2010, First Half Results

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2010-08-06

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2010, First Half Results

  1. 1. First half 2010First half 2010results
  2. 2. Investor Relations, 2010 first half results ‐ 06/08/10Disclaimer 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 t th iti ld terminate or modify some of V li E i i t dif f Veolia Environnements contracts, th risk th t our l t t t the i k that long‐term contracts may t t t 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 past, 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. Investor Relations, 2010 first half results ‐ 06/08/10Table of contentsTable of contents Highlights 2010 first half results 2010 objectives 3
  4. 4. Antoine FrérotChief Executive Officer
  5. 5. Investor Relations, 2010 first half results ‐ 06/08/10Overview of trends in activity (1)Overview of trends in activity (1) First half of 2010 Water: declining revenue in Works activities Water: declining revenue in Works activities • Continued lower Works activity mainly due to the completion of 3 large  contracts in the Middle East • G d ili Good resilience of operations despite the end of the Paris contract f ti d it th d f th P i t t Environmental Services: market improvement  • Strong rebound in prices of recycled raw materials and services pricing remain  g p y p g at good levels • Improvement in volumes is fragile and uneven • Contract signature selectivity g y Energy Services: first half stable • Climate conditions more favorable at the beginning of the year / negative  impact of energy prices  impact of energy prices Transportation: good dynamics masked by the end of 3 contracts • Negative revenue impact of €350m related to the end of the Bordeaux,  Melbourne and Stockholm contracts Melbourne and Stockholm contracts • Revenue growth of 8.8% excluding the impact of these contracts 5
  6. 6. Investor Relations, 2010 first half results ‐ 06/08/10Overview of trends in activity (2)Overview of trends in activity (2) Near and mid‐term Reappearance of opportunities for organic growth in core targets Reappearance of opportunities for organic growth in core targets • For public collectivities • In all our specialties Interesting opportunities to exchange and optimize assets • Water in Central Europe Water in Central Europe Portfolio of United Utilities contracts in Europe Entry of IFC into the capital of Veolia Voda for 9.5% •E Energy efficiency in the Czech Republic ffi i i th C h R bli Divestment of 85% of Usti and 15% of Dalkia Ceska NWR Energy (industrial platform in Ostrava and Poland) Continued pursuit of asset portfolio redeployment 6
  7. 7. Investor Relations, 2010 first half results ‐ 06/08/10Significant commercial and strategic advancesSignificant commercial and strategic advances SEDIF contract win for 12 years y Important commercial successes bring profitable growth • W t L Ré i Water: La Réunion, Royan, Petrobras and Catalonia contracts R P t b dC t l i t t • Environmental Services: High performance sorting and recycling in Nantes,  Staffordshire, Angers’ biopôle, Waste‐to‐energy in Beauvais • Dalkia: Cogeneration by biomass in Lodz Poznan as well as in France (7 Dalkia: Cogeneration by biomass in Lodz, Poznan as well as in France (7  projects)   • Transportation: Saxony, Bavaria, Rhine Westphalia, Boston, Phoenix • Multiple divisions: Renault in Tangier p g Signature of agreement for the merger of Veolia Transport / Transdev on  May 5, 2010 y , 7
  8. 8. Investor Relations, 2010 first half results ‐ 06/08/10Improvement confirmedImprovement confirmed Slight decline in revenue: ‐1.2% • Noticeable improvement in the second quarter in all divisions p q Operating cash flow growth of 2.7% Improvement in recurring operating income: +6.6% (operating income +11.2%) • I Improvement in associated margins ti i t d i Growth in recurring net income: +6.6%, (+69.9% growth in net income) 2010 Efficiency Plan: €132m in cost savings in H1 • Cost reductions proceeding in line with annual €250m target Strong growth in operating cash flow – net investments to €1,533m vs €850m (+80%) • Maintained discipline regarding gross investments: €1,333m (‐12%) Maintained discipline regarding gross investments: €1,333m ( 12%) • Divestments: €766m vs. €268m • Stable free cash flow vs. H1 2009 including the 86% cash dividend payment    Net financial debt amounted to €16bn  Net financial debt amounted to €16bn • Unfavorable exchange rate effect: +€674m • Extension of debt maturity after the debt exchange in July 2010 8
  9. 9. Investor Relations, 2010 first half results ‐ 06/08/102010 objectives confirmed2010 objectives confirmed • Recurring operating income improvement • Positive free cash flow after dividend payment(1) • €3bn of divestments over 2009 – 2010 – 2011 • €250m in cost reductions • Maintain ratio objective: net debt / (cash flow from  operations + repayment of Operating Financial Assets) (1) Excluding the planned merger of Veolia Transport/Transdev 9
  10. 10. Pierre‐François Pierre‐FrançoisRiolacciChief Financial Officer
  11. 11. Investor Relations, 2010 first half results ‐ 06/08/10 2010 First half key figures 2010 First half key figuresEn €m H1 2009 H1 2010  current   constant  Adjusted (1) FX rates FX ratesRevenue 17,389.3 17,177.3 ‐1.2% ‐3.3%Operating Cash Flow(3) 1,835.2(2) 1,885.4 +2.7% +0.2% Margin rate 10.6 % 11.0%Recurring operating income 1,011.5 1,078.2 +6.6% +3.5% Margin rate 5.8 % 6.3%Operating Income 1,011.5 1,125.2 +11.2% +7.9%Recurring net income attributable to  287.3 306.2 +6.6%equity holders of parentNet income attributable to equity Net income attributable to equity 220.3 374.2 +69.9%holders of parent Dec 31  June 30  FX Impact p 2009 2010Net financial debt 15,127 16,027 +674(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations” of UK operations in the Transportation division and the Eolfi activities in the Energy Services division;(2) As of January 1, 2010, due to the application of the new amendment to IAS 7, operating cash flow for H1 2009 has been adjusted for renewal expenses by an amount of €148.3 m, of which €102.3m is within the Water division and €46.0m is within the Energy Services division. 11(3) For detailed definition refer to 2009 Form 20-F page 74
  12. 12. Investor Relations, 2010 first half results ‐ 06/08/10Impact of FX movements on H1 2010 accountsImpact of FX movements on H1 2010 accounts Euro depreciation  H1 2010 / H1 2009 Average Rate        Closing Rate Average Rate Closing Rate • Australian dollar +27% +21% • Czech koruna +6% +1% • Pound sterling +3% +4% • Polish zloty +12% +7% • U.S. dollar ll 0% +15% Impacts on Group’s main figures   I G ’ i fi • Revenue +€357m • Operating cash flow Operating cash flow  +€47m • Recurring operating income  +€32m • Higher net debt (at end of period rates) +€674m 12
  13. 13. Investor Relations, 2010 first half results ‐ 06/08/10Breakdown of consolidated revenueBreakdown of consolidated revenue By division By geographic region Rest of the world Transportation Water €2,847m , , €5,901m Asia / Pacific €1,008m €1,271m 17% North  6% America 7% 34% 10% €1,679m €1 679m Energy Services 22%€3,721m           40% 37% France  F 27% €6,903m Environmental Europe ex. France  Europe ex. France Services  €6,316m €4,708m Consolidated H1 2010 Revenue of €17,177m C lid t d H1 2010 R f €17 177 13
  14. 14. Investor Relations, 2010 first half results ‐ 06/08/10RevenueIn €m 17,389 17 389 + 357 - 384 - 185 17,177 H1 2009 FX effect External Internal H1 2010 adjusted (1) growth growth +2.1% -2.2% -1.1% -1.2%(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations” of UK operations in the Transportation division and the Eolfi activities in the Energy Services division 14
  15. 15. Investor Relations, 2010 first half results ‐ 06/08/10Breakdown of revenue by divisionBreakdown of revenue by divisionIn €m 17,389 17,177    Current  Constant  Exc. Scope  FX rates FX rates FX rates FX rates & FX & FX 6,235 5,901 Water ‐5.4% ‐7.1% ‐5.7% Environmental Services 4.6% 1.9% 6.6% 4,502 4,708 Energy Services 0.2% ‐1.6% 0.6% Transportation ‐3.1% ‐5.2% ‐5.2% VE Group VE Group ‐1.2% 1 2% ‐3.3% 3 3% ‐1.1% 1 1% 3,713 3,721 2,939 2,847 H1 2009 H1 2010 adjusted (1)(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations” of UK operations in the Transportation division and the Eolfi activities in the Energy Services division 15
  16. 16. Investor Relations, 2010 first half results ‐ 06/08/10 An inflexion during second quarter in all divisions An inflexion during second quarter in all divisions Revenue in €m 1st Quarter 2nd  Quarter 1st Half  2009 2010 At  constant 2009 2010 At  constant 2009 2010 At  constant FX FX FXWater 3,143 2,923 , , ‐7.8% 3,092 , 2,978 , ‐6.4% 6,235 , 5,901 ‐7.1% ,Waste  2,188 2,204 ‐0.7% 2,314 2,504 4.3% 4,502 4,708 1.9%Energy services 2,398 2,312 ‐4.9% 1,315 1,409 4.6% 3,713 3,721 ‐1.6%Transportation 1,431 1,356 ‐6.2% 1,508 1,491 ‐4.4% 2,939 2,847 ‐5.2%Group 9,160 8,794 ‐5.1% 8,229 8,383 ‐1.3% 17,389 17,177 ‐3.3%Variation at    current FX  ‐4.0% 4 0% +1.9% +1 9% ‐1.2% 1 2% 16
  17. 17. Investor Relations, 2010 first half results ‐ 06/08/10Breakdown of revenue by geographic areaBreakdown of revenue by geographic areaIn €m 17,389 17,177    Exc.  Current  Constant  Scope & FX FX rates FX rates FX rates FX rates 6,962 6,903 France ‐0.8% ‐0.8% 1.4% Europe ex. France 2.3% ‐0.4% 1.6% North America 4.2% 2.9% 2.7% 6,177 6,316 Asia / Pacific ‐4.0% ‐14.4% ‐15.2% Rest of world Rest of world ‐23.3% 23 3% ‐25.9% 25 9% ‐17.1% 17 1% 1,611 1,679 Group VE ‐1.2% ‐3.3% ‐1.1% 1,324 1,271 1,315 1 315 1,008 1 008 H1 2009 H1 2010 adjusted (1)(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations” of UK operations in the Transportation division and the Eolfi activities in the Energy Services division 17
  18. 18. Investor Relations, 2010 first half results ‐ 06/08/10Revenue : Veolia Water, down 5.4%Revenue : Veolia Water, down 5.4% Veolia Water Solutions & Technologies: ‐ 26.2% at  constant scope and FX  • Impact of the completion of large Design & Build contracts  (Marafiq, Fujairah, Ras Laffan). Identical trend in first and  First half revenue second quarters (€m) • Backlog for D&B activity has stabilized Backlog for D&B activity has stabilized • Good activity in the « Solutions » business 6,235 -5.4% 5,901 France : Revenue decline of 2.4% at constant scope • Decline in Works ( 6 3%) Decline in Works (‐6.3%) 4,013 -1.3% 3,960 • Slight increase in operations activity (+3.4%) excluding impact  of the end of the Paris contract    Outside France: +1.1% at constant scope and FX  Outside France: +1.1% at constant scope and FX 2,222 12 6% 2 222 -12.6% 1,941 1 941 • Europe (excl. France): +3.0% at constant scope and FX (United  Kingdom, Northern Europe) S1 09 S1 10 • Africa / Middle East: +3.3% at constant scope and FX due to  Operations increased volumes and tariffs in 2009 Works and E&C • Asia Pacific: ‐4.9% at constant scope and FX due to end of  construction of the Gold Coast desalination plant (Australia) 18
  19. 19. Investor Relations, 2010 first half results ‐ 06/08/10Revenue: Veolia Environmental Services:  4.6%Revenue: Veolia Environmental Services: +4.6% First half revenue (€m)Variation in revenue H1 2010 / H1 2009       +5% 4,502 +4.6% 4,708 Waste volumes  ± 0% Price and volumes of recycled materials + 6% Rise in service prices  + 1% FX effects FX effects + 3% + 3% Scope ‐ 5% Breakdown of revenue by activity Breakdown of revenue by activity H1 09 H1 10 2009 H1 2010 8% 8% 8% 23% 8% 22% Urban cleaning and collection  Non hazardous industrial waste collection and services 6% 6% Hazardous industrial waste collection and services Sorting and recycling 13% Hazardous waste treatment  Hazardous waste treatment 16% Waste‐to‐energy from non hazardous waste 24% 24% Landfilling of non hazardous and inert waste  19 18% 16%
  20. 20. Investor Relations, 2010 first half results ‐ 06/08/10Veolia Environmental Services: Breakdown of revenue by geographic arearevenue by geographic area % of H1  Δ at  2010  2010 constant  revenue scope & FXFrance 34% +7% Higher recycled raw materials prices Contract selectivity (municipal collection) Contract selectivity (municipal collection) Closure of 2 landfills  Good activity for hazardous wasteGermany 12% +12% Higher recycled raw materials prices Higher recycled raw materials prices Competitive pressure on municipal, DSD contracts and  industrial waste contractsUnited United 16% +4% Positive contribution of integrated contracts (PFI) Positive contribution of integrated contracts (PFI)Kingdom Decline in industrial waste volumes and landfilled  volumes during the first half, with stabilization in the  second quarterNorth America 14% +5% Improvement in solid waste volumes in the second  quarter Improvement in Industrial ServicesRest of the Rest of the 24% +6%world 20
  21. 21. Investor Relations, 2010 first half results ‐ 06/08/10Revenue: Veolia Energy Services, stable,  0.2%Revenue: Veolia Energy Services, stable, +0.2% Lower energy prices Lower energy prices • impact of ‐€83m First half revenue (€m) 3,713 +0.2% 3,721 Favorable climate in the first half of 2010  primarily in France and Central Europe • impact of +€65m p 1 ,952 -1.9% 1,915 Stabilization in Works activities at constant  1,761 +2.6% 1,807 scope H1 09(1) H1 10 Outside France France(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations” of UK operations in the Transportation division and the Eolfi activities in the Energy Services division 21
  22. 22. Investor Relations, 2010 first half results ‐ 06/08/10Revenue: Veolia Transportation, down 3.1%Revenue: Veolia Transportation, down 3.1% Revenue down 5.2% at constant scope and FX  rates • Non‐renewal in 2009 of the Bordeaux, Stockholm  First half revenue and Melbourne contracts (‐€350m) (€m) • Good commercial development Valenciennes, The Netherlands (Haaglanden),  2,940 -3.1% 2,848 Germany, United‐States Revenue growth of 1.8% in France at constant  scope Revenue decline of 9.7% outside France at  constant scope and FX rates (impact of  H1 09(1) H1 10 Stockholm and Melbourne ‐€300m) Stockholm and Melbourne ‐€300m)(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations” of UK operations in the Transportation division and the Eolfi activities in the Energy Services division 22
  23. 23. Investor Relations, 2010 first half results ‐ 06/08/10Operating cash flow (1)Operating cash flow In €m  FX   H1 2009 H1 2010 current  constant  adjusted(2) effect FX rates FX FX rates FXWater 808 788 ‐2.5% 16 ‐4.4%Environmental Services l 540 627 +16.1% 15 +13.3%Energy Services 374 386 +3.2% 11 +0.1%Transportation 160 159 ‐0.6% 0.6% 5 ‐3.8% 3.8%Other ‐47 ‐75 ‐ ‐Total Group 1,835 1,885 +2.7% 47 +0.2% (1) Operating Cash Flow = cash flow from continuing operations before tax and interest expense (2) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations” of UK operations in the Transportation division and the Eolfi activities in the Energy Services division As of January 1, 2010, due to the application of the new amendment to IAS 7, operating cash flow for H1 2009 has been adjusted for renewal expenses by an 23 amount of €148.3 m, of which €102.3m is within the Water division and €46.0m is within the Energy Services division.
  24. 24. Investor Relations, 2010 first half results ‐ 06/08/10Operating cash flow margin improvementOperating cash flow margin improvement H1 2009  H1 2010  margin  margin adjusted (1) Water 13.0% 13.4% Environmental Services 12.0% 13.3% Energy Services 10.1% 10.4% Transportation 5.4% 5.6% Other ‐ ‐ Total Group 10.6% 11.0%(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations” of UK operations in the Transportation division and the Eolfi activities in the Energy Services division . As of January 1, 2010, due to the application of the new amendment to IAS 7, operating cash flow for H1 2009 has been adjusted for renewal expenses by an amount of €148.3 m, of which €102.3m is within the Water division and €46.0m is within the Energy Services division. 24
  25. 25. Investor Relations, 2010 first half results ‐ 06/08/10Efficiency Plan: Cost reduction progressing in line with annual €250m objective line with annual €250m objective Efficiency Plan H1 2009  €m H1 2010 (Reminder) Water 37 38 Environmental Services 25* 43 Energy Services 21 31 Transportation 15 18 Other 3 2 Total Group 101 132 53 % of the annual objective realized during the first half *  Excluding the Environmental Services Division’s separate Plan of Adaptation in 2009 25
  26. 26. Investor Relations, 2010 first half results ‐ 06/08/10 Recurring operating income increased 6.6% Recurring operating income increased 6.6%In m€ H1 2009  Current  FX   adjustéd (1) H1 2010       FX rates effect  Constant  FX ratesWater 596 590 ‐1.0% 13 ‐3.3%Environmental services 134 251 86.6% 8 80.7%Energy services 256 268 4.8% 8 +1.6%Transportation 81 48 ‐40.7% 3 ‐43.8%Holding ‐56 56 ‐79 79Recurring operating income 1,011 1,078 +6.6% 32 +3.5%Of which change in fair value of  ‐18 ‐33pprovisions for landfill rehabilitation f f (1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations” of UK operations in the Transportation division and the Eolfi activities in the Energy Services division 26
  27. 27. Investor Relations, 2010 first half results ‐ 06/08/10Recurring operating income margin improvementRecurring operating income margin improvement Recurring operating g p g income margins H1 2009  H1 2010 In €m margin  g adjusted (1) margin i Water 9.6% 10.0% Environmental services 3.0% 5.3% Energy services 6.9% 7.2% Transportation 2.8% 2 8% 1.7% 1 7% Holding ‐ ‐ Total Group Total Group 5.8% 6.3%(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations” of UK operations in the Transportation division and the Eolfi activities in the Energy Services division 27
  28. 28. Investor Relations, 2010 first half results ‐ 06/08/10 Net income increased 70% Net income increased 70% H1 2009 (1) H1 2010In €m Recurring Non‐ Total Recurring Non‐ Total recurring recurringOperating income 1,011 ‐ 1,011 1,078 47 1,125Cost of net financial debt (2)Cost of net financial debt  ‐406 406 ‐ ‐406 406 ‐443 443 ‐ ‐443 443Corporate Tax Expense ‐198 ‐ ‐198 ‐188 ‐ ‐188Share in net income of associates 7 ‐ 7 9 ‐ 9Net income from discontinued N ti f di ti d ‐ ‐68 ‐68 ‐ 43 43operationsNet income attributable to non‐ ‐127 1 ‐126 ‐149 ‐22 ‐171controlling interestsNet income attributable to equity  287 ‐67 220 306 68 374holders of parent (1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations” of UK operations in the Transportation division and the Eolfi activities in the Energy Services division (2) Including «other financial income and expenses », of which -€37m in unwinding discounts on provisions in 1H 2010 28
  29. 29. Investor Relations, 2010 first half results ‐ 06/08/10Cost of borrowingCost of borrowing Δ30/06/10 In €m H1 2009 H1 2010 30/06/09 Cost of net financial debt ‐379 ‐408 ‐29 Impact of change in average debt +15 Impact of change in interest rates Impact of change in interest rates ‐38 38 Other ‐6In €m17 000 16 819 16 82716 500 16 027 Average net financial debt: 15 90216 000 €15,542m at June 30, 2010 versus15 500 15 377 15 127 €16,888m at June 30, 200915 00014 500 Cost of borrowing stood at14 000 5.06% versus 4.76% in 2009 Marc. 31, June 30, Setp. 30, Dec. 31, Marc. 31, June 30, 09 09 09 09 09 09 (4.47% at H1 2009 and 5.07% at H2 2009) 29
  30. 30. Investor Relations, 2010 first half results ‐ 06/08/10Completed Divestments in H1 2010 Completed Divestments in H1 2010In €m Industrial and financial divestments H1 2010 (1) Industrial and financial divestments H1 2010  766  766 Mature assets 396 • Of which Montenay ‐ Dade (Environmental Services) Of which Montenay  Dade (Environmental Services),  Usti nad Labem (Dalkia) Non‐strategic assets g 106 • Of which Mediterranea delle Acque (Water); Brazil, Ireland Korea (Environmental Services) Development partnerships 192 • Of which IFC in Veolia Voda, CEZ in Dalkia Ceska Republica Industrial Divestments 72(1) Including capital increase subscribed by minority shareholders, net financial debt of divested companies and partial divestments between non-controlling shareholders (with no change in consolidation scope) 30
  31. 31. Investor Relations, 2010 first half results ‐ 06/08/10Maintained discipline on net investments: €352mMaintained discipline on net investments: €352m In €m H1 2009 H1 2010 Maintenance capital expenditures  710 458 As % of consolidated revenue 4.1% 2.7% Investments in growth/existing operations 316 392 (ex. operating financial assets) Financial investments in growth (1) 248 324 New operating financial assets 242 159 Gross investments 1,516 1,333 ‐183 Industrial and financial divestments (2) ‐268 ‐766 +498 Repayment of operating financial assets Repayment of operating financial assets ‐263 263 ‐215 215 Net investments 985 352 ‐633(1) Including partial acquisitions between non-controlling shareholders (with no change in consolidation scope) and net financial debt from acquired entities(2) Including capital increase subscribed by minority shareholders of €108m in H1 2010 and €57m in H1 2009, net financial debt of divested companies and partial divestments between non-controlling shareholders (with no change in consolidation scope) 31
  32. 32. Investor Relations, 2010 first half results ‐ 06/08/10Strong cash generated from operationsStrong cash generated from operations In €m H1 2009 H1 2010 Cash Flow From Operations(1) h l i 1,836 1,878 Repayment of Operating Financial Assets 263 215 Total cash generation Total cash generation 2,099 2,093 Gross investments ‐1,516 ‐1,333 Divestments 268 766 Cash generated from operations 851 1,526 Variation WCR ‐114 ‐382 Taxes paid Taxes paid ‐218 ‐197 Interest expense ‐347 ‐352 Dividend (2) ‐402 ‐709 Other (3) 73 ‐19 Free Cash Flow ‐157 ‐133(1) Of which financial cash flow and cash flow from discontinued operations ((€2m) in H1 2010 et (€6m) in H1 2009)(2) Dividend paid to shareholders and minority shareholders and other movements(3) Includes in particular changes in receivables and other financing assets totaling (€27m) in H1 2010 and €62m in H1 2009 32
  33. 33. Investor Relations, 2010 first half results ‐ 06/08/10Change in net financial debtChange in net financial debt In €m H1 2009 H1 2010 Net financial debt at January 1st ‐16,528 ‐15,127 Free cash flow ‐157 ‐133 FX effects FX ff t ‐30 30 ‐674 674 Other ‐112 ‐93 Net debt at June 30 ‐16,827 ‐16,027 Change in net debt ‐299 ‐900 Strong liquidity position : €9.7bn at the end of June 2010 Pursuing active debt management • Average maturity of net debt of 9.9 years following the debt swap in July 2010  ( g y y related to bonds due in 2012 and 2013 (average maturity of 9.5 years at June 30,  2010 and 10 years at the end of December 2009) Ratings • Moody’s : P‐2 / A3 negative outlook (confirmed on July 8 2010) Moody s : P 2 / A3 negative outlook (confirmed on July 8, 2010) • Standard & Poor’s : A‐2 / BBB+ Stable outlook (April 21, 2010: ratings confirmed  & outlook revised from negative to stable) 33
  34. 34. Investor Relations, 2010 first half results ‐ 06/08/102010 objectives confirmed2010 objectives confirmed • Recurring operating income improvement • Positive free cash flow after dividend payment(1) • €3bn of divestments over 2009 – 2010 – 2011 • €250m in cost reductions • Maintain ratio objective: net debt / (cash flow from  operations + repayment of Operating Financial Assets) (1) Excluding the planned merger of Veolia Transport/Transdev 34
  35. 35. First half 2010 First half 2010results
  36. 36. Sommaire Appendices
  37. 37. Investor Relations, 2010 first half results ‐ 06/08/10Table of contents of appendicesTable of contents of appendices Currency movements Appendix 1 Impact of FX rates on H1 2010 operating cash flow p p g Appendix 2 pp Gross investments by division Appendix 3 Debt management  Appendix 4 Impact of foreign currency on net debt I t ff i t d bt Appendix 5 A di 5 VE SA bond redemption schedule  Appendix 6 Consolidated balance sheet Appendix 7 Main contracts won or renewed in 1H10 Appendix 8 Accounting treatment for renewal expenditures (IAS 7)  Appendix 9 Veolia ‐ Transdev: calendar  Veolia ‐ Transdev: calendar Appendix 10 Appendix 10 37
  38. 38. Investor Relations, 2010 first half results ‐ 06/08/10 Appendix 1: Currency movements  Appendix 1: Currency movements Main currencies  H1 2010 (1 unit of foreign currency = €…) H1 2009 H1 2010 / H1 2009 U.S. U S dollar Average rate 0.7507 0.7528 +0.3% Closing rate 0.7075 0.8149 +15.2% Pound sterling Average rate 1.1187 1.1494 +2.7% Closing rate 1.1736 1,2233 +4.2% Korean won Average rate 0.0006 0.0007 +17.2% Closing rate 0.0006 0.0007 +20.2% Australian dollar Average rate 0.5322 0.6730 +26.5% Closing rate 0.5761 0.6943 +20.5% Czech koruna Average rate 0.0368 0.0389 +5.5% Closing rate 0.0386 0.0389 +0.7%The average rate applies to the income statement and cash flowThe closing rate applies to the balance sheet 38
  39. 39. Investor Relations, 2010 first half results ‐ 06/08/10 Appendix 2: Impact of FX rates on H1 2010  operating cash flow operating cash flow H1  H1  H1  2008 (1) 2008  2009 2010Currency Local currency  Change  Impact  (in millions) Δ H1  €/X H1  H1  on H1  2010/ 2010 2010/ 2010 op.  H1  H1  cash flow  h fl 2009  2009 (€m)U.S. dollar zone   209 203 255 1.328 +1(USD) +28% +0.3%Pound sterling zone  209 174 164 0.870 +5(GBP) ‐6% +2.7%Czech koruna zone  3,725 3,593 3,331 25.734 +6(CZK) ‐7% +5.2%Korean won zone  39,252 35,319 46,253 1,532.27 +4(KRW) +31% +14.7%Australian dollar zone Australian dollar zone 47 30 51 1.486 1 486 +11(AUD) +70% +20.9%Polish zloty  zone  211 217 264 4.003 +7(PLN) +22% +10.6% (1) 2008 figures have not been restated for activities that are expected to be divested 39
  40. 40. Investor Relations, 2010 first half results ‐ 06/08/10Appendix 3: Gross investments by division  Appendix 3: Gross investments by division GrowthIn €m Financial incl.  New  Δ in  Maintenance consolidation  Industrial  operating  Total capex financial  scope assetsWater 116 107 197 110 530Environmental ServicesEnvironmental Services 189 33 74 12 308Energy Services 40 181 73 19 313Transportation 103 2 39 18 162Other 10 1 9 0 20Total H1 2010 458 324 392 159 1,333Total H1 2009 710 248 316 242 1,516 40
  41. 41. Investor Relations, 2010 first half results ‐ 06/08/10Appendix 4: Debt managementAppendix 4: Debt management Ratings • Moody’s :  P‐2 / A3 negative outlook (confirmed July 8, 2010) • Standard & Poor’s :  A‐2 / BBB+ stable outlook (April 21, 2010)  Bond redemption:  €23m in H1 2010 Average maturity of net debt : 9.5 years at June 30, 2010 vs. 10 years in 2009 Group liquidity:  €9.7bn, including €4.6bn in undrawn confirmed credit  lines( without any disruptive covenants) Net Group liquidity:  €6.3 bnNet financial debt after hedges at June 30,  Currencies (gross debt after hedges)          at  2010 June 30, 2010 Other 19% (1) Fixed rate: 62% o/w Euro: 80% Euro 61% o/w USD: 52% GBP 10% o/w GBP: 42% Variable rate: 38% USD 10% Variable cap-rate: 6% (1) o/w RMB 4% and HKD 3% 41
  42. 42. Investor Relations, 2010 first half results ‐ 06/08/10Appendix 5: Impact of foreign currency on net debtAppendix 5: Impact of foreign currency on net debt Net debt at December 31, 2009 N t d bt t D b 31 2009 €15,127m €15 127 Net debt at June 30, 2010 €16,027m • Change Change   €900m • Of which the impact of FX Of which the impact of FX €674m US dollar €283m Pound sterling €151m Hong Kong dollar €92m Chinese renminbi yuan €73m 42
  43. 43. Investor Relations, 2010 first half results ‐ 06/08/10 Appendix 6: VE SA bond redemption schedule  after the bond exchange completed July 1, 2010 the bond exchange completed July 1, 20101800 Average maturity of net debt moved from 9.5 years to  CZK €0.02bn GBP €0.8bn1600 9.9 years after bond exchange completed July 1, 2010  y g p y , USD €1.8bn €1 8b EURO €10.3bn1400 Total €12.9bn12001000 800 600 400 200 0 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 43
  44. 44. Investor Relations, 2010 first half results ‐ 06/08/10Appendix 7: Consolidated balance sheetAppendix 7: Consolidated balance sheet In €m In €m 12/31/09 / / 06/30/10 / / Intangible assets (concessions) 3,625    4,114 Property, plant & equipment 9,382   9,903 Other non‐current assets Oth t t 11,313    11 313 12,306 12 306 Operating financial assets (current and non‐current) 5,652   5,723 Cash & cash equivalents 5,614    5,058 Other current assets 14,231    13,744 Total Assets 49,817    50,848 Capital (including minorities) p 10,131    , 10,739 , Financial debt (current and non‐current) 21,086    21,715 Other non‐current liabilities 4,381    4,868 Other current liabilities Other current liabilities 14,219    14 219 13,526 13 526 Total Liabilities & Shareholders Equity 49,817    50,848 44
  45. 45. Investor Relations, 2010 first half results ‐ 06/08/10 Appendix 8: Main contracts won or renewed  since the beginning of 2010 since the beginning of 2010 INTERNAL GROWTH‐ Renewals: SMICTOM 70 main contracts renewed in France during the 1st half 2010 in Water (o/w 36 in drinking water & 34 in  Flandres Morinie wastewater), 108 in Waste (o/w 52 from local authorities & 56 from companies), 2 in Transportation & 85% of  Lens contracts due to expire during the 1st half 2010 renewed in Energy contracts due to expire during the 1st half 2010 renewed in Energy SEDIF (Syndicat des Eaux d’Ile de France) (water)  Public service concession based on the useful innovation on the following performances:  ‐ technological : single control center « ServO », water traceability, Oise third‐generation remote meter reading ;  Carré de Réunion Strasbourg ‐ environmental : « Zero carbon service » ;   GIMD ‐ social: social program called « Water for all » ;  Caisse des – Length: 12 years – Cumul rev : €3bn Length: 12 years – Cumul. rev.: €3bn  Dépôts SEDIF Lanester Rennes‐ Outsourcing / Privatization: Orléans « Biopôle » waste recovery center from the Angers Loire metropolitan area (1st VES mechanical  biological treatment facility with composting & anaerobic digestion located in France) (waste) Biopôle – Length: 6 years – Cumul. rev.: €46m  Ancenis SMICTOM Flandres Morinie (waste) – Length: 8 years – Cumul. rev.: €40m Angers Tours Bayonne (transportation) – Length: 7 years – Cumul. rev.: €140m Bayonne (transportation) Length: 7 years  Cumul. rev.: €140m Antibes (transportation) – Length: 5 years – Cumul. rev.:  €55m Oise semipublic mass transit authority – Integrated services system for the Oise transit hub  Montluçon (transportation) – Length: 12 years – Cumul. rev.: €29m Montluçon – Energy performance contract (energy) – Length: 10 years  Limoges‐ Engineering / Design & Build: The « Grand Prado » from the Reunion North Interdistrict Community (CINOR) (BOT) (water) The « Grand Prado » from the Reunion North Interdistrict Community (CINOR) (BOT) (water) – Length of contract: 20 years  – Cumul. rev.: €270m incl. €75m for construction Carré de Réunion in Versailles (D&B) (water) – Cumul. rev.:  €48m  CRE 3 (construction & operation of 7 new biomass cogeneration plants in Rennes,  Antibes Strasbourg, Orléans, Tours, Angers, Lens & Limoges) (energy) Bayonne Town of Lanester (Morbihan) (DBO contract for a biomass heating network) (energy) – Operating length: 24 years  GrandPARTNERSHIPS Prado Agreements between Veolia Environnement & Caisse des Dépôts relative to the   Renewals Veolia Transport‐Transdev merger (1) (50/50 before the new group’s IPO) (transportation)  Outsourcing / Privatization Partnership between Veolia Environnement & the Groupe Industriel Marcel Dassault (GIMD) Partnership between Veolia Environnement & the Groupe Industriel Marcel Dassault (GIMD)  with the undertaking by GIMD to maintain its 5% holding of the stock & voting rights of   Engineering / Design & Build Veolia Environnement for a period of 5 years  Partnerships with other companies (1) Signature of the definitive agreements announced  45 on May 5, 2010
  46. 46. Investor Relations, 2010 first half results ‐ 06/08/10 Appendix 8: Main contracts won or renewed  since the beginning of 2010 since the beginning of 2010 INTERNAL GROWTH Vesteralen‐ Renewals: Lofoten Westminster (waste) – Length: 7 years (7‐year option) – Cumul. rev.: €298m excl. option Medway Council (1) (waste) – Length: 7 years – Cumul. rev.: €125m Medway Council  Length: 7 years  Cumul. rev.: €125m  Kristianstad/Skane County (transportation) – Length: 8 years (2‐year option) – Cumul. rev.: €74m excl. option Highlands Sweden E4 (interregional line) (transportation) – Length: 8 years – Cumul. rev.: €69m Moray Norway E4 Frankfurt (transportation) – Length: 6 years – Cumul. rev.: €57m Tay Lofoten (transportation) – Length: 7 years (3‐year option) – Cumul. rev.: €31m excl. option Scottish V t l (t Vesteralen (transportation) – L th 7 t ti ) Length: 7 years (3‐year option) – C (3 ti ) Cumul. rev.: €30m excl. option l €30 l ti Water Kristianstad‐ Outsourcing / Privatization: Solutions Tallinn Staffordshire County Council (1) (waste) ‐ Length: 25 years  – Cumul. rev. for the County Council : £1bn incl.  third party waste & sale of electricity Estonia Staffordshire Poland‐ Engineering / Design & Build: Poznan Construction of 2 boilers wholly dedicated to biomass in Lodz & Poznan (energy) Construction of 2 boilers wholly dedicated to biomass in Lodz & Poznan (energy) United Kingdom United Kingdom Germany Lodz od – Additional yearly rev. : €364m Westminster Construction & operation of a set of solar photovoltaic fields in the region of Pouilles  NWR Energy Bielsko Biala (energy) – Operating length: 20 years – Cumul. rev.: €160 m for construction Medway Francfurt CEZ IFC Czech Rep.  EXTERNAL GROWTH Acquisition (2) of several United Utilities activities in Europe (water): Acquisition  of several United Utilities activities in Europe (water):  ‐ 58% stake in Sofiyska Voda (water & wastewater for the city of Sofia in Bulgaria)  ‐ 26% stake in AS Tallinna Vesi (water & wastewater for the Tallinn in Estonia)   ‐ 33% stake in Aqua SA (water & wastewater for the city of Bielsko Biala in Poland)  Italy Bulgaria ‐ portfolio of outsourcing, industrial engineering & infrastructure contracts in UK   ‐ minority stakes in 3 PFI contracts in Scotland (Tay, Moray & Highlands)   Sofia Acquisition of NWR Energy (leader in Czech Rep. In the mining & industrial sector) Acquisition of NWR Energy (leader in Czech Rep. In the mining & industrial sector)  from the NWR group (energy)  Renewals Pouilles PARTNERSHIPS  Outsourcing / Privatization Partnership between Veolia Energy‐Dalkia & CEZ (1er company in the Czech energy market) (energy):   Engineering / Design & Build ‐ disposal by Dalkia International of its 15% stake in Dalkia Ceska Republica’s shares to CEZ  ‐ disposal by Dalkia Ceska Republica of its 85% stake in Dalkia Usti Nad Labem to CEZ  Interests acquisitions in others companies P Partnership between CREED (Veolia’s Waste management & Energy Research Center), hi b CREED (V li ’ W &E R hC )  Partnerships with other companies Partnerships with other companies the company Dalkia & Lodz Technical University (energy) Partnership between Veolia Voda & the IFC (International Financial Corporation – World Bank) (water)  (1) Signature announced on July 2010 ‐ 9.5% stake acquisition via a rights issue in Veolia Voda by IFC   (2) Transaction subject notably, to the competition authorities &  Partnership between Veolia Water & Scottish Water with the new JV establishment « Scottish Water to the EBRD’s approval for Continental Europe (excl. Poland) 46 Solutions » (backed notably by Veolia Water UK) dedicated to delivering the Scottish Water investment program over the 2010‐2015 period, one of the largest in the UK water industry (water)
  47. 47. Investor Relations, 2010 first half results ‐ 06/08/10 Appendix 8: Main contracts won or renewed  since the beginning of 2010 since the beginning of 2010 INTERNAL GROWTH‐ Renewals: Boston (transportation) – Length: 2 years – Cumul. rev.: €486m    York (Bus Rapid Transit) (transportation) ‐ Length: 5 years – Cumul. rev.: €71m  Canada‐ Outsourcing / Privatization: Phoenix (transportation) – Length: 5 years – Cumul. rev.: €314m York (bus & transport of people with special needs) (transportation) – Length: 5 years (5‐year option) – Cumul. rev.: €80m excl. option York Cleantech Savannah (transportation) – Length: 5 years (5‐year option) – Cumul. rev.: €61m excl. option Group United States Boston Baltimore  Phoenix cooling network Boston (trigeneration for 6 hospitals) (energy) ( g p )( gy) – Length: 10 years – Cumul. rev.: $70m $ Savannah Suburbio hospital under PPP (Public‐Private Partnership) in the  State of Bahia (energy) – Operating length: 20 years – Cumul. rev.: €107m‐ Engineering / Design & Build: g g/ g Petrobras P63  (1) & Tupi (D&B) (water) – Cumul. rev.: €41m EXTERNAL GROWTH Brazil Suburbio Hospital S b rbio Hospital Acquisition of a cooling network in Baltimore (energy) PARTNERSHIPS  Renewals  Outsourcing / Privatization Partnership between Veolia Environnement & Cleantech Group   Engineering / Design & Build (leading global innovation network of start ups & investors in  (leading global innovation network of start‐ups & investors in  Interests acquisitions in other companies Interests acquisitions in other companies P63 & Tupi  p clean technologies) with the program « Veolia Innovation   Partnerships with other companies Petrobras Accelerator » (VIA) with the objective to boost cleantech  innovation by cooperating with the most innovative start‐ups (1) Announced on Aug. 2010 47

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