Quarterly Financial Information for the three months ended March 31, 2018

Transcription

1 Velia - Quarterly Financial Infrmatin fr the three mnths ended March 31, 2018 >>>>-- VEOLIA ENVIRONNEMENT Sciété annyme with a share capital f 2,816,824,115 Registered ffice: 21 rue La Bétie Paris RCS PARIS Quarterly Financial Infrmatin fr the three mnths ended March 31, 2018 (UNAUDITED FIGURES) Cntents 1 MAJOR EVENTS OF THE PERIOD General cntext Changes in Grup structure Grup financing Changes in gvernance 4 2 ACCOUNTING AND FINANCIAL INFORMATION Preface Key figures Revenue by business 14 3 SUBSEQUENT EVENTS 15 4 OUTLOOK 15 5 APPENDICES 16 1

2 Velia - Quarterly Financial Infrmatin fr the three mnths ended March 31, Majr events f the perid 1.1 GENERAL CONTEXT The Grup s perfrmance fr the three mnths ended March 31, 2018 was marked mainly by: Accelerated revenue grwth: +7% (1) at cnstant exchange rates t 6,419.4 millin 6 th quarter in a rw f very strng grwth, Organic grwth f +5.4% at cnstant scpe and exchange rates after 3.5% in 2017; Rbust cmmercial mmentum and gd waste vlumes Limited impact f recycled prices (impact f -0.3% n revenue) French water imprving with better tariff indexatin and satisfactry cntractual renegtiatins (in Water and Waste), Sustained grwth in Eurpe, Duble digit grwth in Rest f the wrld Strng results perfrmance: EBITDA up +5.3% (2) at cnstant exchange rates t 876 millin driven by revenue grwth and efficiency gains Current EBIT up +6.9% at cnstant exchange rates t 448 millin; Current net incme attributable t wners f the Cmpany up 31.8% at cnstant exchange rates ( millin) and +8.0% excluding capital gains; Net financial debt f 8,213 millin and 9,665 millin including hybrid debt repayments f 1,452 millin (1) Revenue up +5.6% at cnstant scpe and exchange including the lss f Gabn (as if nt discntinued) (2) EBITDA up +3.3% at cnstant scpe and exchange rate including the lss f Gabn (as if nt discntinued) 2

3 Velia - Quarterly Financial Infrmatin fr the three mnths ended March 31, CHANGES IN GROUP STRUCTURE COMMERCIAL DEVELOPMENTS The Grup's strng 2017 cmmercial mmentum cntinued in Q1 2018, with a gd start t the year fr cmmercial develpments. Ntably in the industrial market, the Grup wn a multi-service cntract in Energy (O&M f a cgeneratin plant) and in waste prcessing fr the Dw DuPnt site in Virginia (United States). In France, the Grup was selected t renvate and perate energy installatins at the Arcelr Mittal site in Fs-sur-Mer ( 450 millin cntract ver 20 years). DIVESTITURES Industrial Services in the United States Velia Envirnmental Services Nrth America, LLC, a subsidiary f Velia Nrth America, Inc. and Clean Harbrs, Inc. ( Clean Harbrs ) signed n February 23 rd, 2018 a definitive agreement whereby Clean Harbrs acquires Velia Nrth America s U.S. Industrial Cleaning Services Divisin fr $120 millin in an all-cash transactin. This transactin represents a capital gain n dispsal f 37 millin befre tax in its cnslidated result. 1.3 GROUP FINANCING CHANGE IN HYBRID DEBT On March 15, 2018, Velia ntified hlders f its intentin t redeem its deeply subrdinated perpetual securities (TSSDI) denminated in eurs and pund sterling issued n January 23, 2013 in the nminal amunt f 1 billin and GBP 400 millin, respectively. These instruments were issued t supprt the Grup's transfrmatin, and were aimed at strengthening its financial structure, being cnsidered as 100% equity in the IFRS cnslidated financial statements. Thanks t the success f the Grup s transfrmatin and the imprvement f its financial health, Velia n lnger requires these instruments and can save the assciated cupn f 68 millin per year, while maintaining an Investment Grade rating and significant financial flexibility. In 2017, Velia tk advantage f extremely favrable market cnditins t anticipate this redemptin, which is expected t ccur n April 16, DIVIDEND PAYMENT The Cmbined Sharehlders Meeting f April 19, 2018 set the payment f a dividend f 0.84 per share fr the fiscal year 2017, an increase f +5% vs The dividend will be paid with effect starting in May 16,

4 Velia - Quarterly Financial Infrmatin fr the three mnths ended March 31, CHANGES IN GOVERNANCE VEOLIA ENVIRONNEMENT COMBINED SHAREHOLDERS MEETING OF APRIL 19, 2018 The Velia Envirnnement Cmbined Sharehlders Meeting tk place at the Maisn de la Mutualité in Paris n April 19, 2017, chaired by Mr. Antine Frért, Chairman and Chief Executive Officer f the Cmpany. At the Meeting, sharehlders apprved all the reslutins n the agenda. In particular, sharehlders: - apprved the cmpany financial statements and cnslidated financial statements fr fiscal year 2017; - set the dividend in cash fr the fiscal year ended n December 31, 2017 at 0.84 per share. The shares will g ex-dividend n May 14, 2018 and the dividend will be paid with effect frm May 16, 2018; - apprved the fixed and variable items f ttal cmpensatin and advantages f all kind paid r due t Mr. Antine Frért by virtue f his mandate as Chairman and Chief Executive Officer, with respect t fiscal year 2017; - apprved the principles and criteria fr determining, allcating and awarding the fixed, variable and exceptinal cmpnents f ttal cmpensatin and benefits f all kinds that may be awarded t the Chairman and Chief Executive Officer with respect t fiscal year 2018; - renewed all financial authrizatins granted t the Bard f Directrs; - authrized the Bard f Directrs t grant free and perfrmance shares t emplyees f the Grup and its crprate fficers It is recalled that the Bard f Directrs, at its meeting n 21 February 2018, decided t renew the mandate f Chairman and Chief Executive Officer Mr. Antine Frért, subject t the renewal f his mandate as a directr by the general meeting this day. After this Cmbined Sharehlders' Meeting, Velia Envirnnement s Bard f Directrs cnsists f fifteen directrs, including tw directrs representing emplyees and six wmen (46% (1) ), as well as ne nn-vting member (censr): - Mr. Antine Frért, Chairman and Chief Executive Officer; - Mr. Luis Schweitzer, Vice-Chairman; - Mrs. Maryse Aulagnn referent administratr; - Mrs. Hmaira Akbari; - Mr. Jacques Aschenbrich; - Caisse des dépôts et cnsignatins, represented by Mr. Olivier Mareuse; - Mrs. Isabelle Curville; - Mrs. Clara Gaymard; - Mrs. Marin Guillu; - Mr. Bauduin Prt; - Mrs. Nathalie Rachu; - Mr. Pal Scarni; - Mr. Guillaume Texier; - Mr. Pavel Páša, Directr representing emplyees; - Mr. Pierre Victria, Directr representing emplyees; - Mr. Serge Michel, nn-vting member (censr). The fur Bard Cmmittees are nw cmprised as fllws: - Accunts and Audit Cmmittee: Mrs. Nathalie Rachu (Chairman), Mrs. Hmaira Akbari, Mr. Jacques Aschenbrich, Mrs. Isabelle Curville and Mr. Pierre Victria (Directr representing emplyees). - Nminatins Cmmittee: Mr. Luis Schweitzer (Chairman), Mrs. Maryse Aulagnn and Mr. Pal Scarni. (1) Excluding Directrs representing emplyees in accrdance with Article L f the French cmmercial Cde. 4

5 Velia - Quarterly Financial Infrmatin fr the three mnths ended March 31, Cmpensatin Cmmittee: -Mrs. Maryse Aulagnn (Chairman), Mrs. Clara Gaymard, Mrs. Marin Guillu, Mr. Luis Schweitzer and Mr. Pierre Victria (Directr representing emplyees). - Research, Innvatin and Sustainable Develpment Cmmittee: Mr. Jacques Aschenbrich (Chairman), Mrs. Isabelle Curville, Mrs. Clara Gaymard, Mrs. Marin Guillu, Mr. Pavel Páša (Directr representing emplyees) and Mr. Guillaume Texier. 5

6 Velia - Quarterly Financial Infrmatin fr the three mnths ended March 31, Accunting and financial infrmatin 2.1 PREFACE GABON Velia, thrugh its 51% subsidiary, SEEG, manages the distributin f drinking water and electricity thrughut all Gabn under the terms f a cncessin agreement signed in 1997 and extended fr five years in March On February 16, 2018, the Gabnese Republic unilaterally terminated the cncessin agreement signed with the Grup s subsidiary, SEEG Sciété d énergie et d eau du Gabn, (Gabn Energy and Water Cmpany), alleging reasns f general interest. The same day, thrugh Ministerial rder, all material and human resurces were seized by the Gabnese Republic. A further Ministerial rder als appinted an executive bdy t implement terminatin and seizure measures. As f March 31, 2018, the cessatin f activities in Gabn led the Grup t classify SEEG in net incme frm discntinued peratins in accrdance with IFRS 5. Figures fr the three mnths ended March 31, 2017 were represented accrdingly t ensure cmparability, fllwing the reclassificatin f the Grup s activities in Gabn in Net incme frm discntinued peratins in accrdance with IFRS 5. NORMATIVE EVOLUTIONS With effect frm January 1, 2018, the Grup applies IFRS 9, the new financial instruments standard, which replaces IAS 39 (see chapter 4 nte f the 2017 registratin dcument). The new standard prvides fr the retractive applicatin f the classificatin and measurement rules applicable t financial assets and liabilities. The inventry and analysis f the differences resulting frm the prvisins f this new standard primarily identified tw differences cncerning the impairment methdlgy fr trade receivables and the recgnitin f debt swaps. The impacts f the restatements resulting frm the first-time applicatin f this standard n the incme statement (EBITDA, Current Ebit and Net result) and balance sheet were nt material (see Appendix Prfrma impact Q1 2017). The applicatin f IFRS 15 as f January 1, 2018 (see Chapter 4, Nte f the 2017 Registratin Dcument relating t the single revenue recgnitin mdel applicable t all types f cntracts cncluded with custmers and all business segments), des nt generate a significant cumulative impact n the Grup's financial statements as at March 31, Wrk t adapt the ntes in preparatin will enable the Grup t meet the publicatin requirements f this new standard fr the publicatin f the first half f

7 Velia - Quarterly Financial Infrmatin fr the three mnths ended March 31, KEY FIGURES Variatins 2017 / 2018 (in millin) Three mnths ended March 31,2017 published Three mnths ended March 31, 2017 represented (3) Three mnths ended March 31, 2018 at cnstant exchange rates Revenue 6,270 6, % 7.0% EBITDA % 5.3% EBITDA Margin 13.8% 13.7% 13.6% Current EBIT (1) % 6.9% Current Net incme - Grup share % 31.8% Current net incme - Grup share, excluding capital gains and lsses n financial divestitures net f tax % 8.0% Industrial capex Net free cash-flw (2) Net financial debt -8,430-8,418-9,665 (1) Including the share f current net incme f jint ventures and assciates viewed as cre Cmpany activities. (2) Net free cash flw crrespnds t free cash flw frm cntinuing peratins, and is calculated by: the sum f EBITDA, dividends received, changes in perating wrking capital and perating cash flw frm financing activities, less net interest expense, net industrial investments, taxes paid, renewal expenses, restructuring charges and ther nn-current expenses. (3) In rder t ensure the cmparability f perids, the three mnth perid ended March 31, 2017 has been adjusted fr the reclassificatin f the Grup's activities in Gabn t "Net incme (lss) frm discntinued peratins" pursuant t IFRS 5 The main freign exchange impacts were as fllws: FX impacts fr the three mnths ended March 31, 2018 (vs March 31, 2017 re-presented) % (in millin) Revenue -3.3% -204 EBITDA -1.8% -16 Current EBIT -2.2% -9 Current net incme -6.0% -9 Net financial debt -4.6%

8 Velia - Quarterly Financial Infrmatin fr the three mnths ended March 31, 2018 GROUP CONSOLIDATED REVENUE Grup cnslidated revenue fr the three mnths ended March 31, 2018 increased 7.0% at cnstant exchange rates t 6,419.4 millin, cmpared t a re-presented 6,191.2 millin fr the three mnths ended March 31, Excluding Cnstructin (1) revenue and energy price effects, revenue imprved by +4.6% cmpared t +5.9% in Q By segment, the change in revenue cmpared t represented figures fr the three Change 2017 / 2018 (in millin) Three mnths ended March 31, 2017 re-presented Three mnths ended March 31, 2018 at cnstant exchange rates at cnstant scpe and exchange rates France 1, , % 0.6% 0.7% Eurpe, excluding France 2, , % 6.9% 3.3% Rest f the wrld 1, , % 14.7% 14.4% Glbal Businesses 1, , % 3.5% 2.6% Other % - - Grup 6, , % 7.0% 5.4% Revenue increased +0.6% in France and +0.7% at cnstant scpe cmpared t re-presented figures fr the three mnths ended March 31, 2017: Water revenue increased +2.2%, while Waste revenue fell -1.3% at current scpe: Water revenue rse by +2.2% cmpared t re-presented figures fr the three mnths ended March 31, 2017, impacted by tariff indexatin (+0.6%), and partially ffset by lwer vlumes sld (-0.8%); Waste revenue fell -1.3% (and -0.9% at cnstant scpe) cmpared t re-presented figures fr the three mnths ended March 31, 2017, with lwer recyclate prices (-3.5%) ffset by higher vlumes (+2.3%). Eurpe excluding France grew 6.9% at cnstant exchange rates cmpared t re-presented figures fr the three mnths ended March 31, 2017, with slid mmentum in the majrity f regins: in the United Kingdm/Ireland zne, revenue increased 4.0% at cnstant exchange rates t millin, due t an increase in electricity tariffs, gd PFI availability and industrial service cntract wins; in Central and Eastern Eurpe, revenue increased 6.3% at cnstant exchange rates t millin. Grwth was driven by: in Energy, a favrable weather impact (+ 12 millin), an increase in heating and electricity vlumes sld, and the impact f recent develpments in Hungary; in Water, a slight increase in vlumes sld and higher tariffs acrss all cuntries (Bulgaria, Czech Republic, Rmania and Slvakia); in Waste, small acquisitins (in Hungary and Czech Republic). (1) Cnstructin revenue encmpasses the Grup s engineering and cnstructin activities (mainly thrugh Velia Water Technlgies and SADE), as well as cnstructin cmpleted as part f perating cntracts. 8

9 Velia - Quarterly Financial Infrmatin fr the three mnths ended March 31, 2018 in Nrthern Eurpe, revenue increased +11.8% at cnstant exchange rates t millin. Germany, the main cntributr ( millin), benefited frm strng Waste activities reprting revenue f millin (cmpared t millin fr the three mnths ended March 31, 2017). The revenue impact f the 2017 tuck-ins ffset the fall in recyclate paper prices and lwer energy vlumes. Strng grwth in the Rest f the Wrld, +14.7% at cnstant exchange rates cmpared t re-presented figures fr the three mnths ended March 31, 2017 : Revenue rse 10.1% at cnstant exchange rates t millin in Nrth America, mainly due t strng grwth in Energy (price and vlume increases due t cld weather), cmmercial wins in Energy and Industrial Water, and higher vlumes in hazardus waste. Strng revenue grwth in Latin America (+22.5% at cnstant exchange rates) t millin thanks t tariff increases in Argentina and cmmercial develpment in Clmbia and Ecuadr; Revenue in Asia increased by 21.1% at cnstant exchange rates t millin. Strng revenue grwth in China (+14.7%) was due t increased vlumes in Hazardus Waste, increased sales f heating netwrks (Harbin), partially ffset by lwer Water sales (end f Chengdu BOT cntract). Revenue grwth in Japan was driven by an increase in Engineering wrks in Municipal Water. In Krea, the increase in revenue was due t higher tariffs in Water and Waste and increased cnstructin wrks in Water; the Pacific zne recrded 13.1% revenue grwth at cnstant exchange rates fr the three mnths ended March 31, 2018, due t higher waste vlumes prcessed (+ 8 millin) and the start-up f the new Springvale cntract in Water; in Africa/Middle East, revenue increased 9.9% at cnstant exchange rates, with a favrable vlume impact in Mrcc (weather effect and increase in number f custmers) and cnstructin wrk fr the Redal cntract. Glbal businesses: revenue increased by 3.5% at cnstant exchange rates versus the re-presented priryear perid: Hazardus Waste activities increased by 7.6% at cnstant exchange rates, mainly due t strng il recycling activities and an increase in vlumes prcessed; Design & Build activities remained dwn by -9.2% at cnstant exchange rates, with the slw start-up f activities in Nrth America, France and the rest f Eurpe. The delivery f majr prjects in Latin America was ffset by the develpment f majr prjects in the Middle East and China. Backlg increased by +10% cmpared t March 31, The increase in revenue between 2017 and 2018 breaks dwn by main impact as fllws: 9

10 Velia - Quarterly Financial Infrmatin fr the three mnths ended March 31, 2018 The freign exchange impact n revenue was millin (-3% f revenue) and mainly reflects fluctuatins in the U.S. dllar ( millin), the Australian dllar ( millin), the Argentine pes (- 17 millin), the pund sterling ( millin), the Chinese renminbi ( millin) and the Japanese yen ( millin). The cnslidatin scpe impact f millin mainly relates t: develpments in 2017: integratin f Crvara industrial assets and Hans Anderssn in Scandinavia (+ 44 millin), Van Scherpenzeel Grpe B.V. in the Netherlands (+ 14 millin) and the acquisitin f Eurlgistik in Germany in July 2017 (+ 8 millin); 2018 transactins, which includes the sale f the Industrial Services Divisin in the United States (- 41 millin). Energy and recyclate prices had an impact f + 50 millin, fllwing a significant drp in recyclate prices (- 18 millin, including - 26 millin fr paper) and an increase in energy prices f + 70 millin especially in the United States. Cmmercial mmentum imprved significantly (Cmmerce/Vlumes impact) t millin: vlume increase f millin, in line with higher vlumes (France, United Kingdm, Latin America and Asia), vlume develpment in hazardus waste and slid cnstructin activity especially at Sade in France, in water business in Australia (Springvale prject) and in Mrcc; a cmmercial effect f + 47 millin, due t numerus industrial cntract wins in Eurpe (in Waste in Germany and Iberia with new energy efficiency cntracts), the United States (cntract wins in Industrial Water and Energy) and Latin America (cntract wins in Water in Argentina and Clmbia and in Waste in Chile and Brazil); a favrable weather impact f + 17 millin in Central Eurpe and the United States. Favrable price effects (+ 47 millin) are tied t psitive tariff indexatin in France, in the United Kingdm in Waste, in Central Eurpe in Water, in Nrth America in Water and Hazardus Waste, in Mrcc in electricity, and the significant impact f higher prices in Latin America. EBITDA Grup cnslidated EBITDA fr the three mnths ended March 31, 2018 is millin, up 5.3% at cnstant exchange rates frm Q re-presented. The EBITDA margin decreased frm 13.7% in Q re-presented t 13.6% in Q Changes in EBITDA by segment were as fllws: In France, EBITDA slightly decreased: In Water, EBITDA was up, driven by revenue grwth and cst savings; In Waste, EBITDA was dwn due t the fall in recyclate prices (-27% fall in the average selling price f paper and cardbard cmpared t Q1 2017). The slight imprvement in EBITDA in Eurpe excluding France at cnstant exchange rates was the result f several impacts: In Central and Eastern Eurpe, EBITDA decreased due t higher fuel prices in Energy in the Czech Republic and Pland; this decrease was partially ffset by perating efficiency gains and a favrable weather effect; Slid grwth f EBITDA in the United Kingdm, with an imprved availability f incineratin plants, impact f new cntracts, partially ffset by lwer paper prices; 10

11 Velia - Quarterly Financial Infrmatin fr the three mnths ended March 31, 2018 EBITDA strngly up in Nrthern Eurpe,due t scpe transactins perfrmed in 2017 in Scandinavia, Netherlands and Germany, and perating efficiency gains. Cntinued strng EBITDA grwth in the Rest f the wrld: Sharp imprvement in the United States : favrable weather in Energy driving energy prices, spark spreads and vlumes. Higher EBITDA in Latin America due t new cntracts in Water and Waste, tariff increases in Waste, and efficiency gains; Sustained EBITDA grwth in Asia driven by revenue grwth in Energy and Waste, partially ffset by negative weather impacts and cmpletin f the Chengdu BOT cntract in China (municipal water). In the Glbal Businesses segment, gd hazardus waste perfrmance (including the imprvement in the il recycling business) was ffset by the slw start f cnstructin activities in Q in Velia Water Technlgies. The evlutin f EBITDA between 2017 and 2018 breaks dwn by impact as fllws: The freign exchange impact n EBITDA was - 16 millin and mainly reflects fluctuatins in the U.S. dllar (- 9.4 millin), the Chinese renminbi (- 3.6 millin), the pund sterling (- 2.0 millin) and the Argentine pes (- 1.6 millin). The cnslidatin scpe impact f + 17 millin partially relates t develpments in 2017, f which the integratin f Crvara industrial assets and Hans Anderssn in Scandinavia and acquisitins in Germany (Eurlgistik) and in the Netherlands (Van Scherpenzeel Grpe B.V.). Cmmerce and vlume impacts ttaled + 19 millin thanks t strng vlume grwth in Central Eurpe in Water and Energy, vlumes f waste in France ffsetting lwer Water vlumes, strng cmmercial develpment in Asia (waste and energy) and in Latin America (new cntracts in Water and Waste). The weather impact n EBITDA was favrable verall, with strng disparities between Central Eurpe (favrable effect in Pland and the Czech Republic) and Asia (negative effect). Energy and recyclate prices had a negative impact n EBITDA (- 13 millin): the significant increase in fuel prices in Central Eurpe and the negative impact f paper prices (- 5 millin fr France, Germany and the United Kingdm) are partially ffset by the increase f heating and electricity tariffs in the United States and Nrthern Eurpe. The - 28 millin impact frm the price squeeze and cntractual renegtiatins mainly relates t weak price indexatin in Water and Waste in France which nly partially cver pressure n wages increase and ther csts. 11

12 Velia - Quarterly Financial Infrmatin fr the three mnths ended March 31, 2018 Cst-savings plans cntributed 70 millin. These savings mainly cncern peratinal efficiency (47%) and purchasing (33%) and were achieved acrss all gegraphical znes: France (25%), Eurpe excluding France (28%), Rest f the wrld (20%), Glbal businesses (15%), and Crprate (12%). The guidance f 300 millin fr year 2018 is cnfirmed. CURRENT EBIT Grup cnslidated current EBIT fr the three mnths ended March 31, 2018 was millin, up 6.9% at cnstant exchange rates frm Q re-presented. Recnciling items between EBITDA and Current EBIT are as fllws: (in millin) Three mnths ended March 31, 2017 re-presented Three mnths ended March 31, 2018 EBITDA Renewal expenses Depreciatin and amrtizatin (1) Prvisins, fair value adjustments & ther (2) : Current EBIT (1) Including principal payments n perating financial assets (OFA) f - 31 millin fr the three mnths ended March 31, 2018 (cmpared t - 37 millin fr the three mnths ended March 31, 2017 re-presented.) (2) Including prvisin, assets depreciatins, industrial capital gains and share f current net incme f jint ventures and assciates The imprvement in current EBIT at cnstant exchange rates reflects: EBITDA grwth; the increase in depreciatin and amrtizatin charges at cnstant exchange rates (- 9.8 millin r +2.6% cmpared t the three mnths ended March 31, 2017), in line with the develpment f the Grup s activities and cnslidatin scpe impacts. The decline in principal payments n perating financial assets in 2018 (frm - 37 millin t - 31 millin) mainly relating t cntract cmpletins in 2017 (including Chengdu in China) is als f nte; the unfavrable change in net perating prvisins and net impairment lsses n assets: Reversal f the prvisin fr captive insurance ( 12 millin) in March 2017 Industrial capital gains slightly belw that f March 2017 (+ 2.3 millin as f March 31, 2018 cmpared t millin in March 2017). Partly ffset by an imprvement f the cntributin frm equity jint ventures and assciates The freign exchange impact n Current EBIT was millin and mainly reflects fluctuatins in the U.S. dllar (- 8.1 millin), the Chinese renminbi (- 3.0 millin), the Argentine pes (- 1.3 millin) and the pund sterling (- 1.1 millin), partially ffset by favrable fluctuatins in the Czech crwn (+ 6.0 millin). 12

13 Velia - Quarterly Financial Infrmatin fr the three mnths ended March 31, 2018 NET FINANCIAL EXPENSE Net finance csts fell t millin fr the three mnths ended March 31, 2018, cmpared t a re-presented millin fr the three mnths ended March 31, This decrease is mainly due t the benefits f active debt management. Other financial incme and expenses ttaled - 7 millin fr the three mnths ended March 31, 2018, cmpared t a re-presented millin fr the three mnths ended March 31, These expenses mainly include interest n cncessin liabilities (IFRIC 12) f millin and the unwinding f discunts n prvisins f millin, steady cmpared t March 31, Fr the three mnths ended March 31, 2018, ther financial incme and expenses included capital gains r lsses n financial divestitures f 36.9 millin (capital gain n financial dispsal f Industrial Services in Nrth America), cmpared t 1.4 millin fr the three mnths ended March 31, 2017, re-presented. INCOME TAX EXPENSE The incme tax expense is 86.9 millin. This amunt includes taxatin f capital gains n the dispsal f Industrial Services in the United States fr $9 millin. The current incme tax expense n March 31, 2018 is 27.9% excluding capital gains tax. CURRENT NET INCOME Current net incme attributable t wners f the Cmpany was millin fr the three mnths ended March 31, 2018, cmpared t millin fr the three mnths ended March 31, 2017 re-presented. This imprvement is attributable t the increase in current EBIT, the decrease in the net finance cst and higher capital gains n financial divestitures in Q (dispsal f the Industrial Services Divisin in the United States) cmpared t Q re-presented. Excluding capital gains and lsses n financial divestitures net f tax and minrity interests, current net incme attributable t wners f the Cmpany rse 8.0% at cnstant exchange rates t millin frm millin fr the three mnths ended March 31, 2017 re-presented. FINANCING (in millin) Three mnths ended March 31, 2017 represented Three mnths ended March 31, 2018 EBITDA Net industrial investments Change in perating WCR Dividends received frm equity-accunted entities and jint ventures Renewal expenses Other nn-current expenses and restructuring charges Interest n cncessin liabilities Financial items (current cash financial expense, and perating cash flw frm financing activities) Taxes paid Net free cash flw befre dividend payment, financial investments and financial divestitures Opening net financial debt -7,813-7,837 Clsing net financial debt

14 Velia - Quarterly Financial Infrmatin fr the three mnths ended March 31, 2018 Net free cash flw was millin fr the three mnths ended March 31, 2018, cmpared t millin in Q re-presented. The year-n-year change in net free cash flw mainly reflects the increase in net industrial investments cmpared t Q (- 47 millin) and the wrking capital evlutin f - 75 millin (in line with the develpment f Grup activities), partially ffset by an increase in dividends received frm assciates. Overall, net financial debt is 9,665 millin (i.e. 8,213 millin excluding the redemptin f the hybrid debt in the amunt f 1,452 millin in April 2018), cmpared t 8,418 millin as f March 31, 2017 re-presented. In additin t the change in net free cash flw, net financial debt was impacted by favrable exchange rate fluctuatins ttaling 45 millin in Q REVENUE BY BUSINESS Change 2017 / 2018 (in millin) Water Waste Energy Grup Three mnths ended March 31, 2017 re-presented Three mnths ended March 31, 2018 at cnstant exchange rates at cnstant scpe and exchange rates 2,554 2, % 3.5% 3.8% 2,154 2, % 9.6% 4.3% 1,483 1, % 9.0% 9.9% 6,191 6, % 7.0% 5.4% WATER Water revenue increased by +3.5% at cnstant exchange rates and +3.8% at cnstant scpe and exchange rates cmpared t re-presented figures fr the three mnths ended March 31, This imprvement can be explained as fllws: - A psitive vlume / cmmercial effect f +0.5% with cntinued rbust cmmercial mmentum in Rest f the Wrld (mainly in Latin America), which ffsets the reduced vlumes in France; - a psitive price impact f +1.7% with higher tariffs in Central Eurpe, Nrthern Eurpe and in the Water activity in France (+0.6%); - slid cnstructin activity (+1.6%) in Australia (Springvale facility) and in Mrcc ; slw start f the year fr VWT but gd activity at Sade in France. WASTE Waste revenue rse cnsiderably by +9.6% at cnstant exchange rates cmpared t re-presented figures fr the three mnths ended March 31, 2017 (+4.3% at cnstant scpe and exchange rates) due t: - a scpe impact f +5.3%: acquisitins in Germany and in Nrthern Eurpe, ffset by the sale f the industrial services activity in the United States f America. 14

15 Velia - Quarterly Financial Infrmatin fr the three mnths ended March 31, cmmercial and vlume effects f +3.0% with increasing vlume, waste cllectin, and waste treatment in France, Asia and Germany, an increase f vlumes in Hazardus waste and als a gd renewal rate f cntracts in France, United Kingdm and in Germany; - a psitive price effect f +1.1% (mainly in Latin America, Asia and the UK); - the negative impact f recyclate prices (-0.8%, partly due t the reductin f paper prices). ENERGY Energy revenue rse +9.0% at cnstant exchange rates cmpared t the March 31, 2017 re-presented figures (+9.9% at cnstant scpe and exchange rates). This imprvement can be explained by: - an psitive price effect (+3.5%) with a strng increase f heat and electricity prices in the United States f America; - a psitive weather impact (i.e. +1.1%) particularly in Central Eurpe and Nrth America; - cmmercial and vlume effect f +2.5% in Central Eurpe in relatin with weather, and due t the develpment f new energy activities (energy efficiency and bimass) in Asia and Nrth America and f multi utility industrial activities. 3 Subsequent events Nne 4 Outlk The Grup s mid-term utlk (1) is therefre as fllws: 2018 (at cnstant exchange rate): cntinuatin f sustained revenue grwth; EBITDA grwth greater than that f 2017 mre than 300 millin in cst savings (1) : cntinuatin f revenue grwth and full impact f cst savings; EBITDA between 3.3 billin and 3.5 billin (excluding IFRIC 12), i.e. between 3.5 billin and 3.7 billin including IFRIC 12. Dividend grwth in line with that f current net incme. (1) At cnstant exchange rates (based n rates at the end f 2016). 15

16 Velia - Quarterly Financial Infrmatin fr the three mnths ended March 31, Appendices RECONCILIATION OF 2017 PUBLISHED DATA WITH 2017 RE-PRESENTED DATA (1) IFRS 5 March 2017 In m Adjustment(3) published IFRS 9 Adjustment March 2017 represented Revenue 6, ,191.2 EBITDA Current EBIT (2) Operating incme Current net incme - Grup share Grss industrial investments Net free cash flw Net financial debt -8, ,418 (1) Unaudited figures (2) Including the re-presented share f current net incme f jint ventures and assciates fr the three mnths ended March 31, (3) Figures fr the three mnths ended March 31, 2017 were re-presented accrdingly t ensure cmparability, fllwing the reclassificatin f the Grup s activities in Gabn in Net incme frm discntinued peratins in accrdance with IFRS 5. In m March 2017 published IFRS 5 Adjustment IFRS 9 Adjustment March 2017 represented France 1, ,302.9 Eurpe excluding France 2, ,274.6 Rest f the Wrld 1, ,569.4 Glbal businesses 1, ,036.6 Other Revenue 6, ,