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2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
2011, First Half Results
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2011, First Half Results

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2011-08-04

2011-08-04

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  • 1. Half Year Results as of June 30, 2011 1
  • 2. DISCLAIMERVeolia Environnement is a corporation listed on the NYSE and Euronext Paris. This document contains "forward-lookingstatements" within the meaning of the provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-lookingstatements are not guarantees of future performance. Actual results may differ materially from the forward-looking statements as aresult of a number of risks and uncertainties, many of which are outside our control, including but not limited to: the risk of sufferingreduced profits or losses as a result of intense competition, the risks associated with conducting business in some countriesoutside of Western Europe, the United States and Canada, the risk that changes in energy prices and taxes may reduce VeoliaEnvironnements profits, the risk that we may make investments in projects without being able to obtain the required approvals forthe project, the risk that governmental authorities could terminate or modify some of Veolia Environnements contracts, the risk thatour long-term contracts may limit our capacity to quickly and effectively react to general economic changes affecting ourperformance under those contracts, the risk that acquisitions may not provide the benefits that Veolia Environnement hopes toachieve, the risk that Veolia Environnements compliance with environmental laws may become more costly in the future, the riskthat 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, aswell 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-lookingstatements. 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 andExchange Commission under the U.S. Sarbanes-Oxley Act of 2002. These "non-GAAP financial measures" are beingcommunicated and made public in accordance with the exemption provided by Rule 100(c) of Regulation GThis document contains certain information relating to the valuation of certain of Veolia Environnement’s recently announced orcompleted acquisitions. In some cases, the valuation is expressed as a multiple of EBITDA of the acquired business, based on thefinancial information provided to Veolia Environnement as part of the acquisition process. Such multiples do not imply anyprediction as to the actual levels of EBITDA that the acquired businesses are likely to achieve. Actual EBITDA may be adverselyaffected by numerous factors, including those described under “Forward-Looking Statements” above. - 2
  • 3. Antoine Frérot, CEO 3
  • 4. Where are we in the transformation?  Be more flexible  Reduce costs more than €250M per year €265M in 2010 First restructuring initiated  Review the asset base (€4 billion in divestments in 3 years) €1,241M in 2010 + €1,048M in H1 2011  Grow in a more selective way within the company’s leading positions  Return of organic revenue growth confirmed Organic revenue growth improvement: H1 2010 was -1.1%*, H1 2011 was +4.4%  Increased concentration Concentration within top 8 countries: 79% of revenue (excluding Veolia Transdev) => TO ACCELERATE TRANSFORMATION 4* Published figures
  • 5. Acceleration of the company’s transformation Restructure business activities Simplify the organization Reduce costs Modify the Executive Committee 5
  • 6. Restructure business activities The complete review of company assets is finished  Exit or immediate divestment of activities  Complete assessment of operations in certain geographies => Presence in less than 40 countries by the end of 2013 A more concentrated and reactive company 6
  • 7. Company transformation: simplify the organization Company project: “Convergence” Plan Reduction of management layers from 2011 In light of restructuring, reorganization of business units Review of operational processes and reinforcement of management control Rationalization of headquarters functions 7
  • 8. Company transformation: reinforce cost reductions Annual Efficiency Plan cost savings of at least €250M is maintained  2013 objective: €300M Additional cost savings plan  Impact on operating income of at least €150M on 2013 annual results  €250M to €300M in 2015 8
  • 9. Modify the Executive Committee A team dedicated to organizational structure, operational performance and cost reductions => Denis Gasquet A new Head of Environmental Services division => Jérôme Le Conte A new Head of Energy Services division => Franck Lacroix A new Director of Human Resources => Jean-Marie Lambert => Sharing the same vision for the company’s future 9
  • 10. Pierre-François Riolacci, CFO 10
  • 11. First half 2011 Continued revenue growth Localized difficulties in Southern Europe, North Africa and the United States Action plan and acceleration of restructuring activities, resulting in significant write-downs and provisions (€838M) Positive free cash flow of €155M 11
  • 12. Highlights- Southern Europe (1/5) First half events  Italy: difficult context in three divisions Energy Services: –Increased competition  Adaptation plan related to structure and activities Environmental Services: –Persistent operational difficulties  Litigation payment Water: –Failure of the referendum on the privatization of services in Water –Operational financing difficulties  Degradation of activity and financing conditions in Spain and Portugal  Decline in adjusted operating cash flow of €39M Significant disengagements decided Fair value adjustment: €494M (non-recurring)  Italy: write-downs of €476M 12  Other Southern Europe: write-downs of €18M
  • 13. Highlights- North Africa (2/5) First half events  Morocco (Water) Contracts in Tanger-Tétouan and Rabat  Takes into account ongoing negotiations (conclusions of an Independent Commission)  Morocco (Bus in Rabat) Modification of the conditions of operation of the contract  Exit, with client taking over operations  Egypt (Environmental Services) Alexandria contract: non payment for services during the second quarter  Contract termination in progress Decline in adjusted operating cash flow of €21M Reduce/exit certain operations as part of restructuring in the zone Fair value adjustment  €32M in write-downs in non-recurring items  €54M in write-downs and provisions accounted for within adjusted operating income 13
  • 14. Highlights- United States (3/5) Marine Services (offshore oil and gas industrial services in the Gulf of Mexico - Environmental Services division)  Discovery of accounting fraud: correction impacted the opening balance sheet in accordance with IAS 8  First half events: Weak fleet utilization rates Reduced adjusted operating cash flow by €37M in H1 2011  Decision to sell this non-core business TNAI (Energy Services)  First half events: Revision of expected growth projects Modification of investment plan  Fair value adjustment Goodwill write-down of €152M 14
  • 15. Highlight - Veolia Transdev combination (4/5) In accordance with IFRS 3 revised and IFRS 5, and following Veolia’s loss of control of the Transport division (closure March 3, 2011):  The former Veolia Transport operations are reclassified to discontinued operations for the months of January and February 2011 and during the first half of 2010.  The new entity Veolia Transdev (VTD) is consolidated by proportional integration at 50% beginning March 3, 2011.  Divestment, by Veolia Transport, and prior to the closing at March 3, 2011, of certain French and Swiss transportation assets to RATP.  Initial assessment of opening balance sheet (PPA) Impact on the accounts for the six months ending June 30, 2011  Scope effect (4 months) Revenue €1,317M Adjusted operating cash flow €75M Operating income €10M  Capital gain of €430M (in discontinued operations)  Reduction of net financial debt of €540M Full year negative impact on operating income of amortization related to initial assessment of 15 opening balance sheet of roughly €20M to €30M (at 100%)
  • 16. Highlights - Overview (5/5) Adj. Op cash flow impact Adj. Op. income impact Operational losses, provisions (WCR) and In €M Impact adj. op In €M Impact adj. op income intangible asset write-downs* cash flow Southern Europe (18) Southern Europe (39)  -€97M in adjusted operating cash flow North Africa (54) North Africa (21)  -€109M in adjusted operating income Marine Services (37) Marine Services (37) TOTAL (109) TOTAL (97) Non-recurring write-downs Non-recurring write-downs: €686M In €M Water Environmental Energy Total  Of which -€500M goodwill impairments and Services Services -€186M in write-downs of other assets Southern Europe (77) (149) (268) (494) North Africa (32) (32) United States (152) (152) Other 2 (10) (8) TOTAL (107) (149) (430) (686) Capital gain on Veolia Transdev in discontinued operations of €430M 16 * Excluding Italy
  • 17. Key figures at June 30, 2011 In €M H1 2010 H1 2010 H1 2011  Current  Constant published Re-presented (1) FX FX Revenue 17,177 14,106 16,287 +15.5% +15.2% (2) Revenue excl. VTD 14,330 - 14,970 +4.5% (3) +4.2% (3) Adjusted operating cash flow 1,885 1,694 1,741 +2.8% +2.3% Adjusted operating cash flow margin 11.0% 12.0% 10.7% Adjusted operating cash flow excl. VTD 1,726 - 1,665 -3.5% (3) -3.9% (3) Adjusted operating income 1,078 1,011 938 -7.2% -8.3% Adjusted operating income margin 6.3% 7.2% 5.8% Adjusted operating income excl. VTD 1,030 - 927 -10.0% (3) -11.0% (3) Operating income 1,125 1,101 252 -77.1% -78.9% Adjusted net income attrib to owners of the company 306 263 188 -28.5% - Net income attrib to owners of the company 374 374 (67) na - Free Cash Flow (133) (133) 155 - - Net financial debt 16,027 16,027 14,764 - -(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods for the reclassification into « net income from discontinued operations » of the historical Veolia Transport  division, the German operations in the Energy Services division, the Norwegian operations in the Environmental Services division, and Water operations in the Netherlands. For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division. 17(2) +4.4 % at constant scope and exchange rates(3) Change compared to June 30, 2011 published figures, excluding Veolia Transdev
  • 18. Revenue by division in €M 16,287 14,106 6,214  Current  Constant  Constant FX FX scope & FX 5,891 Water +5.5% +5.2% +2.5% Environmental Services +8.4% +8.2% +8.7% 4,894 Energy Services +4.3% +3.8% +2.1% 4,514 Transport +100% - - 3,862 Total +15.5% +15.2% +4.4% 3,701 1,317 H1 2010 (1) H1 2011  (1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the Environmental Services  division, and operations in the Netherlands within the Water division;  ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division;‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division. 18
  • 19. Veolia Water: Revenue increased 5.5% Operations: Revenue increased 5.7% (+2.6% at constant scope and exchange rates)  France: despite unfavorable contract changes (SEDIF), revenue First half revenue stabilized due to price effects and good volumes in the month of May (€M)  Outside France: Revenue increased 9.7% (+4.5% at constant scope & 6,214 +5.5% 5,891 exchange rates): good performance in Europe (Germany, United Kingdom and Bulgaria due to contracts purchased from United Utilities) and in Asia (higher prices in China) 4,530 4,285 Technologies and Networks: Revenue increased 4.9% (+2.5% at +5.7% constant scope and exchange rates)  Effect of the end of large Design & Build contracts (Marafiq/ Fujairah / Ras Laffan), offset by : 1,606 1,684 +4.9% The Hong Kong contract (€67M) Recovery in Solutions and industrial D&B H1 2010 (1) H1 2011  Good activity at Sade, despite the impact of SEDIF contract renewal Tec h & Netw orks Operations (1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods for the reclassification into « net income from  19 discontinued operations » of the operations in the Netherlands within the Water division 
  • 20. Veolia Environmental Services: Revenue increased 8.4% First half revenue (€M) Change in revenue H1 2011 / H1 2010                         +8.4% +8.7% at  Waste volumes +2.5% 4,514 constant 4,894 scope &  Price and volumes of recycled materials + 3.7% FX  Service price increases + 1.3%  Other +1.2%  Foreign currency + 0.2%  Consolidation scope - 0.5% H1 2010 (1) H1 2011Breakdown of revenue by activity (1) The financial statements of 2010 have been re‐presented to ensure  comparability of periods for the reclassification into « net income from  H1 2010 9% H1 2011 discontinued operations » of the Norwegian operations 8% 20% 8% 22% 9% Urban cleaning and collection  Non‐hazardous industrial waste collection and services 6% 6% Hazardous industrial waste collection and services Sorting, recycling and trading Hazardous waste treatment 16% 17% 24% Waste‐to‐energy from non‐hazardous waste 24% Landfilling of non‐hazardous and inert waste 20 16% 15%
  • 21. Veolia Environmental Services: Revenue by geography % of H1 Δ at constant 2011 scope & FX revenueFrance 35% +8.6% Higher prices and volumes of recycled materials (impact €80M) Volumes increased notably in hazardous waste, commercial collection and landfillsGermany 13% +11.7% Higher prices and volumes of recycled materials (impact €69M) Higher industrial volumes Competitive pressure on municipal contracts and DSD businessUnited Kingdom 17% +11% Positive contribution from integrated contracts (PFI): Construction revenue in East Sussex and Hampshire and good waste-to-energy utilization Municipal still in decline Good improvement in landfill: higher volumes landfilled and higher prices, including benefit of landfill taxNorth America 14% +1.6% Solid waste: Revenue increased 4.9% at constant scope and FX Improvement in industrial services, excluding Marine Services Marine Services: weak fleet utilization (improvement throughout the first half) and significant damages 21
  • 22. Veolia Energy Services: Revenue increased 4.3% First half revenue (€M)  Revenue of €3,862M increased 4.3% (+2.1% at constant scope and exchange rates) +4.3% 3,862 3,701  Higher energy prices  impact of roughly €160M vs. H1 2010 1,890 2,002  Unfavorable climate effect in first half 2011, +5.9% principally in France and Central Europe  impact of -€113M vs. H1 2010 1,811 +2.7% 1,860  Scope effect related to acquisitions completed in 2010, notably NWR and its subsidiaries  impact of +€45M vs. H1 2010 H1 2010 (1) H1 2011 Outside France France (1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division; ‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division. 22
  • 23. Veolia Transdev Following the combination of Veolia Transport and Transdev, consolidation of the new entity, by proportional integration at 50% since Mar 3, 2011: Revenue of €1,317M from March to June 2011 (of which Veolia Transport €936M and Transdev €381M): For the first half of 2011 Veolia Transdev posted a pro forma* revenue decline of 1.6%: –Of which -4.2% primarily due to divestments (RATP) –Of which +2.5% due to organic growth primarily related to new contracts in France, Germany and the United States* 6 months Veolia Transdev at 100% 23
  • 24. Adjusted operating cash flow In €M H1 2010 H1 2010 H1 2011  current  constant published (1) re-presented (1) FX FXWater 788 784 766 -2.2% -2.5%Environmental Services 627 608 583 -4.1% -4.6%Energy Services 386 377 362 -4.0% -4.7%Transport 159 - 76 - -Other -75 -75 -46 +38.6% +38.6%Total adjusted operating cash flow 1,885 1,694 1,741 +2.8% +2.3%Adjusted operating cash flow margin 11.0% 12.0% 10.7% - -Adjusted Operating cash flow excl. VTD 1,726 - 1,665 -3.5% -3.9% (1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the Environmental Services  division, and operations in the Netherlands within the Water division;  ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division;‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division. 24
  • 25. Performance analysis (1/2): Adjusted operating cash flow2 000 1,885 -1591 9001 800 1,726 +8 -39 1,741 -21 -371 700 1,637 +28 1,6651 6001 5001 4001 3001 2001 1001 000 Adj. op cash Veolia Adj. op cash FX Southern North Africa Marine Total Operations Adj. op. Adj. op. flow June Transport flow Europe Services cash flow cash flow 2010 June 2010 June 2011 June 2011 (published) excl. Veolia excl. VTD (published) Transport 25
  • 26. Adjusted operating income In €M H1 2010 H1 2010 H1 2011  current  constant published (1) re-presented (1) FX FXWater 590 586 484 -17.4% -18.0%Environmental Services 251 240 253 +5.2% +3.1%Energy Services 268 264 253 -4.0% -4.9%Transport 48 - 10 - -Other -79 -79 -62 +21.5% +21.5%Adjusted operating income 1,078 1,011 938 -7.2% -8.3%Adjusted operating income margin 6.3% 7.2% 5.8% - -Adjusted operating income excl. VTD 1,030 - 927 -10.0% -11.0% (1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods:  ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the Environmental Services  division, and operations in the Netherlands within the Water division;  26 ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division; ‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division.
  • 27. Performance analysis (2/2): Adjusted operating income 1 200 1 100 1,078 -48 1,030 +11 -18 -54 1 000 -37 932 -63 927 938 +29 +29 900 800 700 Adj. op Veolia Adj, op FX Southern North Africa Marine Total Capital Site Operations Adj. op Adj. op income Transport income Europe Services gains provisions* income income (published) June 2010 June 2011 June 2011 excl. Veolia excl. VTD (published) Transport 27* Impact of the change in discount rate utilized to calculate landfill site remediation provisions
  • 28. Veolia Water: Adjusted operating cash flow and adjusted operating income Adjusted operating cash flow declined 2.2% (-2.5% at constant exchange rates) to €766M: -€18M  Contribution from new contracts (Sofia and PFI in UK)  Good performance in Asia (China, Japan, Korea)  Contractual erosion in France (SEDIF)  Asset maintenance costs in the United Kingdom at the beginning of the year Adjusted operating income declined 17.4% (-18.0% at constant exchange rates) to €484M: -€102M  Of which €35M of asset write-downs in Southern Europe and North Africa  Decline in capital gains included within adjusted operating income (-€44M) 28
  • 29. Veolia Environmental Services: Adjusted operating cash flow and adjusted operating income Adjusted operating cash flow declined 4.1% (-4.6% at constant exchange rates) to €583M: -€25M  Marine services: -€37M  Egypt: -€21M  Italy: -€14M  Excluding these items, adjusted operating cash flow would have increased by €47M, or 7.7% Adjusted operating income increased 5.2% (+3.1% at constant exchange rates) to €253M: +€13M  Of which -€51M related to write-downs and operational impacts, and +€29M related to the favorable impact of the change in discount rate utilized to calculate landfill site remediation provisions  Excluding these items, adjusted operating income would have increased 14.6% 29
  • 30. Veolia Energy Services: Adjusted operating cash flow and adjusted operating income Adjusted operating cash flow declined 4.0% (-4.7% at constant exchange rates), to €362M: -€15M  Of which Southern Europe: -€25M  Excluding Southern Europe, adjusted operating cash flow increased 2.7%  Climate impact was more than offset by favorable energy prices Adjusted operating income declined 4.0% (-4.9% at constant exchange rates) to €253M: -€11M  Of which Southern Europe: -€23M  Excluding these items, adjusted operating income increased 4.5% 30
  • 31. Veolia Transdev : Adjusted operating cash flow and adjusted operating income Following the combination of Veolia Transport and Transdev, and consolidation of the new entity using proportional integration since March 3, 2011: Adjusted operating cash flow of €75M and adjusted operating income of €10M During the first half, the new entity (on a pro forma* basis) posted a decline in adjusted operating cash flow due to: Transaction costs for the new entity Fuel prices Contract renewals (notably in France) under strong competition Employee strikes (SNCM & Germany) * 6 months Veolia Transdev at 100% 31
  • 32. Taxes and cost of net financial debt The cost of net financial debt declined from €387M to €376M due to lower average net financial debt. The financing rate increased from 5.06% to 5.32%, primarily due to higher cash position. After adjusting for one-time items, the group tax rate at June 30, 2011 was 33.1% compared to 33.4% at June 30, 2010. The « Effective » tax rate at June 30, 2011 is derived: Income Tax rate Tax base In €M expense before taxes Adjusted for one-time items -193 584 33.1% Goodwill impairment and intangible asset write-downs 3 -686 Impairment of net deferred tax position of France tax group -115 - Other non-deductible 1 -65 Effective -304 -167 -182.4% 32
  • 33. Reconciliation of operating income to net income In €M 2010 re-presented (1) 2011 Adjusted Adjustment Total Adjusted Adjustment TotalOperating income 1 011 90 1 101 938 -686 252Cost of net financial debt -387 - -387 -376 - -376Other financial revenue and expense -33 - -33 -43 - -43Income tax expense -183 - -183 -183 -121 -304Share of net income of associates 7 - 7 6 - 6Net income from discontinued operations - 40 40 - 434 434Non-controlling interests -152 -19 -171 -154 118 -36Re-presented net income attrib. to owners of Co. 263 111 374 - - -Published net income attrib. to owners of Co. 306 68 374 188 -255 -67 (1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the  Environmental Services division, and operations in the Netherlands within the Water division;  ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division; 33‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division.
  • 34. Statement of cash flows: free cash flow of €155M In €M 2010 2011 Cash flow from operations (1) 1,878 1,732 Repayment of operating financial assets 215 219 Total cash generation 2,093 1,951 Gross investments -1,333 -1,199 Variation of working capital -382 -658 Taxes paid -197 -210 Interest expense -352 -327 Dividend (2) -709 -387 Other (3) -19 -63 Divestments 766 1,048 Free cash flow -133 155 Impact of exchange rates and other -767 299 Net financial debt at June 30 -16,027 -14,764 Change in net financial debt -900 + 454(1) Of which financial cash flows (‐€6M in 2010 and +€8M in 2011)  and cash flow from discontinued operations (€190M in 2010 and ‐€17M in 2011)(2) Dividend paid to shareho9lders and non‐controlling shareholders(3) Notably changes in receivables and other financial assets for ‐€27M in 2010 and ‐€72M in 2011 34
  • 35. Net investments In €M H1 2010 H1 2011 Maintenance investments 458 453 % of consolidated revenue 2.7% 2.8% Industrial growth investments 392 473 (excl. Operating financial assets) Financial growth investments (1) 324 102 New operating financial assets 159 171 Gross investments 1,333 1,199 -134 Industrial and financial divestments (2) -766 -1,048 -282 Reimbursement of operating financial assets -215 -219 Net investments 352 -68 -420(1) Including partial acquisitions between shareholders  where there is no change in control and net financial debt of companies entering control(2) Including capital increases from minority shareholders of €39M versus €108M in H1 2010, net financial debt of divested companies and partial sales between  shareholders where there is no change in control (€32M versus €93M) 35
  • 36. Evolution of net financial debt In €M H1 2010 H1 2011 Net financial debt at January 1 -15,127 -15,218 Free cash flow -133 +155 Foreign currency impact -674 +283 Other -93 +16 Net financial debt at June 30 -16,027 -14,764 Change in net financial debt -900 +454 Strong liquidity position: €10.1 billion at June 30, 2011 versus 9.7 billion at June 30, 2010 Continued active debt management  Average maturity of net financial debt of 9.1 years (vs. 9.5 years at June 30, 2010 and 9.4 years at December 31, 2010  Average maturity of gross financial debt of 6.5 years (vs. 7 years at December 31, 2010) Ratings  Moody’s : P-2 / A3, outlook: stable (on April 18, 2011: rating confirmed and outlook revised from negative to stable)  Standard & Poor’s : A-2 / BBB+, outlook stable (on April 21, 2010: rating confirmed and outlook revised from 36 negative to stable)
  • 37. Conclusion 37
  • 38. A strategy focused on profitable growth Veolia will concentrate its development in activities and regions that are growing:  Water in Central Europe and China  Environmental Services : PFI in United Kingdom  Energy Services in Central Europe Our financial discipline allows us to finance this development without increasing debt 38
  • 39. Recent development at the heart of our strategy Warsaw heating network (SPEC)  Successful offer related to the privatization of the largest district heating network in the European Union Dalkia Polska invested €360M for 85% ownership stake 2010 Revenue: €360M  Veolia has already demonstrated its know-how in the operation and optimization of heating networks in Central Europe  Possibility of coupling the network with cogeneration facilities Hertfordshire PFI  350,000 tons of residual waste treated each year  25 year contract duration  Estimated cumulative revenue of £1.3 billion 39
  • 40. Organization of an Investor Day Beginning of December 2011 Details of the “Convergence” Plan New scope of the company Medium term objectives will be discussed 40
  • 41. 2011 annual objectives Continued organic revenue growth Slight decline in adjusted operating income at constant exchange rates, compared to previously published 2010 figures (excluding Veolia Transdev) Divestments of at least €1.3 billion Efficiency Plan cost savings of at least €250M Positive free cash flow after dividend payment 41
  • 42. Half Year Results as of June 30, 2011 42
  • 43. First Half 2011 Results APPENDICES 43
  • 44. Table of contents of appendices Currency movements Appendix 1 Evolution of revenue Appendix 2 Revenue by geographic area Appendix 3 Quarterly revenue Appendix 4 Adjusted operating cash flow margins Appendix 5 Adjusted operating income margins Appendix 6 Adjusted operating income to operating income Appendix 7 Gross investments by division Appendix 8 Divestments completed during 1H11 Appendix 9 Financing costs Appendix 10 Debt management Appendix 11 Impact of foreign currency on net debt Appendix 12 VE SA bond redemption schedule Appendix 13 Consolidated statement of financial position Appendix 14 Evolution of quarterly Veolia Water revenue Appendix 15 Efficiency Plan Appendix 16 Commercial developments Appendix 17 44
  • 45. Appendix 1: Currency movements Main currencies 1 unit of foreign currency = …€) Δ H1 2011 vs. H1 - 2010 H1 - 2011 H1 2010 U.S. dollar Average rate 0.7528 0.7128 -5.3% Closing rate 0.8149 0.6920 -15.1% U.K. pound sterling Average rate 1.1494 1.1521 +0.2% Closing rate 1.2233 1.1079 -9.4% Australian dollar Average rate 0.6730 0.7364 +9.4% Closing rate 0.6943 0.7416 +6.8% Czech koruna Average rate 0.0389 0.0411 +5.7% Closing rate 0.0389 0.0411 +5.7%The average rate applies to the income statement and cash flow statementThe closing rate applies to the balance sheet 45
  • 46. Appendix 2: Evolution of revenue +619 16,287 En €M +1,518 14,106 + 44 FX External Internal H1 2010 growth growth H1 2011 re-presented (1) +0.3% +10.8% +4.4% +15.5%(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the  Environmental Services division, and operations in the Netherlands within the Water division;  ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division; 46‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division.
  • 47. Appendix 3: Revenue by geographic area In €M 16,287 14,106 (1) Δ current Δ constant Δ constant 6,494 FX FX scope & FX 5,734 France +13.3% +13.3% +4.1% Europe excl. France +19.2% +18.0% +3.7% 6,038 United States +13.5% +19.1% +4.8% 5,067 Asia/Pacific +25.3% +20.9% +14.6% 1,106 1,255 1,138 1,426 Rest of the world +1.1% +1.4% -2.2% 1,061 1,074 H1 2010 re- H1 2011 Total 15.5% 15.2% 4.4% presented(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the  Environmental Services division, and operations in the Netherlands within the Water division;  ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division;‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division. 47
  • 48. Appendix 4: Quarterly revenue in €M 1st quarter 2nd quarter 1st half Δ Δ Δ 2010 2011 2010 2011 2010 2011 constant constant constant Re-presented (1) scope & Re-presented (1) scope & Re-presented (1) scope & FX FX FXWater 2,918 3,022 -1.4% 2,973 3,192 +6.3% 5,891 6,214 +2.5%Environmental 2,113 2,361 +10.2% 2,401 2,533 +7.3% 4,514 4,894 +8.7%ServicesEnergy Services 2,299 2,443 +3.3% 1,402 1,419 +0.3% 3,701 3,862 +2.1%Transport - 334 na - 983 na - 1,317 naCompany 7,330 8,160 +3.4% 6,776 8,127 +5.4% 14,106 16,287 +4.4%Variation at current FX +11.3% +19.9% +15.5%(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the  Environmental Services division, and operations in the Netherlands within the Water division;  ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division;‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division. 48
  • 49. Appendix 5: Adjusted operating cash flow margins Margin Margin H1 2010(1) H1 2011 Water 13.3% 12.3% Environmental Services 13.5% 11.9% Energy Services 10.2% 9.4% Transport - 5.7% Total Company 12.0% 10.7%(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the  Environmental Services division, and operations in the Netherlands within the Water division;  ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division;‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division. 49
  • 50. Appendix 6: Adjusted operating income margins Margin Margin H1 2010 (1) H1 2011 Water 9.9% 7.8% Environmental Services 5.3% 5.2% Energy Services 7.1% 6.6% Transport - 0.8% Total Company 7.2% 5.8%(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the Environmental Services division, and operations in  the Netherlands within the Water division;  ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division;‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division. 50
  • 51. Appendix 7: Adjusted operating income to operating income In €M H1 2010 H1 2011 re-presented (1) Adjusted operating income 1,011 938 Goodwill and other asset impairments Italy - -448 Goodwill impairment United States - -152 Goodwill impairment Morocco - -32 Goodwill impairment Spain - -18 Other write-downs and restructuring charges (Italy) - -27 Capital gain on Usti 88 - Other 2 -9 Operating income 1,101 252 Non-recurring items +90 -686(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the Environmental Services division, and operations in  the Netherlands within the Water division;  ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division;‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division. 51
  • 52. Appendix 8: Gross investments by division GrowthIn €M Maintenance Financial, incl. Industrial New operating Total Δ scope (1) financial assetsWater 70 6 224 100 400Environmental Services 204 63 112 42 421Energy Services 46 14 98 27 185Transport 119 4 13 - 136Other 14 15 26 2 57Total H1 2011 453 102 473 171 1,199Total H1 2010 458 324 392 159 1,333 (1) Including transactions between shareholders – partial acquisitions with no change in control 52
  • 53. Appendix 9: Divestments completed during 1H11In €M H1 2011 industrial and financial divestments (1) 1,048  Of which: Operation Veolia Transdev 540  Of which: development partnerships 71  Divestment of 5% of Dalkia Ceska to J&T and EBRD investment in Dalkia Eastern Europe  Of which: industrial divestments 80(1) Including capital increases subscribed to by minorities, net financial debt of divested companies and partial divestments between non‐controlling interests (with no  53change in consolidation scope). 
  • 54. Appendix 10: Net finance costs In €M H1 2010 * H1 2011 Variation Cost of net financial debt -408 -376 +32 Impact change in average debt +10 Impact change in interest rates +21 Impact foreign currency * Published figures +1 Gross debt: €20,337M vs. €20,629M Closing net financial debt (1) in €M  Cost of borrowing 4.08% vs. 4.13% 18 000 Cash & cash equivalents of €6,037M: 1.38% 16 820 16 827 16 027 15 909 15 767 16 000 Net debt of €14,764M€ vs. €16,027M 15 127 15 377 15 218 14 764  Cost of borrowing of 5.32% (vs. 5.06%) 14 511 Average net debt (2) of €14,756M versus €15,542M€ in H1 2010 14 000 12 000 (1) Net financial debt represents gross financial debt (non‐ current borrowings, current borrowings, bank overdrafts  and other cash position items), net of cash and cash  equivalents and excluding fair value adjustments to  10 000 31-Mar- 30-Jun- 30-Sep- 31-Dec- 31-Mar- 30-Jun- 30-Sep- 31-Dec- 31-Mar- 30-Jun- derivatives hedging debt; 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 (2) Average net financial debt is the average of monthly debt  54 during the period. 
  • 55. Appendix 11: Debt management Ratings  Moody’s : P-2 / A3 stable outlook (April 18, 2011: rating confirmed and outlook revised from negative to stable)  Standard & Poor’s : A-2 / BBB+ stable outlook (April 21, 2010: rating confirmed and outlook revised from negative to stable) Average net debt maturity: 9.1 years at June 30, 2011 vs. 9.5 years at June 30, 2010 Group liquidity : €10.1 billion, of which €4.1 billion in undrawn confirmed credit lines (without disruptive covenants) Net group liquidity: €5.8 billion Net financial debt after hedges Currency breakdown of gross debt at June 30, 2011 after hedges at June 30, 2011 Fixed rate : 62% Other 19% (1) of which Euro : 76% of which USD : 52% GBP 9% Euro 61% of which GBP : 41% Variable rate: 38% USD 8% Variable rate capped: 9% 55 (1) Of which RMB 4% and HKD 3%
  • 56. Appendix 12: Impact of foreign currency on net debt Net financial debt at December 31, 2010 €15,218 M Net financial debt at June 30, 2011 €14,764 M  Variation -€454 M  Of which impact of FX -€283 M US dollar -€151 M U.K. pound sterling -€90 M Hong Kong dollar -€51 M 56
  • 57. Appendix 13: VE SA bond redemption schedule1600 GBP €0.7 Bn USD €1.6 Bn1400 EURO €10.4 Bn1200 Total  €12.7 Bn Nominal bond values converted at close June 30, 20111000800600400200 0 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 57 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
  • 58. Appendix 14: Consolidated statement of financial position Year ended Six months December 31, 2010 ending June In €M re-presented (1) 30, 2011 Intangible assets (concessions) 4,164.6 4,279.6 Property, Plant & Equipment 9,703,3 8,814.5 Other non-current assets 11,932.2 11,048.1 Operating financial assets (current and non-current) 5,628.6 5,427.0 Cash and cash equivalents 5,406.8 6,037.2 Other current assets 14,591.8 13,480.7 Total Assets 51,427.3 49,087.1 Capital (including non-controlling interests) 10,804.4 10,262.4 Financial debt (current and non-current) 20,723.2 20,677.1 Other non-current liabilities 4,610.4 4,387.3 Other current liabilities 15,289.3 13,760.3 Total Liabilities 51 427,3 49,087.1 58(1) The opening balance sheet has been re‐presented according to IAS 8 in order to take into account the accounting  fraud during the years 2007‐2010 in the Marine Services business.
  • 59. Appendix 15: Evolution of quarterly Veolia Water revenue M/F/R* In €M Works excl. M/F/R6,500 11 Operations 756,000 *Marafiq / Fujairah / Ras Laffan5,500 1,6735,000 1,5314,5004,0003,500 11 0 61 143,000 773 9002,500 731 800 4,285 4,5302,0001,5001,000 2,126 2,238 2,159 2,292 500 0 59 Q1 2010 Q1 2011 Q2 2010 Q2 2011 H1 2010 H1 2011
  • 60. Appendix 16: Efficiency Plan in line with 2011 objective En M€ H1 2009* H1 2010* H1 2011 Water 37 38 46 Environmental Services 25 43 30 Energy Services 21 31 32 Transport 15 18 7** Other 3 2 - TOTAL 101 132 115*Published figures 60** Included in the scope effect
  • 61. Appendix 17: Main contracts won or renewed since the beginning of 2011ORGANIC GROWTH‐ Renewals: 100 main contracts renewed in France during the 1st half 2011 in Water (o/w 50 in drinking water   VTNI  & 50 in wastewater), 74 in Waste (o/w 48 from local authorities & 26 from companies),  5 in Transportation & 80% of contracts due to expire during the 1st half 2011 renewed in Energy La Manche VTNI (Seine Maritime) (transportation) ‐ Length: 4 years ‐ Cumul. Rev.: €92m Fontainebleau (water) ‐ Length: 10 years ‐ Cumul. Rev.: €34m SICTOM  Trenitalia Nanterre Airefsol Energies The Nanterre waste management authority (SICTOM) (waste) ‐ Length: 3 years ‐ Cumul. Rev.: €36m  Collection of household waste & recyclable materials in Hyères les Palmiers (waste) Lorient M2o Fontainebleau ‐ Length: 6 years ‐ Cumul. Rev.: €25m city Operation of the biodegradable waste & household residual waste treatment unit for  the Pays de Lorient Conurbation (waste) ‐ Length: 6 years ‐ Cumul. Rev.: €25m‐ Outsourcing / Privatization: Besançon The «La Manche Conseil Général» (energy performance partnership contract) (energy) ‐ Length: 15 years ‐ Cumul. Rev.: €8m Local bus services in Besançon(1) (transportation) ‐ Length: 7 years ‐ Cumul. Rev.: €217m  Management of Carcassonne airport infrastructure (transportation) ‐ Length: 7 years ‐ Cumul. Rev.: €56m Management of Perpignan airport infrastructure (transportation) ‐ Length: 7 years ‐ Cumul. Rev.: €70m Electric car‐sharing vehicles service in Nice, through VENAP (70% Veolia Transdev/30% EDF)  (transportation) ‐ Length: 12 years ‐ Cumul. Rev.: €42m‐ Engineering / Design & Build: Verdon /  Hydraulic  link Verdon/Saint‐Cassien (networks) (water) ‐ Cumul. Rev.: €12m  Saint‐Cassien Carcassonne NicePARTNERSHIPS Hyères Partnership between Veolia Transport & Trenitalia(2) with the creation of a new rail  Perpignan operator (50/50) aiming at providing overnight international services between  France & Italy at the end of 2011 (transportation) Partnership between Veolia Water & Orange with the creation of «m2o city», an operator   Renewals specialized in remote environmental data & water meter reading services (water) Partnership between Eolfi (Veolia Environnement’s subsidiary) & Réseau Ferré de France (RFF)(3) (1) Operations start up on January 1st, 2011  Outsourcing / Privatization with the creation of a common company (67/33) «Airefsol Energies » aiming at  (2) Signature in January 2011  Engineering / Design & Build 61 developing clean energy sources (multi‐services)  (3) Signature in 2010   Partnerships with other companies
  • 62. Appendix 17: Main contracts won or renewed since the beginning of 2011ORGANIC GROWTH‐ Renewals: SAN C2013(1) (transportation) ‐ Length: 10 years ‐ Cumul. Rev.: €960m OWL ‐ Dieselnetz (1) (transportation) ‐ Length: 12 years ‐ Cumul. Rev.: €494m EBRD Linköping city (transportation) ‐ Length: 8 years ‐ Cumul. Rev.: €160m Sweden‐ Outsourcing / Privatization: IFC Management contract for Thames Water’s metering services through Vennsys Limited  (water) ‐ Length: 10 years ‐ Cumul. Rev.: €276m    Contract for street cleaning, waste collection & recycling for the Haringey district of London (waste) ‐ Length: 14 years ‐ Cumul. Rev.: £200m United Kingdom Contract for waste collection & recycling for the Hart county and the Basingstoke Russia Linköping & Deane county (waste) ‐ Length: 7 years ‐ Cumul. Rev.: £32m  Private Finance Initiative (PFI) contract for residual waste treatment for the Hertfordshire county (waste) ‐ Length: 25 years ‐ Cumul. Rev.: £1.3bn Hertfordshire «E‐Netz Rosenheim» (transportation) The Netherlands Dieselnetz Haringey LNVG  SPEC ‐ Length: 12 years (3‐year option)  ‐ Cumul. Rev.: €1,092m (without option) Vennsys SAN Dieselnetz LNVG (transportation) ‐ Length: 10 years ‐ Cumul. Rev.: €134m  Basingstoke Ltd C2013 OWL Poland Vigo new hospital ‐ O&M contract (PPP) (energy) ‐ Length: 20 years ‐ Cumul. Rev.: €96m & Deane Dieselnetz Nestlé (energy) ‐ Length: 15 years ‐ Cumul. Rev.: €96m Campus of Bari (energy) ‐ Length: 12 years ‐ Cumul. Rev.: €40m Germany Bonduelle (energy) ‐ Length: 5 years ‐ Cumul. Rev.: €4m Vigo Hungary Rosenheim‐ Engineering / Design & Build: ERD Bonduelle ERD (sewer system) (water) ‐ Cumul. Rev.: €11m Portugal Spain Nagykanizsa Nagykanizsa (sewer & rain water system) (water) ‐ Cumul. Rev.: €11m Nestlé ItalyEXTERNAL GROWTH Privatization of the district heating network of Warsaw(2) (energy) ‐ Disposal of 85% stake in SPEC   Renewals Bari  Outsourcing / PrivatizationPARTNERSHIPS  Engineering / Design & Build Partnerships (energy) between:  Interests acquisition in other companies‐ Dalkia & the International Finance Corporation (a member of World Bank Group) ; (1) Signature in July 2011   Partnerships with other companies‐ Dalkia & EBRD with a 5.5% stake acquisition each  in the capital of Dalkia Eastern Europe,  (2) Transaction subject notably by the Warsaw town council  62the new subsidiary created to bring together its activities in Russia & the Baltic states & the European Commission approvals
  • 63. Appendix 17: Main contracts won or renewed since the beginning of 2011ORGANIC GROWTH‐ Renewals: Aberdeen Proving Ground ‐ Hazardous waste collection & treatment (waste) ‐ Cumul. Rev.: $75m New York ‐ Waste Electrical & Electronic Equipment (WEEE) collection & treatment  (waste) ‐ Contract term: 10 years (2 options of 5 years) Victor Valley Operations (transportation) ‐ Length: 7 years ‐ Cumul. Rev.: €46m‐ Outsourcing / Privatization: Canada Long Island Bus (LIB) «Management contract » (transportation) Hazardous waste treatment for UPS Group’s sites in the United States  (waste) ‐ Cumul. Rev.: $50m Hazardous waste treatment for BASF Group’s sites in the United States  Montreal (waste) ‐ Cumul. Rev.: $24m United States Centre Hospitalier Universitaire de Montreal (CHUM) (energy) New York West Virginia BASF ‐ Length: 30 years ‐ Cumul. Rev.: around €1.2bn California Long Island Aberdeen‐ Engineering / Design & Build: Victor Valley UPS Construction of a mine wastewater treatment plant in West Virginia (D&B) (water) Global cumul. Rev.:  Construction & operation a produced water $150m  facility for an oilfield in California (DBO) (water) (including Civil  ‐ Operating length: 10 years engineering)  Renewals  Outsourcing / Privatization  Engineering / Design & Build 63
  • 64. Appendix 17: Main contracts won or renewed since the beginning of 2011ORGANIC GROWTH China‐ Outsourcing / Privatization:Bus network in Macao through a joint‐venture withRATP Développement in Asia (transportation) Macao‐ Length: 7 years ‐ Cumul. Rev.: €75m (Veolia share)Perth ‐ Joondalup (transportation)‐ Length: 8 years ‐ Cumul. Rev.: €139m Australia Perth  Outsourcing / Privatization 64
  • 65. Appendix 17: Main contracts won or renewed since the beginning of 2011 KuwaitORGANIC GROWTH Az‐Zour sud‐ Engineering / Design & Build: Construction & operation of 3 central cooling facilities for  Saadiyat Island in Abu Dhabi (energy) ‐ Contract term: 29 years ‐ Cumul. Rev.: €373m Saadiyat Island Construction & operation of a new reverse osmosis desalination unit  at the Az‐Zour South plant (DBO) (water) United Arab Emirates Yanbu II  ‐ Operating length: 5 years ‐ Cumul. Rev.: €81m (incl. construction) Supply of technology for a drinking water treatment plant  Saudi Arabia at Yanbu II(1) (water) ‐ Cumul. Rev.: €45m  Engineering / Design & Build 65 (1) Signature in July 2011 
  • 66. Investor relations contact information  Ronald Wasylec, Directeur des Relations avec les Investisseurs et Actionnaires individuels Téléphone +33 1 71 75 12 23 e-mail ronald.wasylec@veolia.com  Ariane de Lamaze Téléphone +33 1 71 75 06 00 e-mail ariane.de-lamaze@veolia.com 38 Avenue Kléber – 75116 Paris - France Fax +33 1 71 75 10 12  Terri Anne Powers, Director of North American Investor Relations 200 East Randolph Street Suite 7900 Chicago, IL 60601 Tel +1 (312) 552 2890 Fax +1 (312) 552 2866 e-mail terri.powers@veoliaes.com http://www.finance.veolia.com 66

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