406 57Net financial debt at December 31st 16,528 15,127Change in debt 1,403 (1,401)(1) Of which the capital reduction associated with the Berlin contract in the Water division is €131m 33
  34. 34. Investor Relations – 2009 Annual Results – 05.03.10 Debt ratio €bn x 3.6x Net financial debt/(Cash 3.4x 3.4x(1) flow from operations + 3.3x Repayment of operating 3.6x financial assets) As of 01/01/10, application of IAS 7(2) (related to renewal charges), changes the targeted range of the Group ratio from 3.5x – 4x to 3.85x – 4.35x Net financial debt  Average maturity of net debt: 10 years versus 9.3 years at December 31, 2008  Ratings — Moody’s: P-2/ A3 negative outlook (confirmed on March 26, 2009) — Standard & Poor’s: A-2 / BBB+ negative outlook (confirmed on January 4, 2010)(1) The 2009 ratio adjusted for IAS 7 changes from 3.44 x to 3.75x(2) Refer to appendix 5 34
  35. 35. Outlook
  36. 36. Investor Relations – 2009 Annual Results – 05.03.10Veolia-Transdev Partnership project with Transdev — A new combined entity with:  Revenue ~ €8bn  Operating cash flow ~ €500m  Net debt ~ €1.8bn — A 50-50 partnership before the IPO, with Veolia Environnement as the industrial operator — Negotiation and process on going  Finalisation of conditions for RATP exit  Consultation of the numerous employee representative bodies  Approval by competition authorities IPO of a world leader in passenger transportation — Evolution of the business toward increased complexity and sophistication — In a strongly developing market — Dedicated means to fuel growth — Full valuation of Transportation assets 36
  37. 37. Investor Relations – 2009 Annual Results – 05.03.10Collaboration with EDF A partnership since 2000 through Dalkia New and important challenges in…. — energy savings, — CO2 emissions, … now involving all of Veolia Environnement’s businesses New offers and services on the drawing board: — Local energy production through CHP and biomass — Electric motorization and mobility management — Combined electricity production and seawater desalination — Smart meters and value-added services — Sustainable development offerings for residential buildings An industrial partnership to enlarge 37
  38. 38. Investor Relations – 2009 Annual Results – 05.03.10 Review of last few years: Operating cash flow Operating cash flow€m FX - €186m (2) Scope + €185m Business cycle - €472m Net productivity & other + €265m Δ 2009 / 2007 - €208m (1) (1)(1) Estimated(2) 2007 figures have not been adjusted for 2009 discontinued operations 38
  39. 39. Investor Relations – 2009 Annual Results – 05.03.10 Review of last few years: ROCE After-tax ROCE (1) FX - 0.5% Business env. - 1.8% Recent acquisitions - 1.1% Slow-return assets - 1.2% Net productivity & + 1.3% other Δ 2009 / 2007 - 3.3% French GAAP(1) 2007 figures have not been adjusted for 2009 discontinued operations 39
  40. 40. Investor Relations – 2009 Annual Results – 05.03.10Veolia Environnements strengths Structurally growing markets Significant competitive advantages A decentralized and responsive Group A broad asset base of about €25bn RESTORE PROFITABILITY, so as to position the Group for PROFITABLE ORGANIC GROWTH WITHOUT INCREASING DEBT 40
  41. 41. Investor Relations – 2009 Annual Results – 05.03.10Drive to restore profitability (1) Continue to reduce our cost base Turn around recent acquisitions in Waste Optimize our asset portfolio 41
  42. 42. Investor Relations – 2009 Annual Results – 05.03.10Drive to restore profitability (2) Reduce our cost base Make cost reduction an ongoing pursuit €250m every year Managed by the recently created Operations Department — Rationalization of corporate resources — Reduction of head office expenses — Optimization of maintenance costs — Focus innovation programs on continuing improvement of operational processes 42
  43. 43. Investor Relations – 2009 Annual Results – 05.03.10Drive to restore profitability (3) Turn around recent Waste acquisitions Germany — Reduce structure and number of employees (from 6 to 4 regions, decline of 600 FTE) — Renegotiation of waste collection and removal prices — Reduce exposure to recycled paper prices — Renegotiation and/or exit of unprofitable contracts — Improvement in Dual System business profitability and exit from DS licensing activity — Unification of management systems — Capex and working capital reduction Italy — Resume normalized operation of waste-to-energy facilities after a long shutdown of several units which had to be brought in line with regulatory requirements — Pursue contractual negotiation with our clients 43
  44. 44. Investor Relations – 2009 Annual Results – 05.03.10Drive to restore profitability (4) Optimize our asset portfolio Pursue selective asset optimization: An average of €1bn of assets divested every year By capturing value of mature assets By divesting non-core assets on the basis of following criteria: — Business — Geographic — Financial By sharing with partners the ramping up of slow-return assets 44
  45. 45. Investor Relations – 2009 Annual Results – 05.03.10Internal and profitable growth (1) Organic: — Very few acquisitions With significant added value: — Mobilisation of our unique capabilities:  Technologies  Established track record  Management teams  Capacity to manage risks — Complex and global challenges — Duration — Significant contracts that have a strong base for development 45
  46. 46. Investor Relations – 2009 Annual Results – 05.03.10Internal and profitable growth (2) Priority areas targeted: — Urban density — Stringent and enforced regulations — Legal stability — Financially sound clients A focus on four regions European Union (Domestic market) North America Northern Asia Middle East Rapidly profitable : — IRR > WACC +3% for each project — ROCE > WACC at the end of year 3 Each year, on average on the — Payback < 7 years portfolio of new contracts — Revenue / capital employed > 1.5 10% for the total group 46
  47. 47. Investor Relations – 2009 Annual Results – 05.03.10 Return + profitable growth: 3-5 years outlook ROCE after tax 10%10% 9%8% 7.6%6%4% 2009 Recent Slow Productivity, Normalized 3-5 years 3-5 years Acquisitions return Asset tax assets optimization, Business profitable growth environment 47
  48. 48. Investor Relations – 2009 Annual Results – 05.03.10Return + profitable growth: 3-5 years outlook Recurring Operating Income €m CAGR 3-5 years 6-8 % Normal business environment Reduction of the cost base 4-5 % Turn around recent acquisitions 1 932 Ramp up « slow-return assets » Asset optimisation and profitable growth 2009 3-5 years 48
  49. 49. Investor Relations – 2009 Annual Results – 05.03.102010 objectivesAssumption: Economic stability in 2010 in comparison with H2 2009 Priority focus on cash flow generation maintained Recurring operating income improvement — Positive free cash flow after dividend payment(1) — €3bn of divestments over 2009 – 2010 – 2011 — €250m in cost cutting — Maintain ratio objective: net debt / (cash flow from operations + repayment of Operating Financial Assets) (1) Excluding Veolia Transport/Transdev merger project 49
  50. 50. Conclusion
  51. 51. Investor Relations – 2009 Annual Results – 05.03.10One ambition for Veolia Environnement (1)- Today : economic crisis- Tomorrow : density How to reconcile human development and environmental quality? scarcity diversity Veolia is at the core of the world’s major challenges and their solutions The worldwide sustainable development reference 51
  52. 52. Investor Relations – 2009 Annual Results – 05.03.10One ambition for Veolia Environnement (2) The reference exemplary model of performance — Financial and economic performance But also — Innovation performance: keep one step ahead — Social performance: employees satisfaction, employability, solidarity — Societal performance : contribute to the common good An exemplary company, balanced and responsible in all its dimensions 52
  53. 53. Restore balance between growth and returns
  54. 54. Investor Relations – 2009 Annual Results – 05.03.10 Table of Contents of Appendices Currency movements Appendix 1 Impact of FX rates on 2009 operating cash flow Appendix 2 Veolia Water’s consolidated revenue Appendix 3 Gross investments by division Appendix 4 Renewal expenses in concession contracts (IAS 7) Appendix 5 Main contracts renewed or won in 2009 Appendix 6 Overview of operating financial assets Appendix 7 Recurring operating income margin Appendix 8 Debt management: main characteristics Appendix 9 VE SA bond redemption schedule Appendix 10 Net liquidity Appendix 11 Definition of ROCE Appendix 12 Pre-tax ROCE by division Appendix 13 Composition of Board of Directors and of the Executive Committee Appendix 14 Trends in prices of recycled materials Appendix 15 Evolution of combined industrial production (France, Germany, UK, USA) Appendix 16 weighted by Veolia Waste revenue contribution 54
  55. 55. Investor Relations – 2009 Annual Results – 05.03.10Appendix 1: Currency movements Main currencies 2008 2009  2009 / 2008 (1 unit of foreign currency = €…) U.S. dollar Average rate 0.6782 0.7177 +5.9% Closing rate 0.7185 0.6942 -3.4% Pound sterling Average rate 1.2433 1.1222 -9.7% Closing rate 1.0499 1.1260 +7.2% Korean won Average rate 0.0006 0.0006 -6.0% Closing rate 0.0005 0.0006 +20.0% Australian dollar Average rate 0, 5691 0.5634 -1.0% Closing rate 0, 4932 0.6246 +26.6% Czech koruna Average rate 0.0399 0.0378 -5.3% Closing rate 0.0372 0.0378 1.5%The average rate applies to the income statement and cash flowThe closing rate applies to the balance sheet 55
  56. 56. Investor Relations – 2009 Annual Results – 05.03.10 Appendix 2: Impact of FX rates on 2009 operating cash flow 2007 (1) 2008 (1) 2009Currency Local currency 2009 €/X Impact on 2009/ (in millions) exchange 2009 2008 rate operating 2009/ chge. 2008 cash flow chge. (m)U.S. dollar zone (USD) 416 496 475 1.393 +19 -4% +5.5%Pound sterling zone (GBP) 353 401 370 0.891 (44) -8% -10.8%Czech koruna zone (CZK) 6.315 6.193 6.551 26.457 (13) +6% -5.5%Korean won zone (KRW) 76.295 93.653 88.810 1.772.649 (4) -5% -8.5%Polish zloty zone (PLN) 287 331 387 4.33001 (20) +17% -6% (1) Fiscal years 2007 and 2008 were not adjusted for assets held for sale 56
  57. 57. Investor Relations – 2009 Annual Results – 05.03.10Appendix 3: Veolia Water’s consolidated revenue €m +0.0% 12,558 12,556 Total Veolia Water  Year-on-year change +0.0% — Internal growth -0.4% — External growth +0.6% — FX effect -0.2% +2.3% Operations -3.7% Works and E&C 57
  58. 58. Investor Relations – 2009 Annual Results – 05.03.10 Appendix 4: Gross investments by division Growth€m Financial New operating incl. Δ in Industrial Maintenance financial Total consolidation capex assets scopeWater 498 160 329 265 1,252Environmental Services 485 6 128 74 693Energy services 233 84 296 99 712Transportation 377 62 68 26 533Other 39 26 40 36 1412009 total 1,632 332 861 500 3,3312008 total 1,860 1,280 1,033 529 4,702 58
  59. 59. Investor Relations – 2009 Annual Results – 05.03.10Appendix 5: Accounting treatment of renewal expenditures according to the newamendment specifying the implementation conditions of IAS7  Veolia Environnement is generally subject to the obligation of maintaining and repairing assets of facilities it manages under public service contracts. In accounting terms, this obligation is reflected by renewal expenses (for assets covered by public-private partnership service contracts in France).  In application of the new amendment specifying the implementation conditions of IAS7 Statement of Cash Flow, renewal expenditures are booked as operating expenses as of January 1, 2010, whereas they were previously treated as maintenance expenditures.  As a consequence, during reconciliation, in the cash flow statement, between “Net income attrib. to equity holders of parent” and “Net cash flow from operating activities”, renewal expenses will no longer be eliminated, as of January 1, 2010, in the “Depreciations, provisions and operating value impairments” item.  The deduction of renewal expenditures from the operating cash flow and maintenance costs, has no impact on the cash position, net income, or shareholders’ equity. 59
  60. 60. Investor Relations – 2009 Annual Results – 05.03.10Appendix 5: Accounting treatment of renewal expenditures according to the newamendment specifying the implementation conditions of IAS7 2008 Renewal 2008 adjusted (1) and adjusted (1) expenditures adjusted for IAS 7 €m Revenue 35,765 35,765 Operating cash flow 4,105 - 390 3,715 Recurring operating income 2,275 2,275 Maintenance capex 1,860 - 390 1,470 Operating cash flow(2) - net investments 601 601 2009 Renewal 2009 adjusted for €m published expenditures IAS 7 Revenue 34,551 34,551 Operating cash flow 3,956 - 361 3,595 Recurring operating income 1,932 1,932 Maintenance capex 1,632 - 361 1,271 Operating cash flow(2) - net investments 2,357 2,357 (1) To ensure the comparability of financial years, 2008 financial statements have been adjusted: Refer to footnote (1) slide 9 for details (2) Including the operating cash flow from discontinued operations 60
  61. 61. Appendice 6: Main contracts won or renewed in 2009 INTERNAL GROWTH- Renewals: Roubaix 223 main contracts renewed in France en 2009 in Water (o/w 126 in drinking water & Lens Valenciennes 97 in wastewater), 134 in Waste (o/w 85 from local authorities & 49 from companies), 17 in Transportation & 86% of contracts due to expire in 2009 renewed in Energy La Roche-sur-Yon (water) – Length: 12 years – Cumul. rev.: €66m Reg. Public Authority of Vallée de Chevreuse (waste) – Length: 8 years – Cumul. rev.: €72m Limoges Métropole, the city urban authority (waste) – Length: 6 years – Cumul. rev.: €37m Mont Saint Michel Roubaix (energy) – Length: 24 years – Cumul.rev.:€196m Moselle Chartres Vallée de Strasbourg Poitiers (energy) – Length: 15 years – Cumul.rev.: €72m Métropole Chevreuse Moselle Departmental Council (transportation) – Length: 10 years – Cumul. rev.: €177m Orléans Gard Departmental Council (transportation) – Length: 10 years – Cumul. rev.: €160m Rennes DCNS Indre et Loire Var Departmental Council (transportation) – Length: 8 years – Cumul. rev.: €83m- Outsourcing / Privatization: Nevers Angers Valenciennes (transportation) – Length: 8 years – Cumul. rev.: €405m Tours Joint Authority with responsability for the Bay of Mont Saint Michel (transportation) – Length: 13 years (o/w 3 for construction) – Cumul. rev.: €91m La Roche-sur-Yon Poitiers Le Creusot Nice (self-service cycles) (transportation) – Length: 15 years – Cumul.rev: €45m Limoges Touraine interurban network « Green line » for Indre & Loire District (transportation) – Length: 7 years – Cumul.rev: €45m Royan Le Creusot, Montceau-les-Mines (transportation) – Length: 6 years – Cumul.rev.: €26m Embrunais Mende in Lozère (heating network from local biomass) (energy) – Operating length: 24 years – Cumul.rev.: €41m in partnership with Engelvin TP réseaux Mende Alès Roquebrune Alès (heating network) (energy) – Length: 20 years – Cumul.rev.: €30m Cap Martin Reg. Public Authority of Nevers (construction & operation of waste drop off center for Gard professionnals) (waste) – Operating length: 20 years – Cumul.rev.: €18m Nice Reg. Public Authority of Embrunais (water) – Length: 30 years – Cumul.rev.: €62m Roquebrune Cap Martin (water) – Operating length: 20 years – Cumul.rev.: €50m Var Royan (1) (water) – Length: 12 years – Cumul.rev.: €17m- Engineering / Design & Build: Chartres Métropole, the Chartres urban authority (construction & operation of the new wastewater treatment plant, environmentaly friendly) (water)  Renewals 1) Announced in January 2010 - Operating length: 20 years – Cumul.rev.: €156m (incl.€54m for construction)  Outsourcing / Privatization Biomasse 3 (1) (construction & operation of 7 new biomass cogeneration plants – Rennes, Strasbourg, Orléans, Tours, Angers, Lens & Limoges) (energy)  Engineering / Design & Build  Partnership with other company PARTNERSHIP Partnership with DCNS (multiservices), through creation of a JV Défense Environnement Services (51/49) – Estimated yearly rev. by 5 to 10 years: €150m 61
  62. 62. Appendice 6: Main contracts won or renewed in 2009 INTERNAL GROWTH- Renewal: Stadtwerke Görlitz (energy activity) (water) – Length: 20 & 7 years – Cumul.rev.: €310m- Outsourcing / Privatization: Water regional Authority of Burg (Saxony-Anhalt) (water) - Length: 15 years – Cumul.rev.: €20m Madrid area - « South plant » (water) Sweden – Length: 4 years (2 years option) – Cumul.rev.: €16m Finland Merseyside Waste Disposal Authority (MWDA) (waste) – Length: 20 years – Cumul.rev.: €720m Göteborg Göteborg (1) (transportation) Boräs Helsinki – Length: 8 years – Cumul.rev.: €240m Merseyside Landskrona Trelleborg Helsinki (1) (transportation) United Kingdom – Length: 4 years – Cumul.rev.: €80m Skäne Grudziadz Boräs (transportation) Poland – Length: 8 years (2 years option) – Cumul.rev.: €68m Skäne / Trelleborg (transportation) Hamburg – Length: 8 years – Cumul.rev.: €49m Burg Landskrona (bus regional network) (transportation) Slovakia Görlitz – Length: 8 years – Cumul.rev. : €45m Germany Trnava Grudziadz (transportation on demand) (transportation) – Length: 10 years – Cumul.rev.: €15m Hungary Hamburg (energy) – Length: 25 years – Cumul.rev.: €83m Barcelona Trnava area (energy) Madrid Békéscsaba - Length: 10 years – Cumul.rev.: €55m Spain- Engineering / Design & Build: Barcelona (construction & operation of a new heating & cooling network) (energy)  Renewal – Operating length: 30 years – Cumul.rev.: €492m  Outsourcing / Privatization  Engineering / Design & Build Békéscsaba (works on networks) (water) – Cumul.rev.: €36m (1) Contract whose Veolia is « preferred bidder », signature under way 62
  63. 63. Appendice 6: Main contracts won or renewed in 2009INTERNAL GROWTH- Renewals: Boston (1) (transportation) – Length: 2 years – Cumul.rev.: €428m United States Wilmette Tempe (transportation) - Length: 4 years – Cumul.rev.: €93m Boston Denver (2) (transportation) - Length: 3 years – Cumul.rev.: €43m Mapleton Wilmette (waste) – Length: 88 months – Cumul.rev.: €9m Denver Tempe Seminole- Outsourcing / Privatization: New Orleans Lithia Seminole County (waste) – Length: 8 years – Cumul.rev.: €16m New Orleans (overall public transportation system) (transportation) – Operating length: 5 years (5 years option) – Cumul. rev.: €202m Mapleton (water) – Length: 15 years – Cumul.rev.: $29m Brazil Petrobras- Engineering / Design & Build: Petrobras (construction of a new water & reuse treatment plant) (water) – Cumul.rev.: €123m Lithia (design & build) (water) – Cumul.rev.: $40m  Renewals  Outsourcing / Privatization  Engineering / Design & Build (1) Announced in January 2010 (2) Contract whose Veolia is « preferred bidder », signature under way 63
  64. 64. Appendice 6: Main contracts won or renewed in 2009INTERNAL GROWTH- Renewals: Rockingham – Manudrah (1) (transportation) – Length: 10 years – Cumul.rev.: €150m Perth (transportation) - Length: 7 years – Cumul.rev.: €17m China Hong Kong (hazardous waste treatment) (waste) – Length: 10 years – Cumul.rev.: €174m Saitama & Hiroshima (water) RATP Développement Japan - Length: 3 years – Global cumul.rev.: €21m- Outsourcing / Privatization: Saitama Hong Kong Chiba Chiba (water) - Length: 3 years – Cumul.rev.: €35m Hiroshima National Environmental Agency in Singapore (waste) – Length: 6 years – Cumul.rev.: €10m Singapore- Engineering / Design & Build: Sydney (networks maintenance) in consortium with Bovis (water) - Length: 4 years (3 years option) - Cumul.rev.: €28m (€51m with option)EXTERNAL GROWTH Australia Hong Kong tramway network (transportation) with the partnership of RATP Développement Perth RockinghamPARTNERSHIP Sydney Partnership with RATP Développement company (transportation) through the creation of a JV (50/50) in Asia  Renewals  Outsourcing / Privatization(1) Contract whose Veolia is « preferred bidder », signature under way  Engineering / Design & Build  Company acquisition 64
  65. 65. Appendice 6: Main contracts won or renewed in 2009 INTERNAL GROWTH Rabat Nador- Outsourcing / Privatization: Morocco Bus network for Grand Rabat area (commercial activity) (transportation) – Length: 15 years (7 years option) – Cumul.rev.: €1.1bn Nador district (waste) – Length: 7 years – Cumul.rev.: €18m Doha – Ashghal (water) – Length: 7 years (3 years option) – Cumul.rev.: €44m (€61m with option) Qatar Sipchem- Industry & services: Doha Saudi International Petrochemical (Sipchem) (operating contract) (water) – Length: 5 years – Cumul.rev.: €6m Saudi Arabia  Outsourcing / Privatization  Industry & services 65
  66. 66. Investor Relations – 2009 Annual Results – 05.03.10Appendix 7: Overview of operating financial assets€m 12/31/2008 12/31/2009Balance sheet: current and non-current operating financial assets are 5,751 5,652recorded at amortized costs on the balance sheet with a correspondingliability booked in Veolia’s consolidated net financial debtIncome statement: interest payments are a sub-line to the revenue 398 394from ordinary activities “o/w revenue from operating financial assets”and are included in operating cash flow before changes in workingcapitalCash flow statement (inflows): Principal repayments associated with 358 455operating financial assets are not recognized in the income statement,but recorded within ”cash flow from investing activities” on the cashflow statementCash flow statement (outflows): “New operating financial assets” 507 483which are the current year’s investments in operating financial assetsare also recorded within ”cash flow from investing activities” on thecash flow statement 66 66

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