2009 annual results

2009 ANNUAL RESULTS

2

Investor Relations – 2009 Annual Results – 05.03.10

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 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.

Antoine Frérot Chief Executive Officer

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Table of Contents

2009 highlights

2009 results

Outlook

5


2009 highlights: commitments met

Asset divestment program carried out — 2009 divestments: €1,291m*, exceeding the €1,000m commitment

Net financial debt

— Significant drop in net financial debt to €15.1bn from €16.5bn at December 31, 2008 — Improvement in credit ratio

Sharp increase in free cash flow at €1,344m — Positive free cash flow after dividend payment and before divestments

Operating cash flow – net investments — €2,357m versus €601m in 2008, exceeding the commitment of €2,000m

Investments tightly controlled

— Down nearly 30% to €3,331m from €4,702m in 2008 — Stopped acquisitions — Maintenance investments held at nearly 5% of revenue

* Including €138m in capital increase of minority shareholders

6


2009 highlights: rapid adaptation to the business environment

Cost reduction plans — General efficiency Plan: contributed €255m in 2009, topping an initial objective of €180m

— Veolia Waste Adaptation Plan: €126m in cost savings compared to €100m objective

Total cost savings: €381m

Revenue contracted 2.5% at constant FX rates to €34,551m with stabilization of the economic environment in the second half

Operating cash flow: Favorable trend in Q4 09

— €3,956m, generating a stable operating cash flow margin in 2009 of 11.5%

Operating cash flow Operating cash flow margin 2008

2009 (€m)

7


Dividend policy

(1) Subject to approval by the Annual Shareholders' Meeting on May 7, 2010

2009 dividend at €1.21 (1) per share

€0.55

€0.68 €0.85

€1.05

€0.55 €0.55

€1.21 (1) €1.21 €1.21

Pierre-François Riolacci Chief Financial Officer

9


€m 2008 adjusted (1) 2009

Revenue 35,765 34,551

Operating cash flow 4,105 3,956

Recurring operating income 2,275 1,932

Operating income 1,961 2,020

Recurring net income attrib. to equity holders of parent 687 538

Net income attrib. to equity holders of parent 405 584

Net financial debt 16,528 15,127

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

3.64 X 3.44 X

Net earnings per share (€) 0.88 1.24

Recurring net earnings per share (€) 1.49 1.14

Dividend per share (€) 1.21 1.21 (2)

2009 key figures

(1) To ensure the comparability of financial years, 2008 financial statements have been adjusted: - by the divestment of Freight operations in the Transport division in December 2009 and of Waste-to-Energy operations in the Waste Division in the United States in August

2009; which are presented in the income statement in the line item “net income from discontinued operations” according to IFRS 5; - by the reclassification into “net income from discontinued operations” of UK operations in the Transport division and of the Renewable Energies business; the balance of assets

and liabilities of these two cash-generating units was reclassified under the assets and liabilities held for sale lines. (2) Subject to approval by the Annual Shareholders' Meeting on May 7, 2010 (3) Audit processes are ongoing by auditors

10


Breakdown of revenue by division

€m

+0.0%

-9.2%

-4.9%

+1.3%

-2.7%

current FX rates

constant FX rates

VE Group -2.5% -3.4%

■ Water

■ Environmental Services

■ Energy services

■ Transportation

+0.2%

-7.9%

-3.0%

+1.9%

-0.4%

-7.8%

-2.2%

+0.4%

12,558

9,973

7,446

5,788

12,556

9,056

7,079

5,860

2008 adjusted (1) 2009

35,765 34,551

35%

28%

21%

16%

36%

26%

21%

17%

Exc. scope & FX

(1) To ensure the comparability of financial years, 2008 financial statements have been adjusted: Refer to footnote (1) slide 9 for details

11


Breakdown of revenue by geographic zone

€m

-4.9%

-5.5%

+2.4%

+3.4%

+1.4%

-4.9%

-1.3%

-2.9%

+0.9%

+2.2%

current FX rates

constant FX rates

VE Group

Exc. scope & FX

-4.9%

-1.1%

-3.7%

-1.0%

+0.8%

■ France

■ Europe ex France

■ North America

■ Asia/Pacific

■ Rest of the world

2008 adjusted (1) 2009

14,465

12,964

3,072 2,708 2,556

13,756

12,257

3,144

2,593 2,801

35,765 34,551

40%

36%

9%

8%

7%

40%

35%

9%

8%

8%

-2.7% -2.5% -3.4%


12


(1) Operating cash flow = cash flow from continuing operations before tax and interest expense (2) To ensure the comparability of financial years, 2008 financial statements have been adjusted: Refer to footnote (1) slide 9 for details

Operating cash flow (1)

€m

2008 adjusted (2)

2009

current FX rates FX effect constant

FX rates

Water 1,821 1,837 0.8% (31) +2.6%

Environmental Services 1,331 1,194 -10.3% (19) -8.8%

Energy services 759 740 -2.5% (25) +0.8%

Transportation 287 327 +13.8% (3) +14.7%

Other (93) (142) -

Total Group 4,105 3,956 -3.6% (78) -1.7%

13


Stable operating cash flow margin

2008 margin adjusted (1) 2009 margin

Water 14.5% 14.6%

Environmental Services 13.4% 13.2%

Energy services 10.2% 10.5%

Transportation 5.0% 5.6%

Other - -

Total Group 11.5% 11.5%

(1) 2008 operating cash flow margins were adjusted, in order ensure the comparability of financial years: Refer to footnote (1) slide 9 for details

14


Efficiency Plan: Initial 2009 objectives exceeded, €255m versus €180m

(1) excluding Veolia Environmental Service’s 2009 Plan to Adapt to the Business Environment

€m

Water

Energy services

Environmental Services

Transportation

Achieved in 2009

87

56

72 (1)

40

€255m €230 - 270m

2010 objectives

80 - 90

50 - 60

60 - 70

40 - 50

~€500m

Total 2009 & 2010

170

110

140*

80

Efficiency Plan

Veolia Environmental Services Adaptation Plan

€126m

15


Veolia Water: Revenue stable at €12,556m (+0.2% at constant FX)

Veolia Water Solutions & Technologies reported a slight decline in revenue, down to €2,470m (-1.8% at constant consolidation scope & FX rates)

— Several large contracts outside France near completion

— Less sustained business in industrial markets

In France, revenue inched down 0.3%, excluding consolidation scope effects

— 0.2% decrease in volumes of water distributed — 2% slowdown in Works businesses

Outside France(1) , 0.4% growth (0.2% at constant consolidation scope & FX rates)

— Stability in Europe (at constant consolidation scope & FX rates), as the satisfactory performance of business in Central Europe offset less activity in the United Kingdom

— Robust growth in Asia (up 12% at constant consolidation scope & FX rates) due to the extension of certain chinese contracts

(1) excluding VWST

Quarterly revenue

Q1 09/Q108 Q2 09/Q2 08 Q3 09/Q3 08 Q4 09/Q4 08

€m

€m

Absolute change in Works and Engineering & Construction revenue

16


Veolia Water: Operating cash flow at €1,837m versus €1,821m

Resilient operating cash flow, up 2.6% at constant FX rates to €1,837m Stable operating cash flow in France

— Lower volumes of water distributed and changes in the Works business — Contractual developments offset by productivity gains and the positive indexing effect

Marked decline in operating cash flow at Veolia Water Solutions & Technologies

— Impact of the slowdown in the Works business — Decrease in industrial services margins

Outside France(1) , operating cash flow grew

— Substantial increase in Asia-Pacific (mainly in China) — Virtually stable in Europe due to the satisfactory contribution of Germany, despite volume declines and the

tough economic conditions

Negative €24m impact related to the extinction of the “Vivendi Universal compensation”

Efficiency Plan: €87m in 2009

Operating income stable at constant FX rates at €1,164m

(1) excluding VWST

17


Veolia Environmental Services : 9.2% revenue decline to €9,056m (-7.9% at constant FX rates)

Quarterly revenue (€m) 2008

2009 Change in 2009/2008 revenue - 9 % Decline in waste volumes - 5 %

— I&C non-hazardous waste: –8% — Municipal: -2.3%

Price and volumes of recycled materials - 4 % — Average prices fell by 40% in 2009

Rise in service prices + 1 % FX effects - 1 %

Breakdown of revenue by activity 2008 2009

Urban cleaning and collection

Non hazardous industrial waste collection and services

Hazardous industrial waste collection and services

Sorting and recycling

Hazardous waste treatment

Waste-to-energy from non hazardous waste

Landfilling of non hazardous and inert waste

Stable revenue at constant consolidation scope and FX rates in Q4 09

18


Veolia Environmental Services : Breakdown of revenue by geographic zone

France 37% -9% Decline in waste

volumes and price of recycled materials Germany 11% -11% Decline in waste

volumes and price of paper United Kingdom 15% -4% Decline in industrial

waste volumes partially offset by price increases Positive contribution from integrated

PFI contracts North America 14% -9% Decline in waste

volumes partly offset by price increases Decline in industrial services Rest of the world 23% -7%

% of 2009 revenue

at constant scope & FX rates

19


Veolia Environmental Services: Recovery in profitability during 2009

Decline in operating cash flow to €1,194m (-8.8% at constant FX rates)

Stabilization of operating cash flow margin at

13.2% vs. 13.4%

Substantial profitability improvement throughout the year

— Efficiency Plan: €72m in 2009 — 2009 Waste Adaptation Plan: €126m — In Germany, profitability improved since Q2 — Positive impact of lower fuel prices

4th quarter of 2009

— Sharp increase in operating cash flow: +19.7% — Operating cash flow margin rate: 14.7%

Operating income of €454m (including €99m from

non-recurring capital gains on divestments) — includes a negative impact of (€56m) in 2009

compared to a positive contribution of €21m in 2008, resulting from the fall in discount rates on landfill site rehabilitation provisions

Operating cash flow (€m)

and margin (%)

2008 2009

20


Veolia Energy: Revenue declined 4.9% to €7,079m (-3% at constant FX rates)

Revenue declined 2.2% at constant consolidation scope and FX rates

Negative FX effect of €139m (-1.9%) mainly due to movement of Eastern European currencies and the pound sterling

Energy prices — Negative impact of €140m — Declined in France and North America — Increased in Central Europe and Baltic

countries

Slowdown in Works business and in services

for industrial customers

Weather conditions had no significant impact

Quarterly revenue (€m)

Outside France France

21


Veolia Energy: Operating cash flow

Operating cash flow declined 2.5% to €740m but grew 0.8% at constant FX rates

Slowdown in the Works business and in services for European industrial customers, notably in Southern Europe

Negative effect of CO2 and energy prices in France

Efficiency Plan: €56m

Operating income of €416m

22


Veolia Transport: Revenue increased 1.3% to €5,860m (+1.9% at constant FX rates)

In France, business resiliance and 0.5% growth

— Contracts won in mid-sized cities and the updating of indexed prices offset the loss of the Bordeaux contract (May 2009)

Outside France, 1.7% growth

— Bolstered by North America and Germany — Loss of the Melbourne (December 2009) and

Stockholm (November 2009) contracts had a limited impact of (€34 m) in 2009

— Development of the JV with RATP (Hong Kong tramway)

Slowdown in airport operations

Quarterly revenue (€m)

2008 2009

23


Veolia Transport: Operating cash flow

Strong growth in operating cash flow (+14.7% at constant FX rates) to €327m from €287m in 2008

Efforts to renegotiate contracts and boost productivity led to a significant improvement in operating cash flow in Germany, the Netherlands and North America

Efficiency Plan contributed €40m to the improvement in operating cash flow in 2009

Positive impact of the decline in fuel prices

Slowdown affecting airport operations

Operating income of €153m

24


€m 2008 adjusted (1) 2009

At current FX rates

FX effect

At constant FX rates

Water 1,196 1,164 -2.7% (31) -0.1%

Environmental Services 620 360 -42.0% (12) -40.1%

Energy services 430 416 -3.0% (17) +1.0%

Transportation 137 158 15.6% (1) +16.2%

Holding (108) (166)

Recurring operating income 2,275 1,932 -15.1% (61) -12.4% of which change in fair value of provisions for landfill rehabilitation

21 (56)

Recurring operating income


25


2009 2008 adjusted (1)

From operating income to net income

€m Recurring Non- recurring

Total Recurring Non- recurring

Total

Operating income 2,275 (314) 1,961 1,932 88 2,020

Cost of net financial debt (2) (948) (948) (894) (894)

Corporate tax expense (420) -42 (462) (242) (242)

Equity in net income of affiliates 19 19 1 1

Net income from discontinued operations

- 139 139 - (43) (43)

Net income attributable to minority interests (239) (65) (304) (259) 1 (258)

Net income attributable to equity holders of parent 687 (282) 405 538 46 584

(1) To ensure the comparability of financial years, 2008 financial statements have been adjusted: Refer to footnote (1) slide 9 for details (2) Including “other financial income and expenses”, of which €83m in accretion expenses on provisions in 2009

26


Cost of borrowing

€m 2008 2009 12/31/09 12/31/08

Cost of net financial debt (909) (784) 125

Impact of change in average debt (13)

Impact of changes in interest rates 140

Other (2)

Cost of borrowing stood at

4.76% as compared with 5.61%

at December 31, 2008

Average net financial debt

€16,466m versus €16,142m in 2008

€m

31-mar-09 30-june-09 30-sept-09 31-dec-09

27


Taxes

The normalized rate was 31%

(1) Actual tax rate: relationship between tax expense and net income from continuing operations, adjusted by the same tax expense and income from affiliates (2) Mainly related to 2009 items (3) 2007 reported figure

46% -3%

-4%

-13%

-6%(2)

22%

%

+2% 25%

Mainly related to 2008 elements

(3) (1) (1)

28


Net Investments: €1,585m

€m 2008 2009

Maintenance capital expenditures 1,860 1,632

As % of consolidated revenue 5.2% 4.7%

Investments in growth/existing operations (ex. operating financial assets)

1,033 861

Financial investments in growth incl. change in consolidation scope

1,280 338

New operating financial assets 529 500

Gross investments 4,702 3,331 -€1.4bn

Industrial and financial divestments(1) (789) (1,291) >€1bn

Repayment of operating financial assets (358) (455)

Net investments 3,555 1,585 <€2bn

(1) Including the capital increase subscribed to by minority interests of €138m in 2009 and €27m (excluding the capital reduction in Berlin) in 2008 and including the net financial debt of divested companies

Stop to acquisitions

Optimization of current investments

29


Completed divestments

€m 2008 2009

Industrial divestments 330 259

Financial divestments and change in consolidation scope 432 894

Capital increase subscribed to by minority interests 27 138

Total divestments 789 1,291

More than €2bn in divestments completed in two years

30


Completed divestments

2009 financial divestments (1) €1,032m

Divest mature assets €230m — o/w Montenay International (USA) €220m (2)

Non-strategic assets €420m — o/w VPNM (France) €111m — o/w Veolia Cargo (France) €94m — o/w Dalkia Facility Management (UK) €90m — Other €125m

Development partnerships €382m — o/w EBRD (Veolia Voda, Central Europe) €70m — o/w JV with Mubadala (Africa – Middle East) €189m

(1) Including changes in consolidation scope and capital increases subscribed to by minority interests (2) Includes only divestments completed in 2009. The divestment of the operating contract for the Miami-Dade County Waste-to-Energy plant, announced on February 2, 2010

will be included in 2010 divestitures

Valuation multiple, ex capital increases

subscribed to by minority interests:

11 x EBITDA 2008

31


Operating cash flow – net investments (1)

€m 2008 2009

Operating cash flow (2) + repayment of operating financial assets 4,514 4,397

Gross investments (4,702) (3,331)

Divestments 789 1,291

Operating cash flow (2) – net investments (1) 601 2,357

Reminder of 2009 objective 2,000

(1) Net investments = gross investments– (divestments + repayment of operating financial assets + capital increases subscribed to by minority interests) (2) Operating cash flow including cash flow of discontinued operations

32


Cash flow statement

€m 2008 2009

Cash flow from operations (1) 4,178 3,939

Repayment of operating financial assets 358 455

Total cash generation 4,536 4,394

Gross Investments (4,702) (3,331)

Change in WCR (81) 432

Tax paid (348) (408)

Interest expenses paid (849) (802)

Dividend (2) (754) (434)

Other (3) (400) 202


Free cash flow (1,809) 1,344

(1) Of which financial cash flow and cash flow from discontinued operations (-€14 m in 2009 and €50 m in 2008) (2) Dividend paid to shareholders and minority shareholders (3) Includes in particular changes in receivables and other financial assets totalling (€312 m) in 2008 and €163 m in 2009

33


Changes in net financial debt

€m 2008 2009

Net financial debt at January 1st 15,125 16,528

Free cash flow before divestments and dividends (1,713) 487

Dividends paid (754) (434)

Free cash flow before divestments (2,467) 53


Capital increase reserved for minority shareholders (104) (1) 138

Free cash flow (1,809) 1,344

FX effects and other 406 57

Net financial debt at December 31st 16,528 15,127

Change in debt 1,403 (1,401)

(1) Of which the capital reduction associated with the Berlin contract in the Water division is €131m

€1,291m

34


Debt ratio

Average maturity of net debt: 10 years versus 9.3 years at December 31, 2008 Ratings

— Moody’s: P-2/ A3 negative outlook (confirmed on March 26, 2009) — Standard & Poor’s: A-2 / BBB+ negative outlook (confirmed on January 4, 2010)

(1) The 2009 ratio adjusted for IAS 7 changes from 3.44 x to 3.75x (2) Refer to appendix 5

€bn

3.4x 3.3x 3.6x

3.6x x

3.4x(1) Net financial debt/(Cash flow from operations + Repayment of operating financial assets)

Net financial debt

As of 01/01/10, application of IAS 7(2) (related to renewal charges), changes the targeted range of the Group ratio from 3.5x – 4x to 3.85x – 4.35x

Outlook

36

Veolia-Transdev

Partnership project with Transdev — A new combined entity with:

Revenue ~ €8bn Operating cash flow ~ €500m Net debt ~ €1.8bn

— A 50-50 partnership before the IPO, with Veolia Environnement as the industrial operator

— Negotiation and process on going Finalisation of conditions for RATP exit Consultation of the numerous employee representative bodies Approval by competition authorities

IPO of a world leader in passenger transportation — Evolution of the business toward increased complexity and sophistication — In a strongly developing market — Dedicated means to fuel growth — Full valuation of Transportation assets


37


Collaboration with EDF

A partnership since 2000 through Dalkia

New and important challenges in…. — energy savings, — CO2 emissions,

… now involving all of Veolia Environnement’s businesses

New offers and services on the drawing board: — Local energy production through CHP and biomass — Electric motorization and mobility management — Combined electricity production and seawater desalination — Smart meters and value-added services — Sustainable development offerings for residential buildings

An industrial partnership to enlarge

38


Review of last few years: Operating cash flow

€m FX

Scope

Business cycle

Net productivity & other

- €186m

+ €185m

- €472m

+ €265m

- €208m

Operating cash flow

Δ 2009 / 2007

(1) Estimated (2) 2007 figures have not been adjusted for 2009 discontinued operations

(1) (1)

(2)

39


Review of last few years: ROCE

After-tax ROCE

- 3.3%

FX - 0.5%

Business env. - 1.8%

Recent acquisitions - 1.1%

Slow-return assets - 1.2%

Net productivity & other

+ 1.3%

Δ 2009 / 2007

French GAAP

(1)

(1) 2007 figures have not been adjusted for 2009 discontinued operations

40


Veolia Environnement's strengths

Structurally growing markets

Significant competitive advantages

A decentralized and responsive Group

A broad asset base of about €25bn

RESTORE PROFITABILITY, so as to position the Group for PROFITABLE ORGANIC GROWTH

WITHOUT INCREASING DEBT

41


Drive to restore profitability (1)

Continue to reduce our cost base

Turn around recent acquisitions in Waste

Optimize our asset portfolio

42



Reduce our cost base

Make cost reduction an ongoing pursuit €250m every year

Managed by the recently created Operations Department

— Rationalization of corporate resources — Reduction of head office expenses — Optimization of maintenance costs — Focus innovation programs on continuing improvement of operational processes

43



Turn around recent Waste acquisitions

Germany — Reduce structure and number of employees (from 6 to 4 regions, decline of 600

FTE) — Renegotiation of waste collection and removal prices — Reduce exposure to recycled paper prices — Renegotiation and/or exit of unprofitable contracts — Improvement in Dual System business profitability and exit from DS licensing

activity — Unification of management systems — Capex and working capital reduction

Italy — Resume normalized operation of waste-to-energy facilities after a long shutdown

of several units which had to be brought in line with regulatory requirements — Pursue contractual negotiation with our clients

44



Optimize our asset portfolio

Pursue selective asset optimization: An average of €1bn of assets divested every year

By capturing value of mature assets

By divesting non-core assets on the basis of following criteria:

— Business — Geographic — Financial

By sharing with partners the ramping up of slow-return assets

45


Internal and profitable growth (1)

Organic:

— Very few acquisitions

With significant added value: — Mobilisation of our unique capabilities:

Technologies Established track record Management teams Capacity to manage risks

— Complex and global challenges — Duration — Significant contracts that have a strong base for development

46


Internal and profitable growth (2)

Priority areas targeted: — Urban density — Stringent and enforced regulations — Legal stability — Financially sound clients

Rapidly profitable : — IRR > WACC +3% for each project

— ROCE > WACC at the end of year 3

— Payback < 7 years

— Revenue / capital employed > 1.5 ± 10% for the total group

A focus on four regions

European Union (Domestic market)

Northern Asia Middle East North America

Each year, on average on the portfolio of new contracts

47


Return + profitable growth: 3-5 years outlook

ROCE after tax

Business environment

Normalized tax

10%

8%

6%

4% 2009 3-5 years

7.6%

10%

Recent Acquisitions

Productivity, Asset

optimization, profitable growth

Slow return assets

9%

3-5 years

48


Return + profitable growth: 3-5 years outlook

Recurring Operating Income

2009 3-5 years

€m

Reduction of the cost base

Ramp up « slow-return assets »

Asset optimisation and profitable growth

Normal business environment

1 932

4-5 % Turn around recent acquisitions

6-8 %

CAGR 3-5 years

49


2010 objectives

Assumption: Economic stability in 2010 in comparison with H2 2009

Priority focus on cash flow generation maintained Recurring operating income improvement

— Positive free cash flow after dividend payment(1)

— €3bn of divestments over 2009 – 2010 – 2011

— €250m in cost cutting

— Maintain ratio objective: net debt / (cash flow from operations

+ repayment of Operating Financial Assets)

(1) Excluding Veolia Transport/Transdev merger project

Conclusion

51


One ambition for Veolia Environnement (1)

- Today : economic crisis

- Tomorrow : density scarcity diversity

Veolia is at the core of the world’s major challenges and their solutions

How to reconcile human development and environmental quality?

The worldwide sustainable development reference

52


One ambition for Veolia Environnement (2)

The reference exemplary model of performance

— Financial and economic performance

But also

— Innovation performance: keep one step ahead

— Social performance: employees satisfaction, employability, solidarity

— Societal performance : contribute to the common good

An exemplary company,

balanced and responsible in all its dimensions

Restore balance between growth and returns

54


Table of Contents of Appendices

Currency movements Appendix 1 Impact of FX rates on 2009 operating cash flow Appendix 2 Veolia Water’s consolidated revenue Appendix 3 Gross investments by division Appendix 4 Renewal expenses in concession contracts (IAS 7) Appendix 5 Main contracts renewed or won in 2009 Appendix 6 Overview of operating financial assets Appendix 7

Recurring operating income margin Appendix 8

Debt management: main characteristics Appendix 9

VE SA bond redemption schedule Appendix 10

Net liquidity Appendix 11

Definition of ROCE Appendix 12

Pre-tax ROCE by division Appendix 13

Composition of Board of Directors and of the Executive Committee Appendix 14

Trends in prices of recycled materials Appendix 15

Evolution of combined industrial production (France, Germany, UK, USA) Appendix 16 weighted by Veolia Waste revenue contribution

55


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

U.S. dollar Average rate 0.6782 0.7177 +5.9% Closing rate 0.7185 0.6942 -3.4%

Pound sterling Average rate 1.2433 1.1222 -9.7% Closing rate 1.0499 1.1260 +7.2%

Korean won Average rate 0.0006 0.0006 -6.0% Closing rate 0.0005 0.0006 +20.0% Australian dollar Average rate 0, 5691 0.5634 -1.0% Closing rate 0, 4932 0.6246 +26.6% Czech koruna Average rate 0.0399 0.0378 -5.3% Closing rate 0.0372 0.0378 1.5%

2008 2009

Appendix 1: Currency movements

2009 / 2008 Main currencies (1 unit of foreign currency = €…)

56


Appendix 2: Impact of FX rates on 2009 operating cash flow

2007 (1) 2008 (1) 2009

Currency Local currency (in millions)

2009/2008 chge.

2009 €/X exchange rate

2009/ 2008

chge.

Impact on 2009 operating cash flow (m)

U.S. dollar zone (USD) 416 496 475

-4%

1.393

+5.5%

+19

Pound sterling zone (GBP) 353 401 370 -8%

0.891 -10.8%

(44)

Czech koruna zone (CZK) 6.315 6.193 6.551 +6%

26.457 -5.5%

(13)

Korean won zone (KRW) 76.295 93.653 88.810 -5%

1.772.649 -8.5%

(4)

Polish zloty zone (PLN) 287 331 387 +17%

4.33001 -6%

(20)

(1) Fiscal years 2007 and 2008 were not adjusted for assets held for sale

57


Appendix 3: Veolia Water’s consolidated revenue

-3.7%

+2.3%

€m

12,558 12,556 +0.0%

Total Veolia Water Year-on-year change +0.0%

— Internal growth -0.4% — External growth +0.6% — FX effect -0.2%

Operations

Works and E&C

58


Appendix 4: Gross investments by division

Growth

€m Maintenance

Financial incl. Δ in

consolidation scope

Industrial capex

New operating financial

assets Total

Water 498 160 329 265 1,252

Environmental Services 485 6 128 74 693

Energy services 233 84 296 99 712

Transportation 377 62 68 26 533

Other 39 26 40 36 141

2009 total 1,632 332 861 500 3,331

2008 total 1,860 1,280 1,033 529 4,702

59


Veolia Environnement is generally subject to the obligation of maintaining and repairing assets of facilities it manages under public service contracts. In accounting terms, this obligation is reflected by renewal expenses (for assets covered by public-private partnership service contracts in France).

In application of the new amendment specifying the implementation conditions of IAS7 Statement of Cash Flow, renewal expenditures are booked as operating expenses as of January 1, 2010, whereas they were previously treated as maintenance expenditures.

As a consequence, during reconciliation, in the cash flow statement, between “Net income attrib. to equity holders of parent” and “Net cash flow from operating activities”, renewal expenses will no longer be eliminated, as of January 1, 2010, in the “Depreciations, provisions and operating value impairments” item.

The deduction of renewal expenditures from the operating cash flow and maintenance costs, has no impact on the cash position, net income, or shareholders’ equity.

Appendix 5: Accounting treatment of renewal expenditures according to the new amendment specifying the implementation conditions of IAS7

60


Appendix 5: Accounting treatment of renewal expenditures according to the new amendment specifying the implementation conditions of IAS7

(1) To ensure the comparability of financial years, 2008 financial statements have been adjusted: Refer to footnote (1) slide 9 for details (2) Including the operating cash flow from discontinued operations

Revenue

Operating cash flow


Maintenance capex

Operating cash flow(2) - net investments

34,551

3,956

1,932

1,632

2,357

- 361

34,551

3,595

1,932

1,271

2,357

- 361

2009 published

2009 adjusted for IAS 7

Renewal expenditures €m

Revenue

Operating cash flow


Maintenance capex

Operating cash flow(2) - net investments

35,765

4,105

2,275

1,860

601

- 390

35,765

3,715

2,275

1,470

601

- 390

2008 adjusted (1)

2008 adjusted (1) and adjusted for IAS 7

Renewal expenditures

€m

61

Outsourcing / Privatization Renewals

Engineering / Design & Build Partnership with other company

1) Announced in January 2010

- Renewals: 223 main contracts renewed in France en 2009 in Water (o/w 126 in drinking water &

97 in wastewater), 134 in Waste (o/w 85 from local authorities & 49 from companies), 17 in Transportation & 86% of contracts due to expire in 2009 renewed in Energy

La Roche-sur-Yon (water) – Length: 12 years – Cumul. rev.: €66m Reg. Public Authority of Vallée de Chevreuse (waste) – Length: 8 years – Cumul. rev.: €72m Limoges Métropole, the city urban authority (waste) – Length: 6 years – Cumul. rev.: €37m Roubaix (energy) – Length: 24 years – Cumul.rev.:€196m Poitiers (energy) – Length: 15 years – Cumul.rev.: €72m Moselle Departmental Council (transportation) – Length: 10 years – Cumul. rev.: €177m Gard Departmental Council (transportation) – Length: 10 years – Cumul. rev.: €160m Var Departmental Council (transportation) – Length: 8 years – Cumul. rev.: €83m - Outsourcing / Privatization: Valenciennes (transportation) – Length: 8 years – Cumul. rev.: €405m Joint Authority with responsability for the Bay of Mont Saint Michel (transportation)

– Length: 13 years (o/w 3 for construction) – Cumul. rev.: €91m Nice (self-service cycles) (transportation) – Length: 15 years – Cumul.rev: €45m Touraine interurban network « Green line » for Indre & Loire District (transportation)

– Length: 7 years – Cumul.rev: €45m Le Creusot, Montceau-les-Mines (transportation) – Length: 6 years – Cumul.rev.: €26m Mende in Lozère (heating network from local biomass) (energy)

– Operating length: 24 years – Cumul.rev.: €41m in partnership with Engelvin TP réseaux Alès (heating network) (energy) – Length: 20 years – Cumul.rev.: €30m Reg. Public Authority of Nevers (construction & operation of waste drop off center for

professionnals) (waste) – Operating length: 20 years – Cumul.rev.: €18m Reg. Public Authority of Embrunais (water) – Length: 30 years – Cumul.rev.: €62m Roquebrune Cap Martin (water) – Operating length: 20 years – Cumul.rev.: €50m Royan (1) (water) – Length: 12 years – Cumul.rev.: €17m - Engineering / Design & Build: Chartres Métropole, the Chartres urban authority (construction & operation of the

new wastewater treatment plant, environmentaly friendly) (water) - Operating length: 20 years – Cumul.rev.: €156m (incl.€54m for construction)

Biomasse 3 (1) (construction & operation of 7 new biomass cogeneration plants – Rennes, Strasbourg, Orléans, Tours, Angers, Lens & Limoges) (energy)

Partnership with DCNS (multiservices), through creation of a JV Défense Environnement Services (51/49) – Estimated yearly rev. by 5 to 10 years: €150m

Appendice 6: Main contracts won or renewed in 2009

Chartres Métropole

Indre et Loire DCNS Nevers

Moselle

Var

Nice Gard

La Roche-sur-Yon

Mende

Valenciennes

Mont Saint Michel

Le Creusot

Royan

Vallée de Chevreuse

Roquebrune Cap Martin

Embrunais

INTERNAL GROWTH

PARTNERSHIP

Rennes

Strasbourg

Orléans

Tours Angers

Lens

Limoges

Poitiers

Roubaix

Alès

62

Outsourcing / Privatization Renewal

Engineering / Design & Build

(1) Contract whose Veolia is « preferred bidder », signature under way

- Renewal: Stadtwerke Görlitz (energy activity) (water)

– Length: 20 & 7 years – Cumul.rev.: €310m

- Outsourcing / Privatization: Water regional Authority of Burg (Saxony-Anhalt) (water)

- Length: 15 years – Cumul.rev.: €20m Madrid area - « South plant » (water)

– Length: 4 years (2 years option) – Cumul.rev.: €16m Merseyside Waste Disposal Authority (MWDA) (waste)

– Length: 20 years – Cumul.rev.: €720m Göteborg (1) (transportation)

– Length: 8 years – Cumul.rev.: €240m Helsinki (1) (transportation)

– Length: 4 years – Cumul.rev.: €80m Boräs (transportation)

– Length: 8 years (2 years option) – Cumul.rev.: €68m Skäne / Trelleborg (transportation)

– Length: 8 years – Cumul.rev.: €49m Landskrona (bus regional network) (transportation)

– Length: 8 years – Cumul.rev. : €45m Grudziadz (transportation on demand) (transportation)

– Length: 10 years – Cumul.rev.: €15m Hamburg (energy) – Length: 25 years – Cumul.rev.: €83m Trnava area (energy)

- Length: 10 years – Cumul.rev.: €55m

- Engineering / Design & Build:

Barcelona (construction & operation of a new heating & cooling network) (energy) – Operating length: 30 years – Cumul.rev.: €492m

Békéscsaba (works on networks) (water) – Cumul.rev.: €36m

INTERNAL GROWTH

Sweden

Skäne

Trelleborg Landskrona

Boräs Göteborg

United Kingdom

Merseyside

Germany

Burg

Görlitz

Poland

Grudziadz

Slovakia

Trnava

Hungary

Békéscsaba Spain

Finland

Helsinki

Madrid Barcelona

Hamburg


63

Outsourcing / Privatization Renewals


INTERNAL GROWTH

(1) Announced in January 2010 (2) Contract whose Veolia is « preferred bidder », signature under way

- Renewals:

Boston (1) (transportation) – Length: 2 years – Cumul.rev.: €428m

Tempe (transportation) - Length: 4 years – Cumul.rev.: €93m

Denver (2) (transportation) - Length: 3 years – Cumul.rev.: €43m

Wilmette (waste) – Length: 88 months – Cumul.rev.: €9m

- Outsourcing / Privatization:

Seminole County (waste) – Length: 8 years – Cumul.rev.: €16m New Orleans (overall public transportation system)

(transportation) – Operating length: 5 years (5 years option) – Cumul. rev.: €202m

Mapleton (water) – Length: 15 years – Cumul.rev.: $29m

- Engineering / Design & Build: Petrobras (construction of a new water & reuse treatment plant)

(water) – Cumul.rev.: €123m Lithia (design & build) (water) – Cumul.rev.: $40m

United States

New Orleans

Tempe

Denver

Brazil

Boston

Petrobras

Lithia

Wilmette

Seminole

Mapleton


64

Outsourcing / Privatization

Company acquisition

Renewals

Partnership with other company


INTERNAL GROWTH

EXTERNAL GROWTH

Hong Kong tramway network (transportation) with the partnership of RATP Développement

PARTNERSHIP

Partnership with RATP Développement company (transportation) through the creation of a JV (50/50) in Asia

Australia

Sydney

Perth

- Renewals:

Rockingham – Manudrah (1) (transportation) – Length: 10 years – Cumul.rev.: €150m

Perth (transportation) - Length: 7 years – Cumul.rev.: €17m

Hong Kong (hazardous waste treatment) (waste) – Length: 10 years – Cumul.rev.: €174m

Saitama & Hiroshima (water) - Length: 3 years – Global cumul.rev.: €21m


Chiba (water) - Length: 3 years – Cumul.rev.: €35m National Environmental Agency in Singapore (waste)

– Length: 6 years – Cumul.rev.: €10m

- Engineering / Design & Build:

Sydney (networks maintenance) in consortium with Bovis (water) - Length: 4 years (3 years option) - Cumul.rev.: €28m (€51m with option)

Japan

Hiroshima

Saitama

China

RATP Développement

Hong Kong

Singapore

Rockingham

(1) Contract whose Veolia is « preferred bidder », signature under way

Chiba


65

Outsourcing / Privatization

Industry & services


Bus network for Grand Rabat area (commercial activity) (transportation) – Length: 15 years (7 years option) – Cumul.rev.: €1.1bn

Nador district (waste) – Length: 7 years – Cumul.rev.: €18m

Doha – Ashghal (water) – Length: 7 years (3 years option) – Cumul.rev.: €44m (€61m with option)

- Industry & services:

Saudi International Petrochemical (Sipchem) (operating contract) (water) – Length: 5 years – Cumul.rev.: €6m

INTERNAL GROWTH

Saudi Arabia

Qatar

Doha Sipchem

Morocco

Rabat Nador


66


66 66

Appendix 7: Overview of operating financial assets

€m 12/31/2008 12/31/2009

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

5,751 5,652

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

398 394

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

358 455

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

507 483

67


Appendix 7: Operating Financial Assets. In the case of long-term contracts, Veolia Environnement 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

€bn Counterparty

Water-Berlin 2.7 Land of Berlin

CHP France 0.5 EDF

Waste UK 0.3 Municipalities

Water Belgium 0.2 City of Brussels

Other 2.0

Total 5.7

Average return at market conditions (2009 average rate): 6.9%

Repayment of principal: €455m in 2009

68


Appendix 7: Operating Financial Assets

Financing Net debt – Operating financial assets

€9,475m

Total net debt

€15,127m

Cash flow from operations

EBITDA (1)

€3,545m

+ =

+ =

2.7x EBITDA (1)

Operating financial asset flows

Revenue from ordinary activities:

€394m

Repayment of principal: €455m

3.44x (2)

Operating financial assets

€5,652m

= =

Cash flow

from ops:

Repayment of operating financial assets:

€3,939m

€455m

€4,394m

+

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

The 2009 ratio adjusted for IAS 7 changes from 3.44x to 3.75x.

69


Appendix 8: Recurring operating income margins

€m 2008 adjusted (1) 2009

2008 margin

adjusted (1)

2009 margin

Water 1,196 1,164 9.5% 9.3%

Environmental Services 620 360 6.2% 4.0%

Energy services 429 416 5.8% 5.9%

Transportation 137 158 2.3% 2.7%

Holding (107) (166) - -

Total Group 2,275 1,932 6.3% 5.6%

Recurring operating income margins


70

Net financial debt

Cost of borrowing

Average maturity of net debt

Net liquidity of short-term financial liabilities

Credit ratio Net financial debt / (Cash flow from operations + repayment of

operating financial assets)

Ratings - Moody’s: P-2/ A3 negative outlook (confirmed on March 26, 2009)

- Standard & Poor’s: A-2 / BBB+ negative outlook (confirmed on January 4, 2010)


€16,528m

Appendix 9: Debt management, main characteristics

9.3 years xx

€4.0bn €6.8bn

12/31/2008 12/31/2009

€15,127m

3.6x

10 years

5.61% 4.76%

3.4x

71


Appendix 9: Debt management

Variable rate: 31%

USD 8%

GBP 9%

Other 18% (1)

Fixed rate: 69%

o/w Euro: 99%

o/w USD: 53%

o/w GBP: 41%

Euro 65%

(1) o/w RMB 3% and HKD 3%

Net financial debt after hedges

Currencies (gross debt after hedges)

Ratings — Moody’s: P-2/ A3 negative outlook (confirmed on March 26, 2009) — Standard & Poor’s: A-2 / BBB+ negative outlook (confirmed on January 4, 2010)

2009 bond issues: €2.25bn, 5-year, 8-year and 10-year maturities Bond redemption: €72m in 2009 Average maturity of net debt: 10 years vs 9.3 years in 2008 Group liquidity: €10.3bn including €4.7bn in undrawn confirmed credit lines

(without any disruptive covenants) Net Group liquidity: €6.8bn

72


Appendix 10: VE SA bond redemption schedule

€m EURO €10.5bn

USD €1.6bn

GBP €0.7bn

TOTAL €12.8bn

73


Appendix 11: Net liquidity

€m 12/31/2008 12/31/2009

Veolia Environnement

Syndicated loan 2,890 3,695

Bilateral credit lines 925 975

Cash and cash equivalents 2,284 4,091

Total Veolia Environnement 6,099 8,761

Subsidiaries

Cash and cash equivalents 1,566 1,523

Total subsidiaries 1,566 1,523

Total Group liquidity 7,665 10,284

Current liabilities and bank overdrafts (3,685) (3,438)

Total net Group liquidity 3,980 6,846

74


Appendix 12: 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 capital requirements, net + Net derivative instruments – Provisions – Other non-current debt 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

75

Appendix 12: ROCE

€m 12/31/2009

Recurring operating income 1,932

Operating financial assets revenues -394

Equity in net income of affiliates 1

Income tax -242

Tax expense allocated to operating financial assets 77

Charge reversal associated with utilization of tax losses 29

Net results of operations 1,403

2009 average capital employed 18,461

Post-tax ROCE 7.6%

76


Appendix 13: Pre-tax ROCE by division

Average capital employed (€m)

Pre-tax ROCE (%)

2008 adjusted(1)

2009 2008 adjusted(1)

2009

Water 6,239 6,222 14.6% 14.1%

Environmental Services 6,472 6,217 8.5% 4.6%

Energy services 3,741 4,008 10.5% 9.5%

Transportation 1,450 1,526 9.4% 9.2%


€m 2008 adjusted(1)

2009

Group capital employed (end of the year)

18,621 18,301

77


Appendix 14: Composition of Board of Directors

Composition of Veolia Environnement’s Board of Directors – January 2010 — Henri Proglio, Chairman of the Board and Chief Executive Officer of EDF, Chairman of the Board of Veolia

Environnement — Louis Schweitzer*, Deputy Chairman of the Veolia Environnement Board of Directors, Chairman of France's

Equal Opportunities and Anti-Discrimination Commission (HALDE) — Jean Azéma*, Chief Executive Officer of Groupama SA — Daniel Bouton*, former Chairman of the Board and Chief Executive Officer of Société Générale — Jean-François Dehecq*, Chairman of the Board of Sanofi-Aventis — Pierre-André de Chalendar*, Chief Executive Officer of Saint-Gobain — Augustin de Romanet de Beaune*, Chairman and Chief Executive Officer of Caisse des Dépôts et

Consignations — Jean-Marc Espalioux*, Chairman of the Board and Chief Executive Officer of Financière Agache Private Equity — Paul-Louis Girardot*, Chairman of the Supervisory Board of Veolia Water — Esther Koplowitz, Deputy Chairwoman of the Board of Directors of Fomento de Construcciones y Contratas

(FCC) (appointment subject to approval by the Annual Shareholders' Meeting on May 7, 2010) — Philippe Kourilsky, Professor and Chair of Molecular Immunology at the Collège de France — Serge Michel, Chairman of Soficot SAS — Baudouin Prot*, Director and Chief Executive Officer of BNP Paribas — Georges Ralli*, Managing Partner, and Executive Deputy Chairman of Lazard Frères SAS — Paolo Scaroni*, Chief Executive Officer of ENI (Italy)

Committees of the Board of Directors of Veolia Environnement — Accounts and Audit Committee: D. Bouton (Chairman), J-M. Espalioux, P-L. Girardot, P-A. de Chalendar — Nominations and Compensation Committee: S. Michel (Chairman), D. Bouton, L. Schweitzer — Strategy, Research, Innovation and Sustainable Development Committee: P. Kourilsky (Chairman), P-L.

Girardot, J-M. Espalioux * independent director

78


Appendix 14: Composition of Executive Committee

Antoine Frérot — Chief Executive Officer of Veolia Environnement

Denis Gasquet — Chief Operating Officer 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

79


Appendix 15: Trends in prices of recycled materials

Average prices

Cardboard (ref. 1.05)

— 2008: 67.2 €/T — 2009: 40.5 €/T

Paper (ref. 1.11)

— 2008: 81.1 €/T — 2009: 52.1 €/T

Scrap iron (ref. E40)

— 2008: 300 €/T — 2009: 180 €/T

Sources : REVIPAP, UCFF

80

Appendix 16: Evolution of combined industrial production (France, Germany, UK, USA) weighted by Veolia Waste revenue contribution

Source : OCDE

Evolution of combined industrial production (France, Germany, UK, USA) weighted by Veolia Waste revenues contribution

81


Investor Relations contact information

Nathalie Pinon, Head of Investor Relations and Financial Communication

Telephone +33 1 71 75 01 67 e-mail [email protected]

Xavier d’Ouince

e-mail [email protected] Telephone +33 1 71 75 19 34

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]

Web site http://www.veolia-finance.com

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