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2010-08-06
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First half 2010First half 2010results
Investor Relations, 2010 first half results ‐ 06/08/10
DisclaimerDisclaimerVeolia Environnement is a corporation listed on the NYSE and Euronext Paris. This document contains "forward‐lookingstatements" within the meaning of the provisions of the U.S. Private Securities Litigation Reform Act of 1995. Suchforward‐looking statements are not guarantees of future performance. Actual results may differ materially from theforward‐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 risksassociated with conducting business in some countries outside of Western Europe, the United States and Canada, the riskthat changes in energy prices and taxes may reduce Veolia Environnement's profits, the risk that we may makeinvestments in projects without being able to obtain the required approvals for the project, the risk that governmentalth iti ld t i t dif f V li E i t' t t th i k th t l t t tauthorities 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 thosecontracts, the risk that acquisitions may not provide the benefits that Veolia Environnement hopes to achieve, the risk thatVeolia Environnement's compliance with environmental laws may become more costly in the future, the risk that currencyexchange rate fluctuations may negatively affect Veolia Environnement's financial results and the price of its shares, therisk that Veolia Environnement may incur environmental liability in connection with its past present and future operationsrisk 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 ExchangeCommission. Veolia Environnement does not undertake, nor does it have, any obligation to provide updates or to reviseany forward‐looking statements. Investors and security holders may obtain a free copy of documents filed by VeoliaEnvironnement 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. Securitiesand Exchange Commission under the U.S. Sarbanes‐Oxley Act of 2002. These "non‐GAAP financial measures" are beingcommunicated 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 recentlyannounced or completed acquisitions. In some cases, the valuation is expressed as a multiple of EBITDA of the acquiredbusiness, based on the financial information provided to Veolia Environnement as part of the acquisition process. Suchmultiples 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
2
Statements” above.
Investor Relations, 2010 first half results ‐ 06/08/10
Table of contentsTable of contents
Highlights
2010 first half results
2010 objectives
3
Antoine FrérotChief Executive Officer
Investor Relations, 2010 first half results ‐ 06/08/10
Overview of trends in activity (1)Overview of trends in activity (1)
Water: declining revenue in Works activities
First half of 2010
Water: declining revenue in Works activities• Continued lower Works activity mainly due to the completion of 3 large contracts in the Middle EastG d ili f ti d it th d f th P i t t• Good resilience of operations despite the end of the Paris contract
Environmental Services: market improvement • Strong rebound in prices of recycled raw materials and services pricing remain g p y p gat good levels
• Improvement in volumes is fragile and uneven• Contract signature selectivityg y
Energy Services: first half stable• Climate conditions more favorable at the beginning of the year / negative impact of energy pricesimpact of energy prices
Transportation: good dynamics masked by the end of 3 contracts• Negative revenue impact of €350m related to the end of the Bordeaux, Melbourne and Stockholm contracts
5
Melbourne and Stockholm contracts• Revenue growth of 8.8% excluding the impact of these contracts
Investor Relations, 2010 first half results ‐ 06/08/10
Overview of trends in activity (2)
Reappearance of opportunities for organic growth in core targets
Near and mid‐term
Overview of trends in activity (2)
Reappearance of opportunities for organic growth in core targets• For public collectivities• In all our specialties
Interesting opportunities to exchange and optimize assets• Water in Central Europe• Water in Central Europe
Portfolio of United Utilities contracts in EuropeEntry of IFC into the capital of Veolia Voda for 9.5%
E ffi i i th C h R bli• Energy efficiency in the Czech RepublicDivestment of 85% of Usti and 15% of Dalkia CeskaNWR Energy (industrial platform in Ostrava and Poland)
Continued pursuit of asset portfolio redeployment
6
Investor Relations, 2010 first half results ‐ 06/08/10
Significant commercial and strategic advancesSignificant commercial and strategic advances
SEDIF contract win for 12 yearsy
Important commercial successes bring profitable growthW t L Ré i R P t b d C t l i t t• Water: La Réunion, Royan, Petrobras and Catalonia contracts
• Environmental Services: High performance sorting and recycling in Nantes, Staffordshire, Angers’ biopôle, Waste‐to‐energy in Beauvais
• Dalkia: Cogeneration by biomass in Lodz Poznan as well as in France (7• Dalkia: Cogeneration by biomass in Lodz, Poznan as well as in France (7 projects)
• Transportation: Saxony, Bavaria, Rhine Westphalia, Boston, Phoenix• Multiple divisions: Renault in Tangierp g
Signature of agreement for the merger of Veolia Transport / Transdev on May 5, 2010y ,
7
Investor Relations, 2010 first half results ‐ 06/08/10
Improvement confirmedImprovement confirmedSlight decline in revenue: ‐1.2%• Noticeable improvement in the second quarter in all divisionsp q
Operating cash flow growth of 2.7%
Improvement in recurring operating income: +6.6% (operating income +11.2%)I t i i t d i• Improvement in associated margins
Growth in recurring net income: +6.6%, (+69.9% growth in net income)
2010 Efficiency Plan: €132m in cost savings in H1• Cost reductions proceeding in line with annual €250m target
Strong growth in operating cash flow – net investments to €1,533m vs €850m (+80%)• Maintained discipline regarding gross investments: €1,333m (‐12%)Maintained discipline regarding gross investments: €1,333m ( 12%)
• Divestments: €766m vs. €268m
• Stable free cash flow vs. H1 2009 including the 86% cash dividend payment
Net financial debt amounted to €16bnNet financial debt amounted to €16bn • Unfavorable exchange rate effect: +€674m
• Extension of debt maturity after the debt exchange in July 2010
8
Investor Relations, 2010 first half results ‐ 06/08/10
2010 objectives confirmed2010 objectives confirmed
• Recurring operating income improvement
• Positive free cash flow after dividend payment(1)
• €3bn of divestments over 2009 – 2010 – 2011
• €250m in cost reductions
• Maintain ratio objective: net debt / (cash flow from operations + repayment of Operating Financial Assets)
9(1) Excluding the planned merger of Veolia Transport/Transdev
Pierre‐FrançoisPierre‐François RiolacciChief Financial Officer
Investor Relations, 2010 first half results ‐ 06/08/10
2010 First half key figuresEn €m H1 2009
Adjusted (1) H1 2010 current FX rates
constant FX rates
2010 First half key figures
Revenue 17,389.3 17,177.3 ‐1.2% ‐3.3%Operating Cash Flow(3) 1,835.2(2) 1,885.4 +2.7% +0.2%
Margin rate 10.6 % 11.0%Recurring operating income 1,011.5 1,078.2 +6.6% +3.5%
Margin rate 5.8 % 6.3%Operating Income 1,011.5 1,125.2 +11.2% +7.9%Recurring net income attributable to equity holders of parent 287.3 306.2 +6.6%
Net income attributable to equityNet income attributable to equity holders of parent 220.3 374.2 +69.9%
Dec 31 2009
June 30 2010 FX Impact2009 2010 p
Net financial debt 15,127 16,027 +674
11
(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations” of UK operations in the Transportation division and the Eolfi activities in the Energy Services division;
(2) As of January 1, 2010, due to the application of the new amendment to IAS 7, operating cash flow for H1 2009 has been adjusted for renewal expenses by an amount of €148.3 m, of which €102.3m is within the Water division and €46.0m is within the Energy Services division.
(3) For detailed definition refer to 2009 Form 20-F page 74
Investor Relations, 2010 first half results ‐ 06/08/10
Impact of FX movements on H1 2010 accountsImpact of FX movements on H1 2010 accountsEuro depreciation H1 2010 / H1 2009
Average Rate Closing RateAverage Rate Closing Rate
• Australian dollar +27% +21%• Czech koruna +6% +1%• Pound sterling +3% +4%• Polish zloty +12% +7%
ll• U.S. dollar 0% +15%
I G ’ i fiImpacts on Group’s main figures • Revenue +€357m• Operating cash flow +€47m• Operating cash flow +€47m• Recurring operating income +€32m
12
• Higher net debt (at end of period rates) +€674m
Investor Relations, 2010 first half results ‐ 06/08/10
Breakdown of consolidated revenueBreakdown of consolidated revenue
By division By geographic region
Water€5,901m
Transportation€2,847m Asia / Pacific
Rest of the world€1,008m
,,
North America€1 679m
€1,271m
17%34% 10%
7%6%
Energy Services€3,721m
F
€1,679m
22% 40%
37%
10%
Environmental
France €6,903m
Europe ex. France
27% 37%
C lid t d H1 2010 R f €17 177
EnvironmentalServices €4,708m
Europe ex. France €6,316m
13
Consolidated H1 2010 Revenue of €17,177m
Investor Relations, 2010 first half results ‐ 06/08/10
Revenue
In €m+ 35717 389 - 384
Revenue
+ 35717,389- 185
38417,177
H1 2009adjusted (1)
Internalgrowth
Externalgrowth
FX effect H1 2010adjusted
-1.1%growth
-2.2%growth
+2.1% -1.2%
14(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations”
of UK operations in the Transportation division and the Eolfi activities in the Energy Services division
Investor Relations, 2010 first half results ‐ 06/08/10
Breakdown of revenue by divisionBreakdown of revenue by divisionIn €m
Current FX rates
Constant FX rates
Exc. Scope
& FX
17,389 17,177
FX rates FX rates & FX
Water ‐5.4% ‐7.1% ‐5.7%
Environmental Services 4.6% 1.9% 6.6%
6,235 5,901
Energy Services 0.2% ‐1.6% 0.6%
Transportation ‐3.1% ‐5.2% ‐5.2%
VE Group 1 2% 3 3% 1 1%
4,502 4,708
VE Group ‐1.2% ‐3.3% ‐1.1%3,713
2,939
3,721
2,847
H1 2009 adjusted (1)
H1 2010
15(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations”
of UK operations in the Transportation division and the Eolfi activities in the Energy Services division
Investor Relations, 2010 first half results ‐ 06/08/10
An inflexion during second quarter in all divisionsAn inflexion during second quarter in all divisionsRevenue in €m
1st Quarter 2nd Quarter 1st Half
2009 2010 At 2009 2010 At 2009 2010 At 2009 2010 constantFX
2009 2010 constantFX
2009 2010 constantFX
Water 3,143 2,923 ‐7.8% 3,092 2,978 ‐6.4% 6,235 5,901 ‐7.1%, , , , , ,
Waste 2,188 2,204 ‐0.7% 2,314 2,504 4.3% 4,502 4,708 1.9%
Energy services 2,398 2,312 ‐4.9% 1,315 1,409 4.6% 3,713 3,721 ‐1.6%
Transportation 1,431 1,356 ‐6.2% 1,508 1,491 ‐4.4% 2,939 2,847 ‐5.2%
Group 9,160 8,794 ‐5.1% 8,229 8,383 ‐1.3% 17,389 17,177 ‐3.3%
Variation at 4 0% +1 9% 1 2%
16
current FX ‐4.0% +1.9% ‐1.2%
Investor Relations, 2010 first half results ‐ 06/08/10
Breakdown of revenue by geographic areaBreakdown of revenue by geographic areaIn €m
Current FX rates
Constant FX rates
Exc. Scope & FX
17,389 17,177
FX rates FX rates
France ‐0.8% ‐0.8% 1.4%
Europe ex. France 2.3% ‐0.4% 1.6%
6,962 6,903
North America 4.2% 2.9% 2.7%
Asia / Pacific ‐4.0% ‐14.4% ‐15.2%
Rest of world 23 3% 25 9% 17 1%
6,177 6,316
Rest of world ‐23.3% ‐25.9% ‐17.1%
Group VE ‐1.2% ‐3.3% ‐1.1%1,6111,3241 315
1,679
1 0081,271
H1 20101,315 1,008H1 2009
adjusted (1)
17(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations”
of UK operations in the Transportation division and the Eolfi activities in the Energy Services division
Investor Relations, 2010 first half results ‐ 06/08/10
Revenue : Veolia Water, down 5.4%Revenue : Veolia Water, down 5.4%Veolia Water Solutions & Technologies: ‐ 26.2% at constant scope and FX • Impact of the completion of large Design & Build contracts (Marafiq, Fujairah, Ras Laffan). Identical trend in first and second quarters
• Backlog for D&B activity has stabilized
First half revenue (€m)
Backlog for D&B activity has stabilized• Good activity in the « Solutions » business
France : Revenue decline of 2.4% at constant scope• Decline in Works ( 6 3%)
6,2355,901-5.4%
• Decline in Works (‐6.3%)• Slight increase in operations activity (+3.4%) excluding impact of the end of the Paris contract
Outside France: +1.1% at constant scope and FX 12 6%
-1.3%4,013
2 222
3,960
1 941Outside France: +1.1% at constant scope and FX • Europe (excl. France): +3.0% at constant scope and FX (United Kingdom, Northern Europe)
• Africa / Middle East: +3.3% at constant scope and FX due to S1 09 S1 10
-12.6%2,222 1,941
Operationsincreased volumes and tariffs in 2009• Asia Pacific: ‐4.9% at constant scope and FX due to end of construction of the Gold Coast desalination plant (Australia)
Operations
Works and E&C
18
Investor Relations, 2010 first half results ‐ 06/08/10
Revenue: Veolia Environmental Services: +4.6%Revenue: Veolia Environmental Services: 4.6%First half revenue
(€m)
Waste volumes ± 0%
Variation in revenue H1 2010 / H1 2009 +5%4,502 4,708+4.6%
Price and volumes of recycled materials + 6%
Rise in service prices + 1%
FX effects + 3%FX effects + 3%
Scope ‐ 5%
Breakdown of revenue by activity H1 09 H1 10Breakdown of revenue by activity2009 H1 2010
Urban cleaning and collection 23%8%
8%22%8%
8%
Non hazardous industrial waste collection and services
Hazardous industrial waste collection and services
Sorting and recycling
Hazardous waste treatment13%
6% 6%
19
Hazardous waste treatment
Waste‐to‐energy from non hazardous waste
Landfilling of non hazardous and inert waste 24%
18%
13%
24%
16%
16%
Investor Relations, 2010 first half results ‐ 06/08/10
Veolia Environmental Services: Breakdown of revenue by geographic arearevenue by geographic area
% of H1 2010
Δ at 2010
revenueconstant scope & FX
France 34% +7% Higher recycled raw materials pricesContract selectivity (municipal collection)Contract selectivity (municipal collection)Closure of 2 landfills Good activity for hazardous waste
Germany 12% +12% Higher recycled raw materials pricesGermany 12% +12% Higher recycled raw materials pricesCompetitive pressure on municipal, DSD contracts and industrial waste contracts
United 16% +4% Positive contribution of integrated contracts (PFI)United Kingdom
16% +4% Positive contribution of integrated contracts (PFI)Decline in industrial waste volumes and landfilled volumes during the first half, with stabilization in the second quarter
North America 14% +5% Improvement in solid waste volumes in the second quarterImprovement in Industrial Services
Rest of the 24% +6%
20
Rest of the world
24% +6%
Investor Relations, 2010 first half results ‐ 06/08/10
Revenue: Veolia Energy Services, stable, +0.2%Revenue: Veolia Energy Services, stable, 0.2%
Lower energy pricesLower energy prices• impact of ‐€83m First half revenue
(€m)
Favorable climate in the first half of 2010 primarily in France and Central Europe• impact of +€65m -1.9%1 ,952
3,713 3,721
1,915
+0.2%
p
Stabilization in Works activities at constant scope +2.6%1,761 1,807scope
H1 09 H1 10
Outside France
(1)
Outside France
France
21(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations”
of UK operations in the Transportation division and the Eolfi activities in the Energy Services division
Investor Relations, 2010 first half results ‐ 06/08/10
Revenue: Veolia Transportation, down 3.1%Revenue: Veolia Transportation, down 3.1%Revenue down 5.2% at constant scope and FX rates• Non‐renewal in 2009 of the Bordeaux, Stockholm and Melbourne contracts (‐€350m)
• Good commercial development
First half revenue (€m)
Valenciennes, The Netherlands (Haaglanden), Germany, United‐States
2,940 2,848-3.1%
Revenue growth of 1.8% in France at constant scope
H1 09 H1 10Revenue decline of 9.7% outside France at constant scope and FX rates (impact of Stockholm and Melbourne ‐€300m)
(1)
Stockholm and Melbourne ‐€300m)
22(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations”
of UK operations in the Transportation division and the Eolfi activities in the Energy Services division
Investor Relations, 2010 first half results ‐ 06/08/10
Operating cash flow (1)Operating cash flow
In €m H1 2009adjusted(2) H1 2010
current FX
FX effect
constant FXadjusted FX rates effect FX rates
Water 808 788 ‐2.5% 16 ‐4.4%lEnvironmental Services 540 627 +16.1% 15 +13.3%
Energy Services 374 386 +3.2% 11 +0.1%Transportation 160 159 ‐0.6% 5 ‐3.8%Transportation 160 159 0.6% 5 3.8%Other ‐47 ‐75 ‐ ‐Total Group 1,835 1,885 +2.7% 47 +0.2%
23
(1) Operating Cash Flow = cash flow from continuing operations before tax and interest expense(2) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations”
of UK operations in the Transportation division and the Eolfi activities in the Energy Services division As of January 1, 2010, due to the application of the new amendment to IAS 7, operating cash flow for H1 2009 has been adjusted for renewal expenses by an amount of €148.3 m, of which €102.3m is within the Water division and €46.0m is within the Energy Services division.
Investor Relations, 2010 first half results ‐ 06/08/10
Operating cash flow margin improvementOperating cash flow margin improvement
H1 2009 margin
adjusted (1)H1 2010 margin
Water 13.0% 13.4%Environmental Services 12.0% 13.3%Energy Services 10.1% 10.4%Transportation 5.4% 5.6%OtherOther ‐ ‐
Total Group 10.6% 11.0%
24
(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations” of UK operations in the Transportation division and the Eolfi activities in the Energy Services division .As of January 1, 2010, due to the application of the new amendment to IAS 7, operating cash flow for H1 2009 has been adjusted for renewal expenses by an amount of €148.3 m, of which €102.3m is within the Water division and €46.0m is within the Energy Services division.
Investor Relations, 2010 first half results ‐ 06/08/10
Efficiency Plan: Cost reduction progressing in line with annual €250m objectiveline with annual €250m objective
Efficiency Plan
€mH1 2009
(Reminder)H1 2010
Water 37 38Environmental Services 25* 43Energy Services 21 31Transportation 15 18
Other 3 2Other 3 2
Total Group 101 132
53 % of the annual objective realized during the first half
25* Excluding the Environmental Services Division’s separate Plan of Adaptation in 2009
Investor Relations, 2010 first half results ‐ 06/08/10
Recurring operating income increased 6.6%Recurring operating income increased 6.6%
In m€ H1 2009adjustéd (1) H1 2010 Current
FX ratesFX
effect
Constant FX rates
Water 596 590 ‐1.0% 13 ‐3.3%Environmental services 134 251 86.6% 8 80.7%
Energy services 256 268 4.8% 8 +1.6%
Transportation 81 48 ‐40.7% 3 ‐43.8%
Holding ‐56 ‐79Holding 56 79Recurring operating income 1,011 1,078 +6.6% 32 +3.5%Of which change in fair value of provisions for landfill rehabilitation ‐18 ‐33p f f
26
(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations” of UK operations in the Transportation division and the Eolfi activities in the Energy Services division
Investor Relations, 2010 first half results ‐ 06/08/10
Recurring operating income margin improvementRecurring operating income margin improvement
Recurring operating
In €mH1 2009 margin
H1 2010i
g p gincome margins
gadjusted (1) margin
Water 9.6% 10.0%Environmental services 3.0% 5.3%Energy services 6.9% 7.2%Transportation 2 8% 1 7%Transportation 2.8% 1.7%
Holding ‐ ‐
Total Group 5.8% 6.3%Total Group 5.8% 6.3%
27
(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations” of UK operations in the Transportation division and the Eolfi activities in the Energy Services division
Investor Relations, 2010 first half results ‐ 06/08/10
Net income increased 70%Net income increased 70%
H1 2010
In €m Recurring Non‐recurring
Total Recurring Non‐recurring
Total
H1 2009 (1)
recurring recurring
Operating income 1,011 ‐ 1,011 1,078 47 1,125
Cost of net financial debt (2) ‐406 ‐ ‐406 ‐443 ‐ ‐443Cost of net financial debt 406 406 443 443
Corporate Tax Expense ‐198 ‐ ‐198 ‐188 ‐ ‐188
Share in net income of associates 7 ‐ 7 9 ‐ 9N t i f di ti dNet income from discontinued operations ‐ ‐68 ‐68 ‐ 43 43
Net income attributable to non‐controlling interests ‐127 1 ‐126 ‐149 ‐22 ‐171
Net income attributable to equity holders of parent 287 ‐67 220 306 68 374
28
(1) First half 2009 results have been adjusted in order to assure the comparability of periods for the reclassification into «net income from discontinued operations” of UK operations in the Transportation division and the Eolfi activities in the Energy Services division
(2) Including «other financial income and expenses », of which -€37m in unwinding discounts on provisions in 1H 2010
Investor Relations, 2010 first half results ‐ 06/08/10
Cost of borrowingCost of borrowingIn €m H1 2009 H1 2010
Δ30/06/1030/06/09
Cost of net financial debt ‐379 ‐408 ‐29
Impact of change in average debt +15Impact of change in interest rates 38Impact of change in interest rates ‐38
Other ‐6
16 819 16 827
16 02716 500
17 000
Average net financial debt:
In €m
15 902
15 12715 377
16 027
15 500
16 000Average net financial debt:
€15,542m at June 30, 2010 versus
€16,888m at June 30, 2009
Cost of borrowing stood at
5.06% versus 4.76% in 2009 14 000
14 500
15 000
29
(4.47% at H1 2009 and 5.07% at H2 2009)
14 000Marc. 31,
09June 30,
09Setp. 30,
09Dec. 31,
09Marc. 31,
09June 30,
09
Investor Relations, 2010 first half results ‐ 06/08/10
Completed Divestments in H1 2010Completed Divestments in H1 2010
Industrial and financial divestments H1 2010 (1) 766In €m
Industrial and financial divestments H1 2010 766
Mature assets 396• Of which Montenay ‐ Dade (Environmental Services)• Of which Montenay Dade (Environmental Services), Usti nad Labem (Dalkia)
Non‐strategic assets 106g• Of which Mediterranea delle Acque (Water); Brazil, IrelandKorea (Environmental Services)
Development partnerships 192• Of which IFC in Veolia Voda, CEZ in Dalkia Ceska Republica
Industrial Divestments 72
30
(1) Including capital increase subscribed by minority shareholders, net financial debt of divested companies and partial divestments between non-controlling shareholders (with no change in consolidation scope)
Investor Relations, 2010 first half results ‐ 06/08/10
Maintained discipline on net investments: €352mMaintained discipline on net investments: €352m
In €m H1 2009 H1 2010
Maintenance capital expenditures 710 458
As % of consolidated revenue 4.1% 2.7%Investments in growth/existing operations(ex. operating financial assets)
316 392
Financial investments in growth (1) 248 324
New operating financial assets 242 159
Gross investments 1,516 1,333 ‐183
Industrial and financial divestments (2) ‐268 ‐766 +498
Repayment of operating financial assets ‐263 ‐215Repayment of operating financial assets 263 215
Net investments 985 352 ‐633
31
(1) Including partial acquisitions between non-controlling shareholders (with no change in consolidation scope) and net financial debt from acquired entities(2) Including capital increase subscribed by minority shareholders of €108m in H1 2010 and €57m in H1 2009, net financial debt of divested companies and partial
divestments between non-controlling shareholders (with no change in consolidation scope)
Investor Relations, 2010 first half results ‐ 06/08/10
Strong cash generated from operationsStrong cash generated from operationsIn €m H1 2009 H1 2010
h l i (1)Cash Flow From Operations(1) 1,836 1,878Repayment of Operating Financial Assets 263 215
Total cash generation 2,099 2,093Total cash generation 2,099 2,093Gross investments ‐1,516 ‐1,333Divestments 268 766
Cash generated from operations 851 1,526Variation WCR ‐114 ‐382Taxes paid ‐218 ‐197Taxes paid ‐218 ‐197Interest expense ‐347 ‐352Dividend (2) ‐402 ‐709Other (3) 73 ‐19
Free Cash Flow ‐157 ‐133
32
(1) Of which financial cash flow and cash flow from discontinued operations ((€2m) in H1 2010 et (€6m) in H1 2009)(2) Dividend paid to shareholders and minority shareholders and other movements(3) Includes in particular changes in receivables and other financing assets totaling (€27m) in H1 2010 and €62m in H1 2009
Investor Relations, 2010 first half results ‐ 06/08/10
Change in net financial debtChange in net financial debt
In €m H1 2009 H1 2010
Net financial debt at January 1st ‐16,528 ‐15,127Free cash flow ‐157 ‐133FX ff t 30 674FX effects ‐30 ‐674Other ‐112 ‐93
Net debt at June 30 ‐16,827 ‐16,027Change in net debt ‐299 ‐900
Strong liquidity position : €9.7bn at the end of June 2010Pursuing active debt management• Average maturity of net debt of 9.9 years following the debt swap in July 2010 related to bonds due in 2012 and 2013 (average maturity of 9.5 years at June 30, ( g y y2010 and 10 years at the end of December 2009)
Ratings• Moody’s : P‐2 / A3 negative outlook (confirmed on July 8 2010)
33
• Moody s : P 2 / A3 negative outlook (confirmed on July 8, 2010)• Standard & Poor’s : A‐2 / BBB+ Stable outlook (April 21, 2010: ratings confirmed & outlook revised from negative to stable)
Investor Relations, 2010 first half results ‐ 06/08/10
2010 objectives confirmed2010 objectives confirmed
• Recurring operating income improvement
• Positive free cash flow after dividend payment(1)
• €3bn of divestments over 2009 – 2010 – 2011
• €250m in cost reductions
• Maintain ratio objective: net debt / (cash flow from operations + repayment of Operating Financial Assets)
34(1) Excluding the planned merger of Veolia Transport/Transdev
First half 2010First half 2010 results
Sommaire
Appendices
Investor Relations, 2010 first half results ‐ 06/08/10
Table of contents of appendicesTable of contents of appendicesCurrency movements Appendix 1Impact of FX rates on H1 2010 operating cash flow Appendix 2p p g ppGross investments by division Appendix 3Debt management Appendix 4I t f f i t d bt A di 5Impact of foreign currency on net debt Appendix 5VE SA bond redemption schedule Appendix 6Consolidated balance sheet Appendix 7Main contracts won or renewed in 1H10 Appendix 8Accounting treatment for renewal expenditures (IAS 7) Appendix 9Veolia ‐ Transdev: calendar Appendix 10Veolia ‐ Transdev: calendar Appendix 10
37
Investor Relations, 2010 first half results ‐ 06/08/10
Appendix 1: Currency movementsAppendix 1: Currency movements
U S dollar
H1 2009 H1 2010 H1 2010 / H1 2009
Main currencies (1 unit of foreign currency = €…)
U.S. dollarAverage rate 0.7507 0.7528 +0.3%Closing rate 0.7075 0.8149 +15.2%
Pound sterling Average rate 1.1187 1.1494 +2.7%Closing rate 1.1736 1,2233 +4.2%
Korean wonAverage rate 0.0006 0.0007 +17.2%Closing rate 0.0006 0.0007 +20.2%
Australian dollarAverage rate 0.5322 0.6730 +26.5%Closing rate 0.5761 0.6943 +20.5%
Czech korunaAverage rate 0.0368 0.0389 +5.5%Closing rate 0.0386 0.0389 +0.7%
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The average rate applies to the income statement and cash flowThe closing rate applies to the balance sheet
Investor Relations, 2010 first half results ‐ 06/08/10
Appendix 2: Impact of FX rates on H1 2010 operating cash flowoperating cash flow
H1 2008 (1)
H1 2009
H1 20102008 (1) 2009 2010
Currency Local currency (in millions) Δ H1
2010/
Change €/X H1 2010 H1
2010/
Impact on H1 2010 op.
h flH1 2009
H1 2009
cash flow (€m)
U.S. dollar zone (USD)
209 203 255+28%
1.328+0.3%
+1
Pound sterling zone (GBP)
209 174 164‐6%
0.870+2.7%
+5
Czech koruna zone (CZK)
3,725 3,593 3,331 25.734 +6(CZK) ‐7% +5.2%
Korean won zone (KRW)
39,252 35,319 46,253+31%
1,532.27+14.7%
+4
Australian dollar zone 47 30 51 1 486 +11Australian dollar zone (AUD)
47 30 51+70%
1.486+20.9%
+11
Polish zloty zone (PLN)
211 217 264+22%
4.003+10.6%
+7
39
(1) 2008 figures have not been restated for activities that are expected to be divested
Investor Relations, 2010 first half results ‐ 06/08/10
Appendix 3: Gross investments by divisionAppendix 3: Gross investments by division
Growth
In €mMaintenance
Financial incl. Δ in Industrial
New operating TotalMaintenance consolidation
scopecapex financial
assetsTotal
Water 116 107 197 110 530Environmental Services 189 33 74 12 308Environmental Services 189 33 74 12 308Energy Services 40 181 73 19 313Transportation 103 2 39 18 162Other 10 1 9 0 20Other 10 1 9 0 20Total H1 2010 458 324 392 159 1,333Total H1 2009 710 248 316 242 1,516
40
Investor Relations, 2010 first half results ‐ 06/08/10
Appendix 4: Debt managementAppendix 4: Debt managementRatings• Moody’s : P‐2 / A3 negative outlook (confirmed July 8, 2010)• Standard & Poor’s : A‐2 / BBB+ stable outlook (April 21, 2010)
Bond redemption: €23m in H1 2010Average maturity of net debt : 9.5 years at June 30, 2010 vs. 10 years in 2009Group liquidity: €9.7bn, including €4.6bn in undrawn confirmed credit
lines( without any disruptive covenants)Net Group liquidity: €6.3 bn
Other 19% (1)Fixed rate: 62%
Net financial debt after hedges at June 30, 2010
Currencies (gross debt after hedges) at June 30, 2010
GBP 10%
Fixed rate: 62%
o/w Euro: 80%
o/w USD: 52%Euro 61%
Variable rate: 38% USD 10%
o/w GBP: 42%
Variable cap-rate: 6%
41(1) o/w RMB 4% and HKD 3%
Variable cap-rate: 6%
Investor Relations, 2010 first half results ‐ 06/08/10
Appendix 5: Impact of foreign currency on net debtAppendix 5: Impact of foreign currency on net debt
N t d bt t D b 31 2009 €15 127Net debt at December 31, 2009 €15,127mNet debt at June 30, 2010 €16,027m• Change €900m• Change €900m
• Of which the impact of FX €674m• Of which the impact of FX €674mUS dollar €283mPound sterling €151mHong Kong dollar €92mChinese renminbi yuan €73m
42
Investor Relations, 2010 first half results ‐ 06/08/10
Appendix 6: VE SA bond redemption schedule after the bond exchange completed July 1, 2010after the bond exchange completed July 1, 2010
1600
1800
CZKGBP
€1 8b
€0.02bn€0.8bn
Average maturity of net debt moved from 9.5 years to 9.9 years after bond exchange completed July 1, 2010
1400
USDEURO €10.3bn
€1.8bn
Total €12.9bn
y g p y ,
1000
1200
800
400
600
200
43
02010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038
Investor Relations, 2010 first half results ‐ 06/08/10
Appendix 7: Consolidated balance sheetAppendix 7: Consolidated balance sheet
In €m 12/31/09 06/30/10In €m / / / /
Intangible assets (concessions) 3,625 4,114Property, plant & equipment 9,382 9,903Oth t t 11 313 12 306Other non‐current assets 11,313 12,306Operating financial assets (current and non‐current) 5,652 5,723Cash & cash equivalents 5,614 5,058Other current assets 14,231 13,744Total Assets 49,817 50,848Capital (including minorities) 10,131 10,739p , ,Financial debt (current and non‐current) 21,086 21,715Other non‐current liabilities 4,381 4,868Other current liabilities 14 219 13 526Other current liabilities 14,219 13,526Total Liabilities & Shareholders Equity 49,817 50,848
44
Investor Relations, 2010 first half results ‐ 06/08/10
Appendix 8: Main contracts won or renewed since the beginning of 2010
INTERNAL GROWTH
since the beginning of 2010‐ Renewals: 70 main contracts renewed in France during the 1st half 2010 in Water (o/w 36 in drinking water & 34 in
wastewater), 108 in Waste (o/w 52 from local authorities & 56 from companies), 2 in Transportation & 85% of contracts due to expire during the 1st half 2010 renewed in Energy Lens
SMICTOMFlandres Morinie
contracts due to expire during the 1st half 2010 renewed in Energy SEDIF (Syndicat des Eaux d’Ile de France) (water)
Public service concession based on the useful innovation on the following performances: ‐ technological : single control center « ServO », water traceability,third‐generation remote meter reading ; ‐ environmental : « Zero carbon service » ; ‐ social: social program called « Water for all » ; – Length: 12 years – Cumul rev : €3bn
Strasbourg
Oise
Caisse desDépôts
GIMDCarré de Réunion
SEDIF– Length: 12 years – Cumul. rev.: €3bn ‐ Outsourcing / Privatization: « Biopôle » waste recovery center from the Angers Loire metropolitan area (1st VES mechanical
biological treatment facility with composting & anaerobic digestion located in France) (waste)– Length: 6 years – Cumul. rev.: €46m
SMICTOM Flandres Morinie (waste) – Length: 8 years – Cumul. rev.: €40m Bayonne (transportation) – Length: 7 years – Cumul. rev.: €140m
RennesOrléans
Tours
Biopôle
Lanester
AncenisAngers
Bayonne (transportation) Length: 7 years Cumul. rev.: €140m Antibes (transportation) – Length: 5 years – Cumul. rev.: €55m Oise semipublic mass transit authority – Integrated services system for the Oise transit hub
(transportation) – Length: 12 years – Cumul. rev.: €29m Montluçon – Energy performance contract (energy) – Length: 10 years ‐ Engineering / Design & Build: The « Grand Prado » from the Reunion North Interdistrict Community (CINOR) (BOT) (water)
Limoges
Montluçon
The « Grand Prado » from the Reunion North Interdistrict Community (CINOR) (BOT) (water)– Length of contract: 20 years – Cumul. rev.: €270m incl. €75m for construction
Carré de Réunion in Versailles (D&B) (water) – Cumul. rev.: €48m CRE 3 (construction & operation of 7 new biomass cogeneration plants in Rennes,
Strasbourg, Orléans, Tours, Angers, Lens & Limoges) (energy) Town of Lanester (Morbihan) (DBO contract for a biomass heating network)
BayonneAntibes
PARTNERSHIPS
(energy) – Operating length: 24 years
Agreements between Veolia Environnement & Caisse des Dépôts relative to the Veolia Transport‐Transdev merger (1) (50/50 before the new group’s IPO) (transportation)
Partnership between Veolia Environnement & the Groupe Industriel Marcel Dassault (GIMD) Outsourcing / Privatization Renewals
GrandPrado
4545
Partnership between Veolia Environnement & the Groupe Industriel Marcel Dassault (GIMD) with the undertaking by GIMD to maintain its 5% holding of the stock & voting rights of Veolia Environnement for a period of 5 years
(1) Signature of the definitive agreements announced on May 5, 2010
Engineering / Design & Build Partnerships with other companies
Investor Relations, 2010 first half results ‐ 06/08/10
Appendix 8: Main contracts won or renewed since the beginning of 2010
INTERNAL GROWTHLofoten
Vesteralen
since the beginning of 2010‐ Renewals: Westminster (waste)
– Length: 7 years (7‐year option) – Cumul. rev.: €298m excl. option Medway Council (1) (waste) – Length: 7 years – Cumul. rev.: €125m
NorwayNorwaySwedenSweden
Moray
Highlands
Tay
Scottish
E4
Medway Council (waste) Length: 7 years Cumul. rev.: €125m Kristianstad/Skane County (transportation)
– Length: 8 years (2‐year option) – Cumul. rev.: €74m excl. option E4 (interregional line) (transportation) – Length: 8 years – Cumul. rev.: €69m Frankfurt (transportation) – Length: 6 years – Cumul. rev.: €57m Lofoten (transportation) – Length: 7 years (3‐year option) – Cumul. rev.: €31m excl. option V t l (t t ti ) L th 7 (3 ti ) C l €30 l ti
GermanyGermanyUnited KingdomUnited Kingdom
Staffordshire PolandPoland
Poznan
WaterSolutions
EstoniaEstonia
Tallinn
Kristianstad
Lodz
Vesteralen (transportation) – Length: 7 years (3‐year option) – Cumul. rev.: €30m excl. option
‐ Outsourcing / Privatization: Staffordshire County Council (1) (waste) ‐ Length: 25 years
– Cumul. rev. for the County Council : £1bn incl. third party waste & sale of electricity
‐ Engineering / Design & Build:
Construction of 2 boilers wholly dedicated to biomass in Lodz & Poznan (energy) GermanyGermany
Czech Rep. Czech Rep.
United KingdomUnited KingdomWestminster
EXTERNAL GROWTH
Bielsko BialaNWR EnergyCEZ IFCFrancfurt
Medway
od Construction of 2 boilers wholly dedicated to biomass in Lodz & Poznan (energy)– Additional yearly rev. : €364m
Construction & operation of a set of solar photovoltaic fields in the region of Pouilles (energy) – Operating length: 20 years – Cumul. rev.: €160 m for construction
Acquisition (2) of several United Utilities activities in Europe (water):
BulgariaBulgaria
Sofia
ItalyItaly
Acquisition of several United Utilities activities in Europe (water): ‐ 58% stake in Sofiyska Voda (water & wastewater for the city of Sofia in Bulgaria) ‐ 26% stake in AS Tallinna Vesi (water & wastewater for the Tallinn in Estonia) ‐ 33% stake in Aqua SA (water & wastewater for the city of Bielsko Biala in Poland) ‐ portfolio of outsourcing, industrial engineering & infrastructure contracts in UK ‐minority stakes in 3 PFI contracts in Scotland (Tay, Moray & Highlands)
Acquisition of NWR Energy (leader in Czech Rep. In the mining & industrial sector)
PouillesPARTNERSHIPS
Acquisition of NWR Energy (leader in Czech Rep. In the mining & industrial sector) from the NWR group (energy)
Partnership between Veolia Energy‐Dalkia & CEZ (1er company in the Czech energy market) (energy): ‐ disposal by Dalkia International of its 15% stake in Dalkia Ceska Republica’s shares to CEZ ‐ disposal by Dalkia Ceska Republica of its 85% stake in Dalkia Usti Nad Labem to CEZ
P hi b CREED (V li ’ W & E R h C )
Outsourcing / Privatization
Interests acquisitions in others companies
Renewals
Partnerships with other companies
Engineering / Design & Build
46
Partnership between CREED (Veolia’s Waste management & Energy Research Center),the company Dalkia & Lodz Technical University (energy)
Partnership between Veolia Voda & the IFC (International Financial Corporation – World Bank) (water) ‐ 9.5% stake acquisition via a rights issue in Veolia Voda by IFC
Partnership between Veolia Water & Scottish Water with the new JV establishment « Scottish WaterSolutions » (backed notably by Veolia Water UK) dedicated to delivering the Scottish Water investmentprogram over the 2010‐2015 period, one of the largest in the UK water industry (water)
(1) Signature announced on July 2010(2) Transaction subject notably, to the competition authorities &
to the EBRD’s approval for Continental Europe (excl. Poland)
Partnerships with other companies
Investor Relations, 2010 first half results ‐ 06/08/10
Appendix 8: Main contracts won or renewed since the beginning of 2010
INTERNAL GROWTH
since the beginning of 2010‐ Renewals: Boston (transportation) – Length: 2 years – Cumul. rev.: €486m York (Bus Rapid Transit) (transportation)
‐ Length: 5 years – Cumul. rev.: €71m
‐ Outsourcing / Privatization: Phoenix (transportation) – Length: 5 years – Cumul. rev.: €314m
CanadaCanada
York (bus & transport of people with special needs) (transportation)– Length: 5 years (5‐year option) – Cumul. rev.: €80m excl. option
Savannah (transportation)– Length: 5 years (5‐year option) – Cumul. rev.: €61m excl. option
Boston (trigeneration for 6 hospitals) (energy)$
United StatesUnited States Boston
Phoenix
CleantechGroup
York
Baltimore cooling network( g p ) ( gy)
– Length: 10 years – Cumul. rev.: $70m Suburbio hospital under PPP (Public‐Private Partnership) in the
State of Bahia (energy)– Operating length: 20 years – Cumul. rev.: €107m
‐ Engineering / Design & Build:
Savannah
EXTERNAL GROWTH
g g / g Petrobras P63 (1) & Tupi (D&B) (water) – Cumul. rev.: €41m
BrazilBrazil
S b rbio Hospital
PARTNERSHIPS
Acquisition of a cooling network in Baltimore (energy)
Partnership between Veolia Environnement & Cleantech Group (leading global innovation network of start‐ups & investors in
Outsourcing / Privatization
Interests acquisitions in other companies
Renewals
Engineering / Design & Build
Suburbio Hospital
P63 & Tupi
47
(leading global innovation network of start ups & investors in clean technologies) with the program « Veolia Innovation Accelerator » (VIA) with the objective to boost cleantech innovation by cooperating with the most innovative start‐ups
Interests acquisitions in other companies Partnerships with other companies
(1) Announced on Aug. 2010
pPetrobras
Investor Relations, 2010 first half results ‐ 06/08/10
Appendix 8: Main contracts won or renewed since the beginning of 2010since the beginning of 2010
INTERNAL GROWTH
l ChinaChina‐ Renewals:
Rockingham – Manudrah (transportation)– Length: 10 years – Cumul. rev.: €150m
/
ChinaChina
Shenzhen ‐ Engineering / Design & Build:
Shenzhen Baoan Sludge (D&B) (water) – Cumul. rev.: €17m
Baoan
AustraliaAustralia
Rockingham
48
Renewals
Engineering / Design & Build
Investor Relations, 2010 first half results ‐ 06/08/10
Appendix 8: Main contracts won or renewed since the beginning of 2010
‐ Engineering / Design & Build: Khenifra (D&B) (water) – Cumul. rev.: €16m
INTERNAL GROWTH
since the beginning of 2010
Khenifra (D&B) (water) Cumul. rev.: €16m
PARTNERSHIPSRenault plant
Khenifra Partnership between Veolia Environnement & the Qatari Diar
MoroccoMorocco
Khenifra Partnership between Veolia Environnement & the Qatari Diar fund with the undertaking by the sovereign fund to maintain its 5% holding of the stock & voting rights of Veolia Environnement for a period of 3 years with a common ambition to work together on infrastructure & utilities projects in
fthe Middle East & North Africa Partnership between Veolia Environnement, Renault &
the Kingdom of Morocco to build the Renault’s Tangier plantwhich emits zero carbon & zero industrial liquid discharges(multiservices)
QatarQatarQatari Diar
(multiservices)
49
Engineering / Design & Build
Partnerships with other companies
Investor Relations, 2010 first half results ‐ 06/08/10
Appendix 9: Accounting treatment of renewal expenditures according to the new amendment specifying the implementation conditions of IAS7p y g p
Veolia Environnement is generally subject to the obligation of maintaining and repairing assets of facilities it manages under public
h bl fl d bservice contracts. In accounting terms, this obligation is reflected by renewal expenses (for assets covered by public‐private partnership service contracts in France).
li i f h d if i hIn application of the new amendment specifying the implementation conditions of IAS7 Statement of Cash Flow, renewal expenditures are booked as operating expenses as of January 1, 2010 whereas they were previously treated as maintenance2010, whereas they were previously treated as maintenance expenditures. As a consequence, during reconciliation, in the cash flow statement between “Net income attrib to equity holders ofstatement, between Net income attrib. to equity holders of parent” and “Net cash flow from operating activities”, renewal expenses are no longer eliminated, as of January 1, 2010, in the “Depreciations, provisions and operating value impairments” item.The deduction of renewal expenditures from the operating cash flow and maintenance costs, has no impact on the cash position, net income, or shareholders’ equity.
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Investor Relations, 2010 first half results ‐ 06/08/10
Appendix 9: Accounting treatment of renewal expenditures according to the new amendment specifying the implementation conditions of IAS7
2008adjusted (1)
2008 adjusted (1) and adjusted for IAS 7
Renewal expenditures
€m
p y g p
Revenue
Operating cash flow
Recurring operating income
35,765
4,105
2,275
‐ 390
35,765
3,715
2,275
Maintenance capex
Operating cash flow(2) ‐ net investments
1,860
601
1,470
601
‐ 390
Revenue 34 551 34 551
2009published
2009 adjusted for IAS 7
Renewal expenditures
€m
Revenue
Operating cash flow
Recurring operating income
34,551
3,956
1,932
‐ 361
34,551
3,595
1,932
Maintenance capex
Operating cash flow(2) ‐ net investments
1,632
2,357
1,271
2,357
‐ 361
51
(1) To ensure the comparability of financial years, 2008 financial statements have been adjusted: - by the divestment of Freight operations in the Transportation division in December 2009 and of Waste-to-Energy operations in the Waste Division in the United States in August 2009; which are presented in the income statement in the line item “net income from discontinued operations” according to IFRS 5;- by the reclassification into “net income from discontinued operations” of UK operations in the Transport division and of the Eolfi activities in the Energy Services division;
(2) Including the operating cash flow from discontinued operations
Investor Relations, 2010 first half results ‐ 06/08/10
Appendix 10: Veolia ‐ Transdev: CalendarAppendix 10: Veolia Transdev: Calendar
May 5, 2010: Signature of definitive agreement for merger of Veolia Transport with Transdevg pJoint notification to competition authorities / oversight of economic concentration procedureClosing: after closing unresolved conditions and notably after approval from competition authorities
h h f l k dIPO within 12 months of closing, market conditions permitting
Investor Relations, 2010 first half results ‐ 06/08/10
Investor Relations contact informationInvestor 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
Xavier d’OuinceXavier d OuinceTéléphone +33 1 71 75 19 34
e‐mail xavier.d‐ouince@veolia.com
38 A Kléb 75116 P i F38 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 2890Tel +1 (312) 552 2890Fax +1 (312) 552 2866
e‐mail terri.powers@veoliaes.com
53
http://www.veolia-finance.com
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