2013 General Meeting. Pierre-François RIOLACCI Chief Finance Officer

Transcription

1 2013 General Meeting Pierre-François RIOLACCI Chief Finance Officer 1

2 Disclaimer Veolia 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 Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from the forward-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 risks associated with conducting business in some countries outside of Western Europe, the United States and Canada, the risk that changes in energy prices and taxes may reduce Veolia Environnement's profits, the risk that we may make investments in projects without being able to obtain the required approvals for the project, the risk that governmental authorities could terminate or modify some of Veolia Environnement's contracts, the risk that our long-term contracts may limit our capacity to quickly and effectively react to general economic changes affecting our performance under those contracts, the risk that acquisitions may not provide the benefits that Veolia Environnement hopes to achieve, the risk that Veolia Environnement's compliance with environmental laws may become more costly in the future, the risk that currency exchange rate fluctuations may negatively affect Veolia Environnement's financial results and the price of its shares, the risk that Veolia Environnement may incur environmental liability in connection with its past, present and future operations, as well as the risks described in the documents Veolia Environnement has filed with the U.S. Securities and Exchange Commission. Veolia Environnement does not undertake, nor does it have, any obligation to provide updates or to revise any forward-looking statements. Investors and security holders may obtain a free copy of documents filed by Veolia Environnement with the U.S. Securities and Exchange Commission from Veolia Environnement. To ensure the comparability of period, the 2011 financial statements have been re-presented to include: the impact of the reclassification into net income from discontinued operations of operations in the process of being sold such as the Moroccan activities in the Water division and the Renewable energies activities partially sold as of December 31,2012; the impact of the reclassification into net income from discontinued operations of divested activities in 2012 such as the regulated activities in the United Kingdom in the Water division and Solid waste activities in the United States in the Environmental Services division. The 2011 financial statements have also been re-presented for the reclassification into continuing operations since March 3rd, 2011 of the activities of the group Société Nationale Maritime Corse Méditerranée (SNCM) consolidated within the Transportation Division which was reclassified into net income from discontinued operations as of December 31, The divesture process of the SNCM was interrupted during st semester.. The 2012 financial statements have been re-presented for the application of IFRS 10 & 11 standards from January 1,

3 2012 Annual Results Pierre-François RIOLACCI Chief Finance Officer 3

4 1 st year of Transformation ahead of objectives Asset divestments and restructuring Reduction of net financial debt by 3.4bn to 11.3bn Faster than expected cost reductions Improvement in 2nd half adjusted operating cash flow Commercial success Veolia is on the right path 4

5 Good resilience of activities In M 28,576 29,439 Δ Δ constant FX Δ excl. FX and scope Water +1.3% -0.5% +1.0% Environmental services +0.8% -2.2% -1.9% Energy services +7.4% +7.0% +5.8% Other +21.1% +19.2% +15.3% Veolia +3.0% +1.2% +1.5% 5

6 Water Operations: revenue stable (-0.2% at constant scope and FX) France: revenue increased 1.3% at constant scope Continued contractual erosion: -1.6% Lower volumes: -1% Positive impact of price and construction activities: +3.9% Outside France: Revenue declined 1.1% at constant scope and FX Negative price impact related to Berlin contract Good performance in Central and Eastern Europe (higher prices) China concessions: favorable price and volume effect Technologies & Networks: Revenue increased (+4.9% at constant scope and FX) Increase in industrial activity, particularly in the Oil & Gas sector Revenue (in M) 11,921 12, % +7.9% -1.5% Adjusted operating cash flow declined 8.4% (-9.4% at constant FX) to 1,172M Operations Technologies & Networks 6

7 Environmental Services Revenue of 9,083M: variation +0,8% and -1.9% at constant scope & FX 2012 Q4 2012: 1 st quarter of positive organic revenue growth +3% Price and volume of recycled materials -1.9% Waste volumes - Service price increases +0.8% Other (including construction revenue) -0.8% Currency effect +3.0% Consolidation scope -0.3% Difficult macro-economic context with lower industrial production indices for the second consecutive quarter in Europe and the United States. Revenue remains supported by hazardous waste, which grew in all four quarters in 2012 (+6.6% organic growth for the year) Adjusted operating cash flow increased 2.7% (-0.3% at constant FX) to 1,048M 7 7

8 Energy Services Revenue increased 7.4% (+5.8% at constant scope & FX) to 7,665M Higher energy prices: impact > 200M (mainly in France) Favorable weather effect, mainly in France: impact > 100M Increase in construction activities in France (CRE projects) Adjusted operating cash flow declined 7.6% (-7.7% at constant FX) to 544M France: negative impact of regulation changes (heating price and electricity tariff from gas cogeneration) Contribution of Warsaw heating network: 36M Italy: receivables write down and accrued expenses of - 82M Excluding the write down and accrued expenses, adjusted operating cash flow would have increased by 6.3% Revenue (in M) 7, % 7, % +8.6% Outside France France 8 8

9 Evolution of adjusted operating cash flow In M 9 9

10 Reconciliation of adjusted operating cash flow to adjusted operating income In M 2011 re-presented 2012 constant FX Adjusted operating cash flow 2, , % -6.2% Depreciation & amortization -1, ,479.8 Net capital gains Provisions, fair value adjustment & others Adjusted operating income 1, , % -24.5% 10 10

11 Reconciliation of operating income to net income 2011 re-presented 2012 In M Adjusted Adjustment Total Adjusted Adjustment Total Operating income 1, , ,095 Cost of net financial debt Income tax expense Share of net income from associates Net income from discontinued operations Non-controlling interests Net income attrib. to owners of Co Net income attrib. to owners of Co. published

12 Statement of cash flows In M Operating cash flow before changes in working capital 3,353 3,085 Reimbursement of operating financial assets Total cash generation 3,794 3,456 Gross investments -3,134-3,282 Variation working capital Taxes paid Interest expense Dividend Others Divestments 1,544 5,099 Free cash flow 438 3,673 Impact of exchange rates Others Net financial debt 14,730 11,283 Change in net financial debt ,

13 Review of asset divestments since 2009: 9bn in divestments completed at high multiples In a post financial crisis context Multiples achieved by division and by geography since 2009 (1) (2) By Geography By Division (1) On transactions greater than 50m since January 2009 : 23 operations utilized, excluding Berlin Water, representing 6bn of EV, or 78% of the divestments completed between 2009 and 2012 (2) Calculated EV/EBITDA multiples calculated as a weighted average: EBITDA of year n-1 (of year n if the transaction was at the end of the year) Multiples restated for divestments having the highest and lowest multiples 13 13

14 Application of new IFRS standards Pierre-François RIOLACCI Chief Finance Officer 14

15 Scope concerned Which treatment for each entity? Dalkia International: joint venture owned 75% by Dalkia and 25% by EDF, with an economic interest of 50% => change to equity method at 50% VTD: change from proportionate consolidation at 50% to equity method at 50% Proactiva Group: joint venture with FCC owned at 50% => change from proportionate consolidation at 50% to equity method at 50% Shenzhen: joint venture owned at 45%, with 25% economic interest => change to equity method at 25% Tianjin: joint venture owned at 49% => change from proportionate consolidation at 49% to equity method at 49% Recall BWB (Berlin water contract): RWE sold its stake to the Land of Berlin: Veolia no longer has joint control => change to equity method at 25% from October 31,

16 2012 adjusted operating cash flow bridge Proforma 2012 adjusted operating cash flow of 1.9 billion In M -30% * Including Other Europe & Middle East Water 47M, Europe and China Environmental Services 42M, and Dalkia France 20M 16 16

17 2012 net financial debt bridge Proforma 2012 net financial debt of 10.8bn (compared to 11.3bn published in 2012) Adjusted net financial debt (less loans granted to joint ventures) of 7.8bn In bn -28% * Net financial debt before application of IFRS standards, and excluding loans granted to main joint ventures consolidated by proportionate consolidation for 417M 17

18 2012 contributions of entities changing to equity method accounting from Jan.1 st, 2013 (1) In M 2012 Revenue 6,200 Adjusted operating cash flow 804 Operating income 395 Net income (Group share) 8 Gross capex (2) 629 Main companies concerned: Dalkia International, Berlin Water (10 months), Tianjin, Shenzhen, Proactiva (1) Following the 1st application of IFRS (2) Industrial and financial investments and new operating financial assets 18 18

19 Impact of elimination of proportionate consolidation (PI) on 2013 objectives In bn NFD entities PI (Investor Day) In 2013, positive cash flow before financial divestments 2013 net financial debt (post PI and hybrid) between 8bn and 9bn* 2013 Adjusted net financial debt (post PI and hybrid) between 6bn and 7bn* * Before closing exchange rates impact 19

20 From 16.5bn net financial debt at the end of 2008 to 6bn- 7bn adjusted net financial debt (1) by the end of 2013 In bn 2014 Leverage objective of 3.0x (3) (1) Adjusted net financial debt excluding debt from JVs and post application of IFRS (2) Net financial debt / (Operating cash flow before working capital + OFA Repayments) (3) Adjusted net financial debt/ (Operating cash flow before working capital + OFA Repayments), ±5% 20

21 Conclusion Pierre-François RIOLACCI Chief Finance Officer 21

22 Mid-term objectives confirmed : Transformation Period 6 billion in divestments (1) 2013 net financial debt, under new IFRS standards: Net Financial Debt between 8bn and 9bn (2) Adjusted Net Financial Debt between 6bn and 7bn (2) Cost reductions: in 2013: 170M net impact (3) Extended dividend commitment of 0.70 (4) per share in 2013 (5) and 2014 Beginning in 2014: New Veolia Organic revenue growth > 3% per year (mid-cycle) Adjusted operating cash flow growth >5% per year (mid-cycle) Leverage ratio (6) of 3.0x (7) beginning in 2014 Mid-term: Payout ratio in line with historic level Cost reductions in 2015: 750M net impact (3) (1) Including the debt reduction of 1.4 billion related to the change to equity method accounting for the Berlin Water contract and repayment of loans to joint ventures (2) Before closing exchange rate impact (3) Net of implementation costs, of which due to the new accounting treatment of joint ventures, ~80% will benefit adjusted operating income (4) Subject to the approval of Veolia s Board of Directors and the Annual General Shareholders Meeting (5) In cash or shares (6) Adjusted net financial debt/ (Operating cash flow before changes in working capital + OFA Repayments) (7) ±5% 22