Veolia Environnement Sa · EURONEXT:VIE
Veolia Environnement Sa — Vivendi Environnement — FY2002 Earnings Presentation
43 slides from Veolia Environnement Sa's earnings presentation, Mar 4, 2003
Slide 1: 2002 Annual Results - March 2003 - London
VIVENDI Environnement 2002, Annual Results — March 2003 - London
Slide 2: Forward-looking statements
Vivendi Environnement is a corporation listed on the NYSE and Euronext Paris. This document contains “forward-looking statements’ within the meaning of the provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements are not quarantees of future performanc
Slide 3: Presentation of Annual Financial Statements
Presentation of Annual Financial Statements 2002, Annual Results ViVENDI_ Environnement
Slide 4: Introduction
Introduction Henri Proglio Chairman of the Management Board 2002, Annual Results — March 2003 - London
Slide 5: 2002: A decisive year in the company's history
2002: A decisive year in the company’s history = Capital stock restructuring successfully completed = Solid results in a difficult environment = Balance sheet strengthened > Strong increase in cash flow from operations > Divestment program exceeded (over €1.7 billion vs €1 billion planned) > Net deb
Slide 6: Shareholder structure after Vivendi Universal sale
niversal 20.4% Patt oth hah New investors 20.4% (") o#——__ Float 59.2% () New investors: Companies in the following groups: CDC, Groupama, Electricité de France, BNP Paribas, Société Générale, Dexia, Groupe Axa, Assurances Générales de France, Eurazeo, Caisse Nationale des Caisses d'Epargne, Crédit
Slide 7: Main municipal and industrial contracts
Main municipal and industrial contracts Order backlog won in 2002: €30 billion Backlog China 10,000 Morocco 4,500 Czech Republic 2'700 USA 1500 Netherlands 1500 q 390 China 265 USA 200 Germany ‘100 ‘Alon USA 5 French industry France 68 Richmond USA 59 = Oklahoma USA 36 . France 35 . 2 . i France 7 =
Slide 8: Main municipal and industrial contracts
Main municipal and industrial contracts Order backlog won in 2002: €30 billion rom Backlog Poznan Poland 1,700 BP Lavera France ‘498 S : France 387 Resonor France 437 Ahistrom uk 72 Manuli Films Italy 70 Arcelor France 65 Viry-Chatillon France 48 Aulnay France 42 Majid United Arab Emirates 4a Parme
Slide 9: Solid results: Key figures for 2002
Solid results: Key figures for 2002 In€m Revenue Revenue from core businesses EBITDA EBITDA from core businesses EBIT EBIT from core businesses Net income Recurring net income Recurring net income per share (in €) Dividend per share (in €) © Net debt 45.9% 47.1% +1.9% +8.0% +3.2% Number of shares: 4
Slide 10: Increase in cash generation
Increase in cash generation: Very strong improvement in cash indicators 3000 Iném & 2,455 2000 1500 1000 2000 = 2001 = 2002 2000 = 2001 = 2002 Cash flowfrom operations © Cash flow available before growth 2002, Annual Resuts~ March 2008 - London 10 4 39 38 37 36 36 34 33 3.2 34 3.0 2,780 Net debt / E
Slide 11: Jérôme Contamine
Jéréme Contamine Senior Executive Vice President
Slide 12: Solid results: Income statement
Solid results: Income statement In€m 2007 2001 = Revenue = EBITDA > Long Term depreciation and provisions > Renewal expense = EBIT > Other operating items > Net financial expense | > Notional tax charge : > Companies accounted for by equity method > Minority interests = Recurring net income before g
Slide 13: Growth in revenue from core businesses
Solid results: Growth in revenue from core businesses nem ie | Sta = Water +24% +4.0% m= Waste +3.8% +5.0% = Energy services +13.8% +6.3% = Transportation +10.4% +4.5% = FCC +8.1% +8.5% TOTAL 28,073 26,513 +5.9% +5.0% 2002, Annual Resuts~ March 2008 - London 13
Slide 14: EBIT by division
Water waste‘) Energy Transportation FCC Total services Dec.34,02MeC.31.01 409% 4.4% 440.7% Pate +9.1% ae peat 442% 424% +9.0% 42.9% +9.4% 43.2% = Dec. 31, 2002 (145% excluding Proactiva at constant exchange rate (Onyx scope) Dec. 31, 2001 2002, Annual Resuts ~ March 2008 - London 14
Slide 15: Water
Water France EBIT margin 8.0% USA Vivendi Water Systems 2002, Annual Resuts~ March 2008 - London Good business activity in water distribution. Favorable impact of industrial business growth Growth in municipal and industrial outsourcing and growth at Culligan Slowdown in sale of equipment to industr
Slide 16: Waste
Waste EBIT margin 6.3% France USA Europe Asia 2002, Annual Resuts~ March 2008 - London Excluding Latin America, EBIT growth of 5% at constant exchange rates Sustained performance despite competitive environment and the renegotiation of certain contracts Double-digit growth in EBIT Good growth in sol
Slide 17: Energy services and Transportation
Energy services France Sustained business activity: increase in EBIT margin 5.3 cogeneration offset reduction in gas price Margin: impact of full-year change in mix International Revenue +31%, with 1/3 from the acquisitions (Siram, Italy), 1/3 with the startup of important contracts (Talin, Vilnius
Slide 18: Disposals and financial divestments
d financi Bristol Waterworks February 02 37 Filtration & Separation April 02 378 Plymouth Products September 02 126 Philadelphia Suburban Corp. September 02 207 South Staffordshire October 02 131 Distribution November 02 472 Bonna Sabla December 02 98 Miscellaneous tangible assets 203 Other financia
Slide 19: Strengthened financial situation: cash flow generation
Strengthened financial situation: Cash flow generation up significantly nem a | > Cash flow from operations +13% > Maintenance capital expenditures Cash flow available before growth +36% 1,457 1,073 > Capital expenditures for growth > Disposal of assets > Change in consolidation scope > Change in wo
Slide 20: Extension of average debt maturity
= Extension of average debt maturity to more than 4 years = Significantly stronger financial ratios: 40% improvement in coverage ratio in two years Financial ratios = EBITDA/financial expense (x) = Net debtv/EBITDA (x) 2002, Annual Resuts~ March 2008 - London 20
Slide 21: Strategy and Outlook
Strategy and Outlook Henri Proglio
Slide 22: Continued execution of strategy
Continued execution of strategy Confirmed business model Vivendi Environnement: m= The pure player in environmental services = 4 well matched divisions > Water > Waste > Energy services > Transportation = Secure geographical coverage Over 95% of revenue generated in industrialized countries with sta
Slide 23: Growth and financial targets
ind financial ri m Average revenue growth in core businesses of 4-8% per year from 2002 to 2005 = Improved profitability: increase in ROCE for each division, based on: > Maturation of contracts signed since 1999 > Productivity improvement efforts Implementation of synergies > Selective investment po
Slide 24: ROCE as key indicator
proce ti) —EBIT= group tax + companies accounted for by equity method) Average capital employed for the year Capital employed = Gross goodwill - impairment: fixed assets + working capital requirements + equity method securities = provisions for risks and liabilities — other LT liabilities (1 These f
Slide 25: 2005 targets for growth and ROCE
Key indicator: ROCE 2005 targets for growth and ROCE 8.5% 8,0% 7.5% 7.0% 65% ROCE 6,0% 2005 : +8! 55% 5,0% 23000 25.000 2002, Annual Resuts~ March 2008 - London 27000 29000 31000 33000 Core business revenue 2s 35 000 Iném 37 000
Slide 26: Growth and financial rigor
Growth and financial rig = Continued improvement in financial ratios = Positive free cash flow after disposals and investments in growth in 2003 = Positive free cash flow in 2004 2002, Anni 26
Slide 27: Appendixes
Appendixes
Slide 28: Vivendi Universal ownership timeline
= December 1999 = July 20, 2000 = December 17, 2001 m June 28, 2002 = August 2, 2002 = December 24, 2002 exercisable 2002, Annual Resuts~ March 2008 - London Formation of Vivendi Environnement (VE), owned 100% by Vivendi Universal (VU) IPO VU owns 72.3% VU sells 9.3% VU owns 63% VU sells 15.5% VU ow
Slide 29: 7.1% increase in EBITDA from core businesses
Solid results: 7.1% increase in EBITDA from core businesses In€ém ees 3), 2002 § 420022001 Boone mnarain, m Water m Waste m= Energy services = Transportation = FCC = Holding company = Total for core businesses = Non-core businesses = Total 3,887 2002, Annual Resuts~ March 2008 - London 29
Slide 30: Financial expense down significantly
Strengthened financial situation: Financial expense down significantly = Cost of financing = Other financial income and expense Recurring > Amort. of premium (mainly Océane > Other Non-recurring > Capital gain from PSC disposal > Depreciation of treasury stock > Other = Net financial expense (648) (
Slide 31: Non-recurring items
inێm = Provisions and write-downs, Latin America = Provisions and write-downs, German subsidiaries = Other exceptional goodwill write-downs = Restructuring costs = Capital gains and other TOTAL 2002, Annual Resuts~ March 2008 - London a 2001 (90) (2,672)
Slide 32: Capital expenditures and investment acquisitions
Strengthened financial situation: Capital expenditures and investment acquisitions: €3.7bn, vs €4bn in 2001 in€n Maintenance m Water = Waste = Energy services = Transportatior: = FCC and Proactiva 1,323 Pudong,Czech Republic, Morocco, USA Major projects in France, Sheffield, Hampshire Contract in Es
Slide 33: Active debt management
= Active debt management > Total independence of financing (elimination of cross-default with Vivendi Universal in August 2002) > Currency coverage of assets > Extension of average debt maturity = Financial flexibility > Improvement in liquidity > Elimination of all ratings triggers > Easing of cove
Slide 34: Secure geographical coverage
Secure geographical coverage Revenue from core businesses Asia 4% Other 2% Latin America 2% North America 12% Europe 35% 55% of revenue generated outside France 2002, Annual Resuts March 2008 - London 4
Slide 35: Outsourcing contracts
Outsourcing contracts: = 2.5 times more orders booked in recurring revenue won 2002 than in 2001: Recurring revenue won: €200m + Backlog: €1,920m + Average contract period: 9.6 years > Corresponding investments: less than €100m @ 2001 B 2002 An emerging market: outsourcing of environmental services
Slide 36: Geographical breakdown of water revenue
Strategic geographical breakdown of revenue from water business 2002 revenue: €11,288m Ainrevenue 2002/2000 France +8% Row) +42% vws N.S USA Core businesses +8% (1) Row = Europe, Asia and others 2002, Annual Resuts ~ March 2003 - London 6 Row
Slide 37: Positions in high-potential markets: French water market
Positions in high-potential markets Structure of the French water market = Over 90% of municipal outsourcing contracts awarded through “affermage " contracts = Pricing trends: > Trend over recent years: increase of 1.5-2% > Price among the low average of European prices, number 7 in decreasing order
Slide 38: French water market: growth opportunities
Positions in high-potential markets French water market: growth opportunities = Potential in wastewater segment (40% privatized) = Continuous productivity through: > Increase in value-added services (quality approach, operator training, health intelligence) > Upgrading of treatment facilities (Europ
Slide 39: Water - Europe
Positions in high-potential markets Water - Europe = Annual double-digit growth in revenue and EBIT for 2000-2004. = Growth based on: > Strong positions: for example, Czech Republic + Strategy to intensify geographical coverage « Berlinin 1999 * New contracts in 2000: Germany (Midewa), Romania (Buch
Slide 40: Positions in high-potential markets
Positions in high-potential markets
Slide 41: Water - United States
Positions in high-potential markets Water — United States = Leader with 47% share of outsourcing market = Leader with 29% market share in municipal outsourcing and 86% in industrial outsourcing = Balanced mix between industrial and municipal customers = Contract renewal rate >90% in 2002 More than $
Slide 42: Positions in high-potential markets: outlook
markets m Focus on core businesses = Favorable trends in both municipal and industrial outsourcing markets = Outlook unchanged for equipment sales > Growth in sales to municipalities > Sales to industrial customers flat 2002, Annual Resuts~ March 2008 - London “2
Slide 43: 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 4, 2003 VIVENDI ENVIRONNEMENT By: /s/ Jérôme Contamine Name: Jérôme Contamine Title: Chief