2010 Annual results

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2011-03-04

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2010 Annual results

  1. 1. 2010 Annual Results 
  2. 2. Investor Relations March 4, 2011Disclaimer 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. 2010 HIGHLIGHTS
  4. 4. Investor Relations March 4, 2011Veolia exceeded 2010 objectives Objectives exceeded Return to organic growth confirmed Asset portfolio optimization continued at a strong pace Reinforced financial flexibility Successful business developments Finalized the combination of Veolia Transport – Transdev 4
  5. 5. Investor Relations March 4, 2011Financial objectives exceeded Adjusted operating income increased 8.5%, or 5.3% at constant  exchange rates, to €2,056M • Adjusted operating cash flow margin improved from 10.3% to 10.5% • Adjusted operating income margin improved from 5.6% to 5.9% €265M in cost reductions exceeded the €250M commitment Positive free cash flow after payment of dividend: €409M Net financial debt at year end of €15,218M vs. €15,127M at the end  of 2009, including unfavorable exchange rate effects (€465M) Improvement of credit ratios Stable net income at €581M. Adjusted net income +11.6% to €579M Proposed dividend of €1.21 per share 5
  6. 6. Investor Relations March 4, 2011A return to organic growth confirmed Return to organic growth confirmed quarter after quarter 6% +4.7% 4% +2.7% 2% +0.9% ‐3.3% 0% -2% -4% 1Q10 2Q10 3Q10 4Q10 Reinforcement of growth potential • Re‐launched commercial dynamic and new projects • An increase in growth investments (industrial and financial) in 2010 to  €2,181M vs. €1,699M in 2009 (+28%) 6
  7. 7. Investor Relations March 4, 2011The combination of Veolia Transport –Transdev finalized Evolution of governance • Priority for operational efficiency with a unified chief executive Consolidation by Proportional Integration Profile of the new entity  Full year pro forma 2010 Veolia Transdev non audited figures, after recapitalization,  excluding synergies In €M Veolia  Transdev Veolia‐ Veolia ‐ Net Impact Transport  (excl. Assets  Transdev Transdev  (IG) divested to  at 100% in PI (50%) RATP) (A) (B) (A)‐(D) (C)=(A)+(B) (D)=(C)x50% Revenue 5,765 2,206 7,971 3,985 ‐1,780 Operating cash flow 329 169 498 249 ‐80 2010 net debt 1,431 616 1,847 923 ‐508 IPO as soon as market conditions permit: • A common enterprise project • After achievement of initial synergies 7 • To finance development of the entity’s activity
  8. 8. Investor Relations March 4, 20112011 : A year of growing results GROWTH FINANCIAL DISCIPLINE Continued organic growth A program of asset  divestments of at least €1.3  billion Adjusted operating  income in the 4% to 8%  range*  Efficiency Plan cost savings  of at least €250M in 2011 Net income improvement Positive free cash flow after  dividend payment* Excluding the impact of Veolia Transport‐Transdev combination 8
  9. 9. 2010 RESULTS
  10. 10. Investor Relations March 4, 2011 2010 key figures 2009 In € M re‐presented  2010(2) Variation (1) Revenue 33,952 34,787 +2.5% Adjusted operating cash flow  3,514 (3) 3,654 +4% Cash flow from operations 3 578 3 742 +4.6% Operating income 1,982 2,120 +7% Adjusted operating income 1,894 2,056 +8.5% Adjusted net income attrib to owners of the  519 579 +11.6% company Net income attributable to owners of the  584 581 ~ company Free Cash Flow 1,344 409 Net financial debt 15,127 15,218 ~ Net financial debt / (Cash flow from operations +  3.75 X 3.65X repayment of operating financial assets)(1) The financial statements of 2009 have been re‐presented, in order to insure the 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 Gabon and the Netherlands within the Water division; the assets and liabilities of these four cash generating units have been reclassified in the lines for assets and  liabilities held for sale; ‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division.(2)         Audit processes are ongoing by auditors(3) As of January 1, 2010, due to the application of the new amendment to IAS 7, adjusted operating cash flow for the year 2009 has been re‐presented for renewal expenses by an amount of  €360.9M, of which €245.7m is within the Water division and €115.2m is within the Energy Services division. 10
  11. 11. Investor Relations March 4, 2011 Breakdown of revenue by division 2009*: € 33,952M 2010: € 34,787M Transportation:  €5,861M Transportation:  Water: €12,318M €5,765M 17% 17% Water: €12,128M 36% 35% 21% Energy Services:  21%Energy Services:  €7,582M €7,041M 26% 27% Environmental Environmental  Services: €8,732M Services: €9,312M  current  constant Excl. FX FX rates FX rates & scope Water - -1.5% -4.1% - -2.9% Environmental Services +6.7% +3.3% +6,9% +6.9% Energy Services +7.7% +5.8% +6.2% Transport Transportation - -1.6% -4.4% - -4.3% - * 2009 financial statements have been re-presented to VE Group +2.5% +2,5% -0.2% -0,2% +1.3% +1,3% ensure the comparability of periods: Refer to Appendix 2 11
  12. 12. Investor Relations March 4, 2011 Breakdown of revenue by geographic zone 2009: €33,952M* 2010: €34,787M Rest of World: €2,566M Rest of World: €2,187MAsia‐Pacific: €2,801M Asia‐Pacific: €2,851M 8% 6% France: 8% North America: 8% €14,038M €3,244M North America: 9% €2,962M 9% 40% 40% France: €13,765M 37% 35% Europe excl. France: €12,467M Europe excl. France:  €11,858M Excl. FX  current  constant & scope FX rates FX rates France +2.0% +2.0% +3.4% Europe excl. France +5.1% +2.8% +3.6% North America +9.5% +4.3% +4.1% Asia/Pacific +1.8% -10.4% -11.3% * 2009 financial statements Rest of World -14.8% -19.9% -10.8% have been re-presented to ensure the comparability of periods: Refer to Appendix 2 12 VE Group +2.5% -0.2% +1.3%
  13. 13. Investor Relations March 4, 2011 Continued improvement throughout the year Revenue in €M, variations at constant scope and exchange rates 1st quarter 2nd quarter 3rd quarter 4th quarter 2009* 2010 At  2009* 2010 At  2009* 2010 At  2009* 2010 At  const.  const.  const.  const.  Scope  Scope  Scope  Scope  & FX & FX & FX & FXWater 3,089 2,856 ‐6.7% 3,032 2,905 ‐5.6% 2,996 3,029 ‐0.6% 3,201 3,338 +1.3%Environ.  2,111 2,113 +3.3% 2,237 2,401 +9.2% 2,193 2,392 +8.3% 2,191 2,406 +6.5%ServicesEnergy  2,380 2,299 ‐2.8% 1,303 1,402 +7.8% 1,112 1,291 +11.3% 2,246 2,590 +12.1%ServicesTransport 1,431 1,356 ‐6.4% 1,508 1,492 ‐4.1% 1,466 1,439 ‐5.3% 1,456 1,478 ‐1.7%Group 9,011 8,624 ‐3.3% 8,080 8,200 +0.9% 7,767 8,151 +2.7% 9,094 9,812 +4.7%Variation  ‐4.3% +1.5% +4.9% +7.9%at current FX * 2009 financial statements have been re-presented to ensure the comparability of periods: Refer to Appendix 2 13
  14. 14. Investor Relations March 4, 2011Adjusted operating cash flow (1) In €M 2009 2010   current FX Constant  re‐presented  (2) FX Water 1,545 1,479 ‐4.3% ‐6.4% Environmental services 1,175 1,297 +10.4% +6.4% Energy services 609 690 +13.4% +10.6% Transportation 327 329 +0.7% ‐3.0% Other ‐142 ‐141 Total Group 3,514 3,654 +4.0% +0.9% Adjusted operating cash  10.3% 10.5% ‐ ‐ flow margin 2009 re‐ 2010 presented  (2) Adjusted operating  3,514 3,654 cash flow Cash flow from  65 106 discontinued ops. Financial cash flow ‐1 ‐18 Cash flow from  3,578 3,742 operations(1) Adjusted operating cash flow = cash flow from continuing operations before tax and interest expense 14(2) 2009 results have been re-presented in order to ensure comparability of periods: refer to appendix 2
  15. 15. Investor Relations March 4, 2011Efficiency Plan: 2010 initial objectives exceeded, €265M versus €250M Cost savings realized in 2009 and 2010 Breakdown by area of optimization In €M 2009 2010 Assets Water 87 93 12% Support  37% Purchasing Env. Services 72(1) 61 19% functions Energy 56 68 32% Transport 40 43 OperationsEfficiency Plan €255M €265M VES €126M Adaptation Plan(1) Excluding the Veolia Environmental services Adaptation Plan 15
  16. 16. Investor Relations March 4, 2011Veolia Water : Revenue declined slightly to €12,128M Revenue declined 1.5%, ‐4.1% at constant FX and ‐2.9% at constant  scope and FX In France, slight revenue decline of 0.9%, excluding scope effects  • Diminution of volumes sold (‐1%) • Major commercial events: end of the city of Paris contract on December 31,  2009 Outside France(1), increase of 2.4% (+1.8% at constant scope and exchange  rates) • Improvement in Germany • Progressive ramp and growth of Chinese contracts Veolia Water Solutions & Technologies declined 13.1%, or ‐16.8% at  constant scope and exchange rates to €2,148M • Completion of three large contracts in the Middle East 2,700 • Excluding these contracts, revenue was globally stable €2,659M 2,650 €2,593M 2,600 Backlog VWS 2,550 2,500 (1) excluding VWST 2009 2010 16
  17. 17. Investor Relations March 4, 2011 Water:  Return of favorable dynamics confirmed4 0003 500 108 189 102 135 114 453 000 61 14 925 790 8802 500 799 725 792 793 7372 0001 500 2 145 2 194 2 219 2 3051 000 2 101 2 070 2 105 2 098 500 0 T1 2009 T1 2010 T2 2009 T2 2010 T3 2009 T3 2010 T4 2009 T4 2010 Operations Works excl. M/F/R M/F/R *Marafiq / Fujairah / Ras Laffan 17
  18. 18. Investor Relations March 4, 2011Veolia Water: Adjusted operating cash flow of €1,479M Adjusted operating cash flow declined 4.3%, ‐6.4% at constant FX  France • Major commercial events • Higher net replacement expenses, including the end of the Vivendi indemnity compensation • Current contractual evolutions and decline in volume of water sold, compensated by  productivity gains Outside France(1) • UK : Decline in regulated water, development costs, higher infrastructure costs  • Slight diminution in Germany • Good progression in Asia and United States Good resilience within Works • Margin pressure in France • limited impact related to the end of Middle East contracts, compensated by the recovery of  industrial Design and Build opportunities and sales of equipment and solutions within VWST (1) hors VWST 18
  19. 19. Veolia Environmental Services: Revenue increased to  Investor Relations March 4, 2011€9,312M +6.7% , +3.3% at constant FX and +6.9% at constant scope and FX Quarterly 2010 Environmental Services Revenue  2009 2010 GrowthVES Organic growth (%) ‐8 pts +7 pts 2500 9.2% 2 401 2 392 10,0% 8.3% 2 406of which 2400 8,0% 6.5%Recycled materials (price, volumes)   ‐4 pts +5 pts 2300 2 237 2 193 2 191 6,0% 2200 3.3%Industrial waste volumes (1)                    ‐4 pts +1 pt 2 111 2 113 4,0%Municipal waste volumes ‐1 pt ‐1 pt 2100 2000 2,0%Price increases +1 pt +1ptOthers +1pt 1900 0,0%(1) Non‐hazardous industrial waste, and Q1 Q2 Q3 Q4hazardous waste and asssociated services 2009 2010 Growth at const. scope & FX Breakdown of revenue by activity Urban cleaning and collection 2009 2010 8% 9% Non hazardous industrial 22% waste collection and services 8% 24% 8% Hazardous industrial waste collection and services 6% 7% Sorting and recycling 12% Hazardous waste treatment 14% 24% Waste-to-energy from non 24% hazardous waste 16% 16% Landfilling of non hazardous and inert waste 19
  20. 20. Investor Relations March 4, 2011Veolia Environmental Services: Adjusted operating cash flow increased to €1,297M Adjusted operating cash flow increased 10.4% and +6.4% at constant FX  Increase in adjusted operating cash flow margin from 13.5% to 13.9% Strong recovery in profitability  • Higher recycled raw material prices • Notable operational improvement in Germany • Significant contribution from the Efficiency Plan, particularly in France 20
  21. 21. Investor Relations March 4, 2011Veolia Energy Services : Revenue increased to €7,582MRevenue increased 7.7% , +5.8% atconstant FX and +6.2 % at constant scope and FX Quarterly revenue (€M)Very favorable climate effect:• +€160M€, of which +€99M in  France and €37M in Central  1 244 1 123 1 100 Europe 1 063Energy prices 790 794• Increase in France (+€45M) related  616 783 to the average increase of 4.3% in  1 2571 199 1 1831 346 the fuel mix for the year  509 612 496 508 (particularly in Q4) 1Q09 1Q10 2Q09 2Q10 3Q09 3Q10 4Q09 4Q10• Decline in Central Europe (‐€25M)  following the 30% decline in  France Outside France electricity prices in the Czech  Republic Temporary peak in activity in solar Works 21
  22. 22. Investor Relations March 4, 2011Veolia Energy Services: Adjusted operating cash flow grew to €690M Adjusted operating cash flow increased 13.4% and +10.6% at constant FX  Elements • Favorable climate impact (France, Central Europe, Baltic countries, USA) • Benefit of CO2 quota sales • Challenging performance in Southern Europe 22
  23. 23. Investor Relations March 4, 2011Veolia Transportation: Revenue declined to €5,765MRevenue declined 1.6%, ‐4.4% at Quarterly revenue (€M)constant FX and ‐4.3% at constant scope and FX 2009 2010In Q4, end of the significant negative  1,508 1,492impact (‐€637M) from the loss of 3  1,478 1,431 1,466 1,439 1,456 4contracts (Bordeaux, Melbourne and  1,356 171 122Stockholm) in 2009  180 2 171In France, good resilience, with a 2.1% revenue increase driven by contract  +11.1%* +10.8%*gains from mid‐sized cities. +11.3%* +8.2%*Outside France, revenue declined 4.1%, (‐8.4% at constant scope and exchange rates)• Ongoing growth in Germany due to 3  Q1 Q2 Q3 Q4 passenger train contracts won in 2009  Part of revenue associated with the Melbourne,  Stockholm and Bordeaux contracts in 2009 (impact +€68M); in the Netherlands (Haaglanden contract), and in the United  Part of revenue associated with the Melbourne,  Stockholm and Bordeaux contracts in 2010 States (New Orleans, Phoenix, Savannah) * Revenue growth excluding Melbourne,  Stockholm and Bordeaux 23
  24. 24. Investor Relations March 4, 2011Veolia Transportation: Adjusted operating cash flow of €329M Adjusted operating cash flow increased 0.7% and declined 3.0% at constant FX  Competitive pressure within France, particularly SNCM Significant improvement in Germany and the Netherlands Negatively impacted by the loss of the Melbourne, Stockholm and  Bordeaux contracts and start up costs for Rabat Good ramp up and growth in Asia 24
  25. 25. Investor Relations March 4, 2011 Reconciliation of adjusted operating cash flow to  adjusted operating incomeIn €M 2009 Re‐  Current  Of which  presented  2010         FX FX (1)Adjusted operating cash flow 3,514 3,654 +140 +107Amortization* ‐1,749 ‐1,717 +32 ‐Net capital gains 115 138 +23 ‐Depreciation and fair value  +14 ‐19 ‐33 ‐adjustmentAdjusted operating income 1,894 2,056 +162 +62* Of which change in discount rates used for provisions for landfill site remediation (‐€56M in 2009 and €26M in 2010) (1) 2009 results have been re‐presented in order to ensure the comparability of periods: Refer to Appendix 2 25
  26. 26. Investor Relations March 4, 2011 Adjusted operating income increased 8.5% and  adjusted operating income margin improvedIn €M 2009 Re‐  Change   Change       presented  2010         courant constant (1)Water 1,145 1,020 ‐11.0% ‐12.6%Environmental Services 355 609 +71.4% +63.6%Energy Services 401 460 +14.6% +12.0%Transportation 158 146 ‐7.9% ‐11.6%Holding ‐165 ‐179Adjusted operating income 1,894 2,056 +8.5% +5.3%Adjusted operating income margin 5.6% 5.9% ‐ ‐ (1) 2009 results have been re-presented in order to ensure the comparability of periods: Refer to Appendix 2 26
  27. 27. Investor Relations March 4, 2011Net finance costs Variation  In M€ 2009 2010 in % Cost of net financial debt ‐768 4,76%* ‐793 5.09% +0.33% Impact of the change in average cash +0.32% Impact of the change in interest rates ‐0.04% Other +0.05% Net Financial Debt (1) of €15,218M vs. €15,127M  Average net financial debt (2) of €15,566M  vs.€16,466M in 2009 Evolution of cost of borrowing since 2004 Gross debt: €20,238M vs. €20,287M 5.8% • Cost of borrowing 4.1% vs. 4.03% 5.61%* 5.6% 5.49%* Cash and cash equivalents of €5,407M : 1.11% 5.4% 5.2% 5.12%* 5.07%* 5.09% 5.04%* 5.0%(1) Net financial debt represents gross financial  4.76%* debt (non‐current borrowings, current  4.8% borrowings, bank overdrafts and other cash  4.6% position items), net of cash and cash  equivalents and excluding fair value  4.4% adjustments to derivatives hedging debt 4.2%(2) Average net debt is the average of monthly  2004 2005 2006 2007 2008 2009 2010 net debts of the period 27 * Previously published
  28. 28. Investor Relations March 4, 2011Taxes 50,0% 48.1% 45,0% 40,0% 35,0% 3.9% 0.3% 27.7% 30,0% 25.0% 0.5% 0.0% 1.4% 25,0% 21.6% 20,0% 15,0% 10,0% 5,0% 0,0% 2007 tax rate 2008 tax rate 2009 tax rate Impairment Divestments VT INC French fiscal Other 2010 tax rate (published) (published) (re- Group presented) 28
  29. 29. Investor Relations March 4, 2011 Reconciliation of adjusted operating income to net  income (1) 2009 re-presented 2010 Total In €M Adjusted Adjustment Total Adjusted AdjustmentOperating income 1,894 88 1,982 2 056 64 2,120 (2)Cost of net financial debt -873 -873 -907 - -907 -Income tax expense - -239 -239 - -319 -17 - -336Share of net income of associates -1 -1 18 18 - -27 -27 - -24 - - 24Net income from discontinued operationsNon controlling interests - -262 4 -258 - 269 -21 - -290Net income attrib. to the owners of the company 519 65 584 579 2 581 (1) The financial statements of 2009 have been re‐presented, in order to insure the 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 Gabon and the Netherlands within the Water division; the assets and liabilities of these four cash generating units have been reclassified  in the lines for assets and liabilities held for sale; ‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division. (2) Including «other financial income and expenses », of which €76M in unwinding discounts on provisions in 2010 29
  30. 30. Investor Relations March 4, 2011Statement of cash flows: positive free cash flow of €409M En M€ 2009 2010 Cash flow from operations (1) 3,578 3,742 Repayments of operating financial assets 455 424 Total cash generation 4,033 4,166 Gross investments ‐2,970 ‐3,256 Variation working capital 432 83 Taxes paid ‐408 ‐368 Interest expense ‐802 ‐808 Dividend (2) ‐434 ‐735 Other (3) 202 86 Divestments 1,291 1,241 Free cash flow 1,344 409 Impact of exchange rates and other 57 ‐500 Net financial debt at December 31 15,127 15,218 Change in net financial debt ‐1,401 91 (1) Of which financial cash flows (€ -1M in 2009 and €-18M in 2010) and cash flow from discontinued operations (€65M in 2009 and €106M in 2010) (2) Dividend paid to shareholders and non controlling shareholders 30 (3) Notably changes in receivables and other financial assets for €41M in 2010 and €163M in 2009
  31. 31. Investor Relations March 4, 2011 Controlled growth in investments In €M 2009 2010 Maintenance capital expenditures 1,271 1,075 As a % of consolidated revenue 3.7% 3.1% Industrial investments in growth 861 1,033 (excluding operating financial assets) Financial investments (1) in growth 338 653 New operating financial assets 500 495 Gross investments 2,970 3,256 +9.6% (1) Including partial acquisitions between non controlling   shareholders (with no change of consolidation  scope) and net financial debt from acquired  entities 31
  32. 32. Investor Relations March 4, 2011 Divestments (1): €2.5bn completed in 2 years 2010: €1,241m  2009‐2010: €2,532m  Industrial  Industrial  divestments divestments €205m €464m Mature  assets €627mPartnerships Mature assets €282m €397m Partnerships  €664m Non strategic assets         €357m Non strategic assets €777m (1) Industrial and financial divestments (including net financial debt of divested companies and partial  divestments between non‐controlling shareholders (with no change in consolidation scope), and capital  increases subscribed by minority shareholders)). 32
  33. 33. Investor Relations March 4, 2011Impact of 2009‐2010 divestments and discontinued operations on 2010 revenue and adjusted operating cash flow In bn€ Impact on 2010  Impact on 2010  Revenue adjusted operating  cash flow 2009 and 2010  ~ 1.3 ~ 0.15 divestments  2010 discontinued  ~ 0.8  ~ 0.1 operations TOTAL ~ 2.1 ~ 0.25  33
  34. 34. Investor Relations March 4, 2011 Impact of asset divestments on results In €M 2008 2009 2010 Recurring capital gains Water 66.0 25.1 65.5 Environmental Services 16.0 24.7 41.8 Energy Services 11.8 43.5 10.7 Transportation 18.6 21.2 20.2 Holdings 0.1 0 0 Total in adjusted operating income (1) 112.5 114.5 138.2 Total non recurring capital gains (2) 99.0 89.0 Total capital gains in operating income 112.5 213.5 227.2 Capital gains in discontinued operations (3) 176.5 92.4 57.4 Total income related to divestments (1) + (2) + (3) 289.0 305.9 284.6 Depreciation and goodwill impairments ‐303.0 ‐21.1 ‐115.5(2) in 2009: capital gain on VPNM in Environmental Services, in 2010 capital gain on Usti in Energy Services(3) In 2008: capital gain on Crystal & Clemessy in Energy Services, in 2009 capital gain on WTE in Environmental services and capital loss on freight in Transportation, in 2010 capital gain on Miami‐Dade contract in Environmental Services 34
  35. 35. Investor Relations March 4, 2011 Free cash Flow 2009 2010 +432 ‐1,2244000 4000 +83 ‐1,591 3,654 3,5143500 35003000 3000 ‐8022500 2500 FCF before  ‐808 ‐408 dividend2000 2000 +266 +€1,778M FCF before  dividend1500 1,344 1500 ‐368 +€1,144M ‐434 +1741000 1000 ‐735500 500 409 0 0 2009 Change in Net capex Interest Taxes Other Dividends FCF after 2010 Change in Net capex Interest Taxes Other Dividends FCF after adjusted WCR expense DIV adjusted WCR expense DIV operating operating cash flow cash flow (re- presented) 35
  36. 36. Investor Relations March 4, 2011Credit ratio improvement In €bn 3.99 17 3.95 4 3.75 16.5 3.7516.5 3.65 3.6 3.55 3.6 3.4 3.5 16 3.37 3.3 3.415.5 15.1 15.1 15.2 Net financial debt 3 15 14.7 Ratio net financial debt (prior def. of EBITDA)14.5 2.5 Ratio net financial debt (post IAS 7) 13.9 14 213.5 As of 01/01/10, application of IAS 13 7 (related to replacement costs) 1.5 changed the targeted range of12.5 the Group ratio from 3.5X - 4X to 3.85X – 4.35X 12 1 31-Dec-31-Dec-31-Dec- 31-Dec-31-Dec-31-Dec- 05 06 07 08 09 10Average maturity of net financial debt:  9.4 years vs. 10 years at the end of 2009Ratings• Moody’s : P‐2/ A3 negative outlook (confirmed July 8, 2010)• Standard & Poor’s : A‐2 / BBB+ stable outlook (April 21, 2010) 36
  37. 37. Investor Relations March 4, 2011 Evolution of after‐tax ROCE 2010 ROCE -Evolution from 2009 to 201010.0%9.5%9.0%8.5% +0.3% - -0.3% +0.6%8.0% + 7.9% +7.6% -0.2%7.5%7.0% ROCE Scope Improve recent Slow return Performance Tax rate ROCE 2009 and FX acquisitions assets evolution 20106.5% re- presented6.0% Redressement ROCE 2009 Performance ROCE 2010 Allemagne et (acquisition Propreté Italie 37
  38. 38. 2011‐2013 OUTLOOK THE CHOICE  OF TARGETED GROWTH INCREASED PROFITABILITY AND  FINANCIAL DISCIPLINE
  39. 39. Investor Relations March 4, 2011A proactive and clear strategy (1) DEVELOP THE GROUP ACCORDING TO 4 PRINCIPLESTarget new profitable markets and  Use our technological edge and  opportunities  know how Favor complex challenges Benefit from scale OUR INVESTMENT AND DEVELOPMENT CHOICES WILL BE DRIVEN  BY THESE FOUR CRITERIA 39
  40. 40. Investor Relations March 4, 2011A proactive and clear strategy (2) GIVE THE MEANS TO GROW PROFITABLY  WITHOUT INCREASING DEBT Be selective • Target the sectors and regions which are fast growing and have the most  potential => priority sectors • Protect profitability and productivity of activities and in regions with strong  positive cash flow => leading Group positions • Build the leading positions of tomorrow starting with existing platforms Be flexible • Reinforce productivity efforts to make the Group more mobile  => Efficiency  Plan • Draw resources from non strategic sectors and regions  =>  Divestments 40
  41. 41. Investor Relations March 4, 2011Be flexible  (1)A PRODUCTIVITY PLAN WHICH REINFORCES GROUP FLEXIBILITY €265M €255M* €129M €102M €112M * Excluding the Environmental  2006 2007 2008 2009 2010 services adaptation plan in  2009 for €126MNew ways to reinforce our competitiveness: ERP: review processes and organization 360° performance review of principal Business Units Objective: Increase annual productivity gains from €250M today  41 to €300M in 3 years
  42. 42. Investor Relations March 4, 2011Be flexible (2)A DIVESTMENT PROGRAM WELL UNDERWAY Divestments completed in 2009‐2010 Global capital gains €2,532M in €M 306 Industrial divestments €464M           Mature assets €627M 289 285 Partnerships €664M Non‐strategic  assets  €777M 2008 2009 2010 For 2011‐2013, a divestment program of €4 billion, which is ~15% of capital employed*  • Non‐priority sectors and geographies • Which will drive greater geographic concentration*including operating financial assets 42
  43. 43. Investor Relations March 4, 2011Be selective (1) IDENTIFIED AND PRIORITIZED SECTORS OF DEVELOPMENT  WATER • Large municipal concession contracts in Europe and Asia • Industrial Build Operate Transfer in BRIC countries ENVIRONMENTAL SERVICES • Treatment and recycling of industrial hazardous waste in Europe, the US and emerging countries • PFI (Private Finance Initiative) and PPP (Public Private Partnership) for integrated  waste  management  in Europe  • Sorting and recycling of non‐hazardous waste in Europe and North America ENERGY SERVICES • Local solutions for energy (biomass, cogeneration, cooling networks, industrial platforms) in Eastern  Europe and North America • Municipal concession contracts focused on energy optimization in Europe and North America TRANSPORTATION • Regional rail in Europe • Tramways and metro in Europe, North America and BRIC countries • Transport‐on‐demand and intermodality in Europe and North AmericaWe will concentrate our organic growth efforts on these sectors. We will  target acquisitions with differentiating technologies in these sectors. 43
  44. 44. Investor Relations March 4, 2011Be selective (2) LEADING POSITIONS TO REINFORCE =>   Current strong cash generating activities WATER WASTE ENERGY TRANSPORT QUICK INVESTMENT PAY BACK France France France France •Energy optimization  existing operations United  United  Germany •Waste (United States) : Asset swap  Kingdom Kingdom Germany United States MARKET DYNAMICS OF THE GROUP DEVELOPMENT IN PRIORITY SECTORS  FAVORABLE ELEMENTS CHALLENGES AND GEOGRAPHIES •Non regulated water in the UK ‐ Public Finance constraints  ‐ Slow erosion in volumes •CRE (Commission de Régulation de l’Energie) drive the need for economic  bids ‐ Public sector  •PFI in the United Kingdomefficiency competition  (historical  •Regional rail in Germany‐ More stringent  monopolies)environmental regulations GROWTH EQUAL TO OR  44 GREATER THAN GDP
  45. 45. Investor Relations March 4, 2011Be selective (3)EXISTING PLATFORMS: LEADING POSITIONS TO COME  Energy Services – Central and Eastern Europe  – Largest local energy producer – 2010  revenue of €1.1bn •Market leader in heating networks, with competitive Water– Central & Eastern Europe – 2010  heating prices and asset ownership •A number of heating network opportunities: Prague, Revenue  €873M Warsaw, Gdansk, Bucharest, Sofia •First contract in 1994 in Szeged (Hungary) •9.5 million people serviced with drinking  water and 8.9 million in waste water  treatment.  •Strong positions in main countries: market  share in Czech Republic of 45%, 25% in Slovakia  Water– China – 2010 revenue of €670M and 40% in Hungary in waste water treatment. •First contract in 1997 in Chengdu  •40 million people serviced with drinking water  •Presence in the main Chinese megacities  •Very strong revenue growth through a  combination of volume increases, higher tariffs  and contract extensions. DOUBLE DIGIT GROWTH 45
  46. 46. Investor Relations March 4, 2011Investment allocation 2011‐2013In €bn Maintenance Consolidation investments TotalLeading positions 2.5 1.0 3.5 Maintenance Existing contracts New projects TotalPriority sectors 0.8 3.5 3.0 7.3Other 0.7 0.5 ‐ 1.2Divestments ‐4.0 Maintenance Growth Divestments TotalTotal 4.0 8.0 ‐4.0 8.0Cumulative free cash flow before investments and divestments Cumulative free cash flow before investments and divestments  €8.0  bn €8.0  bn 46
  47. 47. Investor Relations March 4, 2011Investments in new projects 2010 breakdown of adjusted  Breakdown of investments in new  operating cash flow projects 2011‐2013 Emerging Emerging countries countries 12% 21% Eastern Europe 15% 62% Eastern Western Europe Western Europe 30% Europe 22% North 11% America 27% North America50 % OF GROWTH INVESTMENTS CONCENTRATED IN EMERGING COUNTRIES  AND CENTRAL EUROPE 47
  48. 48. Investor Relations March 4, 2011Our 3 Year Objectives Adjusted operating income improvement in the range*  of 4% to 8%M€ With +8 % economic recovery +6% +4 % Without economic recovery 1,932 2,056 (+6%) Average annual growth 2009 2010 ROCE after tax of 9% to 10% at the end of 2014 Positive free cash flow and stable net debt* Excluding the impact of the Veolia Transport /Transdev combination 48
  49. 49. Sommaire Appendices
  50. 50. Investor Relations March 4, 2011Table of contents of appendices A year affected by foreign currency movements Appendix 1 Principal 2009 adjusted figures Appendix 2 Main contracts won or renewed in 2010 Appendix 3 Evolution of revenue 2009‐2010  Appendix 4 Evolution of operating cash flow and margins  Appendix 5 2010 efficiency gains by area of optimization  Appendix 6 Environmental Services: Revenue vs. Industrial Production ,& raw materials prices Appendix 7 Gross investments by division Appendix 8 Completed divestments  Appendix 9 Overview of operating financial assets  Appendix 10 Debt characteristics  Appendix 11  Net liquidity Appendix 12 Balance sheet Appendix 13 ROCE  Appendix 14 Composition of Board of Directors and Executive Committee   Appendix 15 50
  51. 51. Investor Relations March 4, 2011 Appendix 1 : Currency movements Main currencies  2010 / (1€ = x unit of foreign currency) 2009 2010 2009U.S. dollar Average rate 1.393 1.327 +4.8% Closing rate 1.441 1.336 +7.2%U.K pound sterling Average rate 0.891 0.858 +3.7% Closing rate 0.888 0.861 +3.1%Korean won Average rate 1,772.65 1,532.51 +13.5% Closing rate 1,666.97 1,499.06 +10.1%Australian dollar Average rate 1.775 1.444 +18.6% Closing rate 1.601 1.314 +17.9%Czech koruna Average rate 26.457 25.294 +4.4% Closing rate 26.473 25.061 +5.3%The average rate applies to the income statement and cash flowThe closing rate applies to the balance sheet 51
  52. 52. Investor Relations March 4, 2011Appendix 1 :Impact of FX rates on 2010 annual results Depreciation of the euro 2010 / 2009 Average rate             Closing rate • Australian dollar +18.6% +17.9% • Czech koruna +4.4% +5.3% • U.K. pound sterling +3.7% +3.1% • U.S. dollar +4.8% +7.2% Impact on the Group’s main figures • Revenue +€912M • Adjusted Operating cash flow  +€107M • Adjusted operating income +€62M • Higher net debt (at end of period rates) +€465M 52
  53. 53. Investor Relations March 4, 2011Appendix 2: Key 2009 adjusted figures En M€ 2009 2009 Re‐ published presented (1) Revenue 34,551.0 33,951.8 Operating cash flow  3,955.8 3,513.6(2) Adjusted operating income 1,932.4 1,894.1 Adjusted net income attrib. to equity of Parent 538.1 519.0 Net income attrib to equity of Parent 584.1 584.1 Free cash flow (3) 1,344 1,344(1) The financial statements of 2009 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 Gabon and the Netherlands within the Water division; the assets and liabilities of these four  cash generating units have been reclassified in the lines for assets and liabilities held for sale; ‐ For the reclassification into “continuing operations” the Renewable Energies business within 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 the year 2009 has been re‐presented for renewal expenses  by an amount of €360.9M, of which €245.7m is within the Water division and €115.2m is within the Energy Services division.(3) Free cash flow represents cash generated (which is equal to the sum of operating cash flow before changes in working capital and principal payments on operating  financial assets) net of the cash component of the following items: (i) changes in working capital from operations, (ii) operations involving equity (share capital  movements, dividends paid and received), (iii) investments net of disposals (including the change in receivables and other financial assets), (iv) net financial  interest paid and (v) tax paid. 53

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