2010 Annual results

2010 Annual Results

2

Investor Relations March 4, 2011

DisclaimerVeolia 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 Environnement's 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 Environnement's 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 Environnement's compliance with environmental laws may become more costly in the future, the risk that currency exchange rate fluctuations may negatively affect Veolia Environnement's 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.

2010 HIGHLIGHTS

4


Veolia exceeded 2010 objectivesObjectives 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

5


Financial objectives exceededAdjusted 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

6


A return to organic growth confirmedReturn to organic growth confirmed quarter after quarter

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%)

-4%

-2%

0%

2%

4%

6%

1Q10 2Q10 3Q10 4Q10

‐3.3%+0.9%

+2.7%

+4.7%

7


The combination of Veolia Transport –Transdev finalizedEvolution of governance• Priority for operational efficiency with a unified chief executive

Consolidation by Proportional Integration

Profile of the new entity

IPO as soon as market conditions permit:• A common enterprise project

• After achievement of initial synergies

• To finance development of the entity’s activity

2010 net debtOperating cash flow

Revenue

In €M

‐5089231,8476161,431‐80249498169329

‐1,7803,9857,9712,2065,765

Net Impact

(A)‐(D)

Veolia ‐Transdev

in PI (50%)

(D)=(C)x50%

Veolia‐Transdev

at 100%

(C)=(A)+(B)

Transdev

(excl. Assets divested to

RATP)

(B)

Veolia Transport

(IG)

(A)

Full year pro forma 2010 Veolia Transdev non audited figures, after recapitalization, excluding synergies

8


2011 : A year of growing results

Continued organic growth

Adjusted operating income in the 4% to 8% range*

Net income improvement

A program of asset divestments of at least €1.3 billion

Efficiency Plan cost savings of at least €250M in 2011

Positive free cash flow after dividend payment

GROWTH FINANCIAL DISCIPLINE

* Excluding the impact of Veolia Transport‐Transdev combination

2010 RESULTS

10


+4.6%3 7423 578Cash flow from operations

4091,344Free Cash Flow

+4%3,6543,514 (3)Adjusted operating cash flow

3.65X15,218

581

5792,0562,120

34,787

2010(2)

~

~

+11.6%+8.5%+7%

+2.5%

Variation

3.75 XNet financial debt / (Cash flow from operations + repayment of operating financial assets)

519Adjusted net income attrib to owners of the company

1,894Adjusted operating income

33,952Revenue

15,127Net financial debt

In € M2009

re‐presented (1)

Operating income 1,982

Net income attributable to owners of the company

584

2010 key figures

(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.

11


Breakdown of revenue by division

2010: €34,787M2009*: € 33,952M

Water: €12,128M

Environmental Services: €9,312M

Energy Services: €7,582M

Transportation: €5,765MWater: €12,318M

EnvironmentalServices: €8,732M

Energy Services: €7,041M

Transportation: €5,861M

17%35%

27%

21%36%

21%

17%

26%

* 2009 financial statements have been re-presented to ensure the comparability of periods: Refer to Appendix 2

-1.5%

+6.7%

+7.7%

-1.6%

+1,3%VE Group -0,2%+2,5%

Water

Environmental Services

Transport

-4.1%

+3.3%

+5.8%

-4.4%

-2.9%

+6,9%

+6.2%

-4.3%

-

-

+1.3%-0.2%+2.5%

Transportation

-

-

+6.9%

-

currentFX rates

constantFX rates

Excl. FX& scope

Energy Services

12


Breakdown of revenue by geographic zone2009: €33,952M* 2010: €34,787M

France:€13,765M

Europe excl. France: €11,858M

North America:€2,962M

Asia‐Pacific: €2,801M

Rest of World: €2,566M

France:€14,038M

Europe excl. France:€12,467M

North America:€3,244M

Asia‐Pacific: €2,851M

Rest of World: €2,187M

+2.0%

+5.1%

+9.5%

+1.8%

-14.8%

+2.0%

+2.8%

+4.3%

-10.4%

-19.9%

currentFX rates

constantFX rates

VE Group

Excl. FX& scope

+3.4%

+3.6%

+4.1%

-11.3%

-10.8%

France

Europe excl. France

North America

Asia/Pacific

Rest of World

+1.3%-0.2%+2.5%


8%

40%

35%

9%

8%8%

40%

37%

9%

6%

13


Continued improvement throughout the year

+4.7%9,8129,094+2.7%8,1517,767+0.9%8,2008,080‐3.3%8,6249,011Group+7.9%+4.9%+1.5%‐4.3%Variation

at current FX

‐1.7%1,4781,456‐5.3%1,4391,466‐4.1%1,4921,508‐6.4%1,3561,431Transport

+12.1%2,5902,246+11.3%1,2911,112+7.8%1,4021,303‐2.8%2,2992,380Energy Services

+6.5%2,4062,191+8.3%2,3922,193+9.2%2,4012,237+3.3%2,1132,111Environ. Services

+1.3%3,3383,201‐0.6%3,0292,996‐5.6%2,9053,032‐6.7%2,8563,089Water

At const. Scope & FX

20102009*At const. Scope & FX



20102009*

1st quarter 2nd quarter 3rd quarter 4th quarter

Revenue in €M, variations at constant scope and exchange rates


14


(1) Adjusted operating cash flow = cash flow from continuing operations before tax and interest expense(2) 2009 results have been re-presented in order to ensure comparability of periods: refer to appendix 2

Adjusted operating cash flow (1)

‐‐10.5%10.3%Adjusted operating cash flow margin

+0.9%+4.0%3,6543,514Total Group

+0.7%+13.4%+10.4%‐4.3%

current FX

‐141‐142Other

+10.6%690609Energy servicesTransportation

Environmental servicesWater

In €M

327

1,1751,545

2009re‐presented

(2)

329

1,2971,479

2010

‐3.0%

+6.4%‐6.4%

Constant

FX

3,7423,578Cash flow from operations

‐18‐1Financial cash flow

10665Cash flow from discontinued ops.

3,6543,514Adjusted operating cash flow

20102009 re‐presented

(2)

15


Efficiency Plan: 2010 initial objectives exceeded, €265M versus €250M

(1) Excluding the Veolia Environmental services Adaptation Plan

In €M

Water

VESAdaptation Plan

Env. Services

Transport

2009

87

56

72(1)

40

€255M €265M

2010

93

68

61

43

€126M

Energy

Efficiency Plan

Breakdown by area of optimization

Purchasing

Assets

Support functions

Operations

19% 37%

32%

12%

Cost savings realized in 2009 and 2010

16


Veolia 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

• Excluding these contracts, revenue was globally stable

(1) excluding VWST

€2,593M

€2,659M

2,500

2,550

2,600

2,650

2,700

2009 2010

Backlog VWS

17


Water: Return of favorable dynamics confirmed

*Marafiq / Fujairah / Ras Laffan

2 101 2 070 2 105 2 098 2 145 2 194 2 219 2 305

799 725 792 793 737 790 880925

18961

135

108102

1141445

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

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

18


Veolia 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

19

Investor Relations March 4, 2011Veolia Environmental Services: Revenue increased to €9,312M

2009 2010

VES Organic growth (%) ‐8 pts +7 pts

of which

Recycled materials (price, volumes) ‐4 pts +5 pts

Industrial waste volumes (1) ‐4 pts +1 pt

Municipal waste volumes ‐1 pt ‐1 pt

Price increases +1 pt +1pt

Others +1pt(1) Non‐hazardous industrial waste, andhazardous waste and asssociated services

22%

24%

16%

14%

7%

8%9%

Urban cleaning and collection

Non hazardous industrialwaste collection and services

Hazardous industrial wastecollection and services

Sorting and recycling

Hazardous waste treatment

Waste-to-energy from nonhazardous waste

Landfilling of non hazardousand inert waste

Breakdown of revenue by activity2009 2010

24%

24%16%

12%

6%

8%8%

Quarterly 2010 Environmental Services Revenue Growth

2 111

2 2372 193 2 191

2 4062 401 2 392

2 113

6.5%

8.3%

3.3%

9.2%

1900

2000

2100

2200

2300

2400

2500

Q1 Q2 Q3 Q4

0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

2009 2010 Growth at const. scope & FX

+6.7% , +3.3% at constant FX and +6.9% at constant scope and FX

20


Veolia 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

21


Veolia Energy Services : Revenue increased to €7,582M

Revenue increased 7.7% , +5.8% atconstant FX and +6.2 % at constant scope and FX

Very favorable climate effect:

• +€160M€, of which +€99M in France and €37M in Central Europe

Energy prices

• Increase in France (+€45M) related to the average increase of 4.3% in the fuel mix for the year (particularly in Q4)

• Decline in Central Europe (‐€25M) following the 30% decline in electricity prices in the Czech Republic

Temporary peak in activity in solar Works

Quarterly revenue (€M)

1 2571 199

1 123

509 612

794 790

508

616 783

1 1831 346

1 0631 244

1 100

496

1Q09 1Q10 2Q09 2Q10 3Q09 3Q10 4Q09 4Q10

Outside FranceFrance

22


Veolia 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

23


Veolia Transportation: Revenue declined to €5,765M

Revenue declined 1.6%, ‐4.4% atconstant FX and ‐4.3% at constant scope and FX

In Q4, end of the significant negative impact (‐€637M) from the loss of 3 contracts (Bordeaux, Melbourne and Stockholm) in 2009

In France, good resilience, with a 2.1% revenue increase driven by contract gains from mid‐sized cities.

Outside France, revenue declined 4.1%,

(‐8.4% at constant scope and exchange rates)

• Ongoing growth in Germany due to 3 passenger train contracts won in 2009 (impact +€68M); in the Netherlands(Haaglanden contract), and in the United States (New Orleans, Phoenix, Savannah)

Quarterly revenue (€M)

1,431 1,4661,508

1,4561,356

1,4781,4921,439

Q1 Q2 Q3 Q4

2009 2010

180 171 171 122

+8.2%*+11.3%*

+11.1%* +10.8%*

Part of revenue associated with the Melbourne, Stockholm and Bordeaux contracts in 2009

2

4

* Revenue growth excluding Melbourne, Stockholm and Bordeaux

Part of revenue associated with the Melbourne, Stockholm and Bordeaux contracts in 2010

24


Veolia Transportation: Adjusted operating cash flow of €329M

Adjusted operating cash flow increased 0.7% and declined 3.0% atconstant 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

25


‐+23138115Net capital gains

+162

‐33

+32

+140

Current FX

+622,0561,894Adjusted operating income

In €M 2009Re‐

presented (1)

2010 Of which

FX

Adjusted operating cash flow 3,514 3,654 +107

Amortization* ‐1,749 ‐1,717 ‐

Depreciation and fair value adjustment

+14 ‐19 ‐

Reconciliation of adjusted operating cash flow to adjusted operating income

(1) 2009 results have been re‐presented in order to ensure the comparability of periods: Refer to Appendix 2

* Of which change in discount rates used for provisions for landfill site remediation (‐€56M in 2009 and €26M in 2010)

26


+5.3%+8.5%2,0561,894Adjusted operating income

‐

‐7.9%

+14.6%

+71.4%

‐11.0%

Change courant

‐5.9%5.6%Adjusted operating income margin

‐179‐165Holding

In €M 2009Re‐

presented (1)

2010 Change constant

Water 1,145 1,020 ‐12.6%

Environmental Services 355 609 +63.6%

Energy Services 401 460 +12.0%

Transportation 158 146 ‐11.6%

Adjusted operating income increased 8.5% and adjusted operating income margin improved

(1) 2009 results have been re-presented in order to ensure the comparability of periods: Refer to Appendix 2

27


Net finance costs

Net Financial Debt (1) of €15,218M vs. €15,127M

Average net financial debt (2) of €15,566M vs.€16,466M in 2009

Gross debt: €20,238M vs. €20,287M

• Cost of borrowing 4.1% vs. 4.03%

Cash and cash equivalents of €5,407M : 1.11%

+0.05%Other

‐0.04%Impact of the change in interest rates

+0.32%Impact of the change in average cash

5.09% +0.33%

Variation in %

4,76%*

In M€ 2009 2010

Cost of net financial debt ‐768 ‐793

Evolution of cost of borrowing since 2004

* Previously published

(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 derivatives hedging debt

(2) Average net debt is the average of monthly net debts of the period

5.09%5.04%*5.12%*

4.76%*

5.07%*

5.49%*5.61%*

4.2%

4.4%

4.6%

4.8%

5.0%

5.2%

5.4%

5.6%

5.8%

2004 2005 2006 2007 2008 2009 2010

28


Taxes

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

30,0%

35,0%

40,0%

45,0%

50,0%

2007 tax rate(published)

2008 tax rate(published)

2009 tax rate(re-

presented)

Impairment Divestments VT INC French fiscalGroup

Other 2010 tax rate

25.0%21.6%

48.1%

0.5% 0.0%

27.7%0.3%3.9%

1.4%

29


Reconciliation of adjusted operating income to net income

(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

20102009 re-presented(1)

2010

519

-262

-

-1

-239

-873

1,894

65

4

-27

88

584

-258

-27

-1

-239

-873

1,982

Total

5812Net income attrib. to the owners of the company

-290-Non controlling interests

--24-Net income from discontinued operations

1818Share of net income of associates

--Income tax expense

-907-907Cost of net financial debt

2,120642 056Operating income

Total

519

-

-

-1

-

-873

-27

88

Adjustment

-258

-27

-1

-873

579

-- 269

- 24-

-336-319

--(2)

TotalIn €M

-21

-17

Adjusted AdjustmentAdjusted

30


Statement of cash flows: positive free cash flow of €409M

15,21815,127Net financial debt at December 31‐50057Impact of exchange rates and other4091,344Free cash flow

91‐1,401Change in net financial debt

1,2411,291Divestments

‐735‐434Dividend (2)

‐368‐408Taxes paid‐808‐802Interest expense

86202Other (3)

83432Variation working capital‐3,256‐2,970Gross investments4,1664,033Total cash generation424455Repayments of operating financial assets

3,7423,578Cash flow from operations (1)

20102009En M€

(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(3) Notably changes in receivables and other financial assets for €41M in 2010 and €163M in 2009

31


Controlled growth in investments

653338Financial investments (1) in growth

3,256

495

1,033

3.1%1,075

2010

+9.6% 2,970Gross investments

3.7%As a % of consolidated revenue

In €M 2009

Maintenance capital expenditures 1,271

Industrial investments in growth(excluding operating financial assets)

861

New operating financial assets 500

(1) Including partial acquisitions between non controlling shareholders (with no change of consolidation scope) and net financial debt from acquired entities

32


Divestments (1): €2.5bn completed in 2 years

(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)).

2010: €1,241m 2009‐2010: €2,532m

Mature assets€397m

Non strategic assets €357m

Partnerships€282m

Mature assets€627m

Non strategic assets€777m

Industrial divestments

€205m


€464m

Partnerships €664m

33


Impact of 2009‐2010 divestments and discontinued operations on 2010 revenue and adjusted operating cash flow

~ 0.25 ~ 2.1TOTAL

~ 0.1~ 0.8 2010 discontinued operations

~ 0.15~ 1.32009 and 2010 divestments

Impact on 2010 adjusted operating cash flow

Impact on 2010 Revenue

In bn€

34


Impact of asset divestments on results

‐115.5‐21.1‐303.0Depreciation and goodwill impairments284.6305.9289.0Total income related to divestments (1) + (2) + (3)

227.2213.5112.5Total capital gains in operating income

57.492.4176.5Capital gains in discontinued operations (3)

89.099.0Total non recurring capital gains (2)138.2114.5112.5Total in adjusted operating income (1)000.1Holdings

20.221.218.6Transportation10.743.511.8Energy Services41.824.716.0Environmental Services65.525.166.0Water

Recurring capital gains201020092008In €M

(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

35


Free cash Flow

2009 2010

1,344‐434

+266‐408

‐802

‐1,224

3,514

+432

0

500

1000

1500

2000

2500

3000

3500

4000

2009adjustedoperatingcash flow

(re-presented)

Change inWCR

Net capex Interestexpense

Taxes Other Dividends FCF afterDIV

FCF before dividend+€1,778M

409‐735

+174‐368

‐808

‐1,5913,654 +83

0

500

1000

1500

2000

2500

3000

3500

4000

2010adjustedoperatingcash f low

Change inWCR

Net capex Interestexpense

Taxes Other Dividends FCF afterDIV

FCF before dividend+€1,144M

36


Credit ratio improvement

Average maturity of net financial debt: 9.4 years vs. 10 years at the end of 2009

Ratings

• Moody’s : P‐2/ A3 negative outlook (confirmed July 8, 2010)

• Standard & Poor’s : A‐2 / BBB+ stable outlook (April 21, 2010)

In €bn

13.9

14.715.1

16.5

15.1 15.2

3.6

3.3

3.6

3.373.55

3.653.4

3.4

3.993.953.75 3.75

12

12.5

13

13.5

14

14.5

15

15.5

16

16.5

17

31-Dec-05

31-Dec-06

31-Dec-07

31-Dec-08

31-Dec-09

31-Dec-10

1

1.5

2

2.5

3

3.5

4

Net f inancial debt

Ratio net f inancial debt (prior def. ofEBITDA)

Ratio net f inancial debt (post IAS 7)

As of 01/01/10, application of IAS 7 (related to replacement costs) changed the targeted range of the Group ratio from 3.5X - 4X to 3.85X – 4.35X

37


Evolution of after‐tax ROCE 2010

ROCE -Evolution from 2009 to 2010

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

9.0%

9.5%

10.0%

RO

CE

200

9

Red

ress

emen

tP

ropr

eté

Alle

mag

ne e

tIta

lie(a

cqui

sitio

n

Per

form

ance

RO

CE

201

0

+ 7.9%

+7.6% -0.2%

-+0.3%

+0.6%-0.3%

ROCE2009re-

presented

Scope and FX

Improve recent acquisitions

Slow return assets

ROCE2010

Performance Tax rate evolution

THE CHOICE

OF TARGETED GROWTH

INCREASED PROFITABILITY AND

FINANCIAL DISCIPLINE

2011‐2013 OUTLOOK

39


A proactive and clear strategy (1)

39

OUR INVESTMENT AND DEVELOPMENT CHOICES WILL BE DRIVEN BY THESE FOUR CRITERIA

DEVELOP THE GROUP ACCORDING TO 4 PRINCIPLES

Target new profitable markets and opportunities

Target new profitable markets and opportunities

Favor complex challengesFavor complex challenges

Use our technological edge and know how

Use our technological edge and know how

Benefit from scaleBenefit from scale

40


A proactive and clear strategy (2)

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

GIVE THE MEANS TO GROW PROFITABLY WITHOUT INCREASING DEBT

41


2006 2007 2008 2009 2010

Be flexible (1)

A PRODUCTIVITY PLAN WHICH REINFORCES GROUP FLEXIBILITY

Objective: Increase annual productivity gains from €250M today to €300M in 3 years

New ways to reinforce our competitiveness:

ERP: review processes and organization

360° performance review of principal Business Units

€102M €112M€129M

€255M*€265M

* Excluding the Environmental services adaptation plan in 2009 for €126M

42


A DIVESTMENT PROGRAM WELL UNDERWAY

42

Be flexible (2)

289

306

285

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

€777M

€664M

€464M €627M

Mature assets

Non‐strategic assets

Partnerships


Divestments completed in 2009‐2010€2,532M

Global capital gainsin €M

43


Be selective (1)

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 America

43

We will concentrate our organic growth efforts on these sectors. We will target acquisitions with differentiating technologies in these sectors.

IDENTIFIED AND PRIORITIZED SECTORS OF DEVELOPMENT

44


Be selective (2)

LEADING POSITIONS TO REINFORCE

=> Current strong cash generating activities

WATER WASTE ENERGY TRANSPORT

France

United Kingdom

Germany

France

United Kingdom

United States

France

Germany

France

FAVORABLE ELEMENTS CHALLENGES

‐ Slow erosion in volumes

‐ Public sector competition (historical monopolies)

‐ Public Finance constraints drive the need for economic efficiency

‐More stringent environmental regulations

GROWTH EQUAL TO OR GREATER THAN GDP

QUICK INVESTMENT PAY BACK

•Energy optimization existing operations•Waste (United States) : Asset swap

DEVELOPMENT IN PRIORITY SECTORS AND GEOGRAPHIES

•Non regulated water in the UK •CRE (Commission de Régulation de l’Energie) bids•PFI in the United Kingdom•Regional rail in Germany

MARKET DYNAMICS OF THE GROUP

45


45

Be selective (3)EXISTING PLATFORMS: LEADING POSITIONS TO COME

DOUBLE DIGIT GROWTH

Water– Central & Eastern Europe – 2010 Revenue €873M

•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 and 40% in Hungary in waste water treatment.

Energy Services – Central and Eastern Europe – Largest local energy producer – 2010 revenue of €1.1bn•Market leader in heating networks, with competitive heating prices and asset ownership•A number of heating network opportunities: Prague, Warsaw, Gdansk, Bucharest, Sofia

Water– China – 2010 revenue of €670M•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.

46


Investment allocation 2011‐2013

In €bn Maintenance Consolidation investments Total

Leading positions 2.5 1.0 3.5

Maintenance Existing contracts New projects Total

Priority sectors 0.8 3.5 3.0 7.3

Other 0.7 0.5 ‐ 1.2

Divestments ‐4.0

Maintenance Growth Divestments TotalTotal 4.0 8.0 ‐4.0 8.0

46

Cumulative free cash flow before investments and divestments €8.0 bnCumulative free cash flow before investments and divestments €8.0 bn

47


WesternEurope

NorthAmerica

EasternEurope

Emergingcountries

47

Investments in new projects

62%

50 % OF GROWTH INVESTMENTS CONCENTRATED IN EMERGING COUNTRIES AND CENTRAL EUROPE

22%

15%

11%

12%

30%

27%

21%

Emergingcountries

WesternEurope

NorthAmerica

EasternEurope

2010 breakdown of adjusted operating cash flow

Breakdown of investments in new projects 2011‐2013

48


Our 3 Year Objectives

Adjusted operating income improvement in the range* of 4% to 8%

ROCE after tax of 9% to 10% at the end of 2014

Positive free cash flow and stable net debt

M€

2009

1,932

+4 %

+8 % With economic recovery

Without economic recovery

2010

+6%

2,056

(+6%)

Average annual growth

* Excluding the impact of the Veolia Transport /Transdev combination

Sommaire

Appendices

50


Table 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

51


Appendix 1 : Currency movements

The average rate applies to the income statement and cash flowThe closing rate applies to the balance sheet

U.S. dollarAverage 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 wonAverage rate 1,772.65 1,532.51 +13.5%Closing rate 1,666.97 1,499.06 +10.1%

Australian dollarAverage rate 1.775 1.444 +18.6%Closing rate 1.601 1.314 +17.9%

Czech korunaAverage rate 26.457 25.294 +4.4%Closing rate 26.473 25.061 +5.3%

2009 2010 2010 / 2009

Main currencies (1€ = x unit of foreign currency)

52


Appendix 1 :Impact of FX rates on 2010 annual results

Depreciation of the euro 2010 / 2009Average 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

53


584.1584.1Net income attrib to equity of Parent

1,3441,344Free cash flow (3)

519.0538.1Adjusted net income attrib. to equity of Parent

1,894.11,932.4Adjusted operating income

3,955.8

34,551.0

2009published

33,951.8Revenue

En M€ 2009Re‐

presented (1)

Operating cash flow 3,513.6(2)

(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.

Appendix 2: Key 2009 adjusted figures

54


5454

Agreement between Veolia Environnement & Caisse des Dépôts relative to the Veolia Transport‐Transdev merger (2) (50/50 before the new group’s IPO) (transportation)

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 Veolia Environnement for a period of 5 years

ORGANIC GROWTH

PARTNERSHIPS

Rennes

Strasbourg

Orléans

Tours

Lens

Limoges

Biopôle

Bayonne

Michelin

Oise

Antibes

Carré de Réunion

SEDIF

Angers Dijon

Marquette‐lez‐Lille

Disneyland

Reunion Island

GrandPrado

Béziers

SYMOVESMITVAD

SYTRADEM

SMFM

Marseille

Mandelieu‐la‐Napoule

Outsourcing / Privatization

Renewals

Engineering / Design & Build

Partnerships with other companies

(1) Awarded in 2010, signature expected in 2011 (2) Signature of the defintive agreements announced on May 5, 2010

‐ Renewals: 202 main contracts renewed in France in 2010 in Water (public service concession contracts)

(o/w 112 in drinking water & 90 in wastewater), 191 in Waste (o/w 108 from local authorities& 83 from companies), 2 in Transportation & 80% of contracts due to expire in 2010 renewed in Energy

SEDIF (Water authority for the Ile de France area) (water) – Public service concession contractfor water production & distribution service – Length: 12 years – Cumul. Rev.: €3.1bn

Béziers (transportation) – Length: 8 years – Cumul. Rev.: €87m Public service concession contract for La Madeleine network in Evreux (energy)

– Length: 20 years – Cumul. Rev.: €85m Marseille Provence Métropole (1) (waste) – Length: 3 years – Cumul. Rev.: €29m Mandelieu‐la‐Napoule (waste) – Length: 7 years – Cumul. Rev.: €17m‐ Outsourcing / Privatization: SYMOVE in Oise department (construction, finance & operation for a multi‐process

recovery center) (waste) – Contract term: 23 years o/w 20 for operation – Cumul. Rev.: €347m SMITVAD in Pays de Caux area (construction, finance & operation for

a waste treatment unit & 2 landfills) (waste)– Contract term: 23 years o/w 20 for operation – Cumul. Rev.: €110m

SYTRADEM in Seine‐et‐Marne department (waste) – Length: 10 years – Cumul. Rev.: €47m « Biopôle » in Angers Loire metropolitan area (mechanical biological treatment facility

with composting & anaerobic digestion) (waste) – Length: 6 years – Cumul. Rev.: €44m Grand Dijon Conurbation (waste) – Length: 5 years – Cumul. Rev.: €44m SMFM in Flandre Morinie (waste) – Length: 8 years – Cumul. Rev.: €40m 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) (transportation)

– Length: 12 years – Cumul. Rev.: €29m Michelin in La Combaude (energy) – Length: 12 years – Cumul. Rev.: €35m CEA in Marcoule (energy) – Length: 10 years – Cumul. Rev.: €52m‐ Engineering / Design & Build: The « Grand Prado » from the Reunion North Interdistrict Community (CINOR) (water)

– Contract term: 20 years – Cumul. Rev.: €270m o/w €75m for construction Marquette‐lez‐Lille from Lille metropolitan area (DBO) (water)

– Operating length: 6 years – Cumul. Rev.: €103m o/w €75m for construction Disneyland in Paris (DBO) (water)

– Operating length: 12 years – Cumul. Rev.: €29m o/w €17m 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, Strasbourg,

Orléans, Tours, Angers, Lens & Limoges) (energy) New Fort d’Issy‐les‐Moulineaux eco‐neighborhood (construction & operation of the 1st geothermal

heating network for an eco‐neighborhood) (energy) – Operating length: 25 years ‐ Cumul. Rev.: €27m

Evreux

CEA

Main contracts won or renewed since the beginning of 2010

Fort d’Issy Caisse des DépôtsGIMD

55


55

GermanyGermany

CzechCzech RepRep. .

‐ Renewals: Westminster (waste)

– Length: 7 years (7‐year option) – Cumul. Rev.: €302m excl. option Medway Council (waste) – Length: 25 & 7 years – Global Cumul. Rev.: €241m Eskiltuna (transportation) – Length: 6 years (3‐year option) – Cumul. Rev.: €91m excl. option Kristianstad/Skane County (transportation)

– Length: 8 years (2‐year option) – Cumul. Rev.: €74m excl. option E4 (interregional line) (transportation) – Length: 8 years – Cumul. Rev.: €69m Frankfurt (transportation) – Length: 6 years – Cumul. Rev.: €57m Halogaland (transportation) – Length: 6 years (3‐year option) – Cumul. Rev.: €35m excl. option Lofoten (transportation) – Length: 7 years (3‐year option) – Cumul. Rev.: €31m excl. option Vesteralen (transportation)

– Length: 7 years (3‐year option) – Cumul. Rev.: €30m excl. option

‐ Outsourcing / Privatization: Rosenheim rail system (1) (transportation) – Length: 12 years – Cumul. Rev.: more than €1bn Staffordshire County Council (waste) ‐ Length: 25 years – Cumul. Rev.: around €1bn Management contract for industrial utilities in the mining sector for OKD in Moravia (energy)

– Length: 20 years – Cumul. Rev.: €1.6bn Management contract for Thames Water ‘s metering services (2) through Vennsys Ltd (water)

– Length: 10 years – Cumul. Rev.: €280m

‐ Engineering / Design & Build: Bekescsaba (networks) (water) – Cumul. Rev.: €44m Construction of 2 boilers wholly dedicated to biomass in Lodz & Poznan (energy)

– Additional yearly Rev.: €36m Construction & operation of a set of solar photovoltaic fields in the region of Pouilles in Italy

(energy) – Operating length: 20 years – Cumul. Rev.: €160m for construction Construction & operation of a biomass cogeneration plant for Dairy Crest (energy)

– Length: 10 years – Cumul. Rev.: €22m

ORGANIC GROWTH

SwedenSweden

United United KingdomKingdom

Westminster

Staffordshire

EXTERNAL GROWTH Acquisition of several United Utilities activities in Europe (water):

‐ 77% stake via Veolia Voda in Sofiyska Voda (drinking water & wastewater for the city of Sofia in Bulgaria) ‐ 33% stake via Veolia Voda in Aqua SA (drinking water & wastewater for the city of Bielsko Biala in Poland) ‐ portfolio of outsourcing, industrial engineering & infrastructure contracts in UK

Acquisition of NWR Energy or « Endo » (leader in Czech Rep. in the mining & industrialsector) from the NWR group (energy)

BulgariaBulgaria

Sofia

ItalyItaly

Pouilles

PARTNERSHIPS Partnership between Veolia Energy‐Dalkia & CEZ (1st company in the Czech energy market) (energy):

‐ disposal by Dalkia International of its 15% stake in Dalkia Ceska Republika share capital to CEZ ‐ disposal by Dalkia Ceska Republika of its 85% stake in Dalkia Usti Nad Labem share capital to CEZ

Partnership between CREED (Veolia’s Waste Management & Energy Research Center), the company Dalkia & Lodz Technical University (energy)

Partnership between Veolia Voda & the IFC (International Financial Corporation – World Bank) (water) ‐ 9.5% stake acquisition via a share capital issue in Veolia Voda by IFC

PolandPoland

Poznan

Bielsko BialaNWR EnergyCEZ IFC

Kristianstad

E4

Frankfurt

NorwayNorway

Lofoten

Vesteralen

Medway

Lodz


Rosenheim

Vennsys Ltd

HungaryHungary

Bekescsaba

Halogaland

Eskiltuna


Interests acquisitions in other companies

Renewals



(1) Awarded in 2010, signature expected in 2011 (2) Announced in February 2011

56


56

BrazilBrazil

United StatesUnited States

CanadaCanada

‐ Renewals:

Highland Park in Chicago (waste) – Length: 5 years – Cumul. Rev.: €9m Boston (transportation) – Length: 2 years – Cumul. Rev.: €449m

Denver (transportation)‐ Length: 3 years (2‐year option) – Cumul. Rev.: €50m excl. option

York (Bus Rapid Transit) (transportation)‐ Length: 5 years – Cumul. Rev.: €65m

‐ Outsourcing / Privatization:

Phoenix (transportation) – Length: 5 years – Cumul. Rev.: €291m

York (bus & transport of people with special needs) (transportation)‐ Length: 5 years (5‐year option) – Cumul. Rev.: €80m excl. option

Savannah (transportation)‐ Length: 5 years (5‐year option) – Cumul. Rev.: €54m excl. option

Boston (trigeneration for 6 hospitals) (energy)‐ Length: 12 years – Cumul. Rev.: €72m

Suburbio hospital under PPP (Public‐Private Partnership) in the State of Bahia (energy) ‐ Length: 20 years – Cumul. Rev.: €107m

Sanibel (waste) – Length: 5 years – Cumul. Rev.: €9m Fulton County (water) – Length: 5 years – Cumul. Rev.: €38m

‐ Engineering / Design & Build:

Petrobras P63 & Tupi (D&B for desalination) (water) – Cumul. Rev.: €51m Aruba Island (State of the Netherlands) (D&B for desalination) (water)

‐ Cumul. Rev.: $43m

ORGANIC GROWTH

PARTNERSHIPS

Partnership between Veolia Environnement & Cleantech Group (leading global innovation of start‐ups & investors in clean technologies) with the program «Veolia Innovation Accelerator»(VIA) aiming at boosting cleantech innovation by cooperating withthe most innovative start‐ups

EXTERNAL GROWTH

Acquisition of a cooling network in Baltimore (energy)

PhoenixSavannah

York

Cooling network in Baltimore

Suburbio hospital

P63 & Tupi Petrobras

Fulton

Aruba Island

Denver

HighlandPark

Sanibel

BostonCleantechGroup



Interests acquisitions in other companies

Renewals



57


57

ORGANIC GROWTH

‐ Renewals:

Rockingham – Mandurah (transportation)‐ Length: 10 years – Cumul. Rev.: €140m

Perth – Joondalup (1) (transportation)‐ Length: 8 years – Cumul. Rev.: €139m

‐ Outsourcing / Privatization:

Macao (1) (transportation) ‐ Length: 7 years – Cumul. Rev.: €66m

‐ Engineering / Design & Build:

Hong Kong (DBO) (water & waste)‐ Operating length: 15 years‐ Cumul. Rev.: €706m o/w €414m for construction

Shenzhen Baoan Sludge (D&B) (water) – Cumul. Rev.: €17m

Sydney Water Corporation (networks) (water)‐ Cumul. Rev.: €28m (+€11m for an option)

ChinaChina

Shenzhen Baoan

AustraliaAustralia

Rockingham

Hong Kong

Macao

SydneyPerth

Renewals



(1) Awarded in 2010, signature expected in 2011


58


58

‐ Outsourcing / Privatization: Saadiyat Island cooling network in Abu Dhabi (energy)

‐ Length: 29 years – Cumul. Rev.: €373m Co‐management of water services on behalf the Public

Authority for Electricity & Water in the Sultanate of Oman PAEW (1) (water)‐ Length: 5 years (2‐year option) ‐ Cumul. Rev.: €33m excl. option

Port of Sohar on behalf the State‐owned company MISC (1)

(water) – Length: 6 years – Cumul. Rev.: €8m

‐ Engineering / Design & Build: Tatweer (D&B) (water) – Cumul. Rev.: €29m Khenifra (D&B) (water) – Cumul. Rev.: €16m

ORGANIC GROWTH

QatarQatarMoroccoMorocco

PARTNERSHIPS Partnership between Veolia Environnement & the Qatari Diar

fund with the undertaking by the sovereign fund to maintainits 5% holding of the stock & voting rights of Veolia Environnement for a period of 3 years with the commonambition to work together on infrastructure & utilities projectsin the Middle East & North Africa

Partnership between Veolia Environnement, Renault & the Kingdom of Morocco to build the Renault’s Tangier plant which emits zero carbon & zero industrial liquid discharges(multi‐services)

Qatari Diar

Renault’s Tangier plant

Khenifra

United United ArabArab EmiratesEmirates

SultanateSultanate of Omanof Oman

PAEW

Port of SoharSaadiyatIsland

KingdomKingdom of of BahreBahreïïnn

Tatweer




(1) Announced in January 2011


59


€ M+ 91234,551

+419- 496

34,787

2009published +1.3%

Internalgrowth

-1.5%

Scope

+2.7%

Change

+2.5%

2010

*Refer to Appendix 2

Appendix 4: Evolution of revenue 2009‐2010

-599

IFRS 5(*) 2009re-presented*

33,952

60


Appendix 5: Evolution of adjusted operating cash flow margin

2009 margin adjusted (1) 2010 margin

Water 12.5% 12,2%

Environmental Services 13.5% 13.9%

Energy Services 8.6% 9.1%Transportation 5.6% 5.7%

Total Group 10.3% 10.5%

(1) 2009 adjusted operating cash flow margins have been re-presented in order to ensure comparability of financial periods; refer to Appendix 2

61


Appendix 5: Evolution of adjusted Operating cash flow by Division

2010: €3,654M2009*: €3,514M

Water€1,479M

Environmental Services€1,297M

EnergyServices€690M

Transport: €329M

Water€1,545M

Environmental Services €1,175M

EnergyServices€609M

Transport: €327M

9.3%

40.5%

35.5%

17.3%44%

19%

9%

33.3%


-4.3%

+10.4%

+13.4%

+0.7%

VE Group -0,2%+2,5%

Water

Environmental Services

Energy Services

Transportation

-6.4%

+6.4%

+10.6%

-3.0%

changecourant

change constant

+0.9%+4.0%

change change constant

‐4%

Holding: ‐€142M Holding: ‐€141M

‐4%

62


Appendix 5: Evolution of adjusted operating income margin

In €M 2009* 20102009* Margin

2010 Margin

Water 1,145 1,020 9.3% 8.4%

Environmental Services 355 609 4.1% 6.5%

Energy Services 401 460 5.7% 6.1%

Transportation 158 146 2.7% 2.5%

Holding ‐165 ‐179 ‐ ‐

Total Group 1,894 2,056 5.6% 5.9%

(1) 2009 financial statements have been re-presented in order to ensure comparability of periods: Refer to Appendix 2

63


37%

32%

19%

12%

Appendix 6: 2010 efficiency gains by area of optimization

Purchasing

Support Functions

Assets

Operations

Actions :Purchasing contract renegotiationContract compliance reinforcementPlatform creation for countrywide

purchasesSubcontracting negotiation

Actions :Optimization of key contracts Improve entities

Actions :Efficiency improvementReduction in energy consummationNon-replacement of personnel Lower costs of risk (renegotiation,

lower workplace accidents)

Actions :Reorganization and

productivity improvementCentralizing support

functionsReduction in external

outsourcingReduced rent expense

880 projects in 2010

64


-20,0%

-15,0%

-10,0%

-5,0%

0,0%

5,0%

10,0%

15,0%

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

Appendix 7: Environmental Services Revenue vs. Industrial Production

Revenue and Industrial Production* Quarterly growth (%)

Industrial Production

growth*

VES revenue growth

* Average composed of France, UK, Germany, United States. Source: OECD

65


Appendix 7: Environmental Services: Recycled raw materials prices (paper, cardboard, metals)

Evolution of raw materials prices (€/t)

0

20

40

60

80

100

120

140

janv-0

8fév

r-08

mars-08

avr-0

8mai-

08jui

n-08

juil-0

8ao

ût-08

sept-

08oc

t-08

nov-0

8dé

c-08

janv-0

9fév

r-09

mars-09

avr-0

9mai-

09jui

n-09

juil-0

9ao

ût-09

sept-

09oc

t-09

nov-0

9dé

c-09

janv-1

0fév

r-10

mars-10

avr-1

0mai-

10jui

n-10

juil-1

0ao

ût-10

sept-

10oc

t-10

nov-1

0dé

c-10

janv-1

1fév

r-11

0

50

100

150

200

250

300

350

400

450

500

Cardboard Paper Metals

66


Appendix 8 : Gross investments by division

Growth

2,9705008613381,271Total 2009

3,2564951,0336531,075Total 201067341320Other

37330954244Transportation

71187248269107Energy Services

7837517661471Environmental Services

1,322303480306233Water

TotalNew operating

financial assets

IndustrialFinancial (incl. ∆scope)

Maintenance

In €M

67


Appendix 9: Completed divestments

1,2411,291Total divestments

931894Financial divestments (1)

In M 2009 2010

Industrial divestments 259 205

Increase in minority capital 138 105

€2.5 billion in divestments completed in two years

(1) Including net financial debt of divested companies and partial divestments between non‐controlling shareholders (with no change in consolidation scope).

68


Appendix 10 : Overview of operating financial assets

20102009 re‐presented*

In €M

Balance sheet: current and non‐current operating financial assets are recorded at amortized costs on the balance sheet with a corresponding liability booked in Veolia’s consolidated net financial debt

5,652 5,629

Income statement: interest payments are a sub‐line to the revenue from ordinary activities “o/w revenue from operating financial assets” and are included in operating cash flow before changes in working capital

384 388

Cash flow statement (inflows): Principal repayments associated with operating financial assets are not recognized in the income statement, but recorded within ”cash flow from investing activities”on the cash flow statement

455 424

Cash flow statement (outflows): “New operating financial assets”which are the current year’s investments in operating financial assets are also recorded within ”cash flow from investing activities”on the cash flow statement

483 489

*Refer to Appendix 2

69

Investor Relations March 4, 2011Appendix 10 : Operating Financial Assets. In the case of long term contracts Veolia may finance certain infrastructures for its clients

Industrial outsourcing contracts (IFRIC4) and concession contracts comprising a public services obligation / BOT (IFRIC12), with the transfer of volume and price risks to the client

Assets treated as financial receivables: Operating Financial Assets

The most significant give rise to dedicated external funding

5.6Total

1.7Other

City of Brussels0.2Water Belgium

Municipalities0.4Waste UK

EDF0.6CHP France

Land de Berlin2.7Water‐ Berlin

Counterparty€Bln

Average return at market conditions: (2010 average rate) : 6.9%

Principal repayments: €424M in 2010

70


Appendix 10 : Operating Financial Assets

Financing Net debt – OFAs

€9,589M

Total net debt

€15,218M

Cash flow from operations

EBITDA (1)

€3,354M

+ =

+ =

2.9x EBITDA (1)

Operating financial asset flows

Revenue from ordinary activities:

€388M

Principal repayment: €424M

3.65x (2)

Operating Financial Assets

€5,629M

= =

Cash flow

from ops:

OFA Repayment:

3,742 M€

424 M€

4,166 M€

+

(1) EBITDA = cash flow from operations excluding operating financial assets.(2) As of January 1, 2010, due to the application of IAS 7 regarding replacement costs, the Group historic objective ratio of 3.5 – 4x became 3.85 – 4.35x.

71


Appendix 11 : Impact of FX rates on net financial debt

Net financial debt at December 31, 2009 €15,127M

Net financial debt at December 31, 2010 €15,218M• Variation +91 M€

• Of which impact of FX +465 M€US dollar 122 M€

U.K. pound sterling 59 M€

Hong Kong dollar 44 M€

Chinese renMinBi Yuan 54 M€

72


Appendix 11 : Debt managementRatings• 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 1H 2010

Debt swap: In 7/2010, bonds maturing in 2012 and 2013 were swapped for a new €834M bond maturing in 2021

Average net debt maturity: 9.4 years at December 31, 2010 vs. 10 years in 2009

Group liquidity: €10.6bn, including €5.2bn in undrawn confirmed credit lines (without disruptive covenants)

Net group liquidity: €7.4 bn

Variable rate: 34% USD 10%

GBP 9%

Other 20% (1)Fixed rate: 66%

o/w Euro: 89%

o/w USD: 49%

o/w GBP: 43%Euro 61%

(1) o/w RMB 4% et HKD 3%

Net financial debt after hedges December 31, 2010

Currency breakdown of gross debt after hedges at Dececmber 31, 2010

Variable rate capped: 6%

73


0

200

400

600

800

1000

1200

1400

1600

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

GBPUSDEURO

Appendix 11 : VE SA bond redemption schedule

€10.4 bn

€1.6 bn

Total €12.8 bn

€0.8bn

Nominal bond values converted at close 2010

74


Appendix 12 : Net liquidity

4680Lines of credit

7,4156,846Total Group net liquidity(3,214)(3, 438)Current liabilities and bank overdrafts10,62910,284Total Group liquidity 1,7261,523Total subsidiaries

1,7261,523Cash and cash equivalentsSubsidiaries

8,9038,761Total Veolia Environnement3,6804,091Cash and cash equivalents

1,100975Bilateral credit lines3,6553,695Syndicated loans

Veolia Environnement

12/31/201012/31/2009In €M

75


Appendix 13 : Consolidated statement of financial position

In €M 12/31/09 12/31/10

Intangible assets (concessions) 3,625 4,165Property, Plant & Equipment 9,382 9,707Other non‐current assets 11,313 11,966Operating financial assets (current and non current) 5,652 5,629Cash and cash equivalents 5,614 5,407Other current assets 14,231 14,637Total Assets 49,817 51,511Capital (including non‐controlling interests) 10,131 10,895Financial debt (current and non‐current) 21,086 21,110Other non‐current liabilities 4,381 4,610Other current liabilities 14,219 14,896Total Liabilities 49,817 51,511

76


Appendix 14: Definition of ROCE

Capital employed consists of capital “earning” a return: equity capital: minority interests, net financial debt less operating financial assets

Net income from operations = Recurring operating income + Share of net income of associates – Income tax expense – Revenue from operating financial assets + Income tax expense allocated

to operating financial assets

Capital employed = Intangible assets and property, plant and equipment, net + Goodwill,net of impairment + Investments in associates + Operating and non‐operating working capitalrequirements, net + Net derivative instruments – Provisions – assets and liabilities held for sale,

excluding discontinued operations

Average capital employed during the year: average of the opening and closing capital employed

ROCE = Average capital employed during

the year

Net income from operations

77


Appendix 14: ROCE calculation

7.9%Post‐tax ROCE18,582Average 2010 capital employed

1,474Net results of operations40Other84Tax allocated to operating financial assets

‐336Income tax18Equity in net income of affiliates

‐‐388Operating financial asset revenue

2,056Adjusted operating income

12/13/2010En M€

78


Appendix 14: Pre‐tax ROCE by division

Pre‐tax ROCE

(in %)

Average capital employed (in €M)

1,612

4,0725,950

6,348

2010 20102009*2009*

11.5%14.1%6,153Water

9.1%4.7%6,043Environmental Services

8.7%9.2%1,526Transportation

10.5%9.7%3,922Energy Services

(1) 2009 financial statements have been re-presented in order to ensure comparability of periods: Refer to Appendix 2

19,111

20102009*€M

18,052Group capital employed (end of year)

79


Appendix 15 : Composition of Board of DirectorsComposition of Veolia Environnement’s Board of Directors – January 2011

• Antoine Frérot, Chairman and CEO of Veolia Environnement

• Louis Schweitzer*, Deputy Chairman of the Veolia Environnement Board of Directors, Chairman of the Board of Astra Zeneca (UK)

• Jean Azéma*, Chief Executive Officer of Groupama SA

• Daniel Bouton*, Chairman of DMJB Conseil

• Jean‐François Dehecq*, Chairman of the Foundation Sanofi Espoir

• Pierre‐André de Chalendar*, Chief Executive Officer of Saint‐Gobain

• Augustin de Romanet de Beaune*, Chairman and Chief Executive O�cer of Caisse des Dépôts et Consignations

• Paul‐Louis Girardot*, Chairman of the Supervisory Board of Veolia Water

• Groupe Industriel Marcel Dassault, represented by Olivier Costa de Beauregard*, managing Director

• Esther Koplowitz, Deputy Chairwoman of the Board of Directors of Fomento de Construcciones y Contratas (FCC)

• Philippe Kourilsky, Professor at the Collège de France

• Serge Michel, Chairman of Soficot SAS

• Henri Proglio, Chairman and CEO of EDF

• Baudouin Prot*, Director and Chief Executive Officer of BNP Paribas

• Qatari Diar Real Estate Investment Company, represented by Dr Mohd Alhamadi, Chief Corporate Improvement Officer

• Georges Ralli*, Chairman of Lazard Frères Gestion

• Paolo Scaroni*, Chief Executive Officer of ENI (Italy)

• Censeur : Thierry Dassault, Chairman of Keynectis

Committees of the Board of Directors of Veolia Environnement

• Accounts and Audit Committee: D. Bouton (Chairman), P‐L. Girardot, P‐A. de Chalendar, O.Costa de Beauregard

• Nominations and Compensation Committee: S. Michel (Chairman), D. Bouton, L. Schweitzer, O.Costa de Beauregard

• Strategy, Research, Innovation and Sustainable Development Committee: P. Kourilsky (Chairman), P‐L. Girardot, P‐A. de Chalendar

*Independent member

80


Appendix 15 : Composition of Executive CommitteeAntoine Frérot

• Chief Executive Officer of Veolia Environnement

Denis Gasquet

• Chief Operating Officer and Senior EVP of Veolia Environnement

• Chief Executive Officer of Veolia Environmental Services

Olivier Barbaroux

• Chief Executive Officer of Veolia Energy

Cyrille du Peloux

• Chief Executive Officer of Veolia Transport

Jean‐Pierre Frémont

• Chief Commercial Officer and Head of Public Affairs

Jean‐Michel Herrewyn

• Chief Executive Officer of Veolia Water

Olivier Orsini

• General Counsel and Company Secretary

Pierre‐François Riolacci

• Chief Financial Officer

Véronique Rouzaud

• Chief Human Resources Officer

81


Investor relations contact information

Ronald Wasylec, Directeur des Relations avec les Investisseurs et Actionnaires individuels

Téléphone +33 1 71 75 12 23

e‐mail [email protected]

Ariane de Lamaze

Téléphone +33 1 71 75 06 00

e‐mail ariane.de‐[email protected]

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 [email protected]

http://www.finance.veolia.com