Veolia 2014 Strategy and Tranformation

Veolia at a glance

1

Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014 2

Veolia Environnement: the recent past• Early 2000’s: focus on growth (organic and acquisitions)

o Yearly gross capex increased from €2.9 billion in 2003 to €6.9 billion in 2007 (from ~10% to ~20% of total revenues)

• Economic crisis of 2008-2009

o Efficiency Plan

o Asset write-downs

o Initiation of €3 billion asset divestment program for 2009-2011 (actual amount achieved was €4.0 billion)

• New management end of 2009/beginning 2010

o Complete review of entire asset portfolio

o Launched strategy of profitable organic growth

o Continuation of asset divestment program (target of €3 billion between 2011 and 2013)

• 2011 operational challenges (European debt crisis and Arab Spring)

o Two profit warnings

o Plan to accelerate restructuring December 2011 Investor Day

• 2012 Refocus and deleverage the Company, renewed governance

o Pursuit of reforms with the planned exit from Transportation and French energy businesses

• 2013 Enhanced cost cutting targets, new organization2


Key 2013 figuresRevenue €22.3 billion

Adjusted operating cash flow

By activity By geographic zone

Water 46%

(€10.2 billion)

Energy services

17% (€3.7 billion)

Environmental

services 36%

(€8.1 billion)

France 51%

Europe excl.

France and

Central & Eastern

Europe 21%

Asia-Pacific 9%

Water 46%

(€833m)

Energy services

13% (€229m)

Rest of world 6%Other 1%

(€0.3 billion)

Central & Eastern Europe 5%

Environmental

services 47%

(€847m)

€1.8 billion (incl. other -€113m)

Year-end average capital employed

Water 38%

(€4.8 billion)

Energy services

22% (€2.6 billion)

Environmental

services 37%

(€4.5 billion)

Other 3% (€0.4 billion)

€12.3 billion3

USA 8%

Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014

Water• Presence in 48 countries

• Drinking water provided to >103 million people

• Wastewater services supplied to > 73 million people

• ~85/15 municipal/industry customer mix

• Operations: Operations and maintenance of water and wastewater facilities

o Public authority retains ownership of assets

• Technologies & Networks: Design & construction of installations, implementation of technological solutions

• Key growth platforms:

o Countries: Central & Eastern Europe, China

o Clients: Industrial

o Model: move towards light capex

o Activities: large municipal projects, focus on technologies (particularly industrial sector)

2013 Water Revenue€10,222M

Oceania 2%

U.S.A.

7%

Other Europe

6%

Central & Eastern

Europe 11%

United

Kingdom

3%

Germany

10%

France

43%

Middle

East

2%Asia

9%ROW 7%

4


Environmental Services

• Presence in 30 countries

• Partnerships with > 750,000 industrial and public sector customers, and serving nearly 61 million residents

• ~66/33 industry/municipal customer mix

• Waste collection, sorting and recycling, processing and treatment (landfill, waste-to-energy or recovery) of liquid, solid, hazardous and non-hazardous waste and industrial cleaning


o Countries: U.K.

o Clients: Industrial

o Model: PFIs, movement towards more recovery solutions, rather than elimination, in line with market demand

o Activities: hazardous waste, recycling/recovery

2013 Environmental Services Revenue : €8,076M

Oceania 10%

North

America

10%

Other Europe 2%

United

Kingdom

21%

Germany

12%

France

42%

Asia 2%ROW 1%

5


Energy Services (Dalkia)(situation before EDF transaction)

• Dalkia is the joint venture between Veolia (66%) and EDF (34%)

o Dalkia owns 75,8% of Dalkia International with EDF

• Presence in 27 countries

• Management of 163,000 installations

• Customer mix:o ~63% commercial (hospitals, universities, retail, offices,

residential)

o ~28% industry

o ~9% municipal

• Energy optimization and environmental efficiency: solutions encompassing entire conversion cycle from fuel purchase to sale of electricity produced

• Three key activities: district heating and cooling networks, industrial utilities and energy services


o Countries: Central & Eastern Europe

o Activities: cogeneration, biomass conversions/installation, waste heat optimization

2013 Energy Services Revenue*

France: 3 479M€

International : 4 862 M€

6* Of which 3 756M€ consolidated in 2013 following

implementation of IFRS 10-11: DKI treated as a Joint Venture

Italy

18%

UK & IRL

5%

Central &

Eastern

Europe

37%

Baltic

countries

7%

Other

Europe

15%

North

America

7%

Asia -

Pacific

4%

Rest of

World

7%

2013 International Revenues


The Dalkia France / Dalkia International deal

A deal which clarifies and accelerates Veolia’s strategy

Veolia Energy becomes a key company asset

… Dalkia International operations grow faster, with

higher profitability than DalkiaFrance

Transaction favorable to financial ratios

• Rebalancing Veolia’s profile

• Transaction neutral to the company’s net financial debt

• Neutral to earnings in 2015, accretive thereafter (before PPA)

• Closing expected in H2, 2014

Takeover of 100% of Dalkia International & Divestiture of all of Dalkia France

Strategic Plan


Transform Veolia

1. Refocus and deleverage the company

3. Streamline our organization

4. Evolve our business models to capture profitable growth opportunities

Improve financial flexibilityFocus the company on our

value-added solutions

Capture highly profitable organic growth opportunities

2. Reduce our costs

9


2012-2013 Transformation objectives achieved : asset divestitures

5.0

In €bn

1

0

6.3

Average multiple of 2012-2013 divestitures : 10,7x EBITDA


2012-2013 Transformation objectives achieved : debt reduction

Net financial debt of €8.2bn at December 31, 2013, down €2.6bn from Dec. 2012


2012-2013 Transformation objectives achieved : cost cutting… continuing at a consistent pace

Gross cumulative savings compared to 2011 (€M)


2012-2013 Transformation objectives achieved : New company organization

More customer-

orientedSimpler More flexible More efficient

A geographic organization

Strong central steering functions

Two new departments: Innovation and Markets, Technical

& Performance


THE INDUSTRY STANDARD FOR ENVIRONMENTAL SERVICESTHE INDUSTRY STANDARD FOR ENVIRONMENTAL SERVICES

Target the most important environmental markets

Increase the market share of industrial clients in our portfolio

Focus on the key growing markets

2012-2013 Transformation objectives achieved : evolve our business models


1) Changes in the Company’s traditional markets

• Markets that currently represent an important share of our revenue

• Adapting our concession model to roll it-out in regions where it still

creates value

2) Seven key growth markets

• Sectors corresponding to new environmental activities

• Sectors where demand already exists and is growing

• Sectors in which there are a limited number of actors with knowledge

and in which Veolia already has business platforms of significant size

Two development axes


POTENTIAL TARGETS

Our municipal model remains attractive

USA

Scandinavia

Benelux

Gulf

Water: Waste: Energy:

Russia

UKGermany

Asia

• Good opportunities still exist, those of which we must carefully select:

o Some, of exceptional quality, can be financed by the Company

o The best of other opportunities will more likely be financed through partnerships

Canada

Latin America

Poland

Balkans

Japan


7 key growth markets In which Veolia can stand out

MARKET IN 2020Estimated value, €bn per year

> €10bnCircular economy Advanced solutions to extend the life of resources

> €10bnNew approaches to promote sustainable urban servicesCreative solutions

for cities

High

margin

Exclusive technology to treat even the most complex types of pollution and protect resources

Hazardous

pollution

> €5bnComprehensive solutions compliant with the highest standards for complex operations; optimizing and recovering materialsDecommissioning

> €10bnImproving efficiency and reducing impact; tailored solutions to provide alternative resources (water, energy) Food & Beverage

> €20bnBespoke solutions to optimize and recycle resourcesReducing environmental and social impactsMining

Improving access to resourcesImproving production yield Reducing environmental and social impacts

Oil & Gas > €20bn


2014: a return to growth

• Revenue growtho Growth platforms

o New contracts

• Around 10% growth in adjusted operating cash flow

• Significant growth in adjusted operating income

• Reduction in financial expense

• Significant growth in adjusted net income

Continued focus on capex management and growing cash generation

2014 Objectives (1)

(1) Excluding FX effects


Mid-term objectives confirmed

(1) Excluding debt reduction €1.4 billion related to the exit of the Berlin contract

(2) Before closing exchange rate impact

(3) Net of implementation costs, of which, due to new accounting standards for joint ventures, ~80% will benefit adjusted operating income.

(4) Subject to the approval of Veolia’s Board of Directors and the Annual General Shareholders Meeting

(5) In cash or shares

(6) Adjusted net financial debt / Operating cash flow before changes in working capital + OFA repayments)

(7) +/-5%

2012-2013 :Transformation

period

Objectives

achieved

• 5 billion in divestments (1)

• 2013 net financial debt under new accounting standards:

o Net financial debt between €8bn and €9bn(2)

o Adjusted net financial debt between €6n and €7bn(2)

• Cost reductions:

o in 2013: €170 M net cumulative impact(3)

• Extended dividend commitment of €0.70(4) per share in 2013(5)

and 2014(5)

Beginning

2015

• Average organic revenue growth> 3% per year (mid-cycle)

• Average adjusted operating cash flow growth > 5% per year

(mid-cycle)

• Leverage ratio(6) of 3.0x(7)

• Mid-term: payout ratio in line with historic level

• Cost reductions in 2015: €750M net cumulative impact(3)


� Strategy was announced and implemented: Veolia is now

transformed

� Objectives announced, objectives achieved, with certain objectives

exceeded

� Veolia: a pioneer in the ongoing revolution in environmental

services, and re-profiled in order to seize all new opportunities

� A strategy of selective, profitable and sustainable growth, which is

already bearing fruit

Conclusion: a new Veolia to drive renewed growth


http://www.finance.veolia.com

Investor Relations contact information

Terri Anne PowersDirector 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]

Ariane de Lamaze

Téléphone : +33 1 71 75 06 00

Fax : +33 1 71 75 10 12


38, avenue Kléber - 75116 Paris - France

Ronald Wasylec

Senior Vice President, Investor Relations

Téléphone : +33 1 71 75 12 23


Veolia 2014 Strategy and Tranformation

Investor Relations

o dalkia

o countries

residential o

acquisitions o

industry o

industrial o model

china o clients

arab spring o