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Key figures at September 30, 2011
Conference call on November 10, 2011
Pierre-François RiolacciVice President in charge of finance
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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.
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Table of ContentsImpact of foreign exchange variation
Key figures for the nine months ending September 30, 2011
Breakdown of revenue by division
Operating trends by division
Operational performance
Free Cash Flow (FCF)
Net financial debt at September 30, 2011
Appendices
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Impact of FX on first 9 months of 2011 accounts
Evolution of the euro 9M 2011 / 9M 2010 Average rate Closing rate
• Australian dollar +7.7% +1.4%• Czech koruna +4.3% -0.6%• U.K. pound sterling -1.6% -0.8%• U.S dollar -6.9% +1.1%
Impact on the company’s main figures • Revenue -€40M• Adjusted operating cash flow - €6M• Adjusted operating income +€5M
• Decline in net debt (at end of period rates) - €97M
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Key figures for nine months ending September 30, 2011In €M Sept. 30,
2010 published
Sept. 30, 2010 re-presented (1)
Sept. 30, 2011
Current exchange rates
Constant exchange rates
Revenue 25,467.9 20,684.9 23,963.4 +15.8% +16% (2)
Revenue excluding VTD 21,181.5 - 21,688.3 +2.4% (3) +2.6% (3)
Adjusted operating cash flow 2,665.6 2,368.6 2,391.2 +1.0% +1.2%
Adjusted operating cash flow margin 10.5% 11.5% 10.0%
Adjusted operating cash flow excluding VTD
2,426.2 - 2,266.3 -6.6% (3) -6.3% (3)
Adjusted operating income 1,495.6 1,368.7 1,250.9 -8.6% -9.0%
Adjusted operating income margin 5.9% 6.6% 5.2%
Adjusted operating income excluding VTD
1,406.5 - 1,230.6 -12.5% (3) -12.9% (3)
Operating income 1,566.4 1,459.9 568.0
Free Cash Flow (220) (220) +58.0
Net financial debt 15,767 15,767 15,045
(1) The financial statements of 2010 have been re-presented, in order to insure the comparability of periods: - for the reclassification into “net income from discontinued operations” of Proxiserve activities in the Water and Energy Services divisions, Norway operation s in the Environmental Services division and the activities in Netherlands in the Water division; - for the reclassification into “net income from discontinued operations” of the Transportation division as a whole (for the accounts in the nine months ending September 30, 2010 of: €4,286.4 million in revenue, €239.4 million in adjusted operating cash flow and €89.1 million in adjusted operating income)- for the reclassification into “continued operations” of the Renewable Energies business within the Energy Services division.
(2) +3.7 % at constant scope and exchange rates(3) Variations compared to previously published figures for the nine months ending September 30. 2010 excluding the contribution of Veolia Transport
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Breakdown of revenue by division
current FX rates
constant FX rates
excl. scope &
FX
Water +4.5% +4.7% +2.1%
Environ. Services +6.1% +6.6% +7.0%
Energy Services +3.7% +3.5% +2.1%
Transport (2) 100% - -
Total Company +15.8% +16.0% +3.7%
(1) The financial statements of 2010 have been re-presented, in order to ensure the comparability of periods: - for the reclassification into “net income from discontinued operations” of Proxiserve activities in the Water and Energy Services divisions, Norway operation s in the Environmental Services division and the activities in Netherlands in the Water division; - for the reclassification into “net income from discontinued operations” of the Transportation division as a whole (for the accounts in the nine months ending September 30, 2010 of: €4,286.4 million in revenue, €239.4 million in adjusted operating cash flow and €89.1 million in adjusted operating income)- for the reclassification into “continued operations” of the Renewable Energies business within the Energy Services division.
(2) Veolia Transdev revenue for the period ending September 30, 2011 is accounted for as a scope effect
4,894
5,076
6,906
7,328
8,885
9,284
2,275
Nine months 2010re-presented (1)
Nine months 2011
20,685
in €M
23,963
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WATEROperations: Revenue increased 4.5% (+1.7% at constant scope and exchange rates)• France: slight decline in revenue in the context of
contractual erosion (notably the SEDIF), and lower volumes sold during the summer, and despite a favorable price effect
• Outside France: Revenue grew 8.2%: good performance in Europe (Germany, Central and Eastern Europe due to contracts purchased from United Utilities) and in Asia (China and Japan)
Technologies and Networks: Revenue increased 4.5% (+3.0% at constant scope and exchange rates) • Continued declines in municipal (including the
scheduled completion of the large Marafiq/ Fujairah / Ras Laffan contracts), offset by the rebound in D&B and Industrial Solutions, and the Hong Kong contract (€108M in revenue)
2,447 2,557
6,438 6,727
9M 2010* 9M 2011
Operations
Technologies and Networks
Revenue nine months ending September 30,
2011 (€M)
* The financial statements of 2010 have been re-presented, in order to ensure the comparability of periods for the Netherlands and Proxiserve activities
8,885 9,284
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+4.5%
+4.5%
+4.5%
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ENVIRONMENTAL SERVICES
France: organic growth of +6.7%: volumes increased, notably in the treatment of hazardous waste, continued high level of recycled raw materials pricesUK: organic growth of +9.9% due in particular to PFI contractsGermany: Organic growth of +8.8% due to higher paper pricesUSA: progression of solid and hazardous waste activity, offset by the negative impact of Marine Services
9M 2010* 9M 2011
6,906 7,328+7.0% constant
scope & FX
Revenue nine months ending September 30, 2011 (€M)
Recyled materials price and volumes +2.9 %Waste volumes +1.6%Price increases +0.9 %Other +1.6%Foreign exchange -0.5 %Scope - 0.4 %
Revenue variation 9M2011 / 9M2010 : +6.1%
* The financial statements of 2010 have been re-presented, in order to ensure the comparability of periods for the Norwegian activities
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In €M 2010 2011 Variation At constant
scope and FX
1st quarter 2,113 2,361 +11.8% +10.2%
2nd quarter 2,401 2,533 +5.5% +7.3%
3rd quarter 2,392 2,434 +1.7% +3.7%
9 months 6,906 7,328 +6.1% +7.0%
Revenue growth by quarter
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ENERGY SERVICES
Revenue increased 3.7% (+2.1% at constant scope and exchange rates) to €5,076 M
Higher energy prices• Impact of roughly €156 M vs. September 2010
Unfavorable climate effect, principally in France and in Central Europe• Impact of roughly - €128 M vs. September
2010
Difficulties in Spain and Italy:• Halt in solar, persistent difficulties in
installation, challenging commercial renegotiations
Revenue nine months ending September 30,
2011 (€M)
* The financial statements of 2010 have been re-presented, in order to ensure the comparability of periods for the Germany and Proxiserve activities
4,894 5,076
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TRANSPORTFollowing the combination of Veolia Transport and Transdev, consolidation of the new entity, proportionally integrated at 50% since March 3, 2011:
• €2,275M in revenue from March to September 2011 (of which Veolia Transport €1,629M and Transdev €646M)
• Excluding the scope effect related to the VTD combination (- €1932M), revenue declined 1.9%
On a pro forma basis* (9 months VTD 2010/2011), the new entity posted a revenue decline of 1.2%:
• Of which -4.3% primarily due to divestments (RATP)
• Of which +3.4% due to organic growth primarily related to new contracts in France, Australia and the United States
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* 9 months of Veolia Transdev at 100%
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OPERATIONAL PERFORMANCE
• Adjusted operating cash flow increased 1.2% at constant exchange rates to €2,391.2M versus re-presented €2,368.6M for the nine months ending September 30, 2010. Excluding Veolia Transdev, adjusted operating cash flow would have declined 6.3% at constant exchange rates compared to previously published figures at September 30, 2010.
• Adjusted operating income declined 8.6% to €1,250.9M versus re-presented €1,368.7M for the nine months ending September 30, 2010. Excluding Transport activities, adjusted operating income would have declined 12.9% at constant exchange rates compared to previously published figures at September 30, 2010.
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Positive Free Cash Flow: + €58M versus -€220M for the period ending September 30, 2010
• Adjusted operating cash flow of €2,391M increased 1.2% at constant exchange rates
Of which €125M related to the new entity Veolia Transdev (presented as external growth ), and representing a variation of -6.3% at constant exchange rates excluding VTD vs. published Sept. 30, 2010 figures
• Favorable seasonal evolution of working capital in Q3 (+ €116M), but -€542M cumulative at the end of September
• Controlled gross investments: €1,846M
• €1,169M of divestments, of which:Impact of Veolia Transdev combination: €540MDivestment of Norway sorting and recycling activitiesDivestment of Solid Waste activities in Belgium
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Net financial debt
14,76415,045
16,820 16,827
15,909
15,127 15,218
14,511
16,027
15,37715,767
10 000
12 000
14 000
16 000
18 000
31-mar-09
30-jun-09
30-sept-09
31-dec-09
31-mar-10
30-jun-10
30-sept-10
31-dec-10
31-mar-11
30-jun-11
30-sept-11
In €M
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(€M) 9M 2010published
IFRS5 Adjustment(a)
IFRS5 Adjustment
VTD(b)
9M 2010Re-presented(1)(2)
Revenue 25,467.9 (496.6) (4,286.4) 20,684.9
Adjusted operating cash flow 2,665.6 (57.6) (239.4) 2,368.6
Adjusted operating income 1,495.6 (37.8) (89.1) 1,368.7
Free Cash Flow (3) (220.0) (220.0)
(1) (a) To ensure the comparability of period, the first nine months 2010 financial statements have been re-presented to include:- the impact of the reclassification into “net income from discontinued operations” of “Proxiserve” activities in the Water and Energy Services division, Norway operations in the Environmental Services division and the activities in Netherlands in the Water division; - the impact of the reclassification into ‘continuing operations’ of the renewable energies activities in the Energy Services division. (b) To ensure the comparability of period, the 2010 financial statements have been re-presented to include the impact of the reclassification into “net income from discontinued operations” of the Transportation Division as a whole.
(2) The financial statements for the first nine months of 2010 have not been re-presented to adjust for the fraud discovered during the second quarter of 2011 in the Marine Services business in the United States (a unit of the Environmental Services Division), as the impact during the period was not significant.
(3) Free Cash Flow represents cash generated (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 for 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 1: Main 9M 2010 re-presented figures IFRS5(1)
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Appendix 2: Quarterly revenue
1st quarter 2nd quarter 3rd quarter Nine months ending September 30
2010
Re-presented (1)
2011 Δ constant scope &
FX
2010
Re-present
ed (1)
2011 Δ constant scope &
FX
2010
Re-presented (1)
2011 Δ constant scope &
FX
2010
Re-present
ed (1)
2011 Δ constant scope &
FX
Water 2,883 2,986 -1.5% 2,941 3,159 +6.4% 3,061 3,139 +1.2% 8,885 9,284 +2.1%
Environmental Services
2,113 2,361 +10.2% 2,401 2,533 +7.3% 2,392 2,434 +3.7% 6,906 7,328 +7.0%
Energy Services
2,264 2,407 +3.3% 1,370 1,386 +0.2% 1,260 1,283 +2.0% 4,894 5,076 +2.1%
Transport - 334 na - 983 na - 958 na - 2,275 na
Company 7,260 8,088 +3.4% 6,712 8,061 +5.5% 6,713 7,814 +2.3% 20,685 23,963 +3.7%
Variation at current FX
+11.4% +20.1% +16.4% +15.8%
(1) (a) To ensure the comparability of period, the first nine months 2010 financial statements have been re-presented to include:- the impact of the reclassification into “net income from discontinued operations” of “Proxiserve” activities in the Water and Energy Services division, Norway operations
in the Environmental Services division and the activities in Netherlands in the Water division; - the impact of the reclassification into ‘continuing operations’ of the renewable energies activities in the Energy Services division. (b) To ensure the comparability of period, the 2010 financial statements have been re-presented to include the impact of the reclassification into “net income from
discontinued operations” of the Transportation Division as a whole.
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Appendix 3: Evolution of recycled raw materials prices
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Evolution of raw materials prices (€/t)
0
20
40
60
80
100
120
140
160
180
0
50
100
150
200
250
300
350
400
450
500
Cardboard Paper Metals
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Investor relations contact information
Ronald Wasylec, Directeur des Relations avec les Investisseurs et Actionnaires individuelsTéléphone +33 1 71 75 12 23
e-mail [email protected]
Ariane de LamazeTéléphone +33 1 71 75 06 00
e-mail [email protected]
38 Avenue Kléber – 75116 Paris - FranceFax +33 1 71 75 10 12
Terri Anne Powers, Director of North American Investor Relations200 East Randolph Street
Suite 7900Chicago, IL 60601
Tel +1 (312) 552 2890Fax +1 (312) 552 2866
e-mail [email protected]
http://www.finance.veolia.com
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