European Utilities Seminar (en anglais)

1Paris - October 12, 2004 – Investor Relati ons Directi on

UBS EUROPEAN UTILITIES SEMINAREnergy Services on a deregulating market

Olivier BarbarouxChief Executive Officer of Dalkia

Investor PresentationParis - October 12, 2004

2Paris - October 12, 2004 – Investor Relati ons Directi on

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 VeoliaEnvironnement'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 Environnementwith 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.

3Paris - October 12, 2004 – Investor Relati ons Directi on

Present in 35 countries in 2003

Managedturnover (Million €)

Staff Managed

FranceNorthern Atlantic Zone Central Europe Zone Southern Zone

Geographic zone

Europe :European leader in Energy Services with a

presence in 24 countries

Rest of the World :Present in 11 countries

Others*Northern Europe Zone

At 31/12/03

677435

98

603

459

2,929 19,161

4,8988,2393,702516

5,226

41,7425,201

* Development Zone and specialisation companies with international activity

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Business ActivitiesThe « guaranteed performance » contract

Guaranteed results

Long-term contract

Dalkia’score offer

Ene

rgy

Ups

trea

m

• Coal• Fuel oil• Gas oil• Gas• Electricity• Biomass O

utpu

ts li

sted

in

per

form

ance

co

ntra

ct

• Temperature• Heat• Steam• Compressed air• Lighting• ……etc…….

Process of Energy

Transformation

Dalkia purchases energy upstream of customer site

Dalkia operates and maintains its customers’ energy-transforming equipment (boiler, turbine, air conditioning system, compressor, lighting system, etc.)

Dalkia sells the finished product with a guarantee of results (quantity, quality, rate, availability)

Dalkia: a purchaser and transformer of energy

Customers: Industry, Tertiary Sector, Public Sector

5Paris - October 12, 2004 – Investor Relati ons Directi on

2003 turnover segmentation

Customer Type

Business Activity

Local Authorities28.0%

Residential Building Managers

16.0%

Individual Housing2.0%

Industrials29.0%

Tertiary (Private Sector)

7.5%

Tertiary (Public Sector)

17.5%

Industrial Maintenance8.0%

Installation8.0%

Heating Systems & Muti-technical

Services33.0% Facilities Management

8.0%

Industrial Utilities14.0%

Public Lighting & Other

5.0%

Heating & Cooling Networks

24.0%

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Cogeneration

Heating

Heating Networks

BuildingMgt

Multi-technical

Air Con

Other

Steam

Residential Local Authorities Tertiary IndustryOther

Works0

20

40

60

80

100%

Cogeneration

Heating

Heating Networks

Building Mgt

Multitechnical

Air Con

P1 electric

Clean Rooms

Cogeneration

Bui lding MgtMultitechnicalCompressed Air

Air ConCold (process)

Steam

Maintenance (process)

BuildingMgt

Air ConOther

ResidentialLocal Authorities Tertiary Industry

OtherWorks

0

20

40

60

80

100%

Strategy & developmentVision for Dalkia France

Strategy :• growth• a more diversified

portfolio of services and customers

Turnover segmentation of the conventional businesses of Dalkia France by activity and client

2010

2004

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Strategy & developmentThe role of cogeneration

• A sizeable electricity generation solution : 7000 MW in France• A good efficiency in terms of GHG emissions• An answer to diversify electricity supply sources• The interest of a decentralised generation source : RTE’s support in PACA

⇒⇒ Cogeneration has an important role to play in the future.Cogeneration has an important role to play in the future.

Enhanced by increasing tension on the electricity market during Enhanced by increasing tension on the electricity market during next 20 years.next 20 years.

CogeneratorsCogenerators like DALKIA will have to manage the like DALKIA will have to manage the

equation gas/electricity/CO²/flexibility on the open marketequation gas/electricity/CO²/flexibility on the open market

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Strategy & developmentDalkia’s Value Chain

Processload

delivery

Energy &environmentalperformance

Short term (P2)Long term (P3)Maintenance

Technicalenergy

efficiency

Optimisation of site energy

assets

Energy purchasing

Energy Markets

Competence

Sophisticatedtechnical &R&D skills

Processunderstanding

Quotamonitoring,

forecasting &trading skills

Client Needs(steam, hot water,compressed air…)

EnergyTransformation

Process

UpstreamEnergies

(gas, coal, HFO,electricity…)

Dalkia’s commitment : to attain excellence at each component of the value-chain

Electricity

Global outsourcing of engineering skills

Dalkia ’s Added Value

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Dalkia Energy Market Portfolio

Growth

Growth

2002 2003 2004 Proforma*

70

8287

0

20

40

60

80

100 TWh (pci) of energy consumed

An important & growing portfolio with an increasingly diversified rangeof energy purchasing ………..… of energies and geographic origin

Gas Coal Others0

20

40

60

80

100%Segmentation of 2004 Proforma volumes

FranceUKCzech RHungaryPolandLithuania

Iberia& Italy

EstoniaSlovakiaRomaniaOthers**

* 2004 proforma : includes cogeneration at Ploiesti & Poznan** Others include : petroleum products, renewables, electricity, heat….

Other Key Dalkia figures• 10.3 TWh’s of decentralised electricity produced from a park of 4800 MW• Gas consumption represents ~1.2% of the total gas consumed in the EU25 • CO2 emissions caught within the EU Emissions Trading Scheme will be 1% - 2% of the total

10Paris - October 12, 2004 – Investor Relati ons Directi on

Dalkia Energy MarketProficiency

Strategy : A unique positioning to maximise competitiveness :

⇒ complete independence towards all energy suppliers ⇒ capture the best opportunities when they arise ⇒ leverage our portfolio (energies and countries)⇒ optimise our positions and flexibility

Means : A highly skilled specialist team⇒ centrally-based expertise plus network of regional

specialists⇒ experience in all of the key EU25 countries⇒ capabilities across all markets (gas, electricity, coal,

petroleum products, renewables, CO2)

Examples :⇒ mutualisation of gas portfolio in France

based on experience gained in the UK⇒ electricity network services in Eastern Europe⇒ CO2 trading in the UK ETS⇒ renewable re-powering in the Baltics

2002 2003 2004 Estimated0

20

40

60

80

100%

Non Daily Metered Sites on historical tariff «No competition »

Daily Metered (DM) Sites on historical tariff

DM Sites on « eligible » contract with incumbent supplier

DM Sites on « eligible » contract with new entrant

Dalkia has a faster switching rate (30%) than the French market (25%) despite its cogeneration position :

⇒ globalisation of Take-or-Pay and Balancing risks

⇒ hedging & optimisation of market risks ⇒ partnership agreements with key suppliers⇒ customer benefits from switch, with limited risk

Example : French gas portfolio

30 %

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Strategy & developmentEuropean Emissions Trading Scheme

Non-CO2

CO2

Excludedsectors

ETS 5 sectors

Other 4 sect ors

Power & Heat

All GHG's CO2 EU ETS0

1,000

2,000

3,000

4,000

5,000Million tonnes

Analysis of EU25 emissions in 2001 Estimation of Baseline emissions & Quotas

> Preliminary analysis of EU National Allocation Plans (NAP’s) suggests that :-– historical emissions from facilities within the EU ETS are around 2 000 million tonnes– the quota allocations will generate a system-wide position which is either marginally short or long (+/- 1-2%)– the quota supply-side will be heavily influenced by the power sector (fuel switching between coal & gas)

> Dalkia’s allocations will be heavily influenced by final NAP’s in France, Czech Republic, Poland and Lithuania -none of which have yet been verified by the EU Commission

> Dalkia anticipates :– a quota allocation of between 1% and 2% of the EU25 total for around 250 sites – a net long position, thanks mostly to its cogeneration portfolio (note customer positions and heat regulator positions)

> Dalkia will leverage its UK experience & Centralised Energy Team to manage & optimise its important positions across the EU25

LithuaniaEstoniaSwedenIrelandHungaryDenmarkSlovakiaAustriaPortugalFinlandBelgiumGreeceCzech RHollandFranceSpainItalyUKPolandGermany

0 200 400 600

Million tonnesBaselineQuota

12Paris - October 12, 2004 – Investor Relati ons Directi on

(1) VE’s scope of consolidation (2) EBIT corresponds to operating income as defined in French accounting regulations

committee rule 99-02(3) See definition of ROCE in “The Veolia Environnement model: ROCE and valuation"

presentation of November 27, 2003

Dalkia - Key figures (1)

2001 2002 2003 Forecast 2009

Turnover 4,017 4,571 4,654 4 to 7% CAGR

EBIT (2) 224 244 274

EBIT margin 5.5% 5.4% 5.9%

Average CapitalEmployed - 2,516 2,544

ROCE (3) - 7.3% 8.3% > 10%

In €m