2012 Annual Results
February 28, 2013
Investor Relations – 2012 Annual Results
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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
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Summary
1. 2012, 1st year of Transformation Antoine Frérot
2. 2012 annual results Pierre‐François Riolacci
3. Application of IFRS 10‐11‐12 standards Pierre‐François Riolacci
4. 2013‐2015 objectives Antoine Frérot and François Bertreau
5. Appendices
Antoine Frérot
12012 : 1st year of Transformation ahead of objectives
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2012 : 1st year of Transformation ahead of objectives
Evolution of corporate governance and new organization
Asset divestments and restructuring
Reduction of net financial debt by €3.4bn to €11.3bn
Faster than expected cost reductions
Improvement in 2nd half adjusted operating cash flow
Commercial success
Veolia is on the right path
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New Company organization
Board of Directors• 4 new members appointed at the 2012 Annual General Shareholders
Meeting: Maryse Aulagnon, Nathalie Rachou, Jacques Aschenbroich and Groupama SA (represented by Georges Ralli)
• During the last quarter of 2012, resignation of Henri Proglio and cooptation of Marion Guillou
Implementation of new Company organization• Nomination of a new Chief Operating Officer, responsible for
standardization throughout the Company and reducing costs
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3.7
74% completed
In €bn
* Following the change from proportionate consolidation to equity method accounting since Oct. 31st, 2012
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2012: Divestment program ahead of our objectives
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Geographic and business refocusing: 48 countries at the end of 2012*
Geographic refocusing
Exit of activities
Business refocusing
Zoom Europe
Objective: 40 countriesat the end of 2013*
*capital employed > €5M8
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2012: Debt reduction ahead of our objectives
Net financial debt amounted to €11.3bn at December 31, 2012, a reduction of €3.4bn compared to the prior year• €3.7bn in asset divestments• Debt reduction of €1.4bn following the change in accounting for the Berlin water contract to equity method as of October 31, 2012
• 68% of proceeds from asset divestments applied to debt reduction• Good working capital management• Control of industrial investments
Leverage of 3.26x (1) at December 31, 2012 versus 3.88x at December 31, 2011• Favorable impact of timing of divestments
(1) Net financial debt/ (operating cash flow before changes in working capital + OFA repayments) = 11,283/ (3,085 + 371) = 3.26x
Reduction of net financial debt by €3.4bn in 1 year instead of 2 years2012 leverage ratio of 3.26x(1)
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20
2012: Cost reductions in advance of the objective*
In €M
Impact on operating income
* Convergence 1
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Fourth quarter adjusted operating cash flow increased 2.9%*Volume impact: Good resilience in waste operationsImpact of savings plans exceeded objectivesGood contribution from growth platforms
*Excluding the impact of the deconsolidation of Berlin water contract for 2 months of ‐€31M. Variation of Q4 adjusted operating cash flow not restated was ‐1.1%** Q2 variation corrected for Italian receivables write down and other accrued charges of ‐€89M
2012: Improvement in 2nd half adjusted operating cash flow despite a deteriorated environment
Q4 2012: 2nd consecutive quarter of Y‐Y increase in adjusted operating cash flow*
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Continued commercial successWater
• United States: performance and consulting contract award for optimization of New York city’s drinking water and wastewater services‐ Cumulated revenue of $36M over 4 years
• United States: contract award for the management of water and wastewater systems in Rialto, California – Cumulated revenue of $300M over 30 years
• India: contract award to upgrade drinking water network and operations in the city of Nagpur‐Cumulated revenue of €387M over 25 years
• France: renewals /contract extensions >€850M (cumulated revenue, contracts > €10M)
Environmental Services• United Kingdom: PFI contract award for the residual municipal waste treatment and recovery in the city
of Leeds – Cumulated revenue of £460M over 25 years
• China: concession contract awarded in partnership with a Chinese company, for a hazardous waste treatment center in Changsha (Hunan province) ‐ Cumulated revenue of €320M over 25 years
• France: contract renewals at the end of December ~€200M (cumulated revenue)
• France: two new lines of recovery (used motor oil recycling and anaerobic digestion)
Energy Services• Central & Eastern Europe: new contract signatures for €950M in cumulated revenue
• France: contract renewals at the end of December >€300M (cumulated revenue), within a more challenging commercial context
2012 Annual Results
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Pierre‐François Riolacci
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(1) See appendix 2(2) The review of results by auditors is still in progress(3) Non recurring items include impairment losses on goodwill recorded in respect of Company subsidiaries as of December 31, 2011 in Southern Europe and the United States and
impairment losses on non‐current assets recorded in the respect of Company subsidiaries mainly in Italy.(4) 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, (iv) change in receivables and other financial assets), (v) net financial interest paid and (vi) tax paid .
(5) +1.5% at constant consolidation scope and exchange rates(6) And accrued additional charges
2012: 1st year of Transformation ahead of our objectivesGood operational resilience in a difficult environment
In €M 2011 published
2011 re‐presented(1) 2012 (2) Δ
Δconstant
FX
Revenue 29,647 28,576 29,439 +3.0% +1.2% (5)
Adjusted operating cash flow 3,152 2,853 2,723 ‐4.6% ‐6.2%
Adj. op. cash flow excluding Dalkia Italy write downs (6) 2,853 2,804 ‐1.7% ‐3.3%
Adjusted operating income 1,700 1,558 1,194 ‐23.4% ‐24.5%
Adj. Op. income excluding Dalkia Italy write downs (6) 1,558 1,275 ‐18.1% ‐19.2%
Operating income (3) 1,017 829 1,095 +32.1% +30.5%
Adjusted net income attributable to owners of company
290 195 60
Net income attributable to owners of company ‐490 ‐490 394
Free Cash Flow (4) 438 438 3,673
Net financial debt 14,730 14,730 11,283
Key Figures
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Breakdown of revenue by division
ΔΔ
constant FX
Δ excl. FX and scope
Water +1.3% ‐0.5% +1.0%Environmental Services +0.8% ‐2.2% ‐1.9%
Energy Services +7.4% +7.0% +5.8%
Other +21.1% +19.2% +15.3%
Veolia +3.0% +1.2% +1.5%
*See appendix 2
in €M
29,43928,576
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Water: Revenue of €12,078MOperations: Revenue stable (‐0.2% at constant scope and FX)• France: Revenue increased 1.3% at constant scope
Continued contractual erosion: ‐1.6%
Lower volumes: ‐1%
Positive impact of price and construction activities: +3.9%
• Outside France: Revenue declined 1.1% at constant scope and FX
Negative price impact related to Berlin contract
Good performance in Central and Eastern Europe (higher prices)
China concessions: favorable price and volume effect
Technologies & Networks: Revenue increased (+4.9% at constant scope and FX) • Increase in industrial activity, particularly in the Oil & Gas sector
* To ensure the compatibility of periods, the 2011 financial statements have been re‐presented (see appendix 2)
+1.3%
+7.9%
‐1.5%
Operations
Technologies & Networks
4 243 4 223
11,921 12,078
Revenue (in €M)
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Water: Adjusted operating cash flow of €1,172M
Adjusted operating cash flow declined 8.4% (‐9.4% at constant FX) to €1,172M• France: contractual erosion and lower volumes (‐1%). Difficulties in Guadeloupe.
• Germany: lower price and only 10 months consolidation of Berlin Water by proportional integration
• Good progression in Central and Eastern Europe, and Asia Pacific
• Net impact of Efficiency and Convergence Plans of €106M (including €40M for Convergence)
Adjusted operating income declined 22.5% (‐23.3% at constant FX) to €674M
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Environmental Services: stable revenue despite difficult economic environment
Difficult macro‐economic context with lower industrial production indices for the second
consecutive quarter in Europe and the United States.
Revenue remains supported by hazardous waste, which grew in all four quarters in 2012
(+6.6% organic growth for the year)
2012
Price and volume of recycled materials ‐1.9%
Waste volumes ‐
Service price increases +0.8%
Other (including construction revenue) ‐0.8%
Currency effect +3.0%
Consolidation scope ‐0.3%
2012 Quarterly Y-Y Revenue Growth 5.8%
‐3.4%
3.0%
0.0%
‐3.1%
0.7%
‐1.1%
‐5.7%
1st quarter 2nd quarter 3rd quarter 4th quarter
Growth rate Growth rate at constant scope & FX
Variation Revenue 2012 / 2011: +0.8% and ‐1.9% at constant scope & FX
Q4 2012: 1st quarter of positive organic revenue growth +3%
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Environmental Services: Revenue of €9,083M (+0.8%) and adjusted operating cash flow of €1,048M (+2.7%)
Revenue: • Good resilience in France, revenue increased 1.4% at constant scope• In the United Kingdom, revenue declined 2.1% at constant scope and FX with lower landfill volumes and a slowdown in construction activity
• Significant revenue decline in Germany: ‐13.2% at constant scope, of which ‐8.8% related to lower prices and volumes of raw materials. Competitive pressure within the industrial and commercial sector
• Australia revenue grew 11.4% at constant scope and FX: increase in volumes, mainly in Q4, as well as increased landfill tax and higher tariffs
Adjusted operating cash flow increased 2.7% (‐0.3% at constant FX) to €1,048M• Unfavorable impact of raw material prices (‐€33M)• Continued difficulty in recovering higher costs from clients• Net impact of Efficiency and Convergence plans of €88M (including €28M from Convergence)
Adjusted operating income declined 14.6% (‐17.1% at constant FX) to €356M
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Energy Services: Revenue of €7,665M
Revenue increased 7.4% (+5.8% at constant scope & FX) to €7,665M• Higher energy prices: impact >€200M (mainly in France)• Favorable weather effect, mainly in France: impact >€100M • Increase in construction activities in France (CRE projects)
Adjusted operating cash flow declined 7.6% (‐7.7% at constant FX) to €544M• France: negative impact of regulation changes (heating price and electricity tariff from gas cogeneration)
• Contribution of Warsaw heating network: €36M• Italy: receivables write down and accrued expenses of ‐€82M
Excluding the write down and accrued expenses, adjusted operating cash flow would have increased by 6.3%
• Net impact of Efficiency and Convergence plans of €66M (including €8M for Convergence)
Adjusted operating income declined 22.9% (‐22.5% at constant FX) to €298M• Excluding the receivables write down and accrued expenses in Italy, adjusted operating income would have declined by 1.8%
* To ensure the compatibility of periods, the 2011 financial statements have been re‐presented (see appendix 2)
Outside France
France
1 690
1 908
1 857
2 064
7,1387,665 +7.4%
+6.2%
+8.6%
Revenue (in €M)
20
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Evolution of adjusted operating cash flowIn €M
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Adjusted operating cash flow
In €M2011
Re‐presented (1)2012
Δ Δ constant FX
Water 1,279.4 1,172.2 ‐8.4% ‐9.4%
Environmental Services 1,020.8 1,048.2 +2.7% ‐0.3%
Energy Services 588.9 544.4 ‐7.6% ‐7.7%
Others ‐36.5 ‐42.0 ‐15.1% ‐21.6%
Total Company 2,852.6 2,722.8 ‐4.6% ‐6.2%
Margin 10.0% 9.2%
(1) See appendix 2
Excluding the Energy Services write down and charges in Italy,adjusted operating cash flow declined 3.3% at constant FX
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Reconciliation of adjusted operating cash flow to adjusted operating income
(1) See appendix 2
In €M2011
re‐presented(1) 2012 ΔΔ
constant FX
Adjusted operating cash flow 2,852.6 2,722.8 ‐4.6% ‐6.2%
Depreciation & amortization ‐1,388.9 ‐1,479.8
Net capital gains +77.1 +84.3
Provisions, fair value adjustment & others +17.0 ‐133.6
Adjusted operating income 1,557.8 1,193.7 ‐23.4% ‐24.5%
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Adjusted operating income
(1) See appendix 2
In €M2011
re‐presented(1) 2012 Δ Δ constant FX
Water 869.2 673.9 ‐22.5% ‐23.3%
Environmental Services 417.0 356.0 ‐14.6% ‐17.1%
Energy Services 387.0 298.5 ‐22.9% ‐22.5%
Others ‐115.4 ‐134.7 ‐16.7% ‐17.8%
Total Company 1,557.8 1,193.7 ‐23.4% ‐24.5%
Margin 5.5% 4.1%
Excluding the Energy Services write down and charges in Italy,adjusted operating income declined by 19.2% at constant FX
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Reconciliation of adjusted operating income and operating income
In €M 2011re‐presented (1)
2012
Adjusted operating income 1,558 1,194
Goodwill and asset impairments Italy ‐446
Goodwill Impairment United States ‐153
Goodwill impairment Morocco ‐5
Goodwill impairment Spain ‐18
Other write downs and restructuring charges ‐29 ‐13
UK Non‐regulated Water impairment ‐57
Impairment SNCM ‐78
Goodwill impairment Baltic countries ‐26
Others ‐ ‐3
Total non‐recurring elements ‐729 ‐99
Operating income 829 1,095
(1) See appendix 225
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Net finance costsIn €M 2011 2012 Δ %
Cost of net financial debt published ‐748 (1) ‐759
Cost of net financial debt restated (2) ‐787 5.39% ‐750 5.25% ‐0.14%
Impact of active debt management and debt amortization ‐0.17%
Impact of change in interest rates ‐0.03%
Currency impact +0.04%
Other +0.02%
(1) €710M pro forma IFRS 5
(2) Including financial costs of discontinued operations and excluding cost of debt repurchases in December 2012 (€47M in 2012)
(3) Net financial debt represents gross financial debt (non‐current borrowings, current borrowings and bank overdrafts and other cash position items), net of cash and cash equivalents and excluding fair value adjustments of derivatives hedging debt
(4) Average net financial debt is the average of monthly net debt during the period
Evolution of cost of borrowing
In €M Dec. 31, 2011 Dec. 31, 2012
Closing net financial debt(3) 14,730 11,283Average net financial debt (4) 14,600 14,292Average gross debt 19,868 18,361
Gross cost of borrowing 4.32% 4.27% Average cash 5,742 4,403
Rate 1.48% 1.13%
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0
200
400
600
800
1000
1200
1400
1600
1800
€ $ £ CNY 2010 buyback 2011 buyback 2012 buyback
Objective: Reduction of the cost of carrying cash, lengthening the average duration of debt and management of required debt repayments• Partial early redemption of bond issues in $ and in €: €649M and $560M• Exchange offer with issuances offset by partial buybacks for €750M• Amortization and repayments: €1,062M
Total repayments and buybacks net of issuances: €1,711M & $560M• One time cost of €47M in 2012
Reduction of net financial debt by €3.4 billion, without further increase in liquidity position=> An optimized debt repayment schedule, without a peak repayment
Debt management in 2012
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Hybrid
Objectives of the issuance• Reinforce our financial strength and support the Company’s transformation
• Take advantage of favorable rates and spreads
• Diversification of financing currencies
January 2013: Issuance of perpetual debt callable at par beginning April 2018 in 2 tranches• €1 billion @ 4.5%
• £400M @ 4.875%
• 100% Equity under IFRS
• 50% Equity for ratings agencies: until reimbursement for Moody’s and until April 2018 for S&P
Improvement in credit ratios
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Taxes
After adjusting for one‐time items, the company tax rate at December 31, 2012 fiscal year was 39.2%.
The effective tax rate at December 31, 2012 is derived:
In €MTax
expense
Income base before taxes
Tax rate
Adjusted for one‐time items ‐232 591 39.2%
Goodwill impairment and asset write downs
Dalkia Italy‐ Receivables write down*
Reintegration of TNAI flow
Provisions and expenses for tax risks
Rate and regulatory changes
Other elements
12
7
54
‐35
21
14
‐191
‐82
‐
‐
‐
‐45
Effective ‐159 273 58.3%
* And accrued expenses 29
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Results from discontinued operations
In €M 2011 2012
UK Regulated Water 65 275
Of which net capital gain 233
US Solid Waste US 43 306
Of which net capital gain 208
Other contributions 13 ‐195
Of which Citelum* ‐11 ‐68
Of which Eolfi* ‐10 ‐60
Of which Morocco Water* ‐45 ‐38
Net income from discontinued operations 121 386
* Including fair value adjustments30
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Reconciliation of operating income to net income
(1) See appendix 2(2) Including other financial revenue and expense(3) See details slide 25
2011 re‐presented (1) 2012
In €M Adjusted Adjustment Total Adjusted Adjustment Total
Operating income 1,558 ‐729 (3) 829 1,194 ‐99 (3) 1,095
Cost of net financial debt (2) ‐758 ‐ ‐758 ‐775 ‐47 ‐822
Income tax expense ‐337 ‐184 ‐521 ‐213 54 ‐159
Share of net income from associates 12 ‐ 12 30 ‐ 30
Net income from discontinued operations ‐ 121 121 386 386
Non‐controlling interests ‐280 107 ‐173 ‐176 40 ‐136
Net income attrib. to owners of Co. 195 ‐685 ‐490 60 334 394
Net income attrib to owners of Co. published 290 ‐780 ‐490 60 334 394
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Statement of cash flows
(1) Including financial cash flows and operating cash flow from discontinued operations (2) Dividend paid to shareholders and non‐controlling interests(3) Including mainly changes in receivables and other financial assets of re‐presented ‐€53M in 2011 and ‐€85M in 2012
In €M 2011 2012
Operating cash flow before changes in working capital (1) 3,353 3,085
Reimbursement of operating financial assets 441 371
Total cash generation 3,794 3,456
Gross investments ‐3,134 ‐3,282
Variation working capital ‐41 103
Taxes paid ‐368 ‐336
Interest expense ‐771 ‐774
Dividend (2) ‐547 ‐547
Others (3) ‐39 ‐46
Divestments 1,544 5,099
Free cash flow 438 3,673
Impact of exchange rates ‐64 ‐148
Others 114 ‐78
Net financial debt 14,730 11,283
Change in net financial debt ‐488 ‐3,447
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2012 capex control
A year which included significant minority interest repurchases as well as controlof industrial investments
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In a post financial crisis context
Multiples achieved by division and by geography since 2009 (1) (2)
Review of asset divestments since 2009: €9bn in divestments completed at high multiples
(1) On transactions greater than €50m since January 2009 : 23 operations utilized, excluding Berlin Water, representing €6bn of EV, or 78% of the divestments completed between 2009 and 2012
(2) Calculated EV/EBITDA multiples calculated as a weighted average: EBITDA of year n‐1 (of year n if the transaction was at the end of the year)Multiples restated for divestments having the highest and lowest multiples
By Geography By Division
34
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(1) Cash flow before financial divestments and after payment of financial expense and taxes represents the sum of adjusted operating cash flow and operating cash flow from financing activities, principal payments on operating financial assets, changes in working capital for operations and industrial investments and industrial divestitures, excluding net industrial investments of discontinued operations
* Operating cash flow before changes in working capital minus capex of discontinued operations: Operating cash flow from discontinued operations: €337M. Net industrial investments: €576M (Eolfi €186M, US Solid Waste €92M, UK Regulated Water €32M, Morocco Water €26M)
** Before changes in receivables and other financial assets
Cash Flows
Positive cash flow before
net divestments
& dividend(1)
80% allocated to debt reduction
In €M
35
Application of new IFRS 10‐11‐12 standards
3
Pierre‐François Riolacci
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Presentation of new IFRS standards
IAS 27 – Consolidated and Separate Financial Statements
SIC 12 – Consolidation – Special Purpose Entities
IAS 28 – Investments in Associates
IAS 31 – Interests in Joint VenturesSIC 13 – Jointly Controlled Entities –Non‐monetary Contributions by
Venturers
Today Tomorrow
IFRS 10 – Consolidated Financial Statements
IAS 28 – Investments in Associates and Joint
Ventures
IFRS 11 – Joint Arrangements
IAS 27 – Separate Financial Statements
IFRS
12–Disclosure of In
terests in Other
Entities
Retrospective application from January 1, 2013
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Scope concerned (1/2)
All of the company’s partnerships including “Joint Ventures” according to IFRS 11, of which the China Water entity, Dalkia International and Dalkia Investment will now be accounted for by the equity method, in the absence of any change in elements that assess control
Some exceptions concerning construction activities (Division T&N) with consortia, Investments in joint venture companies in France and their foreign equivalents for which “Joint Operations” will be accounted (amount non significant)
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Scope concerned (2/2) Which treatment for each entity?
Recall BWB (Berlin water contract): RWE sold its stake to the Land of Berlin: Veolia no longer has joint control => change to equity method at 25% from October 31, 2012
Dalkia International: joint venture owned 75% by Dalkia and 25% by EDF, with an economic interest of 50% => change to equity method at 50%
VTD: change from proportionate consolidation at 50% to equity method at 50%
Proactiva Group: joint venture with FCC owned at 50% => change from proportionate consolidation at 50% to equity method at 50%
Shenzhen: joint venture owned at 45%, with 25% economic interest => change to equity method at 25%
Tianjin: joint venture owned at 49% => change from proportionate consolidation at 49% to equity method at 49%
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Accounts which will presented differently (1/2)
Joint ventures, currently consolidated by proportionate consolidation will from now on be accounted for via the equity method:
• creation in the balance sheet, income statement and cash flow statement of two lines which will allow one to distinguish the nature of entities accounted for by the equity method
• in the income statement, integration of the results from equity accounted entities in the Company’s adjusted operating income
• Interest received from loans granted to entities accounted for by the equity method are included in financial income
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Accounts which will presented differently (2/2)Impact on net financial debt• Inter‐company loans granted to joint ventures are not deducted from net financial debt
• Adjusted Net Financial Debt, (AND) excludes debt from these financings Veolia may be required to participate in the financing of partnerships, but accounting
under the equity method implies that inter‐company loans may no longer be eliminated.A receivable is recognized in the amount of the loan, but is not deducted from net financial debtThe debt incurred by the Company for these financings remains a part of net financial debt
No modification of the actual definition of net financial debt
But, presentation of an additional new metric: Adjusted Net Financial Debt (AND), whichincludes loans granted by the Company to joint ventures
Additional information to be provided within notes to financial statements related to controlled subsidiaries, partnerships and investments in associates
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2011 adjusted operating cash flow bridge2011 adjusted operating cash flow after IFRS 5 adjustments, excluding Berlin water contract and post elimination of proportionate consolidation of €1.9bn
In €M‐32%
* Including Other Europe and Middle East Water ‐€62M, Environmental Services Europe and China ‐ €47M, & Dalkia France ‐€24M Non‐audited figures42
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2/27/2013
2011 net financial debt bridge2011 re‐presented net financial debt of €12.7bn (versus €14.7bn published at 2011 end)2011 Adjusted net financial debt excluding joint venture loan receivables would be €9.2bn
* Net financial debt before the application of IFRS 10‐11‐12 and excluding debt loaned to joint ventures consolidated by proportionate consolidation of €442M Non‐audited figures
‐36% In €bn
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2012 contributions of entities changing to equity method accounting from Jan.1st, 2013 (1)
In €M 2012
Revenue 6,313
Adjusted operating cash flow 801
Operating income 394
Net income (Group share) 49
Gross capex (2) 866
Main companies concerned: Dalkia International , Berlin Water (10 months), Tianjin, Shenzhen, Proactiva
(1) Following the 1st application of IFRS 10‐11‐12
(2) Industrial and financial investments and new operating financial assets
4444
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2/27/2013
Strong capex reduction related to TransformationIncreasing capex controlEnd of a long, heavy investment cycle
3,256 3,1343,282
Net of industrial divestments and OFA repayments,CAPEX of €1.4bn, or ~5.6% of revenue
Buyback minorities…
In €M
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Impact of elimination of proportionate consolidation (PI) on 2013 objectives
Divestments
Cost reductions• On the basis of the scope managed at a consistent consolidation rate• 80% converted into operating income, exclusively in controlled activities
In €bn
* Following the change from proportionate consolidation to equity method accounting since Oct. 31st, 2012 46
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Impact of elimination of proportionate consolidation (PI) on 2013 objectives
NFD entities PI (Investor Day)In €bn
In 2013, positive cash flow before financial divestments2013 net financial debt (post PI and hybrid) between €8bn and €9bn*
2013 Adjusted net financial debt (post PI and hybrid) between €6bn and €7bn*
* Before closing exchange rates impact 47
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Summary of objectives communicated during the December 2011 Investor Day updated for new accounting framework
Before
• Divestments: €5 billion• 2013 Net financial debt: <€12 bn(1)
• Cost reductions 2013: €120M (2)
• Cost reductions 2015: €420M (2)
• 2014 leverage (3): 3.0x (4)
• Mid‐cycle organic revenue growth: +3%
• Mid‐cycle adjusted operating cash flow growth: +5%
After
• Divestments: €6 billion(5)
• 2013 Adjusted net financial debt: between €6bn and €7 bn(1)
• Cost Reductions 2013: €170M (2),(6)
impact on operating income• Cost Reductions 2015: €470M (2), (6)
impact on operating income• 2014 adjusted leverage (7): 3.0x (4)
• Mid‐cycle organic revenue growth: +3%
• Mid‐cycle adjusted operating cash flow growth: +5%
(1) Before closing exchange rate impact(2) Net of implementation costs(3) Net financial debt/ (Operating cash flow before changes in working capital + OFA Repayments)(4) 5%(5) Including the debt reduction of €1.4 billion related to the change to equity method accounting for the Berlin Water contract and repayment of
loans to joint ventures (6) Of which ~20% associated with joint ventures(7) Adjusted net financial debt / (Operating cash flow before changes in working capital + OFA Repayments)
4848
2013‐2015 Objectives
4
Antoine Frérot
François Bertreau
Investor Relations – 2012 Annual Results
50
A significant source of productivity: Transformation and cost reductions
A deleveraged and flexible Company
Growth: deployment of new business models
2013: 2nd year of Transformation: ambitious objectives in order to harness strong potential
Investor Relations – 2012 Annual Results
51
A company with strong potential
Presence in markets with strong growth
Size of the CompanyNeed to leverage the associated benefits
Leading technical know‐howNeed to standardize and disseminate
Global presenceAn asset, but need to be more focused
But a sub‐optimal organization
51
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52
Key areas of improvement
170
52
SIZE
GLOBAL PRESENCE
TECHNICAL KNOW‐HOW Commercial
synergies
Process standardization
Best practices
Purchasing
Mutualization
R&D
IT
Internalization
Human ResourcesReal Estate
Capex management
52
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53
Improve commercial performance
Create a Sales and Marketing Group• Design modular offerings/ Standardization
Create Key Account Managers• Systematic selling to large industrial clients
Empower Country Delegates• Cross selling
Research and Development, a differentiating factor
Investor Relations – 2012 Annual Results
54
Improve operational performance
Establish an Operations leadership for each division
Standardization of operating processes• Definition of comparable business lines• Benchmarks/ Best practices
Rationalization of R&D programs
170A change in culture
54
Investor Relations – 2012 Annual Results
55
Improve support function performance
55
80% already identified
Identified savings
2015 objective – Dec. 2011 Investor Day
€65M
€80M
Reference cost base: €1.3bn
Geographic mutualization • Transactional activities: accounts payable, general accounting, payroll, IT infrastructure…• Expertise activities: Treasury, Tax, Risk & Insurance, Purchasing, Communication, Real Estate, Legal, HR (training…)
Establish global back office management• Nomination of a Director of Veolia Global Support Services
“Quick Wins”: data centers, vehicle fleet, real estate management, insurance, fees
55
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56
Sources of productivity: ITPhase 1: Short term actions• 70% of savings announced at the Investor Day already identified
Hosting, serversReform the French network + international backboneOptimization of support servicesGoogle Apps
2nd portion of IT Plan: Infrastructure rationalization • Mutualization at the country level• Limited number of shared service centers • Functional reorganization • Internalization of key competencies• Sourcing optimization
Global optimization plan: New IT 2.0• Worldwide network optimization• Rationalization of legacy applications
56
€43M
€60M
Reference cost base: €550M
Savings identified
2015 objective – Dec. 2011 Investor Day 56
Investor Relations – 2012 Annual Results
57
Sources of productivity: Purchasing
170
€14bn(1) in purchases per year: • €9bn(1) adressableToday:• Operations significantly decentralized• 20% of purchases centralized
Action plans• Systemizing purchasers’ utilization, with evaluation of requirements• Centralized purchasing by country
Depending on categories, potential gain of more than 5%
(1) Before elimination of proportionate consolidation5757
Investor Relations – 2012 Annual Results
58
A net cost savings plan of €470M* in 2015
A €470M* NET COST SAVINGS PLAN IN 2015
In €M
Impact on operating income
470
270
170
New objectives will be presented on May 3, 2013
* Of which ~20% realized in joint ventures. Net of implementation costs 58
Investor Relations – 2012 Annual Results
From €16.5bn net financial debt at the end of 2008 to €6bn‐€7bn adjusted net financial debt(1) by the end of 2013
In €bn
(1) Adjusted net financial debt excluding debt from JVs and post application of IFRS 10‐11‐12(2) Net financial debt / (Operating cash flow before working capital + OFA Repayments)(3) Adjusted net financial debt/ (Operating cash flow before working capital + OFA Repayments), 5%
2014 Leverage
objective of 3.0x (3)
59
With €1.8 billion in dividends paid during the period
Investor Relations – 2012 Annual Results
60
A deleveraged Company with the ability to self‐finance operations
Regained financial strength
Positive cash flow before net financial divestments(1)
Sustainable resources to appropriately invest in our growth platforms while complying with an objective of positive cash flow before net financial divestments
Dividend stable during the transformation period• Dividend payable in 2014 in respect of the 2013 fiscal year: €0.70 per share
(1) Cash flow before financial divestments and after payment of financial expense and taxes represents the sum of adjusted operating cash flow and operating cash flow from financing activities, principal payments on operating financial assets, changes in working capital for operations and industrial investments and industrial divestitures, excluding net industrial investments of discontinued operations
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61
Reliance on the Company’s growth platforms
Water: Central & Eastern Europe Energy Services: Central & Eastern Europe€M
2009 2012Variation2009/2012
Revenue 875 1,115 +27.4%Adj. Op. Cash Flow 141 195 +38.3%
€M 2009 2012Variation2009/2012
Revenue 1,241 1,631 +31.4%Adj. Op. Cash Flow 289 307 +6.2%
Water: China
€M 2009 2012Variation2009/2012
Revenue 531 867 +63.3%Adj. Op. Cash Flow 92 128 +39.1%
Environmental Services: PFI in the United Kingdom
€M 2009 2012Variation2009/2012
Revenue 370 583 +57.6%Adj. Op. Cash Flow 102 163 +59.8%
Adjusted operating cash flow improvement of roughly €210 M in 3 years+29% in 3 years
Environmental Services: Hazardous waste
€M 2009 2012Variation2009/ 2012
Revenue 603 782 +29.7%Adj. Op. Cash Flow 99 142 +42.6%
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62
Growth: deployment of new business models
Concentrate on large‐scale markets with significant environmental issues...
... Where we can bring differentiated expertise, and be compensated in a profitable manner
Increase our revenue from industrial clients from ~35 % today to more than 50 %
Move toward the most dynamic geographies
Evolve our business models
Investor Relations – 2012 Annual Results
1. Source Cour des Comptes 2012
Concentrate on large‐scale markets with significant environmental issues‐ Ex.: Dismantling of nuclear plants
France is n 1 worldwide in the electronuclear cycle
CEA ‐ AREVA – EDF
A market potential in France of ~ €32bn1 for the dismantling of nuclear plants
… in which Veolia hasa unique position
A market with strong potential…
Veolia already has recognized expertise
•ANDRA : storage management of weakly radioactive waste
•CEA Saclay : operation of the effluent pre‐treatment facility
•Fukushima : emergency management with Areva and the CEA
Veolia has the expertise and the necessary critical mass in order to pursue development of this market
63
Veolia is committed to developing specialized solutions for thedismantling and remediation of nuclear plants
Investor Relations – 2012 Annual Results
Mobile water treatment (evaporation) → discharge / reuseWater treatment (evaporation & crystallization) → discharge / reuseWater treatment (reverse osmosis) → discharge / reuseMobile water treatment → reuse
1
2
3
45
8
8
8
88 7
6
1234
5 Water treatment for odor controlVacuum truck service for liquid wasteSoil remediationSolidification
678
8
Increase revenue with industrial clients Ex.: Shale gas: initial contracts in the USA and Central Europe
64
Investor Relations – 2012 Annual Results
Evolve our business models
STRONG AXES OF CHANGEFOR OUR BUSIENESSES…
…TRANSLATES IN A CONCRETE MANNERFOR OUR CLIENTS
Reinvent our historical businesses
Evolve our business models
Better serve our customers
Collection incentiveBiomassSmart metering
To serve the operator, rather than be the operatorProfit sharing
Solutions compatible with municipal operationsReduced costs for our customers
65
Investor Relations – 2012 Annual Results
66
Mid‐term objectives confirmed
(1) Including the debt reduction of €1.4 billion related to the change to equity method accounting for the Berlin Water contractand repayment of loans to joint ventures
(2) Before closing exchange rate impact(3) Net of implementation costs, of which ~20% associated with joint ventures(4) Subject to the approval of Veolia’s Board of Directors and the Annual General Shareholders Assembly(5) In cash or shares(6) Adjusted net financial debt/ (Operating cash flow before changes in working capital + OFA Repayments)(7) 5%
2012‐2013:Transformation
Period
• €6 billion in divestments (1)
• 2013 net financial debt, under new IFRS standards:Net Financial Debt between €8bn and €9bn(2)
Adjusted Net Financial Debt between €6bn and €7bn(2)
• Cost reductions:in 2013: €170M net impact(3) on operating income
• Extended dividend commitment of €0.70 (4) per share in 2013(5) and 2014
Beginning in 2014:New Veolia
• Organic revenue growth > 3% per year (mid‐cycle)• Adjusted operating cash flow growth >5% per year (mid‐cycle)• Leverage ratio(6) of 3.0x(7) beginning in 2014• Mid‐term: Payout ratio in line with historic level• Cost reductions in 2015: €470M net impact(3) on operating income
66
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Appendices
5
67
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Summary of appendices
Currency movements Appendix 1
Principal 2011 re‐presented figures Appendix 2
Revenue by geography Appendix 3
Quarterly revenue Appendix 4
Main contracts won or renewed in 2012 Appendix 5
Environmental Services revenue by geography Appendix 6
Environmental Services revenue by activity Appendix 7
Environmental Services: Revenue vs. Industrial Production Appendix 8
Environmental Services: Raw materials prices Appendix 9
Gross investments by division Appendix 10
Completed divestments Appendix 11
Efficiency Plan and Convergence 1 Appendix 12
Debt characteristics Appendix 13
Net liquidity Appendix 14
Management of liquidity Appendix 15
Operating financial assets Appendix 16
Balance sheet Appendix 17
ROCE Appendix 18
Composition of Board of Directors and Executive Committee Appendix 19 68
Investor Relations – 2012 Annual Results
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 foreign currency = x€
2011 2012 Δ 2012 vs. 2011
U.S. dollarAverage rateClosing rate
0.71840.7728
0.77760.7582
+8.2%‐1.9%
U.K. pound sterlingAverage rateClosing rate
1.15211.1976
1.23301.2255
+7.0%+2.3%
Australian dollarAverage rateClosing rate
0.74180.7862
0.80580.7868
+8.6%+0.1%
Czech korunaAverage rateClosing rate
0.04070.0388
0.03980.0398
‐2.2%+2.6%
69
Investor Relations – 2012 Annual Results
Appendix 2: Main 2011 re‐presented figures for IFRS 5 (1)
(1) To ensure the comparability of period, the 2011 financial statements have been re‐presented to include:‐ the impact of the reclassification into “net income from discontinued operations” of operations in the process of being sold such as the Moroccan activities in the Waterdivision and the Renewable energies activities partially sold as of December 31,2012;‐ the impact of the reclassification into “net income from discontinued operations” of divested activities in 2012 such as the regulated activities in the United Kingdom inthe Water division and Solid waste activities in the United States in the Environmental Services division.The 2011 financial statements have also been re‐presented for the reclassification into ‘continuing operations’ since March 3rd, 2011 of the activities of the group SociétéNationale Maritime Corse Méditerranée (SNCM) consolidated within the Transportation Division which was reclassified into “net income from discontinued operations”as of December 31, 2011. The divesture process of the SNCMwas interrupted during 2012 1st semester.
(2) Non recurring items include impairment losses on goodwill recorded in respect of Company subsidiaries as of December 31,2011 in Southern Europe and the United States and Impairment losses on non‐current assets recorded in the respect of Company subsidiaries mainly in Italy.
(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, (iv) change in receivables and other financial assets), (v) net financial interest paid and (vi) tax paid.
In €M 2011published
2011re‐presentedfor IFRS5 (1)
Revenue 29,647 28,576
Adjusted operating cash flow 3,152 2,853
Adjusted operating income 1,700 1,558
Operating income (2) 1,017 829
Adjusted net income, Group share 290 195
Free cash flow (3) 438 438
70
Investor Relations – 2012 Annual Results
Appendix 3: Revenue by geography
ΔΔ
constant FX
Δ excl. scope &
FX
Central & Eastern Europe +10.1% +12.1% +6.8%
France +3.5% +3.5% +3.8%
Europe, excl. France and Central & Eastern Europe ‐4.2% ‐6.3% ‐3.6%
United States +7.4% ‐0.8% ‐0.4%
Asia Pacific +8.4% ‐0.2% ‐0.2%
Rest of the world +7.6% +6.4% +5.8%
Total +3.0% +1.2% +1.5%
(1) see Appendix 2
28,576 29,439
in €M
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Appendix 4: Quarterly revenue1st quarter 2nd quarter 1st half
2011
Re‐presented(1)
2012 Δ excl. scope &
FX
2011
Re‐presented(1)
2012 Δ excl. scope & FX
2011
Re‐presented(1)
2012 Δ excl. scope &
FX
Water 2,823.8 2,957.1 +5.1% 2,986.7 3,013.7 ‐0.3% 5,810.4 5,970.8 +2.3%
Environ. Services 2,196.3 2,197.0 ‐1.1% 2,357.3 2,284.9 ‐5.7% 4,553.6 4,481.9 ‐3.5%
Energy Services 2,286.6 2,502.6 +6.2% 1,311.2 1,418.0 +5.6% 3,597.8 3,920.6 +5.9%
Other 94.2 131.8 +21.4% 123.7 147.4 +16.0% 217.9 279.2 +18.3%
Company 7,400.9 7,788.5 +3.8% 6,778.9 6,864.0 ‐0.8% 14,179.7 14,652.5 +1.6%
Δ at current scope & FX
+5.2% +1.3% +3.3%
(1) See Appendix 2 and IFRS 8 reclassifications detailed in section 2.1 “Operational Sectors” of the 2012 Operating & Financial Review
In €M
3rd quarter 4th quarter Full year ended December 31
2011
Re‐presented(1)
2012 Δ excl. scope &
FX
2011
Re‐presented(1)
2012 Δ excl. scope &
FX
2011
Re‐presented(1)
2012 Δ excl. scope &
FX
Water 2,955.8 3,001.1 ‐ 3,155.1 3,106.3 ‐0.6% 11,921.3 12,078.2 +1.0%
Environ. Services 2,252.5 2,268.9 ‐3.4% 2,204.7 2,332.1 +3.0% 9,010.8 9,082.9 ‐1.9%
Energy Services 1,179.4 1,260.6 +3.4% 2,361.0 2,483.4 +6.8% 7,138.2 7,664.6 +5.8%
Others 149,8 173.4 +12.3% 138.5 160.2 +13.8% 506.2 612.8 +15.3%
Company 6,537.5 6,704.0 ‐0.3% 7,859.3 8,082.0 +2.9% 28,576.5 29,438.5 +1.5%
Δ at current scope & FX
+2.5% +2.8% +3.0%
In €M
72
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‐ Renewals:251 main contracts renewed in France in 2012 in Water (o/w 135 in drinking water & 117 in wastewater) and more than 80 contracts with municipalities in Waste &80% of contracts due to expire in 2012 renewed in EnergyAntibes (Drinking water) – Length 10 years – Cumul. Rev.€94M€ (Water)Lens‐Liévin (Drinking water) – Length 12 years – Cumul. Rev. €114M (Water)Bassin de Thau Frontignan Sète – Energy recovery unit – Length 8 years – Cumul. Rev. €39M (Waste)Bassin d’Arcachon (waste water) – Length: 8 years – Cumul. Rev. €66M (Water)Management of household waste Val de Bièvre – Length: 6 years – Cumul. Rev. €34M (Waste)Cleaning services for public spaces and streets for the Mont‐Valérien community agglomeration– Length: 5 years – Cumul. Rev.€33M (Waste)Household waste collection for the Est Ensemble community agglomeration (Ile de France) – Length 5 years – Cumul. Rev. €30M total, of which ~50% for Veolia (Waste)
‐ Outsourcing / Privatization :District heating network – renovation of the biomass heating cogenerations facility in Saint Germain en Laye – Length: 20 years – Cumul. Rev.€90M (Energy) Operation of a mechanical‐biological treatment plant with the SYSEM in Vannes –Length 6 years – Cumul. Rev. €16M (Waste)Industrial utilities – Contract for steam production, upgrade installations Ajinomoto Eurolysine in Amiens – Length: 12 years – Cumul. Rev.€279M (Energy)Industrial utilities – Steam production – Seyfert Paper SAS Descartes –Length: 12 years – Cumul. Rev.€93M€ (Energy)Public service delegation for drinking water in Salon de Provence (SEM Agglopole Provence) – Length: 12 years – Cumul. Rev. €101M (Water)
Outsourcing / PrivatizationRenewals
Engineering / Design & Construction
ORGANIC GROWTHORGANIC GROWTH
Saint Germain en LayeSeine Aval (Achères)
Amiens
Lens‐Liévin
Appendix 5: Main contracts won or renewed since the beginning of 2012 in France (1/4)
Propreté Ile de France
Vannes
Thau‐Frontignan‐
SètePARTNERSHIPSPARTNERSHIPS
Partnerships with other companies
Veolia Environnement and the CEA (French Alternative Energies and Atomic EnergyCommission) signed a general cooperation agreement on January 15, 2013 covering nuclearfacility dismantling and remediation, as well as a specific agreement concerning two facilities,one at the CEA center in Marcoule, the other at the CEA center in Cadarache.
Marcoule
AntibesCadaracheSalon
Provence
Descartes
Bassin d’Arcachon
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‐ Renewals :
Building energy services – renewal of European Commission offices in Brussels, track energy consumption – Length: 10 years – Cumul Rev. €196M (Energy)
Building energy service (local healthcare company in Trévise) – Operations and maintenance of heating, air conditioning and non‐medical equipment–Length: 9 years– Cumul. Rev.€137M (Energy)
‐ Outsourcing / Privatization :Management of technical and energy services for European Parliament real estate assets in Strasbourg, Brussels and Luxembourg – Length: 6 years –Cumul. Rev. €126M (Energy)Public service management contract for operating the district heating network in the city of Iasi in Romania – Length: 20 years – Cumul. Rev. €781M (Energy)Closed Loop Recycling contract in the United Kingdom to provide recycled plastic ‐ Length 5 years – Cumul. Rev. €32M (Waste)
‐ Engineering / Design & Construction :Design and construction of an evaporation and crystallization facility for the recuperation and purification of salts and potash starting with salt by‐products generated in the production of fertilizer – Length: 2 years (Water)PFI contract for residual municipal waste treatment and recovery with the city of Leeds, United Kingdom – Cumul. Rev. £460M – Length: 25 years (Waste)
Outsourcing / PrivatizationEngineering / Design & Construction
Appendix 5: Main contracts won or renewed since the beginning of 2012 in Europe (2/4)
Iasi
Romania
ORGANIC GROWTHORGANIC GROWTH
European Parliament
Luxembourg / Belgium
Spain
Suria
Leeds
United Kingdom
Renewals Italy
Trévise
ClosedLoop
Recycling
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Appendix 5: Main contracts won or renewed since the beginning of 2012 in North America (3/4)
United States(excl. AK & HI)
New York
Canada
‐ Renewals:Contract to treat medical waste (Phoenix) – Length: 5 years – Cumul. Rev. $50M (Waste)Industrial services cleaning contract (United States) –Length: 5 years‐ Cumul. Rev.€76M (Waste)Hazardous waste management and treatment – (United States) Length: 3 years‐ Cumul. Rev. $60M (Waste)
‐ Outsourcing / Privatization :Performance and consulting contract to support improved management of water services in the city of New York–Length: 4 to 6 years – Cumul. Rev. $36M (~€28M) (Water)Management contract for water and wastewater systems in Rialto, California– Length: 30 years– Cumul. Rev. $300M(Water)
‐ Engineering / Design & Construction :Construction of a facility to treat red mud generated by industrial alumina production in partnership with the Canadian company Orbite Aluminae, Inc (Waste)
RenewalsOutsourcing / PrivatizationEngineering / Design & Construction
ORGANIC GROWTHORGANIC GROWTH
Phoenix
Orbite Aluminae Inc
Rialto
Houston
75
Investor Relations – 2012 Annual Results
‐ Outsourcing / Privatization :Operations and maintenance contract for treated wastewater, Kyusetsu – Hiroshima (Japan) – Length: 4 years – Cumul. Rev.€26M (Water) Operations and management of the drinking water service in the city of Nagpur (India) –Length: 25 years – Cumul. Rev. €387M (Water)Contract extension with Hynix (Korea) – Length 6 years – Ultrapure water – Cumul. Rev. €45M (Water)Industrial contract – Water management and optimization of energy consumption at Hebei Iron & Steel (China) – Length: 7 years – Cumul. Rev. €43M (Water)Coles Supermarkets (Australia)– Collection, disposal, treatment of non‐hazardous and organic waste streams – Length 3 years –Cumul. Rev. €47M (Waste)
‐ Engineering / Design & Construction :
Design, build and operation of a hazardous waste treatment center in Changsha (Hunan province in China) – Length: 25 years – Cumul. Rev. more than €320M (Waste)
Design, build and operation of the new wastewater treatment plant in Nilothi, west of New Delhi – Length: 13 years – Cumul. Rev. €40M (Water)
Appendix 5: Main contracts won or renewed since the beginning of 2012 in Asia Pacific (4/4)ORGANIC GROWTHORGANIC GROWTH
Engineering / Design & Construction
Japan
Outsourcing / Privatization
Changsha
China
India
Nagpur
New Delhi
KoreaHebei Iron & Steel
Australia
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% du CA 2012
Var. at constant scope & FX 2012/2011
France 38% +1.5% Lower recycled raw material prices (paper / cardboard /scrap metal)
Hazardous waste remains strong
Increase in waste‐to‐energy
Germany 12% ‐13.2% Lower recycled raw material prices and volumes
Competitive pressure on municipal and C&I contracts
United Kingdom
19% ‐2.1% Unfavorable revenue base effect for PFI construction revenue
Increase in incinerated volumes
Good performance in municipal collection
Reduction in landfill volumes
Competitive pressure in C&I
North America
9% +1.1% US Solid waste divestment: closed November 20, 2012
Good performance in hazardous waste
Asia Pacific
12% +8.0% Asia: lower revenue from recycled materials (paper) and impact of contracts lost in 2011
Australia revenue increased by 11.4% due to increase in level of activity and higher tariffs; increase in landfill tax
Appendix 6: Environmental Services‐ Revenue in key countries
77
Investor Relations – 2012 Annual Results
Appendix 7: Environmental Services revenue by activity
2011 2012
78
Investor Relations – 2012 Annual Results
Appendix 8: Environmental Services revenue vs. Industrial Production
Weighted average industrial production indices for 4 key countries: France, U.K. (excl. PFIs), Germany, and North America (excl. US solid waste and WTE); Includes SARP and SARPISources : OECD Extract Database (up to November 2012); Q4 2012: recopied from November 2012 for France and Germany in the absence of December 2012 figures
Industrial Production and Veolia Environmental Services Organic Growth
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
Q12012
Q22012
Q32012
Q42012
Veolia Environmental Services Organic GrowthIndustrial Production
Y-Y Growth Rate (in %) vs. previous year's quarter
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Investor Relations – 2012 Annual Results
Appendix 9: Environmental Services – Evolution of raw materials prices: paper, cardboard, metal
Evolution of raw materials prices (€/t)
0
20
40
60
80
100
120
140
160
180
jan08
apr08
jul 08 oct08
jan09
apr09
jul 09 oct09
jan10
apr10
jul 10 oct10
jan11
apr11
jul 11 oct11
jan12
apr12
jul 12 oct2012
jan2013
0
50
100
150
200
250
300
350
400
450
500
Cardboard Paper Metals 80
Investor Relations – 2012 Annual Results
Appendix 10: Gross investments by division
GrowthIn €M
MaintenanceFinancial, including Δ scope*
IndustrialNew
operating financial assets
Total
Water 192 412 415 162 1,181Environmental Services 451 43 274 56 824Energy Services 116 28 455 173 772Others 153 26 305 21 505Total 2012 912 509 1,449 412 3,282
Total 2011 1,094 466 1,207 367 3,134
* Including partial acquisitions between shareholders with no change in control
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Appendix 11: Completed divestments
(1) Including net financial debt of divested companies and partial divestments between non‐controlling interests with no change in consolidation scope
In €M
2011 2012
Industrial divestments 169 174
Financial divestments (1) 1,326 4,925
Increase in minority capital 49 ‐
Total divestments 1,544 5,099
82
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€208 M in gross savings in in 2012 from 669 projects*
Appendix 12‐1: Efficiency Plan
* €191M net savings‐ breakdown on the basis of gross savings 83
Investor Relations – 2012 Annual Results
€142 M of gross cost savings in 2012 for 404 projects*
Appendix 12‐2: Convergence 1
* Net impact of +€84M in adjusted operating cash flow and +€60M in operating income‐ Breakdown on the basis of gross savings 84
Investor Relations – 2012 Annual Results
Appendix 13: Debt characteristics
Net financial debt after hedges at December 31, 2012 (*)
Currency breakdown of gross debt after hedges at December 31, 2012
Arrival at term on February 1, 2012 of the 2012 bond with nominal value of €671MEarly redemption of the U.S. private placement issued January 2003 on February 9, 2012 for an equivalent €350.2MRefinancing by early redemption of a portion of bond issues maturing in 2013, 2014, 2017 and 2018 from March 19‐27, 2012 for €750M, while issuing a new bond with maturity in 2027 for the same amountIssuance on June 26, 2012 of a new bond in the amount of RMB500M (€63M equivalent) maturing in June 2017Early reversal of a portion of portfolio of euro‐denominated floating rate payer swaps (€3,075M notional amount and €420M of final payments made by banks)Early redemption of the entire USD bond maturing in 2015 for $50M in November 2012Partial buyback in December 2012 of €341M of the euro‐denominated bond maturing in 2016, €256M of the euro‐denominated bond maturing in 2017, $153M of the USD‐denominated bond maturing in 2018 (resulting in nominal bond amounts of €559M, €744 M and $547M, respectively)Group liquidity: €9.6B, including €4.0B in undrawn confirmed credit lines (without disruptive covenants)Net Group liquidity: €5.6B
Fixed rate: 98%
Variable rate: 2 %
(*) before non active caps at December 31, 2012EUR, 64%
Others, 9%
AUD, 4%
PLN, 4%
HKD, 5%
RMB, 6%
GBP, 6%
USD, 2%
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Investor Relations – 2012 Annual Results
Appendix 14: Net liquidity
December 31, 2011
December 31, 2012
Veolia Environnement
Syndicated loans 2,692.7 2,607.3
Bilateral credit lines 1,000.0 925.0
Lines of credit 483.0 473.7
Cash and cash equivalents 4,283.3 4,349.6
Total Veolia Environnement 8,459.0 8,355.6
Subsidiaries
Cash and cash equivalents 1,440.6 1,198.2
Total Subsidiaries 1,440.6 1,198,2
Total Group liquidity 9,899.6 9,553.8
Current liabilities and bank overdrafts 4,382.5 3,917.9
Total Group net liquidiity 5,517.1 5,635.9
In €M
86
Investor Relations – 2012 Annual Results
87
2/27/2013
Appendix 15 : Management of liquidity
Lines of liquidity refinanced
Stable liquidity between 2011 and 2012
87
Investor Relations – 2012 Annual Results
Appendix 16: Operating financial assets
In €M 2011published
2012published
Balance sheet: current and non‐current operating financial assetsare recorded at amortized costs on the balance sheet with acorresponding liability booked in Veolia’s consolidated netfinancial debt
5,445 2,853
Income statement: interest payments are a sub‐line to therevenue from ordinary activities “o/w revenue from operatingfinancial assets” and are included in operating cash flow beforechanges in working capital
384 329
Cash flow statement (inflows): Principal repayments associatedwith operating financial assets are not recognized in the incomestatement, but recorded within ”cash flow from investingactivities” on the cash flow statement
441 371
Cash flow statement (outflows): “New operating financial assets”which are the current year’s investments in operating financialassets are also recorded within ”cash flow from investingactivities” on the cash flow statement
364 412
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Investor Relations – 2012 Annual Results
Appendix 17: Consolidated statement of financial position
In €M 2011 2012
Intangible assets (concessions) 4,629 4,519
Property, Plant & Equipment 8,488 6,838
Other non‐current assets 10,252 8,566
Operating financial assets (current and non‐current) 5,445 2,853
Cash & Cash equivalents 5,724 5,548
Other current assets 15,868 16,288
Total Assets 50,406 44,612
Capital (including minorities) 9,835 9,126
Financial debt (current and non‐current) 21,089 17,002
Other non‐current liabilities 4,184 3,720
Other current liabilities 15,298 14,764
Total Liabilities 50,406 44,612
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Net income from operations = Adjusted operating income + Share of net income of associates – Adjusted income tax expense – Revenue from operating financial assets + Income tax expense allocatedto 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 capitalrequirements, net + Net derivative instruments – Provisions + capital employed from assets and liabilities held for sale, excluding discontinued operations
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
Capital employed consists of capital “earning” a return: equity capital, minority interests, net financial debt less
operating financial assets
Appendix 18: Definition du ROCE (1/3)
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Appendix 18: ROCE calculation (2/3)
In €M 2012
Adjusted operating income 1,194
Revenue from operating financial assets ‐329Share of net income of associates 30Adjusted income tax expense ‐213Tax expense allocated to operating financial assets 69Net income from operations 751Average 2012 capital employed 14,780Post‐tax ROCE 5.08%
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Appendix 18: Evolution of pre‐tax ROCE by division (3/3)
* 2011 financial statements have been re‐presented in order to ensure the comparability of periods: see Appendix 2
En M€ 2011 * 2012
Capital employed published at year end
14,935 14,625
Average capital employed (in €M)
Before tax ROCE (in %)
2011 * 2012 2011 * 2012
Water 5,594 5,620 10.6% 8.0%
Environmental Services 4,903 4,816 7.2% 6.5%
Energy Services 4,018 3,992 9.0% 6.9%
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Appendix 19: Composition of Board of Directors (1/2)Composition of Veolia Environnement’s Board of Directors• Antoine Frérot, Chairman & CEO of Veolia Environnement
• Louis Schweitzer*, Senior Independent Director, Chairman of the Board of Astra Zeneca (UK)
• Jacques Aschenbroich*, CEO of Valéo
• Maryse Aulagnon*, Chairman and founder of Affine
• Daniel Bouton*, Chairman of DMJB Conseil, Senior Advisor of Rothschild & Cie Bank
• Caisse des dépôts et consignations, represented by Olivier Mareuse, CFO of Caisse des dépôts et consignations
• Pierre‐André de Chalendar*, Chairman and CEO of Saint‐Gobain
• Paul‐Louis Girardot*, Chairman of the Supervisory Board of Veolia Water
• Groupama SA*, represented by Georges Ralli, Chairman of Maison Lazard and Lazard Frères Gestion
• Groupe Industriel Marcel Dassault*, represented by Olivier Costa de Beauregard, Managing Director
• Marion Guillou*, Chairwoman of Agreenium
• Philippe Kourilsky, Professor at the Collège de France, member of the Academy of Sciences
• Serge Michel, Chairman of Soficot SAS
• Baudouin Prot*, Chairman of BNP Paribas
• Qatari Diar Real Estate Investment Company*, represented by Dr Mohd Alhamadi, Chief Corporate Improvement Officer
• Nathalie Rachou*, gérant de Topiary Finance Ltd
• Paolo Scaroni*, CEO de ENI (Italy)
• Censeur: Thierry Dassault, Chairman and Director of Keynectis SA, Deputy Chief Executive Officer and Member of the Supervisory Board of Groupe Industriel Marcel Dassault SAS
Committees of the Board of Directors of Veolia Environnement• Accounts and Audit Committee: D. Bouton (Chairman), J. Aschenbroich, P‐L. Girardot, O. Costa de Beauregard (for Groupe Industriel Marcel
Dassault), N. Rachou
• Nomination and Compensation Committee: S. Michel (Chairman), D. Bouton, L. Schweitzer, O. Costa de Beauregard (for Groupe Industriel Marcel Dassault)
• Research, Innovation and Sustainable Development Committee: J. Aschenbroich (Chairman), P‐L. Girardot, P.‐A. de Chalendar, M. Guillou, T. Dassault
* Independent Director93
Investor Relations – 2012 Annual Results
Appendix 19: Composition of Executive Committee (2/2)Antoine Frérot• Chairman & Chief Executive Officer
François Bertreau• Senior Executive Vice‐President and Chief Operating Officer
Sylvain Boucher• Country Delegate for France
Jean‐Michel Herrewyn• Senior Executive Vice President in charge of the Water Division
Franck Lacroix• Senior Executive Vice President in charge of the Energy Division
Jean‐Marie Lambert• Senior Executive Vice‐President in charge of Human Resources
Jérôme Le Conte• Senior Executive Vice President in charge of the Environmental Services Division
Helman le Pas de Sécheval• Senior Executive Vice President, General Counsel
Pierre‐François Riolacci• Senior Executive Vice President and Chief Finance Officer
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Investor Relations – 2012 Annual Results
Ronald Wasylec, Senior Vice President, Investor RelationsTéléphone +33 1 71 75 12 23
e‐mail [email protected]
Ariane de LamazeTéléphone +33 1 71 75 06 00
e‐mail ariane.de‐[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 7900
Chicago, IL 60601Tel +1 (312) 552 2890Fax +1 (312) 552 2866
e‐mail [email protected]
http://www.finance.veolia.com
Investor Relations contact information
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