Acquisition of Sulo, n°2 German waste company (en anglais)

Acquisition of Sulo, n°2 German waste company

April 27, 2007

Investor Relations – April 2007

2Veolia Environnement

Disclaimer

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 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 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 financialmeasures" are being communicated and made public in accordance with the exemption provided by Rule 100(c) of Regulation G.



Strategic rationale

Core business in a consolidating and fast-transforming market

Complementary geographical footprint in Europe

Veolia Environmental Services becomes undisputed No1 player in European waste management

Strengthens Veolia Environnement’s European leadership in the recycling market

First-class management team

Accelerate opportunities of PPP development in Germany

Unrivalled platform for further growth in Central and Eastern Europe



The German waste sector: why now? — Recent evolution makes it an attractive development market

Major evolution due to changes in market structure and regulationIntroduction of tender offers in Municipal segment.

Opening of DS system resulting in the emergence of competitors to DSD

TASi legislation inducing strong requirements for sorting/treatment capacities

Attractive “new” German marketRegulatory and contractual maturity and transparency

Improved visibility of prices and margins

Growing importance of sorting/recycling and valorisation processes

Market consolidation underway



The German waste sector — Key value drivers

Demand for integrated solutions

New regulation (TASi, Dual System, municipal tenders)

Market consolidation

Valorisation of secondary raw

materials and RDF

Growing demand for sorting & recycling

facilities

Requirements for value-added

services

Acceleration of PPP initiatives

Requirements for scale and national

footprint

German waste sector

value drivers



Sulo – No2 operator in the German waste management sector

€1.3 billion revenues in 2006 out of which €186 million in environmental technologies

Municipal and Industrial nationwide waste management activity

No1 player in Municipal segmentNo2 player in Commercial & Industrial segmentNo1 operator in the Dual System market

Leadership on the Recovered Paper and Plastic markets

Strategically located sorting/recycling facilities

9 Public Private Partnerships

Employs 7,700 employees

Environmental Services revenue breakdown

Commercial &Industrial 49%

Dual System/Recycling

18%

Plastic 3%Int'l 5%

Other 6%

Municipal19%



The German waste sector — Growth opportunities from a still fragmented and public-owned market

Private market size of around €12 billion

A very fragmented market

Room for further consolidation

A third of municipal market still managed by public-owned companies

“private” market structure

Top 3 = 38% market share

18%

Remondis

11%SULO

9% Alba

Others

€15.1bnTop4 - 8



Sulo - A growing player in Central & Eastern European and Baltic markets

More than €55 million revenues in 2006

Leading waste services provider in Central & Eastern EuropeNo4 in Poland

Top 6 in Czech Republic

Major operator in the Baltic countriesNo1 in Estonia

No4 Lithuania

Top 6 in Latvia

Track record of successful profitable growth: CAGR 2002-2006: +15% per year

Strong platform for further development



Strategic benefits - Combining Eastern European franchises to capture forthcoming growth

Strong combined activities in Eastern Europe

Combined revenues of around €200 million

High development potential market

Veolia Environmental Services + Sulo combined forces can sustain double digit growth in this area

Veolia ES main activities

Veolia Environmental Services/Sulo activities in Europe

Sulo main activities

Veolia ES/Sulo activities



Strategic benefits – Integration of recycling and growth opportunities with German municipalities

Recycling and secondary materials market is increasing globallyStrong increase in demand for recovered materials in Asia

Scale driving commercialisation opportunities and prices

Identified opportunity on paper tradeDouble Veolia Environnement’s existing tonnage

Deliver integrated services in France, Germany, UK and rest of Europe

Expected strong development of Public Private PartnershipsIncreasing demand for efficiency and value-added services

Additional growth opportunities with German municipalitiesLeverage Veolia Environnement ’s breadth of expertise on Stadtwerke

Potential for comprehensive value proposition (water, energy services, waste management, public transport)



Key terms of the transaction

Enterprise value of €1,450 million

Including financial net debt and estimated after-tax liabilities of approximately €950 million

8.0x implied EV/2007 EBITDA including associates

Subject to regulatory approval by EU competition authorities

(1) Based on 2006 consolidated EBITDA adjusted for associates



Financial impact

The transaction meets Veolia Environnement’s investment criteria:

Significant value creation: IRR at more than 3% above WACC on base case scenario

Earnings accretive from year 1

Potential upside above base case of €200/300 million additional value creation

Limited impact on credit ratios



2007 estimated Veolia Environnemental Services’ revenue: a well balance geographic revenue breakdown

2007 estimated revenue (WasteManagement) before Sulo’s

acquisition

France 39%

Germany 2%

America 20%

Asia Pacific 7%ROW 1%

France 33%

America 17%


2007 proforma estimated revenue (Waste Management) after Sulo’s

acquisition*

(*) Sulo’s contribution in revenue taken into account for 12 months

United Kingdom 21%

Rest of Europe 10%

United Kingdom 18%Germany 16%

Rest of Europe 9%



Veolia Environnement: presence in Germany multipliedby 3 in 4 years

Energy 5%

Wast e 12%

Wat er 59%

2003 Total revenue: €1,193m

Transport 16%

Energy 2%

Waste 43%

Water ( 1 )

39%

2007 proformaTotal revenue:€3,391m

(1) Water, (including BVAG)

Transport 24%



2007 estimated Veolia Environnement revenue by geographic region : a significant reinforcement in key strategic markets

2007 estimated VE Group revenue before Sulo’s acquisition

France 45%

Germany 6%

America 11%


France 44%

America 10%


2007 proforma estimated VE Group revenue after Sulo’s acquisition*

(*) Sulo’s contribution in revenue taken into account for 12 months

United Kingdom 9%

Rest of Europe 19%

United Kingdom 9%Germany 10%

Rest of Europe 18%



Glossary

United Resource Recovery Corporation, patented PET recycling process technologyURRC

Technische Anleitung Siedlungsabfall: ordinance on the Environmentally Sound Landfilling of Municipal Waste and on Biological Treatment Plants, which states that no waste may be disposed of in landfill sites without adequate pre-treatment from 2005 Onward

TASi

Refuse derived fuelRDF

Public Private Partnership: a business model where a municipality and a private company form a joint holding company, majority owned by the municipality but operationally controlled by the private partner

PPP

Polyethylene TerephthalatePET

Mechanical-biological pre-treatment: a way of treating waste pre-disposalMBT

Duales System Deutschland: a corporation owned by KKR in which the licensees pay fees to the DSD to be in return exempted from having to provide a recycling system for their packaging waste

DSD

Commercial and IndustrialC&I

DefinitionTerm



Nathalie PINON, Head of Investor Relationsand Financial Communication

38 Avenue Kléber – 75116 Paris - FranceTelephone +33 1 71 75 01 67

Fax +33 1 71 75 10 12e-mail [email protected]

Brian SULLIVAN, Vice President, US Investor Relations700 E. Butterfield Road -Suite 201

Lombard, IL 60148 - USATelephone +1 (630) 371 2749

Fax +1 (630) 282 0423e-mail [email protected]

Web sitehttp://www.veolia-finance.com

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