2008 Annual results

2008 ANNUAL RESULTS2008 ANNUAL RESULTS

Investor Relations – 2008 Annual Results – March 6, 2009

Disclaimer

Veolia 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 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 governmentalinvestments in projects without being able to obtain the required approvals for the project, the risk that governmentalauthorities could terminate or modify some of Veolia Environnement's contracts, the risk that our long-term contractsmay limit our capacity to quickly and effectively react to general economic changes affecting our performance underthose contracts, the risk that acquisitions may not provide the benefits that Veolia Environnement hopes to achieve, therisk that Veolia Environnement's compliance with environmental laws may become more costly in the future, the risk thatcurrency exchange rate fluctuations may negatively affect Veolia Environnement's financial results and the price of itscurrency exchange rate fluctuations may negatively affect Veolia Environnement s financial results and the price of itsshares, the risk that Veolia Environnement may incur environmental liability in connection with its past, present andfuture operations, as well as the risks described in the documents Veolia Environnement has filed with the U.S. Securitiesand Exchange Commission. Veolia Environnement does not undertake, nor does it have, any obligation to provide updatesor to revise any forward-looking statements. Investors and security holders may obtain a free copy of documents filed byVeolia Environnement with the U.S. Securities and Exchange Commission from Veolia Environnement.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. 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.

Thi d t t i t i i f ti l ti t th l ti f t i f V li E i t’ tlThis 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-LookingStatements” above

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Statements” above.

Table of ContentsInvestor Relations – 2008 Annual Results – March 6, 2009

li i i Veolia Environnement overview

Key figures Key figures

2008 results

Financing

Growth

2009 challenges and outlook

Conclusion

3

Conclusion

Veolia Environnement overviewInvestor Relations – 2008 Annual Results – March 6, 2009

Operating cash flow: €4,137m Slowdown in Veolia’s waste management operations

i th 4th t2008 operating performance:

In line with the most recent guidance

in the 4th quarter Sustained performance of other business lines and

strong growth in operating cash flow in Energy (up15.5% at constant exchange rates)

Improve profitability to the Group’s standard for assets acquired in 2007 and 2008

Our priority:

Profitability improvement

assets acquired in 2007 and 2008 Plan to adapt Veolia’s waste management division

to the current business climate: cost reduction plan of €100m in 2009

2010 Efficiency Plan: €280m impact in 2009 2010 Efficiency Plan: €280m impact in 2009, including Veolia waste management adaptation plan

Investments net of disposals: €2 billion in 2009I t t d t d t th t Our commitment:

Positive Free Cash Flow in 2009 after payment of the dividend

Investment program adapted to the current economic environment

Strategic review of assets and countries To generate internally the resources required to

f d f h

4

fund future growth


2008 key figures

€m 2007restated (1) 2008

Variation at constant

FXFX

Revenue 31,932 36,205 +15.8%

Operating cash flow 4,164 4,137 +2.0%p g , ,

Recurring operating income before 2008 writedown of Veolia’s waste management division in Germany

2,455 2,346 (2) -1.4%

Operating income 2,482 1,951 (3)Operating income 2,482 1,951

Recurring net income attrib. to equity holders of parent before impact of 2008 writedown of Veolia’s waste management division in Germany

926 703 (2)

Recurring net income attrib. to equity holders of parent 926 659

Net income attrib. to equity holders of parent 928 405 (3)

Net financial debt 15,125 16,528, ,

Dividend per share €1.21 €1.21 (4)

(1) To ensure the comparability of financial years, the accounts at 31 December 2007 have been restated by the amount of income from the disposals in 2008 (in particular for Clemessy & Crystal in the Energy division) according to IFRS 5 and are presented in the income statement in the line item “net income from discontinued operations”. The 2007 revenue for Clemessy and Crystal was €696m.

5

(2) Before the writedown of intangible assets in Veolia’s waste management division in Germany: -€63m in recurring operating income and -€44m in net income (Group’s share). (3) Impact of writedown of Veolia’s waste management division in Germany: -€406m on operating income (including -€343m impairment of goodwill);-€430m on net income.(4) Subject to approval by the Annual Shareholders' Meeting on May 7, 2009.


Dividend policy

Following an average increase of 22% per year over the last 4 years, the 2008 dividend is maintained as compared with 2007the 2008 dividend is maintained as compared with 2007.

€1.05

€1.21 (1)€1.21

€0 55€0.68

€0.85

€0 55€0 55 €0.55€0.55€0.55

2001 2002 2003 2004 2005 2006 2007 2008

2008 dividend per share maintained at €1.21 (1)

2001 2002 2003 2004 2005 2006 2007 2008

6

(1) Subject to approval by the Annual Shareholders' Meeting on May 7, 2009


2008 results

Financing

Growth


7

2008 key figuresInvestor Relations – 2008 Annual Results – March 6, 2009

€m2007

restated (1) 2008 Variation constant FX

Revenue 31,932 36,205 +15.8%

Operating cash flow 4,164 4,137 +2.0%

R i ti i b f 2008 it d f 2 455 2 346 (2) 1 4%Recurring operating income before 2008 writedown of Veolia’s waste management division in Germany

2,455 2,346 (2) -1.4%

Operating income 2,482 1,951 (3)

R i t i tt ib t it h ld f t 926 703 (2)Recurring net income attrib. to equity holders of parent before impact of 2008 writedown of Veolia’s waste management division in Germany

926 703 (2)

Recurring net income attrib. to equity holders of parent 926 659g q y p

Net income attrib. to equity holders of parent 928 405 (3)

Net financial debt 15,125 16,528

Net recurring income per share (non-diluted) 2 15 1 44Net recurring income per share (non diluted) 2.15 1.44

Dividend per share €1.21 €1.21 (4)

(1) To ensure the comparability of financial years, the accounts at 31 December 2007 have been restated by the amount of income from the disposals in 2008 (in particular for Clemessy & Crystal in the Energy division) according to IFRS 5 and are presented in the income statement in the line item “net income from discontinued operations”. The 2007 revenue for Clemessy and Crystal was €696m

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Clemessy and Crystal was €696m.(2) Before the writedown of intangible assets in Veolia’s waste management division in Germany: -€63m in recurring operating income and -€44m in net income (Group’s share). (3) Impact of writedown of Veolia’s waste management division in Germany: -€406m on operating income (including -€343m impairment of goodwill);-€430m on net income.(4) Subject to approval by the Annual Shareholders' Meeting on May 7, 2009.

Revenue: internal growth of nearly 10%Investor Relations – 2008 Annual Results – March 6, 2009

(778)€m 1,97836,205

31,9323,073

2007 Internal External Impact of foreign 2008

+9.6% +6.2% -2.4% +13.4%

2007 restated (1)

(1) To ensure the comparability of financial years the accounts at 31 December 2007 have been restated by the amount of income from the

Internal growth growth

p gexchange

2008

9


Breakdown of revenue by geographic zoneInvestor Relations – 2008 Annual Results – March 6, 2009

€36,205

14,523

€m

+6.9%

+13.0%

+6.9%

+16.1%

currentFX rates

constantFX rates

Internalgrowth

+4.7%

+6.5%

■ France

■ Europe ex France

31,932

13,587 +16.3%

+19.3%

+57.0%

+23.5%

+26.2%

+61.0%

+10.3%

+18.5%

+59.8%

p

■ North America

■ Asia/Pacific

■ Rest of the world

11,658

13,175 +9.6%VE Group +15.8%+13.4%

2,7902 269

3,2432,708

2007 restated (1) 2008

2,2691,628 2,556

(1) To ensure the comparability of financial years the accounts at 31 December 2007 have been restated by the amount of income from the

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Breakdown of revenue by divisionInvestor Relations – 2008 Annual Results – March 6, 2009

€m 36 205

12,558

€m

+14.9%

+10.1%

currentFX rates

constant FX rates

Internalgrowth

■ Water

■ Waste

+16.7%

+14.6%

+13.4%

+4.5%

31,932

36,205

10,928

12,558+20.1%

+8.3%

+9 6%VE Group +15 8%+13 4%

■ Energy services

■ Transportation

+20.7%

+10.6%

+12.0%

+7.9%

9,21410,144 +9.6%VE Group +15.8%+13.4%

6,200

5,590

7,449

6,0545,590 6,054

2007 restated (1) 2008

(1) To ensure the comparability of financial years, the accounts at 31 December 2007 have been restated by the amount of income from the

11

p y y ydisposals in 2008 (in particular for Clemessy & Crystal in the Energy division) according to IFRS 5 and are presented in the income statement in the line item “net income from discontinued operations”. The 2007 revenue for Clemessy and Crystal was €696m.

Veolia’s waste management division consolidated revenue Investor Relations – 2008 Annual Results – March 6, 2009

2008 revenue by activity

2007(€m)

2008(€m)

21%

6%

8%

8% Urban collection and cleaning services

Non-haz industrial waste collection and related services

Industrial services and haz waste collection

9,214 10,14423%

15%

collection

Sorting-Recycling-Trade Haz waste treatment Incineration of non-haz waste Non-haz and inert waste

landfill

19%

landfill

2008 quarterly internal growth

2008/2007 variation +10.1%Internal growth +4.5%

6%

8%

10%

12%

+7.7%+9.1%

+7.1%

External growth +10.1%Impact of foreign exchange -4.5%

-2%

0%

2%

4%

Q1 2008 / Q1 2007

Q2 2008 / Q2 2007

Q3 2008 / Q3 2007

Q4 2008 / Q4 2007

12

-6%

-4%

-4.5%

Operating cash flow (1)


2007restated

2008FX Impact

€m constant FX rates€m €m €m FX rates

Water 1,851 1,821 (41) +0.6%

Waste 1,461 1,362 (76) -1.6%

Energy services 642 (2) 755 14 +15.5%

Transportation 279 292 (4) +5.7%p ( )

Other (69) (93) - -

Total Group 4,164 (2) 4,137 (107) +2.0%

(1) Operating cash flow = cash flow from continuing operations before tax and interest expenses(2) Operating cash flow restated to exclude €15m in cash flow from discontinued operations (Clemessy & Crystal in particular)

13

( ) Operating cash flow restated to exclude €15m in cash flow from discontinued operations (Clemessy & Crystal in particular)

What occurred in 2008? Investor Relations – 2008 Annual Results – March 6, 2009

T

Main impacts to operating cash flow

€m Water Waste Energy Transpor-tation Other Total

Impact of foreign exchange (41) (77) 14 (3) (107)Impact of foreign exchange (41) (77) 14 (3) (107)

Economic conditions (37) (1) (89) 32 (28) (122)

Acquisitions 30 50 79 11 170Acquisitions 30 50 79 11 170

Structural and development costs (27) (35) (20) (23) (105)

Berlin (41) (41)

Growth and Productivity 86 51 8 33 178

Total Group (30) (100) 113 13 (23) (27)

2008 operating cash flow: €4,137m versus €4,164m in 2007

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2008 operating cash flow: €4,137m versus €4,164m in 2007

(1) Impact of volume distributed

Impact of foreign exchange on 2008 operating cash flow Investor Relations – 2008 Annual Results – March 6, 2009

2007 20082007 2008

Currency Local Currency (in millions)

Exchange €/X 2008

Impact on 2008 Oper Cash

Variation 2008/2007

Variation 2008/2007

Oper. Cash Flow (€m)

US Dollar zone (USD) 416 496+19%

1.475+7%

-20+19% +7%

Pound Sterling zone (GBP) 353 401+14%

0.804+17%

-85

Czech Crown zone (CZK) 6 315 6 193 25 083 +23Czech Crown zone (CZK) 6 315 6 193-2%

25.083-10%

+23

Korean Won zone (KRW) 76 295 93 653+23%

1,634.427+28%

-16

Polish Zloty zone (PLN) 287 331+15%

3.5456-6%

+5

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Writedown of intangible assets and goodwill in Veolia’s waste management division in Germany


Efforts launched to restructure the business… New management team Two regional offices have been closed Two regional offices have been closed Restructuring plan

…to offset operational problems… Administrative shutdown of a landfill in April 2008 Substantial market share losses in 2008 during the renewal of waste collection contracts

(DSD) …due to the severe deterioration in the economic environment…

Downturn in the industrial waste market in the first half of 2008 which gathered pace at g pthe end of the year

Paper and cardboard prices have dropped since October and volumes have contracted …have failed to achieve the value creation expected at the time of the acquisition

Assets have had to be written down Assets have had to be written down

Writedown of intangible assets (€63m) Recurring operating income

Writedown of goodwill (€343m) Non-recurring operating income

Impact

g ( ) g p g

Tax impact on writedowns +€18mDeferred tax asset writedown linked to the revised business plan (€42m)

Tax expense

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Total impact on net income (€430m)

Recurring operating income by divisionInvestor Relations – 2008 Annual Results – March 6, 2009

€m 2007restated (1) 2008 FX impact

(€m) constant FX rates

Water 1,266 1,196 (33) -2.9%

Waste (ex. €63m writedown of 803 703 (52) -6.0%intangible assets in German waste)

Energy services 374 425 +9 +11.3%

Transportation 115 130 +2 +10.9%Transportation 115 130 2 10.9%

Holding (103) (108) - -

Recurring operating income ex. impact from the writedown in

2,455 2,346 (74) -1.4%impact from the writedown in German waste

Writedown of intangible assets ex. goodwill

- (63)goodwill

Recurring operating income 2,455 2,283 (74) -4.0%

(1) T h bili f fi i l h 31 D b 2007 h b d b h f i f h

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(1) To ensure the comparability of financial years, the accounts at 31 December 2007 have been restated by the amount of income from the disposals in 2008 (in particular for Clemessy & Crystal in the Energy division) according to IFRS 5 and are presented in the income statement in the line item “net income from discontinued operations”.

From operating income to net incomeInvestor Relations – 2008 Annual Results – March 6, 2009

20082007 restated (1)

€m Recurring Non-recurring

Total Recurring Non-recurring

Total

Operating income 2,455 +28 2,483 2,283 (332) 1,951

Cost of net financial debt (819) - (819) (925) - (925)

Other financial income & expense +9 (5) +4 (51) - (51)p ( ) ( ) ( )

Corporate tax expense (429) +11 (418) (427) (42) (469)

Equity in net income of affiliates +17 - +17 +19 - +19

Net income from discontinued operations

- (12) (12) - +184 +184

Net income attributable to minority interests

(307) (20) (327) (240) (64) (304)interests

Net income – attrib. to equity holders of parent 926 2 928 659 (2) (254) 405

(1) To ensure the comparability of financial years, the accounts at 31 December 2007 have been restated by the amount of income from the di l i 2008 (i ti l f Cl & C t l i th E di i i ) di t IFRS 5 d t d i th i t t t

18

disposals in 2008 (in particular for Clemessy & Crystal in the Energy division) according to IFRS 5 and are presented in the income statement in the line item “net income from discontinued operations”. The 2007 revenue for Clemessy and Crystal was €696m.

(2) €703m before the writedown of Veolia’s waste management operations in Germany.

Cost of borrowingInvestor Relations – 2008 Annual Results – March 6, 2009

€m 2007 200831/12/0831/12/07

Cost of net financial debt -819 -925 -106

Impact from variation of the average debt -86

Impact from variation on interest rates 16Impact from variation on interest rates -16

Impact from variation of the revaluation of non-qualified hedging derivative instruments

-4

instruments

Cost of borrowing at 5 61% (1) Cost of borrowing at 5.61% (1)

as compared with 5.49% at December 31, 2007

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(1) Adjusted for the impact of the unwinding of hedging transactions, the cost of borrowing stood at 5.78% at December 31, 2008 as compared with 5.53% at December 31, 2007

TaxInvestor Relations – 2008 Annual Results – March 6, 2009

70 +12% -15%

%

50

60+16%

+12% 15%

48%

20

30

40

25%

+10%

0

10

2007 actualtax rate

Change in taxlaw

Non-activatedtax losses anddeferred taxasset prov.

Goodwillwritedown

Planning andrisks

2008 actualtax rate

(1) (1)

The normalized rate increased to 33% in 2008 from 28% in 2007

20

(1) Actual tax rate: relationship between the tax expense and the net income from continuing operations, restated by the same tax expense and income from affiliates.

Cash flow statementInvestor Relations – 2008 Annual Results – March 6, 2009

€m 2007 2008

Net financial debt at opening (14,675) (15,125)

Operating cash flow from continuing operations 4,164 4,137

Financial cash flow & operating cash flow from discontinued operations 55 41

Cash flow from operations 4,219 4,178

Tax paid (417) (348)

Change in operating WCR (167) (80)

Total cash flows generated from the businesses 3,635 3,750

G i t t (1) (6 936) (4 701) Gross investments (1) (6,936) (4,701)

Repayment of operating financial assets 395 358

Industrial and financial divestments, net of the debt of divested companies 453 761

Change in receivables & other financial assets (30) (312) Change in receivables & other financial assets (30) (312)

Total net cash flows from investments (6,118) (3,894)

Dividends paid (2) (564) (753)

Net interest expenses paid (786) (849) Net interest expenses paid (786) (849)

Capital increase (VE & minority interests) 3,058 (3) (77)

Currency impacts & other 325 420

Change in net financial debt (450) (1,403)

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(1) Including net financial debt from acquired companies.(2) €420m in 2007 and €553m in 2008 for VE(3) Including €2.6bn for the capital increase completed as of July 10, 2007

g ( ) ( , )

Net financial debt at closing (15,125) (16,528)

Gross investmentsInvestor Relations – 2008 Annual Results – March 6, 2009

€m 2007 2008

Maintenance capital expenditures 1,590 1,860

As % of consolidated revenue 5.0% 5.1%

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

1,039 1,169

New operating financial assets 334 336New operating financial assets 334 336

New projects 3,973 1,336

Total investments (including net financial debt ( )

6,936 4,701from discontinued operations)(1)

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(1) +€38m in 2007 and -€72m in 2008.

Divestments completedInvestor Relations – 2008 Annual Results – March 6, 2009

€m 2007 2008

Industrial divestments 213 330

Financial divestments 202 503

Total divestments 415 833

(Cash) / debt of divested companies +38 (72)(Cash) / debt of divested companies 38 (72)

Total divestments, net of the net financial debt of divested companies 453 761

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Financing

Veolia Environnement has a sound financial structure Investor Relations – 2008 Annual Results – March 6, 2009

Liquidity exceeding €7.6bn D b 31 2008

Confirmed, undrawn lines of credit of nearly €4 billion, without any disruptive

at December 31, 2008 covenants Net liquidity of €3,980 million versus

€3,876 million at December 31, 2007

Bonds: 68% of net debtDebt with a long maturity profile,

i il i b d Average maturity of net debt: 9.3 yrs

No significant debt repayments until

primarily in bonds

€2.6 billion capital increase in July

2012

Acquisitions had been refinanced in 2007 €2.6 billion capital increase in July

2007 for the major acquisitions completed for approximately €2.4 billion (Veolia waste in Germany, TMT in It l d TNAI i th USA)

25

Italy and TNAI in the USA)

Within the framework of long-term contracts, Veolia Environnement may finance certain infrastructures for its clients


Industrial outsourcing contracts (IFRIC4) € Bl C Industrial outsourcing contracts (IFRIC4) and concession contracts comprising a public services obligation/BOT (IFRIC12), with the transfer of volume

d i i k t th li t

€ Bln Counterparty

Water-Berlin 2.8 Land of Berlin

Cogenerations 0 5 EDFand price risks to the client

Assets treated as financial receivables: operating financial assets (OFA)

Cogenerations France

0.5 EDF

Waste-UK 0.3 Municipalities

Water-Belgium 0 3 City of Brussels The most significant give rise to

dedicated external funding

Water-Belgium 0.3 City of Brussels

Other 1.9

Total 5.8

Average return at market conditions (2008 average return): 7.0%

Repayment of principal: €358m in 2008

26

What finances our debt?Investor Relations – 2008 Annual Results – March 6, 2009

Financing Op Fin Assets (OFA) Net debt OFAs Total net debtFinancing Op. Fin. Assets (OFA)

€5,751m

Net debt - OFAs

€10,777m

Total net debt

€16,528m+ =

Cash flows from ops

EBITDA(1)

€3,778m+ =

Revenue (interest income): €400m

Cash flow from ops: €4,178m

+

Repayment of principal: €358mOFA flows

OFA Repayment: €358m

€4,536m

2 9x EBITDA (1)

=3 6x

=2.9x EBITDA ( )

Objective: 3.5 to 4x

3.6x

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(1) EBITDA = Cash flow from operations excluding operating financial assets

Growth

Which growth model?Investor Relations – 2008 Annual Results – March 6, 2009

Veolia Environnement has an Bringing up to par the external growth

d l t f th t 3 ( Veolia Environnement has an embedded improvement in profits

resulting from already financed growth

developments from the past 3 years (more than €5 billion in revenue)

Internal growth from existing contracts Reduction of costs and shared services Reduction of costs and shared services

Presence in non-priority countries which are Presence in non priority countries which are attractive for local operators

Strategic positions allowing us to establish development partnerships

Veolia Environnement has significant leverage from the sale of non-

strategic assets or from possible partnerships (€2 2 billion) partnerships (€2.2 billion)

Service contractsVeolia Environnement does not Partnershipsintend to finance the majority of

infrastructures on behalf of its clients

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Our challenge: To bring the profitability of past and already refinanced growth developments to the Group’s profitability standard


Change in after-tax ROCE from 2007 to 2008

Example: Pre-tax ROCE for 13%

Veolia waste in the UK

%9

11 -0.6 10.2 -0.4-1.4

8.4

10.8

2008 business

Main i iti

10.0

10.113.1

15.7%

7

9 8.4business acquisitions in 2008 Main

acquisitions in 2007

3

5

2006 2007 20082007 ROCE (1)

2008 ROCE before main

acquisitions in 2007 and 2008

2008 ROCE

Medium-term

objective

30

(1) To ensure the comparability of financial years, the accounts at 31 December 2007 have been restated by the amount of income from the disposals in 2008 (in particular for Clemessy & Crystal in the Energy division) according to IFRS 5 and are presented in the income statement in the line item “net income from discontinued operations”.

A 2010 Efficiency Plan underwayInvestor Relations – 2008 Annual Results – March 6, 2009

2009 2010 Total Criteria

Purchasing

Operations

45

65

55

65

100

130

■ Savings to recurring operating income on the basis of n-1 net of non-recurring O

Support functions

Assets

50

20

70

30

120

50

OPEX costs■ Overall 2008

consolidation scope to be taken into account

■ Share of consolidated savingsWater 60 73 133

Energy

Waste

41

49

49

60

90

109

■ Excluding business climate adaptation plan for Veolia waste management

Transportation 30 38 68management division: €100 million in 2009

31

€180m €400m€220m

Veolia Environnement increases its disposal program to nearly €3 billion between 2009 and 2011


Total assets on the balance sheet as of December 31

Non-strategic assets or possible partnerships sheet as of December 31,

2008

€49.2 billion

partnerships

€2.2 billion divested over 3 years

And recurring industrial disposals Capital employed as of

December 31, 2008

And recurring industrial disposals (€250 million/yr)

Thus nearly €3 billion total over €18.9 billion the 3 year-period

In addition to €761 million already completed in 2008already completed in 2008

32


2009 challenges and outlookInvestor Relations – 2008 Annual Results – March 6, 2009

Capture growth embedded within the existing portfolio of contracts

Recovery of Veolia waste management operations in Germany

Veolia Water Veolia ES (Waste)

g p Obtain price increases Stringent refocusing of growth combining

selection of geographic region, technological content and value of projects

p y Plan to adapt division to new business

conditions

technological content and value of projects

Intense selectivity of investmentsC t tti g l

Group

Cost-cutting plan Asset disposal plan

Veolia Energy Veolia Transport Response to the increased demand for

services, relative to- The volatility of energy prices

Needs of cost optimization

Pursuit of “full potential” plan: refocusing on countries with large presence and reduction of overhead expenses

Improvement in results in key countries - Needs of cost optimization- And the reduction of CO2

Growth in partnerships Priority given to the strengthening of

Improvement in results in key countries abroad (Netherlands)

Increased profitability in the USA Development in Asia: RATP partnership

34

service contracts Priority given to free cash flow

Veolia’s waste management division: Measures aimed at adapting to the current economic conditions


Industrial investments reduced to the strict minimum Reduction in fixed costs

R id ili f h d i i b i Rapid curtailing of our resources to meet the reduction in business

France - Central and Southern Europe UK - Northern Europe North AmericaEurope

France Optimization of industrial assets

Shared services Pooling

US Price increases in recyclable

waste collection for Industrial

UK Restructuring of C&I business

(change from 4 to 3 regions Shared services - Pooling Internalization of tonnages Germany Restructuring plan and regional

waste collection, for Industrial Services and Hazardous Waste

Reduction in maintenance costs Reduction in overheads

(change from 4 to 3 regions, overhaul of technical department)

Assets to be regrouped (landfills around London etc )g p g

reorganization Recovery of the industrial

segment

(reduction in positions with hiring and pay freeze, communication, consulting & legal fees, etc.)

around London, etc.) Reduction in overheads (offices

to be pooled, fees, etc.)

2009 Additional Cost Reduction: €100 million

35

Veolia’s waste management division adapting to economic conditions and improving it strategic positioning


Strategic review of countries and assets and refocusing the t th k t d b i li ff i th b t teams on the markets and business lines offering the best outlook

— Continental Europep— Great Britain— North America — Australia

Reduction in fixed costs

Presence throughout the value chain

Through these reorganization efforts and its unique strategic positioning, Veolia’s waste management division will be in a

position to strongly rebound once the economy begins to improve

36

Measures to improve cash flow generation in 2009 versus 2008


€m2008 Actual 2009 Objective2008 Actual 2009 Objective

Scenario 1 Scenario 2

Gross investments 4 701 3 400 3 800Gross investments 4,701 3,400 3,800

Divestments (inc. Industrial) 761 1,000 1,400

Repayment of operating financial assets

358 400 400

Net investments 3 582 2 000 2 000Net investments 3,582 2,000 2,000

D i t i t t b €1 600 illi

Freeze of €400 million in growth investments until l ti f di t t

Decrease in net investments by €1,600 million

37

completion of divestment program

2009 objectivesInvestor Relations – 2008 Annual Results – March 6, 2009

Positive free cash flow after payment of the dividend

How do we achieve this?

Operating cash flow

-Net investments (1)

=

~€2 billion (2)

38

(1) Gross investments – [disposals + repayment of operating financial assets](2) At constant exchange rates

Conclusion

Henri PROGLIO

Markets with very strong growth potential linked to urban development


The environmental challenges will crystallize in and around cities which have undergone significant growth over the past century and in which population will increase 27% in the next 30 years.

2007: 19 megapoles with more than 10m inhabitants, including 6 with more than 15m

40

Megapoles more than: 15 m inhabitants10 m inhabitants

2025: 26 megapoles with more than 10m inhabitants, including 13 with more than 15m

High growth potential markets: waterInvestor Relations – 2008 Annual Results – March 6, 2009

+27 %

+25 %

+41 %

Wastewater recycling capacity throughout the world: +10-12% per year by 2015 (55 million m3 per day)

41

Seawater desalination: from 51 million m3 to 109 million m3

per day by 2016. Potential market: €5bn per year

High growth potential markets: waste treatment, recycling and recovery


Generation of household waste:Generation of household waste:• OECD countries: from 500 kg p.a. per capita currently to 650 kg by 2020• Rest of the world: from 770 million tons p.a. to 2,000 million tons in 15

years

Recycling rate of household waste in France: from 18% in 2007 to 35% in 2015

Europe: 90% of electronic waste (14 kg p.a. per capita) is not recycled,

42

although regulations are stringent

High growth potential markets: energy efficiency and the outsourcing of services


Hospitals / outsourcing of non-medical activities: €8 5B market in 2008 (Europe: Hospitals / outsourcing of non medical activities: €8.5B market in 2008 (Europe: 5.1 / other countries: 3.4), reaching €13.6B in 2020 (9.4/4.2)

Management of Energy Demand for buildings: between now and 2020, reduction of 38% in energy consumption from existing buildings (France).38% in energy consumption from existing buildings (France).Potential markets: €6.4B in France, €51B in Europe

Industrial services in Europe: €13.5B market in 2008 and €21B in 2020. Outsourcing rate increasing from 20-30% to 40%g g

Urban heating networks :• Russia: upgrading existing networks, local electric production•China: growth potential linked to development and urbanization of the country

43

China: growth potential linked to development and urbanization of the country• Central and Eastern Europe and Germany: complementary privatizations and biomass: €2.6B

High growth potential markets: mobilityInvestor Relations – 2008 Annual Results – March 6, 2009

USA: Total market of $15B for transit (including $3B currently to the private market) and $18B for passenger rail. A « conversion »

Asia: Adapted regulation, enormous urban development•China: metro lines built between now and 2015 larger in km than rest of the world

movement trend in cities.

Privatization of rail in Europe:F i f i i d i l il (€3B) d l di

•China: metro lines built between now and 2015 larger in km than rest of the world•South Korea: project of 54 metro lines (740 km)

44

•France: opening of competition underway: regional rail (€3B) and long distance(€6.8B) •Privatized regional rail market in Germany: from €1.6 to €3.2B by 2014

Veolia Environnement is the best positioned group to respond to growing markets


The only comprehensive and consistent response

Adapted to two types of clients: Municipalities/Industrials

Offering synergies between business lines

N°1 in France in its 4 business lines

Leadership in its markets In the top 3 in all the other key

markets

The Group possesses true and High contract renewal ratep precognized contractual and

technological know-how

45

Heightened financial discipline for long-term, profitable growth


Bring the profitability of the past 2 years growth developments to

The Group has many internal revenue and profit growth drivers. .

2 years growth developments to the correct level

Simplification of structures/ Shared Service Centersrevenue and profit growth drivers.…. Shared Service Centers

Technological innovation Contractual innovation

… with a secure base of cash flows… More than 70% of contracts are

with municipalities

…that will enable the Group to Our priority: improved

with municipalities…

pweather this crisis with confidence

while remaining prudent

p y pprofitability and cash flow

46

Table of Contents of AppendicesInvestor Relations – 2008 Annual Results – March 6, 2009

Full-year impacted by moves in currencies Appendix 1

Veolia Water’s consolidated revenue Appendix 2pp

Investments by division Appendix 3

Main contracts won or renewed in 2008 Appendix 4

Veolia Environnement in North America Appendix 5

Operating cash flow margins Appendix 6

Recurring operating income margins Appendix 7g p g g pp

Impact of the rise in fuel costs on operating income Appendix 8

Debt ratios Appendix 9

Debt characteristics Appendix 10

Bond maturities Appendix 11

Net Liquidity Appendix 12q y pp

Overview of operating financial assets Appendix 13

Definition of ROCE Appendix 14

48

Change of pre-tax ROCE by division Appendix 15

Appendix 1: Moves in currenciesInvestor Relations – 2008 Annual Results – March 6, 2009

US dollar

2007 2008 2008 / 2007Main currencies (1 unit of foreign currency = €…)US dollar

Average rate 0.7248 0.6782 -6.4%Closing rate 0.6793 0.7185 +5.8%

Pound sterling Average rate 1.4550 1.2433 -14.5%Closing rate 1.3636 1.0499 -23.0%

Korean won Average rate 0.0008 0.0006 -21.7%Closing rate 0.0007 0.0005 -25.1%

Australian dollarAverage rate 0.6110 0.5691 -6.8%Closing rate 0.5968 0.4932 -17.3%

Czech crownAverage rate 0.0361 0.0399 +10.6%Closing rate 0.0376 0.0372 -0.9%

49

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

Appendix 2: Veolia Water’s consolidated revenueInvestor Relations – 2008 Annual Results – March 6, 2009

€m

10,928

12,558+14.9% VEOLIA WATER Total Annual variation +14.9%

— Internal growth +13 4%

7 720+8 6%

Internal growth +13.4%— External growth +3.3%— Impact of foreign exchange -1.8%

Operations7,110

7,720+8.6% Operations

3 8184,838+26.7% Works and E&C

3,818

2007 2008

50

2007 2008

Appendix 3: Investments by divisionInvestor Relations – 2008 Annual Results – March 6, 2009

Growth

€mTotal

New operating financial

assets

Maintenance

Financial incl. change

in consolidation

Newprojects (1)

Industrial investments

Water 536 32 409 399 214 1,590

Waste 731 63 135 489 - 1,418

assetsscope

Energy services 278 70 237 240 111 936

Transportation 294 95 48 123 11 571

Other 21 10 70 85 - 186

Total 2008 1,860 270 899 1,336 336 4,701

Total 2007 1,590 322 717 3,973 334 6,936

(1) Including the acquisition of a complementary stake in Ashkelon in Israel, in Tianjin Shibei in China & the acquisition of Biothane (Solutions

51

and technologies in Water, of the Bartin Recycling Group in France and other investments in Europe in Waste, that of Praterm in Poland and of Rail4Chem in Germany & the complementary stake in SNCM in France in Transportation

Appendix 4: main contracts renewed or won in 2008Investor Relations – 2008 Annual Results – March 6, 2009

INTERNAL GROWTH- Renewals: 175 main contracts renewed in France in 2008 in Water (o/w 86 in drinking water & 89 in

wastewater), 133 in Waste collection (o/w 59 from local authorities & 74 from companies), 18 in Transportation

Cergy Pontoise area (water) Length: 18 years Cumul rev : €242 m

Lille

Bazancourt

Beauvais-TilléJersey

Seine AvalSeine Grésillons

Cergy

Cergy Pontoise area (water) – Length: 18 years – Cumul. rev.: €242 m Extension of the Jersey public transportation contract (transportation)

– Length: 3 years – Cumul. rev.: €18 m School bus transportation contract for Sarthe District (transportation)

– Length: 7 years – Cumul. rev.: €42 m- Outsourcing / Privatization: B i Tillé i t i (t t ti ) Air France

Oise

Tavaux

Beauvais-Tillé airport services (transportation)– Length: 15 years – Cumul. rev.: €630 m in partnership with the CCI of Oise district

Lille-Lesquin & Merville airport services (transportation) – Length: 10 years – Cumul. rev.: €308 m in partnership with the CCI of Grand Lille & Sanef

Regional système, Oise district (transportation)– Length: 12 years – Cumul. rev.: €333 m

Veloway Nice (transportation)

Nantes Métropole

SartheAir France (TGV)

Bartin Veloway, Nice (transportation)– Length: 15 years – Cumul. rev.: €45 m

Hauts de Garonne waste-to-energy plant & heating network (energy)– Length: 12 years – Cumul. rev.: €180 m

- Engineering / Design & Build: Contract for wastewater authority for the Paris area (SIAAP), Seine Aval plant in Achères

(construction) (water) Cumul rev : €135 mHauts de Garonne

Bartin Recycling Gp

Biganos(construction) (water) – Cumul. rev.: €135 m Contract for the SIAAP, Seine Grésillons plant in Triel sur Seine (construction) (water)

– Cumul. rev.: €89 m Nantes Métropole, the Nantes urban authority (construction) (water) – Cumul. rev.: €14 m- Industry & services: 3 projects to build, supply & operate biomass plants (energy)

L th 20 C l €1 7 bNice

EXTERNAL GROWTH

Bartin Recycling Group (waste) – 2008 revenue: €247 m (10 ½ months)

– Length: 20 years – Cumul. rev.: €1.7 bn - Facture plant in Biganos (69 MW capacity); - Solvay chemicals & plastics site in Tavaux (30 MW); - Bazancourt agro-industrial site (C5D project) (22 MW)

Outsourcing / Privatization Renewals

Engineering / Design & Build

52

y g p ( ) ( )

Company acquisition

g g g & Industry & services

Partnership with another company Partnership with Air France to launch private high-speed TGV trains in France (transportation)

PARTNERSHIP


INTERNAL GROWTH

- Renewals: Novartis (1) (multi-services) – Length: 7 years – Cumul. rev.: €980 m S-Bahn (RER), in Leipzig East (transportation)

– Length: 3 years – Cumul rev €96 mPolandPoland

CzajkaPraterm

Brehmen

Length: 3 years Cumul. rev. €96 m Lightrail, Dublin (transportation) – Length: 5 years – Cumul. rev.: €175 m London Borough of Croydon (waste) – Length: 4 years – Cumul. rev.: €80 m

- Outsourcing / Privatization: Southwark Council (waste) – Length: 25 years – Cumul. rev.: €700 m West Berkshire Council (waste) – Length: 25 years – Cumul rev : €533 m

SwedenSweden

Setra

Castlebar

United KingdomUnited Kingdom

SouthwarkW t B k hi

GermanyGermany

Westphalia Leipzig

West Berkshire Council (waste) Length: 25 years Cumul. rev.: €533 m Bus system, Haaglanden (transportation)

– Length: 8 years – Cumul. rev.: €280 m Rail contract in North Rhine – Westphalia (transportation)

– Length: 16 years – Cumul. rev.: €520 m S-Bahn (RER) in Brehmen (transportation)

– Length: 11 years – Cumul. rev.: €500 m Bilbao (transportation) Length: 8 years Cumul rev : €305 m

IrelandIrelandMullingar

CastlebarLightrail

NetherlandsNetherlands

DiageoWest Berkshire Bilbao (transportation) – Length: 8 years – Cumul. rev.: €305 m Marienbad networks (energy) – Cumul. rev.: €6 m Mafra (water) – Length: 15 years – Cumul. rev.: €93 m

- Engineering / Design & Build: Czajka (construction) (water) – Cumul. rev.: €150 m Mullingar (construction & operation) (water) Length: 22 years Cumul rev : €48 m

Czech RepublicCzech RepublicMarienbad

Skanska

LondonBoroughof Croydon

SwitzerlandSwitzerlandNovartis

Haaglanden

BulgariaBulgariaVarna

Bilbao

Figueruelas rooftopsolar power station

SpainSpain

PortugalPortugal

Artenius

Mullingar (construction & operation) (water) – Length: 22 years – Cumul. rev.: €48 m Castlebar (construction & operation) (water) – Length: 22 years – Cumul. rev.: €26 m

- Industry & services: Artenius, La Seda de Barcelona subsidiary (multi-services)

– Length: 15 years – Cumul. rev.: €850 m Bulgaria’s largest shopping mall in Varna (energy)

Mafra

Bulgaria s largest shopping mall in Varna (energy)– Length: 6 years – Cumul. rev.: €1 m

Skanska (energy) – Length: 15 years – Cumul. rev.: €150 m Setra (energy) – Length: 10 years – Cumul. rev.: €30 m Diageo (energy) – Length: 15 years – Cumul. rev.: £60 m Figueruelas rooftop solar power station near Zaragoza (construction) in partnership

with General Motors Europe, Clairvoyant & the Government of Aragon( lti i ) Outsourcing / Privatization

Renewals

53

(1) Renewed in December 2007(multi-services)

Praterm (energy) – 2008 revenue: €37 m (11 months)

EXTERNAL GROWTH

Outsourcing / Privatization

Company acquisition

Engineering / Design & Build Industry & services


INTERNAL GROWTH

- Renewals: Las Vegas urban contract (transportation)

– Extended to 3 years – Additional rev.: €59 mC t i d t t ti i i S F i (t t ti )Customized transportation services in San Francisco (transportation)– Length: 2 years – Cumul. rev.: €24 mParatransit, Baltimore (transportation)– Length: 3 years – Cumul. rev.: €39 mBoston (1) rail commuter contract (transportation)– Extended to 3 years – Additional rev.: €137 m

CanadaCanaday

Customized transportation services in Seattle (transportation)– Length: 5 years – Cumul. rev.: €74 mOrange County (waste) – Length: 7 years – Cumul. rev.: €35 mPalm Beach (waste) – Length: 5 years – Cumul. rev.: €10 m- Outsourcing / Privatization: Ridgeline

E S l

United StatesUnited States

Outsourcing / Privatization: Oklahoma (water)

– Length: 4 years – Cumul. rev.: €33 m New London (Connecticut) (water)

– Length: 10 years – Cumul. rev.: €42 m Radcliff (water) – Length: 17 years – Cumul rev : €31 m

New London

Energy Seattle

BaltimoreSan F i

Boston

Radcliff (water) Length: 17 years Cumul. rev.: €31 m MTA bus service in the suburbs of Los Angeles (transportation)

– Length: 5 years – Cumul. rev.: €72 m Airport Shuttle, Phoenix (transportation)

– Length: 10 years – Cumul. rev.: €123 m- Engineering / Design & Build:

OklahomaRadcliffLos Angeles

Las Vegas

MexicoMexicoCalvert

Golden Touch Transportation

of New York

Palm Beach

Orange County

Francisco

Phoenix

Engineering / Design & Build: Calvert –TK (Alabama) (construction & operation) (water) – Cumul. rev.: €61 m- Industry & services: PPP for hospital in Tamaulipas (energy)

– Length: 25 years – Cumul. rev.: €200 m

Tamaulipas


54

EXTERNAL GROWTH

Golden Touch Transportation of New York (transportation)– Annual revenue: €22 m

Ridgeline Energy (windmill projects) (energy)


Company acquisition

Engineering / Design & Build Industry & services

(1) Renewed in December 2007


INTERNAL GROWTH

- Renewals: Sydney tram & monorail (transportation)

Length: 5 years Cumul rev : €30 mChinaChina

ADB

South Korea South Korea Dongbu

I diI di

– Length: 5 years – Cumul. rev.: €30 m Commuter rail, Auckland (transportation)

- Length: 4 years – Cumul. rev.: €110 m- Outsourcing / Privatization: Nagpur (DBO) (water)

Operating period: 15 yearsNishihara Environment

JapanJapanChangle

Nanjing

IndiaIndia

Nagpur

Dai Nippon Eco Engineering

– Operating period: 15 years – Cumul. rev.: €24 m (incl. construction)

Mumbai Metro One (operating contract) (transportation)- Operating period: 35 years – Cumul. rev.: €53 m

Changle (operating contract) (water)– Length: 30 years – Cumul rev : €294 m

Environment Technology

TaiwanTaiwanYongKang

– Length: 30 years – Cumul. rev.: €294 m YongKang (waste)

– Length: 20 years – Cumul. rev.: €62 m- Industry & services: Rosehill & Camellia (in partnership with Aquanet) (water)

– Operating period: 20 years – Cumul rev : €99 m

MumbaiMetro One

AustraliaAustraliaEXTERNAL GROWTH

– Operating period: 20 years – Cumul. rev.: €99 m Dongbu (construction & operation) (water)

– Length: 15 years – Cumul. rev.: €180 m Auckland

New Zealand New Zealand AustraliaAustralia Nishihara Environment Technology (water) – 2008 rev.: €82 m Dai Nippon Eco Engineering (water) – 2008 revenue: €9 m 6 transportation networks of Nanjing Zhongbei (transportation)

- Length: 30 years – 2009 estimated rev.: €20 m

Rosehill & Camellia


Sydney

55

PARTNERSHIP

Partnership with ADB (Asian Development Bank) in China (energy)


Company acquisition Industry & services

Partnership with another company


INTERNAL GROWTH

- Outsourcing / Privatization: Riyadh (contract on the basis of an incentive system Riyadh (contract on the basis of an incentive system

linked to performance & savings achieved) (water)– Length: 6 years – Cumul. rev.: €43 m

- Engineering / Design & Build: Ras Laffan (construction) (water) Ras Laffan (construction) (water)

– Cumul. rev.: €305 m

Palm Jumeirah Island (construction) (water) – Cumul. rev.: €12 m QatarQatar R L ff

Burj Dubai Tower (DBO) (water)– Operating period: 3 years (excl. construction) – Cumul. rev.: €12 m

United ArabUnited ArabEmiratesEmirates

Riyadh

SipchemBurj Dubai Tower

Palm Jumeirah Island

Ras Laffan

Al AinAbu Dhabi

Abu Dhabi & Al Ain (BOT) (water)– Operating period: 22 years – Cumul. rev.: €461 m (incl. construction)

Industry & services:

Saudi ArabiaSaudi Arabia

Mubadala

- Industry & services: Saudi International Petrochemical (Sipchem) (1)

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

PARTNERSHIP Outsourcing / Privatization

56

PARTNERSHIP

Partnership with Mubadala in the Middle East and North Africa (water)

(1) Won in January 2009 Engineering / Design & Build Industry & services Partnership with another company

Appendix 5: Veolia Environnement in North America Investor Relations – 2008 Annual Results – March 6, 2009

No.1 in municipal partnerships and industrial outsourcing

Top 1-3 in various categories of waste management

Recent launch in North America• $450m revenue

No.1 in U.S. surface passenger transportation

• $900 m revenue• 3,600 employees

• $2.1 Bn revenue• 11,000 employees

• 575 employees• acquisition of Thermal North America

• $1.1 Bn revenue•15,000 employees

2008: ~$4.5 billion revenue in North America

57

2008: $4.5 billion revenue in North America

Appendix 5: Veolia Water North America - Leader in Water Services & Solutions. 2008 Revenue: $900 million


No. 1 market leader with ~38% share in U.S., Canada and Caribbean*

Approximately 600 communities served in 38 states; 300 municipal facilities

Tampa Bay WaterSignificant DBO project

Manage largest U.S. water and wastewater public private partnership (Indianapolis and Milwaukee, respectively)P id i d t i l/ i l t Provide industrial/commercial water partnerships and operating services at 100+ facilities

Largest number of U S industrial projects Milwaukee – largest U S wastewater Largest number of U.S. industrial projects

(customer base includes many of the Fortune 500)

Technological and design expertise

U.S. wastewater agreement

Technological and design expertise— Engineering, design, construction, service

Manage largest U.S. DBO (Tampa Bay)

58

*Source: Public Works Financing, April 2008Indianapolis – nation’slargest, most innovative partnership

Appendix 5: Veolia Environmental Services North AmericaInvestor Relations – 2008 Annual Results – March 6, 2009

Most comprehensive provider of integrated

Breakdown of 2008 Revenue $2.1 billion

waste services2008 Revenue: $2.1 billion

Solid Waste 38%

Waste-to-Energy 11%

Solid waste locations in 12 states with more than 500 municipal solid waste contracts and over 150,000 commercial

d i d t i l t 38%

Hazardous Services

and industrial customers Second largest hazardous waste service

provider in the U.S. Industrial services (hydro blasting 19% Industrial services (hydro blasting,

industrial cleaning, chemical cleaning, etc.) to most major industries,emergency response 24/7 and marine

Industrial Services 32%

services Operating 9 waste-to-energy facilities

with a capacity of over 14,000 tons per d

59

day

Appendix 5: Veolia Energy North America - Providing leadership in Energy Services. 2008 Revenue: $450 million


Owns and operates the largest portfolio of energy distribution networks (steam hot water chilled water electricity) in the USA(steam, hot water, chilled water, electricity) in the USA— Steam capacity of 11 million pounds/hour— Chilled water capacity of 169,000 tons— Electric generating capacity of over 1,100 MW

F iliti i 11 t t i th 1 200 t i 31 St t Facilities in 11 states, serving more than 1,200 customers in 31 States and the District of Columbia

Key Capabilities:— Operation of heating and cooling networks— Cogeneration— Central plant maintenance and operations— Multi-technical maintenance and services — Comprehensive building and facility management (Houston Galleria, Caesar’s p g y g ( ,

Palace, Copley Place Boston, Biogen-Idec in Cambridge)— Management of complex energy issues and planning in areas related to power

generation, transmission and distribution

Committed to Sustainable Development— In San Diego, CA, operate 25 MW biomass “wood” generating station— In Baltimore, 60% of steam is delivered from a Waste-to-Energy plant— Operate trigeneration (chilled water, steam and electrical power) in Oklahoma City

and Tulsa operations

60

— Recognized by the EPA and other agencies for greenhouse gas reduction and energy efficiency

Appendix 5: Veolia Transportation North America Leading private transportation provider in North America 2008 Revenue: $1.1 billion


Operating over 10,000 vehicles across more than 130 contractsthan 130 contracts

Operations in 22 States and 2 Canadian Provinces

Services include bus operations (fixed route Services include bus operations (fixed route and express/commuter buses), BRT (bus rapid transit), commuter rail, para-transit, airport shuttle and taxi

Operate the largest contracted fixed-route bus service in North America (Las Vegas)

Operate the largest contracted commuter rail system (Boston)system (Boston)

Operations include SuperShuttle, the largest U.S. airport shuttle company serving 27 leading airports and over leading airports and over 8 million passengers per year

61

Appendix 6: Operating cash flow marginsInvestor Relations – 2008 Annual Results – March 6, 2009

Operating cash flow margins

€m 2007 restated (1) 2008

2007 margin

restated

2008 margin

margins

restated

Water 1,851 1,821 16.9% 14.5%

Waste 1 461 1 362 15 9% 13 4%Waste 1,461 1,362 15.9% 13.4%

Energy services 642 (2) 755 10.4% 10.1%

Transportation 279 292 5.0% 4.8%

Holding company (69) (93) - -

Total Group 4,164 4,137 13.0% 11.4%

(1) Accounts at December 31, 2007 were restated, to ensure comparability between accounting periods, by the amount of the income from assets divested in 2008 (Clemessy & Crystal in Energy in particular), according to the IFRS 5 standard and shown in the income statement in the “Net income from discontinued operations” line

62

discontinued operations line. (2) Operating cash flow: €657m - €15m in cash flow from discontinued operations (Clemessy & Crystal in particular)

Appendix 7: Recurring operating income marginsInvestor Relations – 2008 Annual Results – March 6, 2009

Recurring operating

€m2007

restated (1) 20082007

margin 2008

Recurring operating income margins

€m restated (1) 2008 margin restated margin

Water 1,266 1,196 11.6% 9.5%, ,

Waste 803 640 8.7% 6.3%

Energy services 374 425 6.0% 5.7%

T i 115 130 2 1% 2 1%Transportation 115 130 2.1% 2.1%

Holding (103) (108) - -

Total Group 2 455 2 283 7 7% 6 3%Total Group 2,455 2,283 7.7% 6.3%

(1) Accounts at December 31, 2007 were restated, to ensure comparability between accounting periods, by the amount of the income from assets divested in 2008 (Clemessy & Crystal in Energy in particular), according to the IFRS 5 standard and shown in the income statement in the “Net income from

63

discontinued operations” line.

Appendix 8: Impact of the rise in fuel costs on operating income: €48m


Hedging Mechanisms & Comments Net impact Hedging Mechanisms & CommentsAround two thirds of costs are indexed

Net impact 2008/2007

Water NS

66% of costs are indexed or hedged primarily impacting waste collection

Waste

■ ~66% of costs are indexed or hedged, primarily impacting waste collection and transfer operations

■ European municipal clients: Contractual indexing formulas on either monthly, quarterly or annual basis

■ European industrial clients: Major long-term industrial contracts are (€20m)

■ European industrial clients: Major long term industrial contracts are indexed (in particular in the United Kingdom); more pronounced impact on short-term contracts partly offset by fees

■ North America Solid Waste: Fuel surcharge generally with a 30-day delay

Energy NSEnergy NS

Transport

■ 70% of total costs are indexed■ French passenger transportation: Most contracts are indexed■ Germany, Netherlands, Scandinavia (ex-Sweden), Pacific: Total or partial

i d i ( G ) t i ll ith l i i (€28m)ation indexing (e.g. Germany) typically with annual revision

■ Sweden: No indexing ■ North America: managed by municipality or indexed by contract

(€28m)

64

Appendix 9: Debt ratios(1)


€bn

17 4x16.5

16

16.5

14.715.1

14.5

15

15.5

3.53.4x

3.6x3.6x

x

13.9

13.5

14

3.4x

3.3x

12

12.5

13

3x

Net financial debtNet financial debt/(Cash flow from operations + Repayment of operating

31-Dec-05 31-Dec-06 31-Dec-07 31-Dec-08

65

(1) 12-month moving average ratios

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

Appendix 10: Debt characteristicsInvestor Relations – 2008 Annual Results – March 6, 2009

Ratings— Moody’s: A3/P-2 Stable (confirmed on December 23, 2008)y ( , )

— Standard & Poor’s: BBB+/A-2 Stable (confirmed on November 12, 2008)

2008 bond issues: €1.8bn, maturity ranging from 5 to 30 years Bond redemption: €68m in 2009 (€1.2bn in 2008)Bond redemption: €68m in 2009 (€1.2bn in 2008) Average maturity of net debt: 9.3 years vs. 9.2 years in 2007, without any

disruptive covenants Group liquidity: €7.7bn including €3.8bn in undrawn credit lines

O h 19% (1)Net financial debt

after hedgesCurrencies (gross debt after hedges)

p q y g Net Group liquidity: €4.0bn

GBP 8%

Other 19% (1)

Fixed rate: 59% Euro 63%

after hedges

USD 10%

GBP 8%o/w euro: 75%

o/w US dollar: 45%

o/w pound sterling: 48%

66

Variable rate: 41%o/w pound sterling: 48%

(1) o/w Zloty: 2% and HKD: 3%

Appendix 11: Bond maturitiesInvestor Relations – 2008 Annual Results – March 6, 2009

Amount of bond redemption

€m

1400

1600

1200

1400

800

1000

400

600

0

200

67

2009 2013 2017 2021 2025 2029 2033 2037

Appendix 12: Net liquidityInvestor Relations – 2008 Annual Results – March 6, 2009

€m 12/31/2007 12/31/2008

Veolia Environnement

Syndicated loan(1) 4,000 2,890

Bilateral credit lines 1,025 925

Cash and cash equivalents 1 551 2 284Cash and cash equivalents 1,551 2,284

Total Veolia Environnement 6,576 6,099

Subsidiaries

Cash and cash equivalents 1,565 1,566

Total subsidiaries 1,565 1,566

Total Group liquidity 8 141 7 665Total Group liquidity 8,141 7,665

Current liabilities and bank overdrafts (4,264) (3,685)

Total net Group liquidity 3,877 3,980

68

(1) Maturing in April 2012

Appendix 13: Overview of operating financial assetsInvestor Relations – 2008 Annual Results – March 6, 2009

12/31/2007 12/31/2008€m 12/31/2007 12/31/2008

Balance sheet (current and non-current operating financial assets):recorded at amortized costs on balance sheet with a corresponding

5,628 5,751

€m

liability booked in Veolia’s consolidated net financial debt

Income statement: Remuneration (i.e. interest payments) are a sub-line to revenue from ordinary activities “o/w revenue from operatingfinancial assets” and are also included in operating cash flow before

345 400

financial assets and are also included in operating cash flow beforechanges in working capital

Cash flow statement (inflows): Principal repayments associated withthe operating financial assets are not recognized in the incomet t t b t d d ithi “ h fl f i ti ti iti ”

361 358

statement but recorded within “cash flow from investing activities” onthe cash flow statement

Cash flow statement (outflows): “New operating financial assets”which are the current year’s investments in operating financial assets

404 507which are the current year s investments in operating financial assetsare also recorded within “cash flow from investing activities” on thecash flow statement

696969

Appendix 14: Definition of ROCEInvestor Relations – 2008 Annual Results – March 6, 2009

Net income from operationsROCE =

Average capital employed during the year

Net income from operations

Net income from operations = Recurring operating income + Share of net income of associates– Income tax expense – Revenue from operating financial assets + Income tax expense allocatedto operating financial assetsg

Capital employed = Intangible assets and property, plant and equipment, net + Goodwill,net of impairment + Investments in associates + Operating and non-operating working capital requirements, net + Net derivative instruments – Provisions – Other non-current debt

Capital employed consists in capital “earning” a return: equity capital

Average capital employed during the year: average of the opening and closing capital employed

Capital employed consists in capital earning a return: equity capital, minority interests, net financial debt less operating financial assets

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Appendix 15: Changes in pre-tax ROCE by divisionInvestor Relations – 2008 Annual Results – March 6, 2009

Average capital employed (€m)

Pre-tax ROCE (as %)

2007 restated(1)

2008 2007 restated(1)

2008

Water 5,688 6,239 18.1% 14.6%

Waste 5,891 6,522 12.5% 8.7%

Energy services 2,971 3,741 11.4% 10.5%Energy services 2,971 3,741 11.4% 10.5%

Transportation 1,505 1,646 7.6% 7.9%

(1) Accounts at December 31, 2007 were restated, to ensure comparability between accounting periods, by the amount of the income from assets divested in 2008 (Clemessy & Crystal in Energy in particular), according to the IFRS 5 standard and shown in the income statement in the “Net

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( y y gy p ), gincome from discontinued operations” line. Clemessy & Crystal 2007 revenue: €696m

Investor Relations contact informationInvestor Relations – 2008 Annual Results – March 6, 2009

Nathalie Pinon, Head of Investor Relations,and Financial Communication

38 Avenue Kléber – 75116 Paris - FranceTelephone +33 1 71 75 01 67

Fax +33 1 71 75 10 12Fax +33 1 71 75 10 12e-mail [email protected]

Brian Sullivan, Vice President, US Investor Relations200 East Randolph Street

Suite 7900Chicago, IL 60601

Tem +1 (312) 552 2847Fax +1 (630) 282 0423

il b i lli @ lie-mail [email protected]

Web site

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http://www.veolia-finance.com

Economy & Finance

2008 Annual results