2007 annual results

Veolia Environnement

2007 ANNUAL ACCOUNTS

Investor Relations – 2007 Annual Accounts – March 2008


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 1995. 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.

This document contains "non-GAAP financial measures" within the meaning of Regulation G adopted by the U.S. Securities and Exchange Commission under the U.S. Sarbanes-Oxley Act of 2002. These "non-GAAP financial measures" are being communicated and made public in accordance with the exemption provided by Rule 100(c) of Regulation G.

This document contains certain information relating to the valuation of certain of Veolia Environnement’s recently announced or completed acquisitions. In some cases, the valuation is expressed as a multiple of EBITDA of the acquired business, based on the financial information provided to Veolia Environnement as part of the acquisition process. Such multiples 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-Looking Statements” above.


2

Veolia Environnement Investor Relations – 2007 Annual Accounts – March 2008

2007: another year of profitable growth, in line with objectives

Sustained business momentum: revenue up 14.9% (1)

Strong internal growth (+7.8%)Strategy of targeted external growth (+ 7.1%)

Further improvement in recurring operating income (+11.9% (1))Strong rise in net income (+22.3%) and net earnings per share (+13.7% (2) )

Capital position reinforced by a €2.6 billion capital increase in July 2007 [net financial debt/(cash flow from operations + repayment of operating financial assets)] = 3.3x

Free cash flow before new projects (€906 million in 2007) After-tax ROCE: 10.9%

Increase of 15.2% in the dividend from €1.05 per share to €1.21 per share (3)

To be paid on May 27, 2008

(1) At constant exchange rates(2) Non-diluted from options but diluted from the increase in capital completed on July 10, 2007(3) Subject to approval by the Annual Shareholders’ Meeting on May 7, 2008 3


(1) Accounts at December 31, 2005 & at December 31, 2004 were restated, to ensure comparability between accounting periods in the application of the IFRIC12 interpretation relating to the accounting treatment of concessions and the results booked in 2006 under the IFRS5 standard and shown in the income statement in the “Net income from discontinued operations” line.

(2) At constant exchange rates4


2007 Key Figures(€m)

2500

3000

3500

4000

2004 (1) 2005 (1) 2006 20070

5 000

10 000

15 000

20 000

25 000

30 000

35 000

2004 (1) 2005 (1) 2006 2007

28,62032,628

25,570 3,844

3,542

0

500

1 000

1 500

2 000

2 500

2004 (1) 2005 (1) 2006 2007

2,2221,904

0

200

400

600

800

1 000

2004 (1) 2005 (1) 2006 2007

762630

Consolidated revenue +14.9% (2)

22,792

Cash flow from operations

4,219

+9.8%

3,336

Recurring operating income Recurring net income+11.9% (2) +22.5%

2,469 933

1,629477


5


Key figures at December 31, 2007

(1) Non-diluted from options but diluted from the increase in capital completed on July 10, 2007

(€m) 12/31/06 12/31/07 Growth

Consolidated revenue 28,620 32,628 +14.0%

Cash flow from operations 3,844 4,219 +9.8%

Operating income 2,133 2,497 +17.1%

Net income 759 928 +22.3%

Net income per share (€) (1) 1.90 2.16 +13.7%

Net financial debt 14,675 15,125 -


2001 2002 2003 2004 2005 2006 2007

6


Further increase in the dividend

(1) Subject to approval by the Annual Shareholders Meeting on May 7, 2008

(2) After taking into account the dividend payment relative to the 2007 accounts.

2007 dividend (1)

€1.21 per share (+15.2%)

2007 pay-out ratio = 59.5%

€0.55€0.68

€0.85€1.05

€0.55€0.55

€1.21(1)


7


Consolidated revenue at December 31, 2007:

Balanced contribution to growth from all 4 divisions

Water 34%Transportation17%

By division By geographic zone

€32,628m

Energy Services21%

Waste 28%France

44%

Europe ex France 36%

Asia-Pacific7%

Rest of the world5%

NorthAmerica8%


8


+14.9%

Balanced contribution to growth from all 4 divisions

5,5904,951

6,8966,118

9,2147,463

10,92810,088

Water

Waste

Energy Services

Transportation

Chg. at constant exchange rates

12/31/2006 12/31/2007

(€m)

VE Group

Consolidated revenue at December 31, 2007: €32,628m

+7.9%

+7.5%

+7.9%

+8.1%

Internal growth

+7.8%

+9.0%

+25.5%

+12.5%

+14.0%


9


VE Group +14.9%

Chg. at constantexchange rates

+6.4%

+22.6%

+7.6%

+34.8%

+38.5%

12/31/2006 12/31/2007

Significant presence in growth markets

Consolidated revenue at December 31, 2007: €32,628m

(€m)

1,6311,2002,2691,702

2,7902,817

9,49811,682

13,403

14,256

France

Europe ex France

North America

Asia-Pacific

Rest of the world


10


Solid growth in cash flow from operations (1)

(1) Cash flow from operations as defined by the Conseil National de Comptabilité’s (CNC) recommendation dated October 27, 2004

(2) Cash flow from operations

(€m) 12/31/06 12/31/07 Δ current FX rates

CFO margin (1) 12/31/07

Water (2) 1,814 1,851 +2.1% 16.9%

Waste (2) 1,190 1,461 +22.8% 15.9%

Energy Services (2) 611 657 +7.4% 9.5%

Transportation (2) 290 279 -3.8% 5.0%

Other (53) (27) - -

Total from continuing operations 3,852 4,221 +9.6%-

Discontinued operations (8) (2) - -

Total Group 3,844 4,219 +9.8% 12.9%


11


Double-digit growth in recurring operating income: up 11.9% (1)

(1) At constant exchange rates. +11.1% at current change exchange rates

(€m)

12/31/06 12/31/07 Δ constant FX rates 12/31/06 12/31/07

Water 1,163 1,266 +9.3% 11.5% 11.6%

Waste 648 803 +26.4% 8.7% 8.7%

Energy Services 378 388 +1.8% 6.2% 5.6%

Transportation 100 115 +13.9% 2.0% 2.1%

Holding (67) (103) - - -

Total Group 2,222 2,469 +11.9% 7.8% 7.6%

Recurring operating

income margin


12


Operating income up 17.9% (1)

(€m)Operating

income marginOperating income

(1) At constant exchange rates

12/31/06 12/31/07 Δ current FX rates 12/31/07

Water 1,160 1,268 +9.2% 11.6%

Waste 648 803 +23.9% 8.7%

Energy Services 378 399 +5.6% 5.8%

Transportation 14 130 +858.1% 2.3%

Holding (67) (103) - -

Total Group 2,133 2,497 +17.1% 7.7%


Overview of year-over-year growth at half-year periods

H1 2007 H2 2007 2007

En M€

Consolidated revenue 15,462 17,166 32,628+10.9% +16.9% +14.0%

Cash flow from operations 2,009 2,210 4,219+5.2% +14.2% +9.8%

Recurring operating income 1,236 1,233 2,469+9.5% +12.8% +11.1%

13



14


Reconciliation of recurring operating income to operating income

12/31/06 12/31/07 Δ current FX rates

Recurring operating income 2,222 2,469 +11.1%

Non-recurring items

Provisions & write-downs booked in transportation in Germany (86) -

Transportation - +15

Other (incl. Energy Poland in 2007) (3) +13

Operating income 2,133 2,497 +17.1%

(€m)


1,002

1,2681,160

650

750

850

950

1050

1150

1250

1350

31/12/2005 31/12/2006 31/12/2007

Satisfactory contribution of operations in France: decline in volumes due to the climate conditions during summer offset by the good level of contribution from the works business, new services, and improved productivity

In Europe, Very good operating performance in the Czech Republic and RomaniaPositive outcome of a litigation in Berlin Equity interest of the EBRD in Veolia Voda

Good improvement in results in North America: expansion of the Tampa Bay contractIn Asia, continued growth: In China, expansion of the Shenzhen contract and full-year effect of Kunming, Sinopec, Urumqi and Changzhou contracts)In the Africa-Middle East region, strong results overall despite circumstantial difficulties in Gabon

Technological Solutions: further growth in operating income

Water: Recurring operating income: €1,266m, +8.8%Operating income: €1,268m

15


+9.2%

(€m)

Operating income


544

648

803

500

600

700

800

31/12/2005 31/12/2006 31/12/2007

Waste: Recurring operating income: €803m, +23.9%Operating income: €803m

+23.9%(€m)

16


In France, very good performance (development of higher value added services, increase in volumes treated in urban and industrial waste) and double-digit growth in operating income in hazardous waste

In Europe (ex-France), very strong improvement in contribution to operating income (+55% increase in operating income),

United Kingdom (+60%) thanks to internal growth and the full-year contribution from the acquisition of Cleanaway

Germany, integration of Veolia Umwelt Services (formerly Sulo) in the 2nd half

Good contribution of operations in Scandinavia and Central Europe

In North America, double-digit growth in operating income (very favorable impact due to the contributions from hazardous waste and industrial services )

In Asia-Pacific, robust performance particularly in Australia

Operating income


315

378399

200

300

400

31/12/2005 31/12/2006 31/12/2007

+5.6%

17


Energy: Recurring operating income: €388m, up 2.8%Operating income: €399m

Impact of mild weather

Smaller contribution of sales of excess CO2 quotas

France: Growth in contribution of specialized subsidiaries

Outside France: double digit growth in business and operating incomeVery strong increase in the contribution of the Central European zone (Czech Republic, Poland)

Continued good level of business activity in the Southern European zone

(€m)

Operating income


117

14

130

0

100

31/12/2005 31/12/2006 31/12/2007

18


Transportation: Recurring operating income: €115m, up 15%Operating income: €130m vs. €14m at December 31, 2006

In France, satisfactory increase in business and results, effect of the full-year consolidation of SNCM

In Europe:Favorable progression in Marschbahn and upturn in the contribution from Germany

Impact of the start-up of new contracts in the Netherlands

In North America, improved contribution from transit and increased results in transportation on demand

In Australia, further growth in business and results

(€m)

Operating income

+858%


19


€3,973m allocated to new projects & acquisitions

(€m)

Good control of maintenance capital spending (4.9% of revenue) 1,590

Further growth in existing operations 1,335

Increase in new projects and acquisitions 3,973

Total capital expenditures 6,898

Asset disposals (366)Minority interest impacts linked to new acquisitions (49)

Repayment of operating financial assets (395)

Net capital expenditures and investments 6,088


20


Water 531 58 335 939 207 2,070

Waste 554 84 128 1,974 18 2,758

Energy Services 263 81 131 819 73 1,367

Transportation 226 35 97 223 36 617

Other 16 26 26 18 - 86

Total at 12/31/07 1,590 284 717 3,973 (1) 334 6,898

Total at 12/31/06 1,411 270 740 1,424 361 4,206

TotalFinancial

incl. change in

consolidationscope

Industrial Operating financial assets

NewprojectsMaintenance

capex

(€m)

(1) Of which €954m linked to internal growth and €3,019m related to acquisitions.

€3,973m allocated to new projects & acquisitions

Growth


21


4 significant acquisitions made in 2007

GermanyVeolia Umwelt Services (formerly Sulo), the n°2 waste treatment company

Consolidation date: July 2, 2007 – Contribution to Veolia’s 2007 revenue : €628m

Enterprise value: €1,310m (estimated amount after the disposal of Sulo Technology (a container manufacturer) to Plastic Omnium)

Disposal on July 29, 2007 of Sulo Environmental Technology to Plastic Omnium (revenue of around €200m)

ItalyVSA Tecnitalia (Veolia Servizi Ambientali Tecnitalia) (formerly TMT), the largest private operator in the Italian thermal waste treatment market (estimated revenue in 2011: €200m)

Consolidation date: October 3, 2007 – Contribution to Veolia’s 2007 revenue : €26m

Enterprise value: €338m

North AmericaTNAI, the largest portfolio of district heating and cooling networks in the United States

Consolidation date: December 31, 2007 – No contribution to Veolia’s 2007 revenue

Entreprise value: $788m

United KingdomSeveral unregulated businesses of Veolia Water Outsourcing Ltd (former Thames Water)

Consolidation date: November 28th, 2007 – Contribution to Veolia’s 2007 revenue: €15m

Enterprise value: €233m


22


By division By geographic zone

More than €3.9bn allocated to new projects or acquisitions

Water 24% (1)

Transportation 6% (4)

(1) Including Lanzhou, Haikou, Tianjin Shibei (China), Oman Sûr (Sultanate of Oman), Hynix (South Korea), non-regulated water businesses at ThamWater (U-K)

(2) Including integrated contracts (United Kingdom), certain assets of Allied Waste Industries, Marisol (United States), Cleanaway Asia (China), TMT (Italy) and Sulo (Germany)

(3) Including Pannon Power & Sinesco (Hungary), Kolin (Czech Rep.), Varna (Bulgaria), Harbin & Jiamusi (China), TNAI (North America),(4) Including People Travel Group (Sweden), SNCM ship (France)

Asia-Pacific14%

North America21%

Waste50% (2)

es

EnergyServices 20% (3)

Rest of the World2%

Europe63%


23


Revenue 28,620 32,628 +14.0%Operating income 2,133 2,497

Cost of net financial debt (701) (817)Other financial income (expenses) (34) +1Tax (410) (420)Equity in net income of affiliates +6 +17

Net income from continuing operations 994 1,278 +28.5%Net income attributable to minority interests (236) (327)

Net income from continuing operations 758 951

Net income 759 928 +22.3%Recurring net income 762 933 +22.5%

From revenue to net income

Δ12/31/0712/31/06

12/31/06 12/31/07

(€m)


Cost of net financial debt (701) (817) (116)Impact from the variation in the average debt - - (35)Impact from the variation in interest rates - - (59)Impact from the revaluation of non-hedging derivative instruments (22)

12/31/06 12/31/07

In €m

Δ12/31/0712/31/06

Cost of borrowing: 5.49% vs. 5.07% in 2006

Change in cost of borrowing

24



25


From recurring net income to net income

(€m)2007

Recurring net income 933

Non-recurring operating income impact +28

Disposal of discontinued operations (Transport in Denmark…) (23)

Non-recurring tax +11

Other (including minority interests on items above) (21)

Net income 928


26


Change in net financial debt (NFD) at December 31, 2007

NFD at Dec. 31, 2006 NFD at Dec. 31, 2007

14 88914,675

(157)

Cash flow generated

by the operations

Disposals

Investments excl. new projects

Interest paid

New projects

Dividends paid

Currency effect

& otherCapital

increase excl. VE & other

14,675 15,125VE S.A. capital

increases(2)

(3,635)2,925

786

3,973

(2,852) 564(329)

(366)

(221)

(395) (1)

Repayment of operating

financial assets

(€m)

Free cash flow before new projects = €906m

(1) Including the recovery by the municipality of the Orvade financing contract for €34m(2) Including the €2.6 billion capital increase completed on July 10, 2007.


27


Debt ratio and ratings

(1) 3.83 x before taking into account the capital increase announced on June 12, 2007

Moody’s A3/P-2 Stable (cf. October 2007 report)Standard & Poor’s BBB+/A-2 Stable (cf. June 2007 report)

12/31/2004Adjusted

12/31/2005Adjusted

12/31/2006 12/31/2007

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

(1)3.3 x

Debt ratio target: between 3.5 x and 4 x

3.4 x

3.6 x

3.9 x

3.5x

4x

3x


28


Strong improvement in after-tax ROCE since 2002

Further increase in after-tax ROCE

6.4%

7.0%

8.3% 8.3%

9.1%

10.2%10.8%

2002 2003 2004 2004 2005 2005 2006 2007

French GAAP IFRS standards withapplication of IFRIC 12

on concessions

IFRS standards beforeapplication of IFRIC 12

on concessions

10.9%


STRATEGY & OUTLOOK


30


Veolia Environnement: A compelling business model

Leadership in integrated environmental services across all businesses

Complementary services with strong synergies among the four divisions

Commitment to sustainable development in all of our operationsImproved environmental and economic efficiency, conservation and reuse, recycling and recovery, reduction of greenhouse gas emissions and other harmful environmental impacts

Long-term contracts demonstrating long-term and secure visibility of cash flows

Customer base = 67% municipal; 33% industrial and commercial Geographic presence in regions which represent strong growth opportunities in environmental services with limited or well managed risk: Europe, North America and select countries in the Asia-Pacific region and the Middle East

Outlook continues to point to robust and profitable growth


Lafarge Ciments

SNCM

Leslys

Socata

Mâcon

Abbeville

Ste- Maxime

Gonesse

Lille

Charleville-Mézières

ST Micro

Cap d'Agde

Nice

Claye-Souilly

DunkirkHydropale

Bartin Recycling Gp

Grand Ouest WEEE

Morbihan

Achères

SIOM ChevreuseValley

FRANCE

Leslys (transportation) - Length: 30 years – Cumul. revenue: €459mMorbihan departmental council (transportation)– Length: 7 years – Cumul. revenue: €143mLafarge Ciments (transportation)- Freight train between Bordeaux & Toulouse - Length: 4 years – Cumul. revenue: €10mSNCM (transportation) - Length: 6.5 years – Cumul. revenue: €1bnTram in Nice (transportation) - Length: 7 years – Cumul. revenue: €595mBartin Recycling Group (1) (waste) – 2006 revenue: €249m Dunkirk waste-to-energy plant (waste) – Length: 11 years – Cumul. revenue: €50mHydropale (port of Dunkirk) – Marpol waste treatment plant (waste)Grand Ouest WEEE recovery plant (waste)New equipment (additional 16 MW) of the « « Biomass Biogas » project in Claye-Souilly (waste) – Length: 15 years – Cumul. revenue: €160mSIOM Chevreuse Valley (waste) – Length: 5 years – Cumul. revenue: €25mGreater Mâcon region (water & wastewater) (water) - Length: 10 years – Cumul. revenue: €59mAbbeville (water) – Length: 15 years – Cumul. revenue: €22mGonesse (water) – Length: 15 years – Cumul. revenue: €27mSainte-Maxime (water) – Length: 12 years – Cumul. revenue: €32mAchères nitrogenous pollution treatment plant (water)Lille urban community –Organic recovey center – Séquedin (energy)– Length: 11 years – Cumul. revenue: €7mSTMicroelectronics - Crolles (energy) - Length: 6 years – Cumul. revenue: €27mCharleville-Mézières – DSP (energy) - Length: 20 years – Cumul. revenue: €41mCap d'Agde – DSP (energy) - Length: 18 years – Cumul. revenue: €41mSocata (EADS)- Tarbes site (multi-services)- Length: 3 years – Cumul. revenue: €10mRenault – Ile-De-France sites (multi-services)– Length: 5 years – Cumul. Revenue: €600m

Contract start-upContract won or renewedCompany acquisition

(1) Finalized in Feb. 2008

France : revenue up 6.4% to €14,256m

Renault


United United KingdomKingdomLondon Boroughof LambethSouthwark

Shropshire

Thames Water’s unregulated business

United Utilities

SinescoPannon Power

HungaryHungary

NorwayNorway

Finnmark

Rogaland

LucenecBratislava

SlovakiaSlovakiaGermanyGermany

SULO

Bautzen

De Lijn (transportation) – Length: 5 years – Cumul. revenue: €165m


GERMANY

Finnmark (transportation) – Length: 8 years – Cumul. revenue: €168m Rogaland (transportation) – Length: 5.5 years – Cumul. revenue: €226m

NORWAY

SLOVAKIA

TMT (waste) – 2008 estimated revenue: €140mSTMicro – Agrate (energy) – Length: 6 years – Cumul. revenue: €20m

SULO (waste) – 2008 estimated revenue: €1.2bnLandkreis Bautzen (waste) – Length: 7 years – Cumul. revenue: €17m

(1) At constant exchange rates(2) Announced in Feb. 2008

BELGIUM

NETHERLANDSThe Hagues – Harnaschpolder plant (DBFO) (water)- Global operating period: 30 years – Global cumul. revenue: €1.2bn Brabant (transportation) – Length: 8 years – Cumul. revenue: €480m

Contract start-upContract won or renewedCompany acquisition

HUNGARYPannon Power - biomass (energy) – Rev. from acquired contracts: €600mSinesco (energy) – 2007 revenue: €31m

Espool - Lucenec & Rekotak – Bratislava (energy)- Espool : length of acquired contracts: 30 years – Cumul. revenue: €300m- Rekotak : length of acquired contracts: 29 years – Cumul. revenue: €160m

BULGARIAToplofikacja Varna EAD (energy) – Annual revenue: €8m

SPAINCampo de Dalias (DBO) (water)– Operating period: 15 years – Cumul. revenue: €78m (incl. construction)

London Borough of Lambeth (waste) – Length: 7 years – Cumul. revenue: €156mSouthwark council (2) (waste) – Length: 25 years – Cumul. revenue: €900mShropshire (waste) – Length: 27 years – Cumul. revenue: €1bnUnited Utilities (construction) (water) – Cumul. revenue: €62mThames Water’s unregulated business (water) – 2008 estimated revenue: €149m

UNITED KINGDOM

VarnaBulgariaBulgaria

Campo de Dalias

SpainSpain

ITALY

TMT

ItalyItaly

ST Micro

Novartis (multi-services) – Length: 7 years – Annual revenue: €140m SWITZERLAND

SwitzerlandSwitzerland

Novartis

Europe (outside France): revenue up 22.6%(1) to €11,682m

BelgiumBelgium

De Lijn

NetherlandsNetherlands

BrabantThe Hague

32



CanadaCanada

United StatesUnited States

PinellasTampa Bay

Marisol

Enpar

TNAI

Assetsof Allied Waste Industries

Greentree

Milwaukee

Las Vegas

Boston

North America: revenue up 7.6%(1) to €2,790m

Contract start-upContract won or renewedCompany acquisitionPartnership with other company

Milwaukee Metropolitan Sewerage District (water)– Length: 10 years – Cumul. revenue: €272m

Tampa Bay (DBO) (water)- Operating period: 13 years– Cumul. revenue: €108m (incl. construction)

Partnership with Enpar technologies (water)

Pinellas county (waste)- Length: 17 years – Cumul. revenue: €356m (incl. works)

Assets (solid waste) of Allied WasteIndustries, Inc. (waste)

Marisol (waste) – 2006 revenue: €18m

Greentree landfill (Pennsylvania) – biogas collection & treatment (waste)

Thermal North America, Inc. (energy) – 2007 revenue: $368m

Boston (2) (transportation) – Length: 3 years

Las Vegas(2) (transportation) – Length: 2 years

(1) At constant exchange rates(2) Announced in Jan. 2008

NORTH AMERICA


33


JapanJapan

Chiba

AustraliaAustralia

Transit First

Brookers

Sydney

MelbourneContract won or renewedCompany acquisition

Tianjin-Shibei (water)– Length: 30 years – Cumul. revenue: €2.5bnLanzhou (water)- Length: 30 years – Cumul. revenue: €1.6bn Haikou (water)- Length: 30 years – Cumul. revenue: €776mJiamusi (energy)- Length: 25 years – Cumul. revenue: €650mHarbin (energy) – 2007 revenue: €5mJiujiang (BOT) (waste)– Length: 29 years – Cumul. revenue: €92mCleanaway Asia (waste)– Length of acquired contracts: 22 years – Cumul. revenue: €200m

Asia – Pacific: revenue up 34.8%(1) to €2,269m

(1) At constant exchange rates

CHINA

Bali – Taipei County (waste)- Length: 15 years – Cumul. revenue in JV: €154m

TAIWAN

Seoul (transportation) – Length: 10 years – Cumul. revenue: €460mSoonchunhyang teaching hospital (energy)– Length: 5 years – Cumul. revenue: €11m

SOUTH KOREA

Sydney (DBO) (water)– Operating period: 20 years – Cumul. revenue: €540m (incl. construction) Melbourne (transportation) – Length: 1 year – Cumul. revenue: €422mTransit First & Brookers (transportation) – 2007 overall revenue: €11m

AUSTRALIA

Chiba (water)– Length: 3 years – Cumul. revenue: €18m

JAPAN

Cleanaway Asia (waste)– Length of acquired contracts: 22 years – Cumul. revenue: €715mNational Environmental Agency (waste) – Length: 5 years – Cumul. revenue: €28m

SINGAPORE

Taiwan

Bali

South South KoreaKorea

SeoulSoonchunhyang

Haikou

ChinaChina

Jiamusi

Harbin

Lanzhou

Cleanaway Asia

Tianjin

Jiujiang

SingaporeSingapore

Cleanaway AsiaNational

EnvironmentalAgency

34



Delek Group

IsraelIsrael

SaudiSaudi ArabiaArabia

Marafiq

SultanateSultanate of Omanof Oman

Sûr

Fujairah F2 O&M Cy

United United ArabArab EmiratesEmiratesFujairah

Palm JumeirahBurj Dubai Tower

KingdomKingdom of of BahrainBahrain

Arcapita

Sûr (BOO) (water)– Length: 22 years– Cumul. revenue: €434m (incl. construction)

SULTANATE OF OMAN

SAUDI ARABIA

Partnership with Arcapita (energy)

KINGDOM OF BAHRAIN

Marafiq – Jubail & Yanbu (construction) (water)– Cumul. revenue: €647m

Contract start-upContract won or renewedPartnership with other company

UNITED ARAB EMIRATES

Fujairah (construction) (water)– Cumul. revenue: €547m

Fujairah F2 O&M Company (water) – Length: 12 years – Cumul revenue: €71m

Palm Jumeirah (1) (construction) (water) - Cumul. revenue: €12m

Burj Dubai Tower (1) (DBO)(water)– Length: 3 years (excl. construction) – Cumul. revenue: €10m

ISRAEL

Delek Group – Cogeneration plant on the Ashkelon site (energy)– Length: 23 years– Cumul. revenue: €83m

(1) Announced in Jan. 2008

Middle East: a new source of growth in the medium term

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36


Water: global leadership position supported by…

Long-term Public-Private-Partnership (concession) type contractsContinued trend toward outsourcing (less than 20% of the European market and less than 10% of the US market are privatized while operations of private companies are not yet significant given the size of markets in Asia and the Middle East)

Increasingly stringent environmental standards

Concentration of the population in urban zones

Strong technological positioningVeolia Water Solutions and Technologies: average revenue growth of around 20% per year between 2003-2007

Wide range of technological offerings (re-use, scarcity of water as a resource)

Technological offerings to meet demand for (thermal & membrane) desalination

Technological offerings minimizing environmental impact (zero discharge: Z.L.D.)

Simultaneous development of D&B and Technological Solutions (breakdown: 60%/40%)


37


Waste: making waste into a resourceLeadership position across the full value chain

Acceleration of development in major integrated contracts (PFI type, Shropshire, Southwark, etc.) Well-managed external growth strategy

Example: United Kingdom - Cleanaway: a successful integration (~15% market share, etc.)

Strengthened operations in the fast growing recycling business lineIn France, in metals with the acquisition of Bartin Recycling Group

In Germany, in paper and plastics with the acquisition on July 2, 2007 of Veolia Umwelt Services (formerly Sulo)

Accelerated development in waste recovery (biogas, biofuels, recycling of oily waste)Balanced contribution of operations, well managed risk profile

Example: in the United States: 40% of revenue in solid waste, 30% in industrial services, 20% in toxic waste and 11% in Waste-to-Energy (incineration)


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Energy: a development model based on energy & environmental efficiency and an excellent fit with the global offering of solutions

Leadership position in Europe and North America in energy services

An answer to environmental challenges based on the optimization of local energy management and the diversification of energy sources, including renewables

An important complement to the Group’s range of global offerings

A balanced client mix: municipal customers (58% of revenue)

industry and service sector customers (42% of revenue)

Geographic coherence: significant operations in France, Western, Southern and Central Europe, North America and developing markets in China and Australia

Strong contribution to multi-service contracts


39


Transportation: a key player in a growing market

An answer to a crucial environmental challenge and to the needs of large urban areas

Leading position in the global public transportation market (€460bn (1)) that is still in the early stages of outsourcing (15%)

An offering of multi-modal and international services

Tailored delegated management contracts (transportation on demand, etc.)

Development of value added services for the client combined with greater efficiency

(1) 2008 estimated ex Russia, Africa and Middle East


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Solid fundamentals to meet the cyclical uncertainties prevailing in 2008

A development model primarily based on long-term contracts synonymous with ongoing cash flow generationA positive evolution in the business and geographic mix in the last few years (disposal of water equipment businesses in the United States in 2002 and 2003) Balanced geographic exposure

44% of revenue in France, 36% in Europe outside France, nearly 10% in North America (including the contribution from TNAI in 2007 proforma full-year revenue)Growing importance of new development zones (Africa, Middle East, Asia-Pacific)

Significant evolution of waste operations:Accelerated geographic diversification:

Consolidation in the United Kingdom, acquisition in GermanySignificant development of new and stable value-creating business lines Balance between the various business lines (examples: solid waste, industrial services, etc.):

Integrated contracts, biogas and waste-to-energy operations, recycling, with a strong position in paper and metalsIn the United States, diversification of the client base, with municipal customers, the oil industry and the military/civil service.


2008 objectives

Double-digit growth in net income

Confirmation of at least 10% revenue growth

Double-digit growth in cash flow from operations

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Medium-term objectives

Average annual revenue growth of 8% to 10%

After-tax ROCE : 10% (ex potential effect related to timing of acquisitions)

Continued commitment to balance sheet objectives: net financial debt/(cash flow from operations + repayment of operating financial assets) to range between 3.5x and 4x

Dividend policy to be maintained : payout to range between 50% & 60% of recurring net income

Robust growth to be maintained


APPENDICES


FINANCIAL APPENDICES



2007

(1) o/w cash flow from discontinued operations: (€2m) in 2007 & (€8m) in 2006(2) o/w the recovery by the municipality of the Orvade financing contracts for €34m

= 901= Free cash flow before new projects+15Other

(596)Interest paid

(343)Tax paid

+82Rights issue reserved for minority shareholders

+355Asset disposals

(112)Change in WCR

(2,782)Investments ex. new projects4,282Total cash generation+438Repayment of operating financial assets

3,844Cash flow from operations (1)

2006

+15(786)(417)+206+366(167)

(2,925)4,614

+395 (2)

4,219

= 906

Cash flow

(€m)


46


Net financial debt at January 1st 13,871 14,675

Free cash flow (901) (906)Investments in new projects +1,424 +3,973Dividends paid +479 +564Capital increase - VE (165) (2,852) (1)

Impact of exchange rates and other (33) (329)

Net financial debt at December 31 14,675 15,125

Change in debt +804 +450

Changes in net financial debt

2006 2007(€m)

(1) Including €2.6 bn capital increase completed as July 10, 2007


47


Debt management: the Group has further strengthened its financial stability

RatingsMoody’s: A3/P-2 Stable

Standard & Poor’s: BBB+/A-2 Stable

Elimination of the structural subordination status

2007 bond issues:February: €200m maturity August 2008

May: €1bn maturity 2022 (15 years)

October: £500m maturity 2037 (30 years)

Further extension of average maturity:gross debt (€18.2bn): 7.7 years [vs. 6.6 years in 2006]

net financial debt (€15.1bn): 9.2 years [vs. 7.8 years in 2006]

74% of net debt is at a fixed rate or a capped floating rate

66% of gross debt (after swaps) is denominated in euros (10% in USD and 10% in GBP)

Group liquidity: €8.1bn including €5.0bn in undrawn credit lines


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By interest rate

Structure of debt

Floating rate 26%

Fixed rate 74%Euro 66%

USD 10%

GBP 10%

Other 14%

(net financial debt after hedges) (gross debt after hedges)

By currency


49


2006 20072007

4,905

4,729

2,395

1,310

18.6%

12.4%

14.1%

7.4%

Water

Waste

Energy Services

Transportation

Pre-tax ROCE (%)

2006

Average capital employed (€m)

Pre-tax ROCE by division

5,688

5,890

3,013

1,505

18.1%

12.5%

11.7%

7.6%


APPENDICES: OPERATIONAL



51


Significant operations in fast growing desalination market

New major desalination references More than 100 years experience in desalination Construction and/or operation of around 13% of the world’s seawater desalination capacity (1,600 plants with 5.3 million m3/d) capacity *Chosen to design & build one of the largest desalination plants that uses Multiple Effect Distillation (MED) for the city of Jubail and the Eastern province of Saudi Arabia (800,000 m3//d )Construction and operation of the world’s largest seawater reverse osmosis (SWRO) plant in Ashkelon, Israel (capacity of 320,000 m3/d)An estimated 80% market share in Multiple Effect Distillation (MED)

*Estimation of global desalination capacity: Global Water Intelligence “Desalination Markets 2007”

Demonstrating technological leadershipLeader in thermal and reverse osmosis desalination processes

Focused on technological programs (e.g. ARAMIS –Veolia’s Membrane Center of. Expertise (choice of the appropriate solution via the characterization of performances of the membranes in the market, identification of deposits and proposition of solutions in terms of pretreatment)

And proactive in a growing market Robust growth expected in global production capacity, up from 39.9 million m3/day in 2006 to 97.5 million m3 per day by 2015*

Gulf countries account for about 46% of today’s production capacity

Saudi Arabia and the United Arab Emirates are currently the 2 largest markets, followed by the United States, Spain and China

Steady trend towards desalination plants with increasingly large production capacity, both in membrane and thermal processes

Main competitors: Doosan (South Korea), Impreglio (Italy), GE, Suez and Abengoa/Befesa (Spain)

Ashkelon desalination plant


Water Recycling and Reuse

More than 3 million m3/day of total installed capacityMore than 140 references worldwideMF/UF/RO membrane technologies/dedicated technologies

Australia, Kwinana :Water Recycling : 16,700 m3/d Membrane technologies

Singapore, Kranji plant :Water Recycling : 40,000 m3/dMembrane technologies

South Africa, Durban :Industrial Reuse : 40.000 m3/dDedicated filtration steps

Spain, Barcelona : Water Reuse for irrigation and aquifer recharge : 302,400 m3/d Dedicated filtration technology Actidisk®

Actidisk®

Membranes


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Veolia Environnement North AmericaProviding leadership in environmental management

• Market leadership in water services through municipal Public-Private Partnerships, industrial outsourcing and design-build solutions and technologies

Revenue: $850 million

Fully integrated waste management company and a leader in industrial waste services with key market positions across the entire waste management chain

Revenue: $2 billion

• Leading energy services company, including the largest portfolio of heating and cooling systems in the US and comprehensive energy and facility management for buildings and industrial operationsRevenue: $400 million*

• Leading private transportation operator in North America, including bus and rail commuter services, shuttle, paratransit and customized transportation on demandRevenue: $1.1 billion

2007 Revenue: Approximately $4.4 billion*

31,000Total Employees

* Includes full-year 2007 contribution from TNAI acquisition on a proforma basis.


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Veolia Water North America – North American Water Industry Leader 2007 Revenue: $850 million

Market leader with 34% share* of Public-Private Partnership (PPP) marketServing 600 communities in 38 states, including management of largest PPP water distribution (Indianapolis) and wastewater (Milwaukee: start-up in March ‘08) contracts Approximately 300 facilities operatedNearly 6,000 miles of water distribution lines and 4.500 miles of wastewater lines30 effluent reuse & 5 biosolids facilitiesHigh-security federal facilities

Market leader in industrial outsourcing with 70% market share* 100+ industrial facilities managed for various Fortune 500 companies and largest global manufacturers, including Air Products, BP-Amoco, Cargill, General Motors, IBM, Nestle, PepsiCo, US Steel, Valero, Exxon Mobil, Marthon Oil etc.300+ MGD daily flowAll facets of water and wastewater management for multiple industries

* Source: Public Works Financing, March 2007

Municipal leadership Industrial leadership


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Hazardous Waste - 19% of RevenueServices:

Hazardous Waste Disposal, Environmental Program Management, Incineration, Fuels Blending and Solvent Recovery, Electronics Recycling, Lab Packing, Emergency and Special Waste, Low Level Radioactive Waste

Market:1,700 Employees

45 Service Locations15 Transfer, Storage, Disposal Facilities (TSDF’s)Bringing innovative services and technologies to customers that turn over 200,000 tons of waste into a resource

Solid Waste – 39% of RevenueServices:

Collection, Transfer, Recycling, Disposal, On-Site Management

Market:3,730 Employees and Locations in 12 US states, the Bahamas and Quebec

32 Landfills

511 municipal solid waste contracts and serving most major industries

Veolia Environmental Services North America - An Integrated Offering 2007 Revenue: $2 billion

Industrial Services – 31% of RevenueServices:

Industrial Cleaning, Mechanical Services, Sewer Cleaning and Inspection, Dredging and Dewatering, Tank and Basin Cleaning, Emergency Response 24/7, Marine Services

Market:US Market Leader for Industrial Services5,090 Employees and Over 100 LocationsServing most major industries, including clients such as Bayer, Exxon Mobil and Innovene

Waste-To-Energy – 11% of RevenueServices:

Waste Combustion, Energy Recovery, Facility Operation, Facility Maintenance, Design, Retrofit, Construct

Market:630 Employees and 10 WTE Plants with a capacity of over 14,000 tons per day

Operates Largest Refuse Derived Fuel (RDF) facility in the world - Miami-Dade

Electrical Generation for 350,000 households


56


Veolia Energy North America - Providing leadership in Energy Services 2007 Revenue (proforma*): Approx. $400 million

Owns and operates the largest portfolio of energy distribution networks (steam, hot water, chilled water, electricity) in the USA

Steam capacity of 11 million pounds/hourChilled water capacity of 169,000 tonsElectric generating capacity of over 1,100 MW

Facilities in 11 states, serving more than 1,200 customers in 31 States and the District of ColumbiaKey Capabilities:

Operation of heating and cooling networksCogenerationCentral plant maintenance and operationsMulti-technical maintenance and services Comprehensive building and facility management (Houston Galleria, Caesar’s 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 DevelopmentIn San Diego, CA, operate 25 MW biomass “wood” generating stationIn Baltimore, 60% of steam is delivered from a Waste-to-Energy plantOperate trigeneration (chilled water, steam and electrical power) in Oklahoma City and Tulsa operationsRecognized by the EPA and other agencies for greenhouse gas reduction and energy efficiency

* Includes full-year 2007 contribution from TNAI acquisition on a proforma basis.


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Veolia Transportation North America – Leading private transportation provider in North America 2007 Revenue: $1.1 billion

Operating over 10,000 vehicles across more than 130 contracts

Operations in 22 States and 2 Canadian provinces

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)

Operations include SuperShuttle, the largest U.S. airport shuttle company (transportation-on-demand), serving 27 leading airports and over 8 million passengers per year


Water Multi Services Energy Services Waste Transportation

€1,264m

€924m

€612m

€109m€251m

Growth supported by the success of the company’soffering to industrial clients

Backlog of signed contracts in 2007with large industrial accounts: €3,160m

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Industrial offering: business growth since 2001

2001 – 2007:Cumulative total of new contracts signed with large European industrial accounts:

€1,683m in annual revenue.Average duration of contracts: 6.9 years, with a backlog of around €11.6bn.One third of the contracts signed are multi-divisional contracts: €503m in annual revenue.

0200400600800

10001200140016001800

2001 2002 2003 2004 2005 2006 2007

€m

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Investor Relations contact information

Nathalie Pinon, Head of Investor Relationsand Financial Communication

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

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

Brian Sullivan, Vice President, US Investor Relations700 E. Butterfield Road -Suite 201

Lombard, IL 60148 - USATelephone +1 (630) 371 2749

Fax +1 (630) 282 0423e-mail [email protected]

Web sitehttp://www.veolia-finance.com

mailto:[email protected]

mailto:[email protected]

2007 annual results

Business