Post on 28-Nov-2014
description
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Half Year Results as of June 30, 2011
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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 thefinancial 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.
DISCLAIMER
-
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Antoine Frérot, CEO
4
Where are we in the transformation?
Be more flexible Reduce costs more than €250M per year
€265M in 2010First restructuring initiated
Review the asset base (€4 billion in divestments in 3 years)€1,241M in 2010 + €1,048M in H1 2011
Grow in a more selective way within the company’s leading positions Return of organic revenue growth confirmed
Organic revenue growth improvement: H1 2010 was -1.1%*, H1 2011 was +4.4% Increased concentration
Concentration within top 8 countries: 79% of revenue (excluding Veolia Transdev)
=> TO ACCELERATE TRANSFORMATION
* Published figures
5
Acceleration of the company’s transformation
Restructure business activities
Simplify the organization
Reduce costs
Modify the Executive Committee
6
Restructure business activities
The complete review of company assets is finished
Exit or immediate divestment of activities
Complete assessment of operations in certain geographies => Presence in less than 40 countries by the end of 2013
A more concentrated and reactive company
7
Company transformation: simplify the organization
Reduction of management layers from 2011
In light of restructuring, reorganization of business units
Review of operational processes and reinforcement of management control
Rationalization of headquarters functions
Company project: “Convergence” Plan
8
Company transformation: reinforce cost reductions
Annual Efficiency Plan cost savings of at least €250M is maintained 2013 objective: €300M
Additional cost savings plan Impact on operating income of at least €150M on 2013 annual results €250M to €300M in 2015
9
Modify the Executive Committee
A team dedicated to organizational structure, operational performance and cost reductions => Denis Gasquet
A new Head of Environmental Services division => Jérôme Le Conte
A new Head of Energy Services division => Franck Lacroix
A new Director of Human Resources => Jean-Marie Lambert
=> Sharing the same vision for the company’s future
10
Pierre-François Riolacci, CFO
11
First half 2011
Continued revenue growth
Localized difficulties in Southern Europe, North Africa and the United States
Action plan and acceleration of restructuring activities, resulting in significant write-downs and provisions (€838M)
Positive free cash flow of €155M
12
Highlights- Southern Europe (1/5) First half events Italy: difficult context in three divisions
Energy Services:–Increased competition Adaptation plan related to structure and activitiesEnvironmental Services:–Persistent operational difficulties Litigation paymentWater: –Failure of the referendum on the privatization of services in Water–Operational financing difficulties
Degradation of activity and financing conditions in Spain and PortugalDecline in adjusted operating cash flow of €39M
Significant disengagements decided Fair value adjustment: €494M (non-recurring) Italy: write-downs of €476MOther Southern Europe: write-downs of €18M
13
Highlights- North Africa (2/5)
First half events Morocco (Water)
Contracts in Tanger-Tétouan and Rabat
Takes into account ongoing negotiations (conclusions of an Independent Commission)
Morocco (Bus in Rabat)Modification of the conditions of operation of the contract
Exit, with client taking over operations
Egypt (Environmental Services)Alexandria contract: non payment for services during the second quarter
Contract termination in progress
Decline in adjusted operating cash flow of €21M
Reduce/exit certain operations as part of restructuring in the zone
Fair value adjustment €32M in write-downs in non-recurring items
€54M in write-downs and provisions accounted for within adjusted operating income
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Highlights- United States (3/5)
Marine Services (offshore oil and gas industrial services in the Gulf of Mexico -Environmental Services division)Discovery of accounting fraud:
correction impacted the opening balance sheet in accordance with IAS 8
First half events:Weak fleet utilization rates
Reduced adjusted operating cash flow by €37M in H1 2011
Decision to sell this non-core business
TNAI (Energy Services) First half events:
Revision of expected growth projects
Modification of investment plan
Fair value adjustmentGoodwill write-down of €152M
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Highlight - Veolia Transdev combination (4/5) In accordance with IFRS 3 revised and IFRS 5, and following Veolia’s loss of control of the
Transport division (closure March 3, 2011): The former Veolia Transport operations are reclassified to discontinued operations for the months of
January and February 2011 and during the first half of 2010.
The new entity Veolia Transdev (VTD) is consolidated by proportional integration at 50% beginning March 3, 2011.
Divestment, by Veolia Transport, and prior to the closing at March 3, 2011, of certain French and Swiss transportation assets to RATP.
Initial assessment of opening balance sheet (PPA)
Impact on the accounts for the six months ending June 30, 2011 Scope effect (4 months)
Revenue €1,317M Adjusted operating cash flow €75MOperating income €10M
Capital gain of €430M (in discontinued operations)
Reduction of net financial debt of €540M
Full year negative impact on operating income of amortization related to initial assessment of opening balance sheet of roughly €20M to €30M (at 100%)
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Highlights - Overview (5/5)
Operational losses, provisions (WCR) and intangible asset write-downs* -€97M in adjusted operating cash flow
-€109M in adjusted operating income
Non-recurring write-downs: €686M Of which -€500M goodwill impairments and
-€186M in write-downs of other assets
Capital gain on Veolia Transdev in discontinued operations of €430M
(152)(152)United States
(430)
(10)
(268)
EnergyServices
(107)
2
(32)
(77)
Water
(8)Other
(686)(149)TOTAL
(32)North Africa
(494)(149)Southern Europe
TotalEnvironmental Services
In €M
(97)TOTAL
(37)Marine Services
(21)North Africa
(39)Southern Europe
Impact adj. op cash flow
In €M
Non-recurring write-downs
Adj. Op cash flow impact
* Excluding Italy
(109)TOTAL
(37)Marine Services
(54)North Africa
(18)Southern Europe
Impact adj. op income
In €M
Adj. Op. income impact
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Key figures at June 30, 2011
+4.2% (3)+4.5% (3)14,970-14,330Revenue excl. VTD
-11.0% (3)-10.0% (3)927-1,030Adjusted operating income excl. VTD
-3.9% (3)-3.5% (3)1,665-1,726Adjusted operating cash flow excl. VTD
-na(67)374374Net income attrib to owners of the company
--28.5%188263306Adjusted net income attrib to owners of the company
In €M H1 2010 published
H1 2010Re-presented (1)
H1 2011 Current FX
Constant FX
Revenue 17,177 14,106 16,287 +15.5% +15.2% (2)
Adjusted operating cash flow 1,885 1,694 1,741 +2.8% +2.3%
Adjusted operating cash flow margin 11.0% 12.0% 10.7%
Adjusted operating income 1,078 1,011 938 -7.2% -8.3%
Adjusted operating income margin 6.3% 7.2% 5.8%
Operating income 1,125 1,101 252 -77.1% -78.9%
Free Cash Flow (133) (133) 155 - -
Net financial debt 16,027 16,027 14,764 - -
(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods for the reclassification into « net income from discontinued operations » of the historical Veolia Transport
division, the German operations in the Energy Services division, the Norwegian operations in the Environmental Services division, and Water operations in the Netherlands.For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division.(2) +4.4 % at constant scope and exchange rates(3) Change compared to June 30, 2011 published figures, excluding Veolia Transdev
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Revenue by division
Current FX
Constant FX
Constant scope & FX
Water +5.5% +5.2% +2.5%
Environmental Services +8.4% +8.2% +8.7%
Energy Services +4.3% +3.8% +2.1%
Transport +100% - -
Total +15.5% +15.2% +4.4%3,701
3,862
4,514
4,894
5,891
6,214
1,317
14,106
in €M 16,287
(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the Environmental Services
division, and operations in the Netherlands within the Water division; ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division;‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division.
H1 2010 (1) H1 2011
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Veolia Water: Revenue increased 5.5%
Operations: Revenue increased 5.7% (+2.6% at constant scope and exchange rates) France: despite unfavorable contract changes (SEDIF), revenue
stabilized due to price effects and good volumes in the month of May
Outside France: Revenue increased 9.7% (+4.5% at constant scope & exchange rates): good performance in Europe (Germany, United Kingdom and Bulgaria due to contracts purchased from United Utilities) and in Asia (higher prices in China)
Technologies and Networks: Revenue increased 4.9% (+2.5% at constant scope and exchange rates) Effect of the end of large Design & Build contracts (Marafiq/ Fujairah /
Ras Laffan), offset by :The Hong Kong contract (€67M)
Recovery in Solutions and industrial D&B
Good activity at Sade, despite the impact of SEDIF contract renewal
1,6841,606
4,5304,285
Tech & Networks Operations
+4.9%
+5.5%
First half revenue (€M)
5,891 6,214
+5.7%
(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods for the reclassification into « net income from discontinued operations » of the operations in the Netherlands within the Water division
H1 2010 (1) H1 2011
20
Veolia Environmental Services: Revenue increased 8.4%
4,514 4,894+8.7% at constant scope &
FX
First half revenue (€M)
Waste volumes +2.5% Price and volumes of recycled materials + 3.7%
Service price increases + 1.3%
Other +1.2%
Foreign currency + 0.2%
Consolidation scope - 0.5%
Change in revenue H1 2011 / H1 2010 +8.4%
Breakdown of revenue by activityH1 2010 H1 2011
Urban cleaning and collection
Non‐hazardous industrial waste collection and services
Hazardous industrial waste collection and services
Sorting, recycling and trading
Hazardous waste treatment
Waste‐to‐energy from non‐hazardous waste
Landfilling of non‐hazardous and inert waste
H1 2010 (1) H1 2011(1) The financial statements of 2010 have been re‐presented to ensure
comparability of periods for the reclassification into « net income from discontinued operations » of the Norwegian operations
22%
24%
16%
16%
6%
8%
8%20%
24%
15%
17%
6%
9%
9%
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Veolia Environmental Services: Revenue by geography
Solid waste: Revenue increased 4.9% at constant scope and FX
Improvement in industrial services, excluding Marine Services
Marine Services: weak fleet utilization (improvement throughout the first half) and significant damages
+1.6%14%North America
Positive contribution from integrated contracts (PFI): Construction revenue in East Sussex and Hampshire and good waste-to-energy utilizationMunicipal still in declineGood improvement in landfill: higher volumes landfilled and higher prices, including benefit of landfill tax
+11%17%United Kingdom
Higher prices and volumes of recycled materials (impact €69M)Higher industrial volumesCompetitive pressure on municipal contracts and DSD business
+11.7%13%Germany
Higher prices and volumes of recycled materials (impact €80M)
Volumes increased notably in hazardous waste, commercial collection and landfills
+8.6%35%France
Δ at constant scope & FX
% of H1 2011
revenue
22
Veolia Energy Services: Revenue increased 4.3%
Revenue of €3,862M increased 4.3% (+2.1% at constant scope and exchange rates)
Higher energy prices impact of roughly €160M vs. H1 2010
Unfavorable climate effect in first half 2011, principally in France and Central Europe impact of -€113M vs. H1 2010
Scope effect related to acquisitions completed in 2010, notably NWR and its subsidiaries impact of +€45M vs. H1 2010
First half revenue (€M)
Outside FranceFrance
+2.7%
+5.9%1,890
1,811
3,701 3,862
2,002
1,860
+4.3%
(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division; ‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division.
H1 2010 (1) H1 2011
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Following the combination of Veolia Transport and Transdev, consolidation of the new entity, by proportional integration at 50% since Mar 3, 2011:
Revenue of €1,317M from March to June 2011 (of which Veolia Transport €936M and Transdev €381M):
For the first half of 2011 Veolia Transdev posted a pro forma* revenue decline of 1.6%:
–Of which -4.2% primarily due to divestments (RATP)
–Of which +2.5% due to organic growth primarily related to new contracts in France, Germany and the United States
Veolia Transdev
* 6 months Veolia Transdev at 100%
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Adjusted operating cash flow
In €M current FX
constant FX
H1 2011
--10.7%12.0%11.0%Adjusted operating cash flow margin
-3.9%-3.5%1,665-1,726Adjusted Operating cash flow excl. VTD
1,885
-75
159
386
627
788
+2.3%+2.8%1,7411,694Total adjusted operating cash flow
+38.6%+38.6%-46-75Other
--76-Transport
-4.7%-4.0%362377Energy Services
-4.6%-4.1%583608Environmental Services
-2.5%-2.2%766784Water
H1 2010re-presented (1)
(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the Environmental Services
division, and operations in the Netherlands within the Water division; ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division;‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division.
H1 2010 published (1)
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Performance analysis (1/2): Adjusted operating cash flow
1 000
1 100
1 200
1 300
1 400
1 500
1 600
1 700
1 800
1 900
2 000
Adj. op cashflow June
2010(published)
VeoliaTransport
Adj. op cashflow
June 2010excl. VeoliaTransport
FX SouthernEurope
North Africa MarineServices
Total Operations Adj. op.cash flowJune 2011excl. VTD
Adj. op.cash flowJune 2011(published)
1,637 +28
1,885 -159
+8 1,7411,726-21
-39-37
1,665
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Adjusted operating income
In €M current FX
constant FX
H1 2011
--5.8%7.2%6.3%Adjusted operating income margin
-11.0%-10.0%927-1,030Adjusted operating income excl. VTD
1,078
-79
48
268
251
590
-8.3%-7.2%9381,011Adjusted operating income
+21.5%+21.5%-62-79Other
--10-Transport
-4.9%-4.0%253264Energy Services
+3.1%+5.2%253240Environmental Services
-18.0%-17.4%484586Water
H1 2010re-presented (1)
(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the Environmental Services
division, and operations in the Netherlands within the Water division; ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division;‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division.
H1 2010published (1)
27
Performance analysis (2/2): Adjusted operating income
* Impact of the change in discount rate utilized to calculate landfill site remediation provisions
700
800
900
1 000
1 100
1 200
Adj. opincome
(published)
VeoliaTransport
Adj, opincome
June 2010excl. VeoliaTransport
FX SouthernEurope
North Africa MarineServices
Total Capitalgains
Siteprovisions*
Operations Adj. opincome
June 2011excl. VTD
Adj. opincome
June 2011(published)
-63932+29+29
1,078 -48
+11
927
1,030 -54-18
-37
938
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Veolia Water: Adjusted operating cash flow and adjusted operating income
Adjusted operating cash flow declined 2.2% (-2.5% at constant exchange rates) to €766M: -€18M
Contribution from new contracts (Sofia and PFI in UK) Good performance in Asia (China, Japan, Korea) Contractual erosion in France (SEDIF) Asset maintenance costs in the United Kingdom at the beginning of the year
Adjusted operating income declined 17.4% (-18.0% at constant exchange rates) to €484M: -€102M
Of which €35M of asset write-downs in Southern Europe and North Africa Decline in capital gains included within adjusted operating income (-€44M)
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Veolia Environmental Services: Adjusted operating cash flow and adjusted operating income
Adjusted operating cash flow declined 4.1% (-4.6% at constant exchange rates) to €583M: -€25MMarine services: -€37M Egypt: -€21M Italy: -€14M Excluding these items, adjusted operating cash flow would have increased by €47M, or 7.7%
Adjusted operating income increased 5.2% (+3.1% at constant exchange rates) to €253M: +€13MOf which -€51M related to write-downs and operational impacts, and +€29M related to the
favorable impact of the change in discount rate utilized to calculate landfill site remediation provisions
Excluding these items, adjusted operating income would have increased 14.6%
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Adjusted operating cash flow declined 4.0% (-4.7% at constant exchange rates), to €362M: -€15MOf which Southern Europe: -€25M
Excluding Southern Europe, adjusted operating cash flow increased 2.7%
Climate impact was more than offset by favorable energy prices
Adjusted operating income declined 4.0% (-4.9% at constant exchange rates) to €253M: -€11MOf which Southern Europe: -€23M
Excluding these items, adjusted operating income increased 4.5%
Veolia Energy Services: Adjusted operating cash flow and adjusted operating income
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Following the combination of Veolia Transport and Transdev, and consolidation of the new entity using proportional integration since March 3, 2011:
Adjusted operating cash flow of €75M and adjusted operating income of €10M
During the first half, the new entity (on a pro forma* basis) posted a decline in adjusted operating cash flow due to:
Transaction costs for the new entity
Fuel prices
Contract renewals (notably in France) under strong competition
Employee strikes (SNCM & Germany)
Veolia Transdev : Adjusted operating cash flow and adjusted operating income
* 6 months Veolia Transdev at 100%
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Taxes and cost of net financial debt
-182.4%-167-304Effective
-686
-
-65
3
-115
1
Goodwill impairment and intangible asset write-downs
Impairment of net deferred tax position of France tax group
Other non-deductible
33.1%584-193Adjusted for one-time items
Tax rateIncome base
before taxes
Tax expenseIn €M
The cost of net financial debt declined from €387M to €376M due to lower average net financial debt. The financing rate increased from 5.06% to 5.32%, primarily due to higher cash position.
After adjusting for one-time items, the group tax rate at June 30, 2011 was 33.1% compared to 33.4%at June 30, 2010.
The « Effective » tax rate at June 30, 2011 is derived:
33
Reconciliation of operating income to net income
In €M 2010 re-presented (1) 2011
-67-25518837468306Published net income attrib. to owners of Co.
---374111263Re-presented net income attrib. to owners of Co.
-36118-154-171-19-152Non-controlling interests
434434-4040-Net income from discontinued operations
6-67-7Share of net income of associates
-304-121-183-183--183Income tax expense
-43--43-33--33Other financial revenue and expense
-376--376-387--387Cost of net financial debt
252-6869381 101901 011Operating income
TotalAdjustmentAdjustedTotalAdjustmentAdjusted
(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the
Environmental Services division, and operations in the Netherlands within the Water division; ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division;‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division.
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Statement of cash flows: free cash flow of €155M
(1) Of which financial cash flows (‐€6M in 2010 and +€8M in 2011) and cash flow from discontinued operations (€190M in 2010 and ‐€17M in 2011)(2) Dividend paid to shareho9lders and non‐controlling shareholders(3) Notably changes in receivables and other financial assets for ‐€27M in 2010 and ‐€72M in 2011
Cash flow from operations (1) 1,878 1,732
Repayment of operating financial assets 215 219
Total cash generation 2,093 1,951Gross investments -1,333 -1,199
Variation of working capital -382 -658
Taxes paid -197 -210
Interest expense -352 -327
Dividend (2) -709 -387
Other (3) -19 -63
Divestments 766 1,048
Free cash flow -133 155Impact of exchange rates and other -767 299
Net financial debt at June 30 -16,027 -14,764Change in net financial debt -900 + 454
2011In €M 2010
35
Net investments
(1) Including partial acquisitions between shareholders where there is no change in control and net financial debt of companies entering control(2) Including capital increases from minority shareholders of €39M versus €108M in H1 2010, net financial debt of divested companies and partial sales between
shareholders where there is no change in control (€32M versus €93M)
102324Financial growth investments (1)
-219-215Reimbursement of operating financial assets
-68
-1,048
1,199
171
4732.8%
453
H1 2011
-1341,333Gross investments
-282-766Industrial and financial divestments (2)
2.7%% of consolidated revenue
In €M H1 2010
Maintenance investments 458
Industrial growth investments(excl. Operating financial assets)
392
New operating financial assets 159
Net investments 352 -420
36
Evolution of net financial debt
+155-133Free cash flow+283-674Foreign currency impact+16-93Other
-14,764-16,027Net financial debt at June 30+454-900Change in net financial debt
-15,218-15,127Net financial debt at January 1
H1 2011H1 2010In €M
Strong liquidity position: €10.1 billion at June 30, 2011 versus 9.7 billion at June 30, 2010 Continued active debt management
Average maturity of net financial debt of 9.1 years (vs. 9.5 years at June 30, 2010 and 9.4 years at December 31, 2010
Average maturity of gross financial debt of 6.5 years (vs. 7 years at December 31, 2010)
Ratings Moody’s : P-2 / A3, outlook: stable (on April 18, 2011: rating confirmed and outlook revised from negative to stable) Standard & Poor’s : A-2 / BBB+, outlook stable (on April 21, 2010: rating confirmed and outlook revised from
negative to stable)
37
Conclusion
38
A strategy focused on profitable growth
Veolia will concentrate its development in activities and regions that are growing: Water in Central Europe and China Environmental Services : PFI in United Kingdom Energy Services in Central Europe
Our financial discipline allows us to finance this development without increasing debt
39
Recent development at the heart of our strategy
Warsaw heating network (SPEC) Successful offer related to the privatization of the largest district heating network in
the European UnionDalkia Polska invested €360M for 85% ownership stake
2010 Revenue: €360M
Veolia has already demonstrated its know-how in the operation and optimization of heating networks in Central Europe
Possibility of coupling the network with cogeneration facilities
Hertfordshire PFI 350,000 tons of residual waste treated each year 25 year contract duration Estimated cumulative revenue of £1.3 billion
40
Organization of an Investor Day
Beginning of December 2011
Details of the “Convergence” Plan
New scope of the company
Medium term objectives will be discussed
41
2011 annual objectives
Continued organic revenue growth
Slight decline in adjusted operating income at constant exchange rates, compared to previously published 2010 figures (excluding Veolia Transdev)
Divestments of at least €1.3 billion
Efficiency Plan cost savings of at least €250M
Positive free cash flow after dividend payment
42
Half Year Results as of June 30, 2011
43
First Half 2011 Results
APPENDICES
44
Table of contents of appendices
Currency movements Appendix 1 Evolution of revenue Appendix 2 Revenue by geographic area Appendix 3 Quarterly revenue Appendix 4 Adjusted operating cash flow margins Appendix 5 Adjusted operating income margins Appendix 6 Adjusted operating income to operating income Appendix 7 Gross investments by division Appendix 8 Divestments completed during 1H11 Appendix 9 Financing costs Appendix 10 Debt management Appendix 11 Impact of foreign currency on net debt Appendix 12 VE SA bond redemption schedule Appendix 13 Consolidated statement of financial position Appendix 14 Evolution of quarterly Veolia Water revenue Appendix 15 Efficiency Plan Appendix 16 Commercial developments Appendix 17
45
Appendix 1: Currency movements
The average rate applies to the income statement and cash flow statementThe closing rate applies to the balance sheet
Main currencies
1 unit of foreign currency = …€)
+5.7%+5.7%
0.04110.0411
0.03890.0389
Czech korunaAverage rateClosing rate
+9.4%+6.8%
0.73640.7416
0.67300.6943
Australian dollarAverage rateClosing rate
+0.2%-9.4%
1.15211.1079
1.14941.2233
U.K. pound sterlingAverage rateClosing rate
-5.3%-15.1%
0.71280.6920
0.75280.8149
U.S. dollarAverage rateClosing rate
Δ H1 2011 vs. H1 2010H1 - 2011H1 - 2010
46
En €M
+ 4414,106
+619
+1,518
16,287
+15.5%
H1 2010re-presented (1)
+4.4%
Internal growth
+10.8%
External growth
+0.3%
FX H1 2011
Appendix 2: Evolution of revenue
(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the
Environmental Services division, and operations in the Netherlands within the Water division; ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division;‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division.
47
Appendix 3: Revenue by geographic area
+14.6%+20.9%+25.3%Asia/Pacific
Δ current FX
Δ constant FX
Δ constant scope & FX
France +13.3% +13.3% +4.1%
Europe excl. France +19.2% +18.0% +3.7%
United States +13.5% +19.1% +4.8%
Rest of the world +1.1% +1.4% -2.2%
Total 15.5% 15.2% 4.4%
1,138 1,4261,106 1,255
5,0676,038
1,0741,061
6,494
5,734
H1 2010 re-presented
H1 2011
14,106 (1)
16,287In €M
(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the
Environmental Services division, and operations in the Netherlands within the Water division; ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division;‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division.
48
Appendix 4: Quarterly revenue
in €M
+15.5%+19.9%+11.3%Variation at current FX
+4.4%16,28714,106+5.4%8,1276,776+3.4%8,1607,330Company
na1,317-na983-na334-Transport
+2.1%3,8623,701+0.3%1,4191,402+3.3%2,4432,299Energy Services
+8.7%4,8944,514+7.3%2,5332,401+10.2%2,3612,113Environmental Services
+2.5%6,2145,891+6.3%3,1922,973-1.4%3,0222,918Water
Δconstant scope &
FX
20112010Re-presented (1)
Δconstant scope &
FX
20112010Re-presented (1)
Δconstant scope &
FX
20112010Re-presented (1)
1st half2nd quarter1st quarter
(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the
Environmental Services division, and operations in the Netherlands within the Water division; ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division;‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division.
49
Appendix 5: Adjusted operating cash flow margins
12.3%13.3%Water
12.0%
-
10.2%
13.5%
MarginH1 2010(1)
Margin H1 2011
Environmental Services 11.9%
Energy Services 9.4%
Transport 5.7%
Total Company 10.7%
(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the
Environmental Services division, and operations in the Netherlands within the Water division; ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division;‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division.
50
Appendix 6: Adjusted operating income margins
7.2%
-
7.1%
5.3%
9.9%
Margin H1 2010 (1)
MarginH1 2011
Water 7.8%
Environmental Services 5.2%
Energy Services 6.6%
Transport 0.8%
Total Company 5.8%
(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the Environmental Services division, and operations in
the Netherlands within the Water division; ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division;‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division.
51
Appendix 7: Adjusted operating income to operating income
-88Capital gain on Usti
-18-Goodwill impairment Spain
-27-Other write-downs and restructuring charges (Italy)
-32-Goodwill impairment Morocco
-448-Goodwill and other asset impairments Italy
-152-Goodwill impairment United States
-92Other
2521,101Operating income
-686+90Non-recurring items
9381,011Adjusted operating income
H1 2011H1 2010re-presented (1)
In €M
(1) The financial statements of 2010 have been re‐presented in order to ensure comparability of periods: ‐ For the reclassification into « net income from discontinued operations » of the German operations in the Energy Services division, the Norwegian operations in the Environmental Services division, and operations in
the Netherlands within the Water division; ‐ For the reclassification into “net income from discontinued operations” of the historical Veolia Transport division;‐ For the reclassification into “continuing operations” the Renewable Energies business within the Energy Services division.
52
Appendix 8: Gross investments by division
Growth
1,333159392324458Total H1 2010
1,199171473102453Total H1 2011572261514Other
136-134119Transport
18527981446Energy Services
4214211263204Environmental Services
400100224670Water
TotalNew operating financial assetsIndustrialFinancial, incl.
Δ scope (1)Maintenance
In €M
(1) Including transactions between shareholders – partial acquisitions with no change in control
53
Appendix 9: Divestments completed during 1H11
(1) Including capital increases subscribed to by minorities, net financial debt of divested companies and partial divestments between non‐controlling interests (with no change in consolidation scope).
H1 2011 industrial and financial divestments (1) 1,048
Of which: Operation Veolia Transdev 540
Of which: development partnerships 71Divestment of 5% of Dalkia Ceska to J&T and EBRD investment
in Dalkia Eastern Europe
Of which: industrial divestments 80
In €M
54
Appendix 10: Net finance costs
Gross debt: €20,337M vs. €20,629M Cost of borrowing 4.08% vs. 4.13%
Cash & cash equivalents of €6,037M: 1.38%
Net debt of €14,764M€ vs. €16,027M Cost of borrowing of 5.32% (vs. 5.06%)
Average net debt (2) of €14,756M versus €15,542M€ in H1 2010
+1Impact foreign currency
+21Impact change in interest rates
+10Impact change in average debt
+32
VariationIn €M H1 2010 * H1 2011
Cost of net financial debt -408 -376
* Published figures
Closing net financial debt (1) in €M
(1) Net financial debt represents gross financial debt (non‐current borrowings, current borrowings, bank overdrafts and other cash position items), net of cash and cash equivalents and excluding fair value adjustments to derivatives hedging debt;
(2) Average net financial debt is the average of monthly debt during the period.
15 12715 377
16 02715 767
15 218
14 51114 764
15 909
16 82716 820
10 000
12 000
14 000
16 000
18 000
31-Mar-2009
30-Jun-2009
30-Sep-2009
31-Dec-2009
31-Mar-2010
30-Jun-2010
30-Sep-2010
31-Dec-2010
31-Mar-2011
30-Jun-2011
55
Appendix 11: Debt management
Ratings Moody’s : P-2 / A3 stable outlook (April 18, 2011: rating confirmed and outlook revised from negative to stable) Standard & Poor’s : A-2 / BBB+ stable outlook (April 21, 2010: rating confirmed and outlook revised from negative to stable)
Average net debt maturity: 9.1 years at June 30, 2011 vs. 9.5 years at June 30, 2010 Group liquidity : €10.1 billion, of which €4.1 billion in undrawn confirmed credit lines (without disruptive covenants) Net group liquidity: €5.8 billion
Variable rate: 38% USD 8%
GBP 9%
Other 19% (1)Fixed rate : 62%
of which Euro : 76%
of which USD : 52%
of which GBP : 41%Euro 61%
(1) Of which RMB 4% and HKD 3%
Net financial debt after hedgesat June 30, 2011
Currency breakdown of gross debt after hedges at June 30, 2011
Variable rate capped: 9%
56
Appendix 12: Impact of foreign currency on net debt
Net financial debt at December 31, 2010 €15,218 M Net financial debt at June 30, 2011 €14,764 M Variation -€454 M
Of which impact of FX -€283 MUS dollar -€151 MU.K. pound sterling -€90 MHong Kong dollar -€51 M
57
0
200
400
600
800
1000
1200
1400
1600
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
GBPUSDEURO
Appendix 13: VE SA bond redemption schedule
€10.4 Bn€1.6 Bn
Total €12.7 Bn
€0.7 Bn
Nominal bond values converted at close June 30, 2011
58
Appendix 14: Consolidated statement of financial position
In €M
Year endedDecember 31, 2010
re-presented (1)
Six months ending June
30, 2011
Intangible assets (concessions) 4,164.6 4,279.6
Property, Plant & Equipment 9,703,3 8,814.5
Other non-current assets 11,932.2 11,048.1
Operating financial assets (current and non-current) 5,628.6 5,427.0
Cash and cash equivalents 5,406.8 6,037.2
Other current assets 14,591.8 13,480.7
Total Assets 51,427.3 49,087.1
Capital (including non-controlling interests) 10,804.4 10,262.4
Financial debt (current and non-current) 20,723.2 20,677.1
Other non-current liabilities 4,610.4 4,387.3
Other current liabilities 15,289.3 13,760.3
Total Liabilities 51 427,3 49,087.1(1) The opening balance sheet has been re‐presented according to IAS 8 in order to take into account the accounting fraud during the years 2007‐2010 in the Marine Services business.
59
Appendix 15: Evolution of quarterly Veolia Water revenue
In €MWorks excl. M/F/R
Operations
M/F/R*
*Marafiq / Fujairah / Ras Laffan
2,126 2,159 2,292
4,285 4,530731 773 800 900
1,5311,673
2,238
7511
0141161
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,0005,5006,0006,500
Q1 2010 Q1 2011 Q2 2010 Q2 2011 H1 2010 H1 2011
60
Appendix 16: Efficiency Plan in line with 2011 objective
En M€
H1 2011
1013
15
21
25
37
115132TOTAL-2Other
7**18Transport
3231Energy Services
3043Environmental Services
4638Water
*Published figures** Included in the scope effect
H1 2010*H1 2009*
61
Appendix 17: Main contracts won or renewed since the beginning of 2011
‐ Renewals: 100 main contracts renewed in France during the 1st half 2011 inWater (o/w 50 in drinking water
& 50 in wastewater), 74 in Waste (o/w 48 from local authorities & 26 from companies), 5 in Transportation & 80% of contracts due to expire during the 1st half 2011 renewed in Energy
VTNI (Seine Maritime) (transportation) ‐ Length: 4 years ‐ Cumul. Rev.: €92m Fontainebleau (water) ‐ Length: 10 years ‐ Cumul. Rev.: €34m The Nanterre waste management authority (SICTOM) (waste) ‐ Length: 3 years ‐ Cumul. Rev.: €36m Collection of household waste & recyclable materials in Hyères les Palmiers (waste)
‐ Length: 6 years ‐ Cumul. Rev.: €25m Operation of the biodegradable waste & household residual waste treatment unit for
the Pays de Lorient Conurbation (waste) ‐ Length: 6 years ‐ Cumul. Rev.: €25m
‐ Outsourcing / Privatization: The «La Manche Conseil Général» (energy performance partnership contract) (energy)
‐ Length: 15 years ‐ Cumul. Rev.: €8m Local bus services in Besançon(1) (transportation) ‐ Length: 7 years ‐ Cumul. Rev.: €217m Management of Carcassonne airport infrastructure (transportation) ‐ Length: 7 years ‐ Cumul. Rev.: €56m Management of Perpignan airport infrastructure (transportation) ‐ Length: 7 years ‐ Cumul. Rev.: €70m Electric car‐sharing vehicles service in Nice, through VENAP (70% Veolia Transdev/30% EDF)
(transportation) ‐ Length: 12 years ‐ Cumul. Rev.: €42m
‐ Engineering / Design & Build: Hydraulic link Verdon/Saint‐Cassien (networks) (water) ‐ Cumul. Rev.: €12m
Partnership between Veolia Transport & Trenitalia(2) with the creation of a new rail operator (50/50) aiming at providing overnight international services between France & Italy at the end of 2011 (transportation)
Partnership between Veolia Water & Orange with the creation of «m2o city», an operator specialized in remote environmental data & water meter reading services (water)
Partnership between Eolfi (Veolia Environnement’s subsidiary) & Réseau Ferré de France (RFF)(3)with the creation of a common company (67/33) «Airefsol Energies » aiming at developing clean energy sources (multi‐services)
ORGANIC GROWTH
PARTNERSHIPS
(1) Operations start up on January 1st, 2011(2) Signature in January 2011(3) Signature in 2010
Carcassonne Nice
Besançon
La Manche
HyèresPerpignan
Fontainebleau
Outsourcing / Privatization Renewals
Partnerships with other companies Engineering / Design & Build
VTNI
Verdon / Saint‐Cassien
Lorient
SICTOM Nanterre
M2ocity
TrenitaliaAirefsol Energies
62
‐ Renewals: SAN C2013(1) (transportation) ‐ Length: 10 years ‐ Cumul. Rev.: €960m OWL ‐ Dieselnetz (1) (transportation) ‐ Length: 12 years ‐ Cumul. Rev.: €494m Linköping city (transportation) ‐ Length: 8 years ‐ Cumul. Rev.: €160m
‐ Outsourcing / Privatization: Management contract for Thames Water’s metering services through Vennsys Limited
(water) ‐ Length: 10 years ‐ Cumul. Rev.: €276m Contract for street cleaning, waste collection & recycling for the Haringey district
of London (waste) ‐ Length: 14 years ‐ Cumul. Rev.: £200m Contract for waste collection & recycling for the Hart county and the Basingstoke
& Deane county (waste) ‐ Length: 7 years ‐ Cumul. Rev.: £32m Private Finance Initiative (PFI) contract for residual waste treatment for
the Hertfordshire county (waste) ‐ Length: 25 years ‐ Cumul. Rev.: £1.3bn «E‐Netz Rosenheim» (transportation)
‐ Length: 12 years (3‐year option) ‐ Cumul. Rev.: €1,092m (without option) Dieselnetz LNVG (transportation) ‐ Length: 10 years ‐ Cumul. Rev.: €134m Vigo new hospital ‐ O&M contract (PPP) (energy) ‐ Length: 20 years ‐ Cumul. Rev.: €96m Nestlé (energy) ‐ Length: 15 years ‐ Cumul. Rev.: €96m Campus of Bari (energy) ‐ Length: 12 years ‐ Cumul. Rev.: €40m Bonduelle (energy) ‐ Length: 5 years ‐ Cumul. Rev.: €4m
‐ Engineering / Design & Build: ERD (sewer system) (water) ‐ Cumul. Rev.: €11m Nagykanizsa (sewer & rain water system) (water) ‐ Cumul. Rev.: €11m
EXTERNAL GROWTH Privatization of the district heating network of Warsaw(2) (energy)
‐ Disposal of 85% stake in SPEC
PARTNERSHIPS Partnerships (energy) between:‐ Dalkia & the International Finance Corporation (a member of World Bank Group) ;‐ Dalkia & EBRD with a 5.5% stake acquisition each in the capital of Dalkia Eastern Europe, the new subsidiary created to bring together its activities in Russia & the Baltic states
ORGANIC GROWTH
Outsourcing / Privatization
Interests acquisition in other companies
Renewals
Partnerships with other companies
Engineering / Design & Build
(1) Signature in July 2011
(2) Transaction subject notably by the Warsaw town council & the European Commission approvals
United KingdomUnited Kingdom
HertfordshireHaringey
VennsysLtdBasingstoke
& Deane
SwedenSweden
Linköping
GermanyGermany
PolandPolandSPEC
Rosenheim
DieselnetzLNVG
The NetherlandsThe NetherlandsSAN
C2013 OWLDieselnetz
HungaryHungary
Nagykanizsa
ERDBonduelle
Russia Russia
EBRD
IFC
Appendix 17: Main contracts won or renewed since the beginning of 2011
PortugalPortugal SpainSpain
ItalyItaly
Vigo
Nestlé
Bari
63
‐ Renewals: Aberdeen Proving Ground ‐ Hazardous waste collection & treatment (waste)
‐ Cumul. Rev.: $75m New York ‐Waste Electrical & Electronic Equipment (WEEE) collection & treatment
(waste) ‐ Contract term: 10 years (2 options of 5 years) Victor Valley Operations (transportation) ‐ Length: 7 years ‐ Cumul. Rev.: €46m
‐ Outsourcing / Privatization: Long Island Bus (LIB) «Management contract » (transportation) Hazardous waste treatment for UPS Group’s sites in the United States
(waste) ‐ Cumul. Rev.: $50m Hazardous waste treatment for BASF Group’s sites in the United States
(waste) ‐ Cumul. Rev.: $24m Centre Hospitalier Universitaire de Montreal (CHUM) (energy)
‐ Length: 30 years ‐ Cumul. Rev.: around €1.2bn
‐ Engineering / Design & Build: Construction of a mine wastewater treatment
plant in West Virginia (D&B) (water) Construction & operation a produced water
facility for an oilfield in California (DBO) (water)‐ Operating length: 10 years
Global cumul. Rev.: $150m
(including Civil engineering)
Outsourcing / Privatization Renewals
Engineering / Design & Build
Appendix 17: Main contracts won or renewed since the beginning of 2011
ORGANIC GROWTH
United StatesUnited States
CanadaCanada
Montreal
West Virginia
Victor Valley
New York
Aberdeen
BASF
UPS
Long IslandCalifornia
64
ORGANIC GROWTH
‐ Outsourcing / Privatization:
Bus network in Macao through a joint‐venture withRATP Développement in Asia (transportation)‐ Length: 7 years ‐ Cumul. Rev.: €75m (Veolia share)
Perth ‐ Joondalup (transportation)‐ Length: 8 years ‐ Cumul. Rev.: €139m
Appendix 17: Main contracts won or renewed since the beginning of 2011
ChinaChina
AustraliaAustralia
Macao
Perth
Outsourcing / Privatization
65
‐ Engineering / Design & Build:
Construction & operation of 3 central cooling facilities for Saadiyat Island in Abu Dhabi (energy)‐ Contract term: 29 years ‐ Cumul. Rev.: €373m
Construction & operation of a new reverse osmosis desalination unit at the Az‐Zour South plant (DBO) (water)‐ Operating length: 5 years ‐ Cumul. Rev.: €81m (incl. construction)
Supply of technology for a drinking water treatment plant at Yanbu II(1) (water) ‐ Cumul. Rev.: €45m
Appendix 17: Main contracts won or renewed since the beginning of 2011
Engineering / Design & Build
(1) Signature in July 2011
KuwaitKuwaitAz‐Zoursud
Saudi ArabiaSaudi Arabia
Yanbu II United Arab EmiratesUnited Arab Emirates
SaadiyatIsland
ORGANIC GROWTH
66
Investor relations contact information
Ronald Wasylec, Directeur des Relations avec les Investisseurs et Actionnaires individuelsTéléphone +33 1 71 75 12 23
e-mail ronald.wasylec@veolia.com
Ariane de LamazeTéléphone +33 1 71 75 06 00
e-mail ariane.de-lamaze@veolia.com
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 terri.powers@veoliaes.com
http://www.finance.veolia.com