Veolia Environnement Sa · EURONEXT:VIE
Veolia Environnement Sa — FY2003 Earnings Presentation
38 slides from Veolia Environnement Sa's earnings presentation, Mar 8, 2004
Slide 1: 2003 financial statements - Paris, March 2004
2008 financial statements - Pas, March, 2004 4
Slide 2: Disclaimer
Disclaimer Veolia Environnement is a comoration listed on the NYSE and Euronext Paris. This document contains “forward-looking statements" within the meaning of the provisions of the U.S, Private Securities Litigation Reform Act of 1995. Such forward-loaking statements are not guarantees of future p
Slide 3: 2003: a clear strategy that has begun to deliver results
2003: a clear strategy that has begun to deliver results ® Improvement in operating performance excluding completed and announced disposals ® Continued focus on long-term contracts in Europe, Asia and the United States @ Implementation of refocusing in Water in the United States ® Confirmation of th
Slide 4: Shareholder structure at December 31, 2003
Shareholder structure at December 31, 2003 International 27% |B Vivendi Universal pe _ Groupama @ EDF & Société Générale 4. BNP Paribas & Other = Intemational France 73% 2008 financial statements - Pas, March, 2004 4 | Go, |
Slide 5: 2003 Key figures
2003 Key figures In€m Current Constant Reported revenue 28,603 | 30,079 yay of which revenue “)) excl. assets sold in 2002 and 2003 : +5.4% of which new consolidation scope revenue i +5.4% Reported EBIT 7.9% of which EBIT “) excl. assets sold in 2002 and 2003 -1.8% of which new consolidation scope E
Slide 6: 2003 Key figures (continued)
2003 Key figures (continued) In€m Cash flow from operations Capex and financial investments Net income (loss) Recurring net income Net debt Free cash flow ") before disposals of non-core assets, net of tax and financial charges Free cash flow ") after disposals, net of tax and financial charges © Fr
Slide 7: Validation of financial model
Validation of financial model Net debt considerably reduced, In €m Net debt / EBITDA (x) 16,000 4.0 3.9 38 37 3.6 3.5 34 3.3 3.2 31 3.0 14,000 12,000 10,000 8,000 6,000 4,000 2,000 2001 2002 2003 2008 financial statements - Pas, March, 2004 7 | Go, |
Slide 8: Validation of financial model
Validation of financial model Significant increase in. cash generation In €m 2001 2002 2003 +662 700 200 +47 #188 — it -300 IT Cash flow net of tax and -800 ‘ financial charges before disposals of non-core assets 1300 Cash flow net of tax and 1,525 financial charges after -1800 disposals 1,837 -2300
Slide 9: Continual commercial success
Continual commercial success Examples of contracts won since January 2003 In€m ¢ Shenzhen‘) China © Gera Germany Qingdao China California (multiple communities) uUsA Beijing (Lugougiao) China © Osio Norway Alabama (multiple communities) Usa © Synthesia/ Unipetrol (industrial) Gzech Republic ¢ Johnso
Slide 10: Continual commercial success
Continual commercial success Examples of contracts won,and.renewed since January 2003 In€m VE Backlog Schleswig-Holstein Germany © Nordharz-Nertz (Magenburg-Harz) Germany ¢ PSA Peugeot Citroen France © Weisswasser, Saxony Germany Renewals and extensions © Rennes France © Metz France © 200 + municipa
Slide 11: From revenue to net result
From revenue to net result In€m 2003 2002 Revenue EBITDA > Depreciation and LT provisions > Renewal expenses EBIT > Recurring financial income (expense) > Nominal tax charge » Recurring earnings of equity method companies > Minority interests Recurring net income before goodwill » Recurring goodwill
Slide 12: A year impacted by currency fluctuations
A year impacted by currency fluctuations ‘% of consolidated Average Average revenue at Currency rate 2002 | rate 2003 | 2003/2002 12/31/2003 (1€=..) | (1€=..) 12% US dollar 0,948 1,142 17% Th Pound sterling 0,629 0,693 9% 2% Australian dollar 1,728 1,740 1% 2% Czech Koruna 30,888 31,892 3% 2008 fina
Slide 13: Growth in revenue excluding non-core assets
Growth in revenue excluding non-core assets sold in 2002 and 2003.(;,Organic growth of over 5% at constant exchange rates In €m Dec.31, | 9903/2002 Water -1.2% +3.9% -2.7% +4.1% +1.8% +5.4% +7.3% +9.4% +11.7% +11.9% Waste Energy services Transportation FCC @) © "Excluding asets sold in 2002 and 2006
Slide 14: Good resilience of EBITDA
Good resilience of EBITDA “) +2.7% at constant exchange,rates, Aat current | A at constant | 2003 margin rides 2003 Water 0.3% 13.1% Waste +2.1% 15.0% Energy Services +7.2% 13.1% Transportation -1.4% 1.1% Fcc +15.5% 13.8% Total 3,671 1.5% +2.7% 1. (© Excluding assets sold in 2002 and 2008 2008 finan
Slide 15: Contribution to EBIT
Contribution to EBIT In €m 1971 1751 2200 65 ei -122 2000 es a es 1800 xz = 1600 244 = Fee Ves See TRANSPORTATION 1000 1 ENERGY SERVICES 380 800 = WASTE 600 4024 | WATER 400 784 200 O+ 2002 Impact of Assets sold Assetstobe Performance 2003 foreign in. 2002 and sold in 2004 exchange 2003 (4) Includes
Slide 16: EBIT trends by division
EBIT trends by division | Water | €784m, +6% at constant ex. rates, under new 2004 consolidation scope Double digit growth in EBIT excluding USA. Very good level of business in France (impact of weather conditions) Continued improvement of profitability in Europe (increased margins in Czech Republic
Slide 17: EBIT trends by division
EBIT trends by division €274m, #14,3% at constant exchange rates EBIT continued to grow in France despite unfavorable developments in engineering activities Outside France: EBIT up 23% driven by Southern Europe (integration of Giglio), Northern Europe (+20%) and Central & Eastern Europe (impact of V
Slide 18: Control of financial charges
Control of financial charges In €m 2003 2002 = Cost of financing Other financial income and expense ® Recurring > Amortization Oceane premium + borrowings > Exchange rate >» Other ® Non-recurring Net I expense Average interest rate for 2003: 4.31% 2008 financial statements - Pas, March, 2004 18 | Go
Slide 19: Non-recurring income (expense)
Non-recurring income (expense) In€m 2003 2002 Write-down of US Filter assets Other non-recurring goodwill write-downs Restructuring costs Tax Other (including gains or losses from the sale of shares) Prot z05) 0) | 2008 financial statements - Pas, March, 2004 10 | Go, |
Slide 20: Control of capex and financial investments
Control of capex and financial investments: €2.9 billion compared_with.€3.7, billion in 2002 Industrial Financial Southern Water, Maracca, st 280° ‘shenzhen, Brussels 151 28 Major projects in France (Nimes, Saumur) and the UK (New Hampshire, Shetfield) 63 62 Giglio. - 27° FFR 38 61 Energy services T
Slide 21: Disposals completed in 2003
Disposals completed in 2003 In €m Disposals of non-strategic assets Everpure December 2003 191 Surface Preparation September 2003 121 Other disposals 182 Sub-total 494 Disposals of operating assets Tangible assets, miscellaneous 226 Total disposals 720 2008 financial statements - Pas, March, 2004
Slide 22: Strong improvement in cash flow from operations
Strong improvement in cash flow from operations (excluding assets'sold:iny2002 and 2003) and at constant exchange rates In én 3,000 2,780 i -106 2,800 = 60 4207 10 fat. 2,400 2,200 2,000 + Cash flow from Impact Exchange rate Performance Cash flowfrom ops 2002 disposals ops 2003 2008 financial statem
Slide 23: Strong improvement in cash generation
Strong improvement in cash generation Free cash flow after disposals of nearly €700 million Cash flow from operations 2,701 2780 Change in WCR excl. securitization program and Dailly @ 151 (241) Maintenance Capex (1,325) (1.323) Cash flow before disposals and investments for growth Investments for g
Slide 24: Sound financial situation
Sound financial situation @ 30-year bond issue for €700 million ®@ Extension of average debt maturity to 5.5 years ® Liquidity position above €8 billion ® Ratings: Standard & Poor's BBB+/Positive /A2 Moody's Baat / Stable / P2 Financial ratios EBITDA/sfinancial charges (x) 48 Net debt/EBITDA (x) 3.8
Slide 25: Improvement in ROCE in line with targets announced
Improvement in ROCE “) in line with targets announced (EBIT- tax for the Group () + share in earnings of companies accounted for by the ecpuity method) ROCE = ‘Average capital employed during year Average capital employed = Fixed assets + gross goodwill - exceptional write-downs + stare in companies
Slide 26: Veolia 2005: a rigorous efficiency plan
"Veolia 2005": a rigorous efficiency plan with targeted savings of €300 million for full year 2006 Measures to support the plan and provide operational steering Cross-aivision and division-specinc operating processes .! "Project Veolia 2005" team reporting to Risks Insurance 30 to 40% the Chairman W
Slide 27: Veolia 2005 efficiency plan: semi-annual assessment
Veolia 2005 efficiency plan: semi-annual assessment Economic review to be carried out every six months: @ Report on progress made ® Estimated contribution per area @ Illustration of projects under way Today, a target of savings of €300 million for full year 2006 50% have so far begun in project phas
Slide 28: Strategy and outlook
Strategy and outlook
Slide 29: Strategy and outlook
Strategy and outlook 2003 consolidation scope after disposals 2003 revenue () 2003 revenue(’) by division by geographic area ie Asia-Pacific, pe: Row 8 3.5% \ 4.5% Transportation Water "7 ; q 36% North America | Tee 1% France 48% Energy services cee x 17% Waste OSA EUIOE 22% ene i Consolidated reven
Slide 30: Strategy and outlook
Strategy and outlook ®@ Continued leadership in environmental services for municipalities and industrial customers ®@ Long-term and secure contracts guarantying on- going cash-flows @ International geographic presence in growing areas: >» Europe, North America and some Asian countries ® Increased of
Slide 31: Asia-Pacific: A region with a strong potential for growth
Asia-Pacific: A region with a strong potential.for,growth @ Atargeted development strategy >» Opportunities in China, South Korea, Japan, Singapore, and Australia > Flagship projects serving as customer references = Shanghai (water and waste), Shenzhen and Tianjin for municipal services = Hynix and
Slide 32: Asia-Pacific
Asia-Pacific Well-targeted growth South Korea i Tianjin, hat Thailand 2008 financial statements - Pas, March, 2004
Slide 33: Asia-Pacific
Asia-Pacific New contracts won recenily, (1) Inparneship 2008 financial statements - Pas, March, 2004 Ey
Slide 34: Asia-Pacific: Key figures
Asia-Pacific: Key figures 2003 revenue a — - 2009 revenue €933 million target 686 > €2 billion 300 a ge “| = Water Waste Energy services Transportation 300 87 Asia 400. I Pacific Revenue Capital employed 2008 financial statements - Pas, March 8, 2004 24
Slide 35: Outlook
Outlook 2004-2005: Targets maintained @ revenue growth of between 4% and 8% @ free cash flow positive before disposals and excluding new major projects @ improvement targets confirmed for ROCE 10.0% ROCE target 9.0% end-2005 8.0% 05-1.3% 10% ss 06% 8-9% 6.0% 6.4%) 5.0% 2002 US Performance Contract R
Slide 36: Outlook
Outlook Medium term ® Continuation of focus on profitable growth » ROCE objective: above 10% in 2009 » while maintaining financial balance (net debt/EBITDA between 3 and 3.5x) ® Allocation of free cash flow >» new projects (€300-700m Ayr); focus on long-term contracts in Europe, Asia and the United
Slide 37: 2008 financial statements - Pas, March, 2004 7
2008 financial statements - Pas, March, 2004 7
Slide 38: Signatures
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: March 8, 2004 VEOLIA ENVIRONNEMENT By: /s/ Jérôme Contamine Name: Jérôme Contamine Title: Chief