Financial Report 2008 - Veolia Umweltservice

Financial 

Report 

2008

Board of directors 

Honorary Chairman 

Bernard Rouer 

Chairman of the board 

Henri Proglio 

Chief Executive 

Denis Gasquet 

Directors 

Olivier Barbaroux 

Joachim Bitterlich 

Jean Blondeau 

Armand Burfin 

Cyrille du Peloux 

Antoine Frérot 

Denis Gasquet 

Paul-Louis Girardot 

Gustave Kuch 

Thomas Piquemal 

Bernard Rouer 

Jean-Claude Turion 

Statuory auditors 

Principal 

KPMG SA 

Ernst & Young et Autres 

Alternates 

François Caubrière 

Auditex 

Person responsible for providing 

financial communication 

Pierre Bellon-Serre

Content 

Legal structure............................................... p.2 

Management report ....................................... p.3 

Consolidated financial statements 2008 ... p.13 

Parent company financial statements: 

Veolia Propreté S.A...................................... p.83 

Financial Report 2008 – Veolia Environmental Services -1

Legal structure 

Legal structure 

As of December 31, 2008 

UNITED KINGDOM 

100% VES-UK 

NORTHERN EUROPE 

NORWAY (100% Veolia Miljo AS) 

DENMARK (65% Marius Pedersen/ Veolia Miljoservice Holding A/S) 

GERMANY 

100% Veolia Umweltservice GmBH (ex Sulo) 

100% Veolia Umweltservice GmBH Deutschland (Dormagen) 

CONTINENTAL EUROPE 

89% SWITZERLAND (Veolia Umweltservice Schweiz /Stesa 

/Erisman Muldenzentrale Umwelt. AG / Matthey Transp.) 

47,5% SWITZERLAND (GES, Valorec, RSMVA) 

100% BENELUX (VES Belgium) 

100% ITALY (Veolia Servizi Ambientali SpA, holding of VSA 

Tecnitalia) 

NORTH AMERICA 

100% MIC 

100% VES TS 

100% VES Solid Waste 

100% VES IS 

ASIA 

SINGAPORE (100% VES Asia hldg, 100% FME ) 

HONG KONG (100% VES Hong-Kong) 

SOUTH KOREA (50% Eco Services Korea Ltd) 

PHILIPPINES (51% Greenline) 

PACIFIC 

AUSTRALIA (100% VES Australia) 

AFRICA AND MIDDLE EAST 

100% VES Israël 

100% Tamam 

SOUTH AMERICA 

MEXICO (100% RIMSA, 100% Sarpi Mexico, 100% Confinamina) 

BRAZIL (100% Sarpi Brésil, 100% SASA) 

2-Financial Report 2008 – Veolia Environmental Services 

VEOLIA ENVIRONMENTAL SERVICES 

INTERNATIONAL FRANCE 

PARIS region 

100% OTUS / VP (Refuse collection) 

100% Taïs / VP IDF (Industrial waste) 

100% Généris (Treatment) 

100% REP 

NORTH NORMANDY 

100% VP Nord Normandie 

100% VALNOR (Treatment) 

47% ESTERRA 

100% IPODEC Normandie / VP Normandie 

SOUTH WEST 

100% ONYX Aquitaine / ONYX Midi Pyr. 

100% SOVAL (Treatment) 

38% SETMI (Treatment) 

CENTRAL WEST 

100% Soccoim / SVE 

100% SETRAD (Treatment) 

100% Paul Grandjouan SACO (Netra) 

100% GEVAL (Treatment) / 50% SOBREC 

RHIN-RHONE 

95% ONYX EST 

95% VALEST (Treatment) 

47,5% Nancy Energie (Treatment) 

100% ONYX ARA 

100% RONAVAL (Treatment) 

SOUTH EAST 

100% ONYX MED / SEA 

100% VALSUD (Treatment) 

48% SONITHERM (Treatment) 

INDUSTRIAL CLEANING DIVISION 

100% VP Nettoyage et Multiservices 

SPECIAL WASTE 

100% SARP 

100% SARP INDUSTRIES 

100% GRS VALTECH 

100% SEDIBEX 

PAPER DIVISION 

100% VP France Recycling 

SCRAPS AND METALS DIVISION 

100% Bartin Recycling 

OTHERS 

50% SEDE 

100% ANGIBAUD 

FRENCH OVERSEAS DEPTS./TERRITORIES 

100% CSP 

70% Martiniquaise de Valorisation

Management report 

Management report ...................................... p.4 

Veolia Environmental Services 

key consolidated figures ............................... p.4 

French subsidiaries ....................................... p.5 

International subsidiaries............................. p.6 

Litigations ....................................................... p.7 

Legal structure and delegations of powers..... p.8 

Trends and business outlook........................ p.8 

Parent company accounts ............................. p.9 

Cash flow statement .................................... p.10 

Directors’ fees and compensation.............. p.10 

Proposed resolutions .................................. p.11 




Management Report 

With revenue of more than €10.1 billion, Veolia Environmental 

Services maintained its leadership in the waste management 

and recycling activities in 2008 (Waste Management realized 

$13.4 billion in 2008 translated to €9.0 billion according to 

the dollar rate as of December 31, 2008). Veolia Environmental 

Services is present in all hazardous and non-hazardous activities, 

solid and liquid waste market, with an increasing 

focus on industrial customers and new municipal waste 

treatment contracts. 


key consolidated figures 

Veolia Environmental Services recorded in 2008 a significant 

external growth (perimeter effect of + €932M on revenue in 

2008) and a strong organic growth: in constant exchange rate 

and perimeter, the 2008 revenue increased by 4.5% compared 

to 2007. 

However, Veolia Environmental Services’ activities suffered 

from the strong fall in secondary raw materials prices which 


In accordance with European Parliament and Council Regulation 

(EC) n°1606/2002 of July 19, 2002 and European Commission 

Regulation (EC) n°1725/2003 of September 29, 2003, Veolia 

Environmental Services establishes its consolidated accounts since 

fiscal year 2005 in International Financial Reporting Standards 

(IFRS) as published by the International Accounting Standards Board 

(IASB) and adopted by the European Union. Veolia Environmental 

Services anticipated the application of interpretation IFRIC 12 relating 

to Service Concession Arrangements in the course of 2006. n 

€Million except percentages December 2005 December December December 

2005 Pro forma 2006 2007 2008 

IFRS I12 IFRS IFRS IFRS 

Revenue 6,579 6,724 7,446 9,195 10,132 

Operating income 523 536 643 794 279 

Recurring operating income 533 546 643 794 622 

Recurring operating income margin 7.9% 8.0% 8.6% 8.6% 6.1% 

Net financial income (139) (141) (203) (297) (370) 

Net income (including minority interest) 246 255 356 321 (325) 

Operating cash flow before changes in working capital 1,050 1,042 1,167 1,436 1,340 

Industrial investments (740) (613) (692) (878) (1,029) 

Acquisition of financial assets (62) (62) (875) (2,052) (389) 

Cash flow generated by operating activities (*) 56 56 (667) (1,645) (419) 

Operational capital employed (**) 5,118 5,154 5,952 7,796 7,356 

Profitability before tax 10.9% 11.1% 11.6% 11.6% 8.3% 

Net financial debt (***) 3,457 3,457 4,201 5,489 5,774 

(*) Cash flow generated (used) by operating activities corresponds to the cash flow resulting from operating activities, after deduction of industrial investments, and 

acquisition or sale of financial assets. 

(**) Operational capital employed corresponds to shareholder’s equity (group and minorities) and net financial debt. 

(***) Net financial debt corresponds to financial debts after deduction of cash, marketable securities and short term loans (< 3 months). 

occurred in the last term of 2008. The industrial situation 

has been having repercussions on all VES sites, notably in 

France, in Germany and in Italy. 

The operating income totalled €279 million including the 

impairment losses recognized for an amount of €343 million 

in respect of the goodwill in the Germany Cash Generating 

Unit and the depreciation of intangible assets with indefinite 

useful life recognized for an amount of €62.6 million. The

ecurring operating income (operating income without 

depreciation of goodwill), excluding exchange rate and 

consolidation scope impacts, has diminished by 14.4% 

compared to 2007. The operating income margin (relation 

between the operating income and the revenue) has deteriorated 

to 6.1% compared to 8.6% in 2007. 

The operating income included as well research and development 

costs amounting to - €11.5 million in 2008 compared 

to - €8.9 million in 2007. 

Profitability before tax (recurring operating income over average 

capital employed) was reported at 8.3% in 2008. 

A strong control of renewal investments and working capital 

French subsidiaries 

The revenue of VES France increased by 11.6% (including 

4.3% from organic growth) mainly due to the integration in 

February 2008 of Bartin Recycling Group which is number 3 in 

recycling and valorization of scraps and metals in France. This 

acquisition took part in Veolia Environmental Services’ strategy 

to develop its waste management business towards the 

recycling market and in this way keeping in with the market 

orientation. The growth in revenue was also due to the trade 

development in industrial services and in the waste-to-energy 

activity, where new contracts were gained or started in 2008. 

The development was going on with W3E (electric, electronic 

and equipment waste) activities in 2008. A dismantling unit for 

ships was set up in Bordeaux and the first unit producing 

biomethane fuel recovered from biogaz was inaugurated in 

Ile-de-France during the year of 2008. 

The Ile-de-France region includes collection activities of 

Ile-de-France region operated by the affiliate of Veolia 

Propreté SA and its subsidiary OTUS, industrial waste activity 

managed by Taïs, incineration activity operated by Generis 

and landfill activity by REP. This group generated a €605 

million turnover (compared to €639 million in 2007). This 

comparative decrease notably came from final waste landfill 

activity. 

The Nord-Normandie region generated a €285 million turnover 

in 2008 compared to €248 million in 2007. 


requirements enabled the group to generate funds of more 

than €600 million from operating activities before financial 

expenses and growth investments in 2008. Growth investments 

(including Bartin Recycling group acquisition) amounted to 

€687.9 million in 2008. After recording the dividends paid to 

Veolia Environnement (€165 million) and the foreign 

exchange translation (positive around €298 million notably 

due to depreciation the Pound Sterling) of the net financial 

debt of the group was established at €5,774 million. 

The increase of the interest rate and average net financial 

debt generated net financial income deterioration. The group 

net income was reported at - €345 million in 2008, decreasing 

compared to 2007. n 

The Centre-Ouest region generated a €390 million turnover 

in 2008 compared to €387 million in 2007. 

In the Sud-Ouest region, Onyx Aquitaine and its subsidiaries 

reported a €288 million turnover, an increase compared to 

the previous year mainly due to the first year of the company 

Lafforgue fully consolidated. 

The Former Est region (Onyx Est and its subsidiaries) and 

the former Auvergne-Rhône-Alpes region (Onyx ARA and its 

subsidiaries) were merged in 2007 into the new Veolia Rhin- 

Rhône region which reported a €387 million turnover in 2008 

compared to €379 million in 2007. 

The Sud-Est region generated a €219 million turnover in 

2007, increasing compared to 2007 (€211 million). 

The industrial cleaning business operated by Veolia Propreté 

Nettoyage and Multiservices (ex-Renosol) reported a €294 

million turnover, a significant increase due to trade developments 


In France, SARP sub-group turnover rose to €358 million 


The hazardous waste collection and processing business operated 

by SARP Industries generated a €272 million turnover. n 



International subsidiaries 

In the United-Kingdom, the revenue rose to €1,592 million 

in 2008. The negative variation compared to the € 1,708 million 

in 2007 is mainly due to the negative effect on the revenue 

of the pound sterling depreciation amounting to - €271 

million. So the 8.5% organic growth was generated by the 

integrated contracts of East Sussex and Shropshire, by two 

new PFI (“Private Finance Initiative”) contracts for a 25-year 

term comprehensive management of domestic refuse in the 

county of Southwark and the district of West Berkshire, and 

by the price rise in waste collection and landfill activities. 

In North America, the group is set up by Veolia 

Environmental Services North America which owns VES 

Solid Waste in the solid waste industry, VES Technical 

Solutions in hazardous waste activity, Veolia Industrial 

Services in industrial services and Montenay in incineration 

activity. The global turnover amounted to €1,485 million in 

2008. The organic growth rose to 8.6% compared to 2007, 

mainly due to the increase in tariffs in solid waste, to the 

industrial services activity, to the operating contract for the 

valorization unit of Pinellas in Florida and to the contract for 

military waste treatment of Port Arthur. Moreover, Veolia 

Environmental Services has strengthened its position in the 

marine industrial services through a new ship coming into 

service among its fleet, with equipment especially conceived 

for carrying out maintenance and repairs on oil rigs far 

beneath the surface. 

In Germany, group revenue rose to €1,134 million in 2008, 

compared to €787 million in 2007, mainly due to the first 

year fully consolidated since VES acquired the SULO group 

on July 3rd, 2007. Sulo became Veolia Umweltservice 

Deutschland. It is the leader in waste management traditional 

markets (n°1 in municipal waste, n°2 in commercial and 

industrial) and is a major specialist in recycling and valorization, 

notably paper and plastic. The results in 2008 decreased 

compared to the initial business plan resulting from the 

cutbacks in Duales System activity (light packaging) and the 

closure of a landfill in a clay mine. Consequently, the operating 

income includes the impairment losses recognized for 

an amount of €343 million in respect of the goodwill in the 

Germany CGU and the depreciation of intangible assets with 

indefinite useful life recognized for an amount of €62.6 million. 

A new organization and recovery measures were set up 

in 2008. 


In Benelux, Veolia Environmental Services revenue rose to €98 

million in 2008 compared to €92 million in 2007. 

In Scandinavia, Veolia Environmental Services has a significant 

position through Veolia Miljo AS in the Norwegian market 

and through Marius Pedersen in the Danish market. 

Norwegian results decreased in 2008 resulting from the 

price fall in metals and paper/cardboard. 

In Italy, Veolia Environmental Services acquired control of 

TMT, the italian subsidiary of Termomeccanica Ecologia specialized 

in waste management and treatment on October 3rd, 

2007. TMT became Veolia Servizi Ambientali Tecnitalia. It is 

specialized in building and operating Waste-To-Energy plants 

(incinerators and mechanical treatment type MBT* producing 

fuel from waste). 

In the rest of Europe, progression in activities was satisfactory 

with good performances in the Czech Republic. 

In Mexico the group acquired in 2000 hazardous waste activities 

and more specifically operation of a landfill site. Further to the 

operational problems encountered since 2001, VES had gone to 

international arbitration proceedings against the former shareholders. 

In 2007, this arbitration was settled in VES’s favour. 

In Australia, VES Australia Pty (ex-Collex) group pursued a 

steady progression mainly through organic growth (+14.8%), 

its turnover rising to €479 million. Australian growth mainly 

resulted from industrial services activities, soil cleaning up 

and liquid waste treatment. 

Activities in Asia are operated by VES Asia and its subsidiaries. 

Its subsidiaries reported a €227 million turnover in 2008, 

increasing by €46 million compared to 2007, further to starting 

Waste-To-Energy operating contracts. VES gained a 20-year 

term contract for the operating and maintenance in the incineration 

and valorization unit of YongKang in Taiwan, which will 

treat municipal and industrial waste of the county of TaiNan 

and will produce electricity for the surrounding area. 

In Africa-Middle East, Veolia Environmental Services activities 

reported a €123 million turnover in 2008 compared to €100 

million in 2007. This improvement resulted from a good level of 

activity in Israel. n 

* Mechanical Biological Treatment

Litigations 

Crégy-lès-Meaux litigation 

In June 1999, during landscaping works carried out by the 

municipality, on the landfill of Crégy-lès-Meaux, operated by 

VP Nord Normandie (formerly known as Aubine) on behalf of 

the Communauté d’Agglomération des Pays de Meaux 

(CAPM, formerly SIRU), in the framework of a delegate 

management contract for public services, ended in March 

1999, emanations were felt in a private housing estate built 

near to this landfill. Subsequently to this incident, Aubine 

carried out works, at its own costs, to secure and ensure the 

post-operational follow-up of the site. 

Two types of litigations aroused from this case: 

Litigation for indemnification brought to the Administrative Court 

of Melun and the Administrative Court of Appeal of Paris was 

decided in first instance then on appeal on sentences in favour of 

the frontage residents, for a total amount reaching €2.3 million. 

Those sentences were essentially passed jointly on the CAPM and 

Aubine. The developer of the estate was also found partly liable. In 

fine, Aubine should bear costs up to €0.7 million. The counterclaim 

of Aubine relating to the costs advanced to secure and 

ensure the post-operation follow up of the site was dismissed. 

A procedure is still pending before the Court of Appeal of Paris 

concerning the request of the company having offered for sale 

the land of the private housing estate which claims that the 

CAPM and the municipality are condemned to pay €4.3 million 

(Aubine is called as guarantee). In first instance, the 

Administrative Court had pronounced a sentence amounting to 

€1.7 million (including €0.5 million to be paid by Aubine) 

Concerning the insurance coverage, the Assurpol (AGF) 

policy should apply: 

n Coverage of damage to third parties (indemnification of the 

frontage residents in particular): €4.3 million limit of liability 

– awaiting confirmation of this guarantee by the insurer. 

n Coverage of costs for prevention and reduction of the 

damage: AGF refunded VPNN €1.1 million in February 2009 

representing the extent of its guarantee concerning this 

cost category (total Aubine cost: €3.9 million). 

Moreover Aubine took action against CAPM to recover the 

post-operation costs that it spent €0.9 million of. 

Following the claim of a frontage resident, a litigation of criminal 

nature was initiated. In 2003, the legal entity, VP Nord 

Normandie, as well as two natural persons were indicted for 

putting the life of other persons at risk and operation without 

authorization charges (exceeding authorized tonnage). At 

the beginning of 2007, one more natural person was indicted 


and another one was questioned as witness, both were in 

relation with Veolia Environmental Services Group. 

It has been requested for the application of the insurance of 

officers and directors (AIG). 

Italy 

On April 16, 2008, Termo Energia Calabria S.p.a. “TEC”, 

subsidiary held at 90% by Veolia Servizi Ambientali Tecnitalia 

S.p.a. “VSAT” and specialized in waste-to-energy activity, 

referred to the Administrative Court of the Calabria region 

to claim payment for the grants due in respect of the 

concession contract signed with the Calabria region on 

October 17, 2000 and totaling a current amount of €26.9 million. 

On August 11, 2008, the Administrative Court ordered the 

region to pronounce on this claim. At the end of November 

2008, the region made know its refusal to pay the grants 

claimed. Moreover on May 16, 2008 TEC put in a claim to the 

Italian Arbitration Tribunal against the Extraordinary 

Commissioner of Calabria amounting to €58.56 million to 

get the miscellaneous extra-operating expenses and costs 

occurred since 2005 refunded, and for breaking the indexation 

clause of tariffs provided for in the concession contract. 

The arbitration proceedings started and on October 24, 2008 

the Extraordinary Commissioner of Calabria put in a counterclaim 

against TEC for the termination of the concession 

contract, and for the payment of €62.3 million by TEC 

because of delays in construction. The company has been 

considering that the Commissioner’s claims are unfounded 

and decided not to recognize any provision linked to this 

litigation. 

Moreover VSAT had to face up to suspicions relating to the 

manipulation of software controlling carbon monoxide (CO) 

emissions in the Waste-To-Energy plants of Falascaia, 

Vercelli and Brindisi. In those three cases, VSAT lodged complaints 

against a person or persons unknown in June 2008, 

August 2008 and February 2009, that are under examination. 

For all these reasons at the beginning of 2009, Veolia 

Environmental Services decided to begin discussions with the 

italian company TM.E. S.p.a. Termomeccanica Ecologia “TME” 

in respect of the warranty obligations given by TME at the 

transfer of VSAT to VES in 2007. 

At this stage, the company is not in a position to appraise 

whether the repercussions of these actions are likely to have 

a significant impact on its financial position or on its results. 

n 



Legal structure and delegations of powers 

A great attention is given to the composition and the functioning 

of the boards of Veolia Environmental Services subsidiaries. 

The choice of social representative is made according 

to a selection procedure and validated by Veolia 

Environmental Services and Veolia Environment general 

management. In addition, a group circular reminding the 

Trends and business outlook 

With its strategy for “turning waste into a resource” Veolia 

Environmental Services is at the forefront to keep in with the 

market orientation of the waste management business 

towards valorization and recycling and to benefit from it, 

mainly through its recent targeted acquisitions (Bartin 

Recycling group in France oriented in metals market and 

Sulo group specialized in recycling activities). 

Moreover, the main recent developments are as follows: 

In January 2009, Bartin Aero Recycling, a subsidiary of Veolia 

Environmental Services, obtained the ISO14001 certification 

for the site of Châteauroux-Déols. Thus it became the first 

european site capable of providing all aircraft deconstruction 

and dismantling services in compliance with the commitments 

of the environmental and sustainable development 

charter recently signed by the president of the French 

Aircraft and Space Industries group (GIFAS). 

The new Waste-To-Energy plant of Antibes was inaugurated 

on March 23, 2009. The plant was entirely renovated and 

modernized under a public-private partnership (PPP) between 

the SIDOM (Joint commission in charge of domestic 

waste treatment) and Veolia Environmental Services. It is a 

sustainable solution respectful of the environment for the 

treatment of the household waste of 260,000 people living in 

20 urban communities in Alpes Maritimes department. The 

operation of the new unit was allotted for a 20-year term to 

a subsidiary of VES. The equipments carried out will enable 

to obtain nitrogen oxides emissions (NOx) limited to only 

80mg/Nm 3 whereas regulations impose a limit of 200 


rules of the delegations of signatures and of the separation 

of the powers was sent to the whole of the subsidiaries in 

order that they check and adapt, when necessary, their procedures 

as directed. The delegations of powers are fixed and 

organized by the legal management when necessary closely 

with the internal control management. n 

mg/Nm 3 , and to reduce by half the dioxin emissions compared 

to the imposed standards. The energy recovery will 

enable to convert the thermal energy produced by waste 

combustion into electricity that will cover the plant‘s needs 

and the surplus will be sold to EDF (French Company for 

Electricity). 

No significant deterioration had an impact on the VES business 

outlook since the closing of 2008 and the events that 

are reasonably likely to change the company outlook for the 

year being were communicated by Veolia Environment when 

presenting its annual results for 2008 on March 6, 2009. 

On that occasion, Veolia Environment specified that Veolia 

Environmental Services was the division the most sensitive 

to the effects of the current economic crisis. The exposure to 

the industrial activity is significant in ordinary waste (prices 

and volumes) and in hazardous waste. The recycling activities 

are particularly sensitive to raw materials valorization 

(paper, scraps and non ferrous metals). 

In order to compensate for the effects of the economic slowdown 

noted since the 4th quarter 2008, Veolia Environmental 

Services strategic priorities are based on its financial performance, 

notably planning on improving the group profitability 

and on integrating and improving the results of the recent 

acquisitions. Thus Veolia Environmental Services has implemented 

an ambitious action plan including the reduction in 

growth investments in 2009, cost cuts directly impacting the 

operating cash flow before changes in working capital in 2009, 

the recovery of the acquisitions (and a new organization in 

Germany), and the disposal of non strategic assets. n

Parent company accounts 


€ Million 2006 2007 2008 

Revenue 133 136 104 

Other operating profits 130 150 154 

Operating income (28) (34) (30) 

Share of profits from GP 51 58 40 

Net Financial income 316 103 (267) 

Non current income (1) (5) (33) 

Net income 338 123 (288) 

Capital expenditure 16 15 14 

Acquisition of financial assets 364 376 337 

Operating cash flow before changes in working capital 456 89 61 

Proceeds from assets disposals 12 44 3 

Result 

n Veolia Propreté SA turnover decreased by 24%, that is 

€32 million compared to 2007; it resulted from the spinning 

off of La Reunion affiliate as a subsidiary that reported this 

year a €32.5 million turnover. The turnover of the Ile-de- 

France affiliate increased by + €3.6 million whereas Caen 

reported a decrease by - €2.6 million. 

n Other operating profits increased by 2.4%; this growth 

was mainly due to the increase in the head-office technical 

support charged to its subsidiaries in Germany and in 

France. 

n Operating income improved by €4 million; this increase 

resulted from the reduction of the head office deficit up to 

+ €7 million, the spinning off as a subsidiary of 

La Reunion operating income amounting to – €2.2 million 

and the decrease in Caen operating income for an amount 

of - €1.5 million. 

n The decrease in share of profits from General 

Partnership by €18 million resulted from the decrease in 

REP turnover mainly due to the fall of treated volumes after 

having benefited by an exceptional contract for two years. 

n The financial operations generated a €267 million loss 

in 2008 compared to a €103 million profit in 2007 and a 

decrease by - €370 million mainly due to: 

n the non recurrence of exceptional dividends received in 

2007 from SARP partially compensated by other increasing 

dividends up to – €55 million, 

n a negative change of – €48 million in foreign exchange 

gains and losses further to the reorganization of the 

financing lines started in 2007 and carried on, 

n increasing net finance costs charged by Veolia Environment 

by – €19 million, 

n a positive change of + €8 million in net allocations to 

provisions (reversal of YUNLIN risk), 

n a negative change of – €263 million in net allocations to 

provisions for depreciation on securities and current 

accounts including a – €310 million allowance in Germany 

and a + €31.4 million reversal further to AVBV liquidation, 

n a lack of debts forgiveness in 2008 unlike 2007 for an 

amount of + €7 million. 

n The non current income decreased by – €28 million in 

2008; this change resulted , for the main part, from the cancellation 

of AVBV shares further to their liquidation and was 

largely compensated by the reversal of provision for depreciation 

on shares recognized in the financial income. n 



Cash flow statement 

n The deterioration of the Operating cash flow before 

changes in working capital by - € 28 million is mainly due to 

the improvement in the gross operating surplus by + €4 million, 

to the decrease in dividends received by - €55 million, to the 

decrease in share of profits from General Partnership by 

- €18 million, to the deterioration of the net finance costs by 

- €19 million, to the positive change in foreign exchange loss 

(before reversal of provisions) amounting to + €52 million 

and resulting from the reorganization of the financing lines 

in 2007 and 2008, to the increase in non current revenues 

by + €5 million (including WMI transaction), to the lack of 

debts forgiveness in 2008 generating a positive change of 

+ €7 million. 

n Financial investments realized in 2008 for a €337 million 

total amount concern the acquisition of the BARTIN group 

up to €149 million, the acquisition of CLEANAWAY AS and 

Directors’ fees and compensation 

Pursuant to Article L. 225-102-1 of the French Commercial 

Code (Code du Commerce), we report below on the total remuneration 

and benefits paid to directors during the period, either 

by the Company or by companies it controls as defined by Article 

L. 233-16 of the Commercial Code. 

Directors’ remunerations during the period were as follows: 

Henri PROGLIO, Chairman of the Board of Directors: 

n Remuneration paid by VE (including the 

variable compensation for 2007 paid in 2008) €2,418,070 

n Attendance fees paid by VE €40,000 

n Attendance fees paid by VES and subsidiaries €10,300 

n Attendance fees paid by the other VE subsidiaries €52,669 

10 - Financial Report 2008 – Veolia Environmental Services 

UAB hold by VUS for an amount of €26 million, the increase 

in capital of VUS (former SULO) for an amount of €100 million 

and other increases in capital amounting to €56 million. 

n Industrial investments adding up to €14 million concern 

essentially the immobilization of head-office software and 

purchases of trucks by Caen and Ile-de-France affiliates. 

n Proceeds from assets disposals realized in 2008 were 

mainly generated by the contribution retrieval consequently 

to AVBV liquidation. 

The increase by €538 million in the net financial debt 

mainly enabled VP SA to finance the payment of dividends 

to Veolia Environment amounting to €165 million and the 

acquisitions and increases in capital of the subsidiaries up 

to €337 million. n 

Jerome CONTAMINE, Director: 

n Remuneration paid by VE (including the 

variable compensation for 2007 paid in 2008) €1,191,263 

n Attendance fees paid by VES €8,000 

n Attendance fees paid by the other VE subsidiaries €32,562 

Paul-Louis GIRARDOT, Director: 

n Attendance fees paid by VE €60,000 

n Attendance fees paid by VES €8,000 

n Attendance fees paid by other VE subsidiaries €40,337 

A list of all directorships and other outside appointments 

can be found in the appendix.

Proposed resolutions 

We suggest that you allocate all of the income for the year, 

that is a loss of €288,491,262.90 as retained earnings, which 

previously amounted to €166,421,366.71 and would this total 

€(122,069,896.19). 

Moreover, the Board of Directors suggest to distribute the sum 

of €140,065,945.80 as dividends to the shareholders which 

would be drawn upon the account “Premium, merger surplus, 

share premium“ previously amounting to €1,669,322,674.97 

and then reduced to €1,529,256,729.17. 

As required by law, the table below sets out dividends paid over the last three years: 

Further to the reading of the Auditors report, we shall ask you 

to approve the Company’s financial statements, the allocation 

of the income for the year and the payment of dividends; we 

shall also submit for your approval the regulated related 

parties agreements governed by articles L 225-38 of the 

French Commercial Code (Code de Commerce) and we shall 

ask you to approve the consolidated accounts of the 

Company, as of December 31, 2008. 


A net dividend of €15.62 would be paid for each of 8,967,090 

shares constituting the share capital and being entitled to on 

the account of their due date. 

Pursuant to Article L. 158-3 of the French General Tax Code 

(Code Général des Impôts), this dividend entitles to reduction 

of the tax base granted to natural persons . 

The Board of Directors proposes to pay the dividend as from 

July 2, 2009. 

2005 2006 2007 

Number of shares 8,563,375 8,563,375 8,967,090 

Net dividend per share €12.85 €15.20 €18.40 

Total amount distributed €110,039,368.75 €130,163,300.00 €164,994,456.00 

Total amount eligible to tax allowance €5,127.15 €4,848.80 €5,869.60 

Total amount non eligible to tax allowance €110,034,241.60 €130,158,451.20 €164,988,586.40 

You will also be asked to ratify the appointment of Mister Thomas 

PIQUEMAL as Director who was co-opted by the Board of 

Directors during its meeting on March 19, 2009 to replace Mister 

Jérôme CONTAMINE, to renew the director term of Mister 

Joachim BITTERLICH for a six-year period and to raise the global 

yearly amount of attendance fees awarded to the Board of 

Directors up to €105,000 for the current year and the future years 

until a new decision is taken by the General Meeting. n 

Financial Report 2008 – Veolia Environmental Services - 11

12 - Financial Report 2008 – Veolia Environmental Services

Consolidated Financial 

Statements 2008 

Consolidated balance sheet ........................................................... p.14 

Consolidated income statement ................................................ p.15 

Consolidated cash flow statement .............................................. p.16 

Statement of recognized revenues and expenses............. p.17 

Notes .................................................................................................................... p.18 

Note 1 Accounting principles and methods...................................................................................p.18 

Note 2 Use of management estimates in the application of Group accounting standards................p.31 

Note 3 Significant events ................................................................................................................p.32 

Note 4 Goodwill ...............................................................................................................................p.32 

Note 5 Concession intangible assets .............................................................................................p.34 

Note 6 Other intangible assets.......................................................................................................p.35 

Note 7 Property, plant and equipment...........................................................................................p.36 

Note 8 Investments in associates ..................................................................................................p.37 

Note 9 Non-consolidated investments...........................................................................................p.39 

Note 10 Non-current and current operating financial assets .......................................................p.40 

Note 11 Other non-current financial assets....................................................................................p.41 

Note 12 Deferred tax assets and liabilities .....................................................................................p.42 

Note 13 Working capital ...................................................................................................................p.43 

Note 14 Current financial assets......................................................................................................p.45 

Note 15 Cash and cash equivalents .................................................................................................p.45 

Note 16 Equity ..................................................................................................................................p.46 

Note 17 Non-current and current provisions ..................................................................................p.49 

Note 18 Long-term borrowings .......................................................................................................p.51 

Note 19 Other non-current liabilities...............................................................................................p.53 

Note 20 Short-term borrowings.......................................................................................................p.53 

Note 21 Bank overdrafts and other cash position items ................................................................p.53 

Note 22 Revenue ..............................................................................................................................p.54 

Note 23 Operating Income................................................................................................................p.54 

Note 24 Finance costs, net ...............................................................................................................p.56 

Note 25 Other financial revenues and expenses.............................................................................p.56 

Note 26 Income tax expense ...........................................................................................................p.57 

Note 27 Share of net income from associates ............................................................................... p.57 

Note 28 Net income for the year attributable to equity holders of the parent ..............................p.58 

Note 29 Financial instruments as of december 31 .........................................................................p.59 

Note 30 Credit risk management.....................................................................................................p.60 

Note 31 Additionnal information on financial assets and liabilities...............................................p.62 

Note 32 Employee benefits obligations............................................................................................p.64 

Note 33 Main acquisitions in 2008 ...................................................................................................p.67 

Note 34 Finance leases and operating leases ................................................................................p.68 

Note 35 Proportionaly consolidated companies .............................................................................p.69 

Note 36 Tax reviews ..........................................................................................................................p.69 

Note 37 Commitments and contingencies .....................................................................................p.70 

Note 38 Collateral given supporting borrowings ............................................................................p.72 

Note 39 Related party transactions .................................................................................................p.73 

Note 40 Consolidated employees.....................................................................................................p.74 

Note 41 Auditor fees ........................................................................................................................p.74 

Note 42 Main companies included in the consolidated financial statements 2008 ......................p.75 

Statutory auditors’ report on the consolidated 

financial statements .............................................................................. p.80 

Consolidated 

Financial Statements 


Consolidated 


Consolidated balance sheet 

CONSOLIDATED BALANCE SHEET ASSETS (€ million) Notes As of Dec. 31, 2008 As of Dec. 31, 2007 

Goodwill 4 2,815.2 3,131.6 

Concession intangible assets 5 259.1 242.7 

Other intangible assets 6 290.2 410.1 

Property, plant and equipment 7 3,840.2 3,639.6 

Investments in associates 8 81.3 75.5 

Non-consolidated investments 9 23.8 18.1 

Non-current operating financial assets 10 768.4 858.1 

Non-current Derivative Instruments - assets 29 0.1 0.4 

Other non-current financial assets 11 75.0 85.7 

Other non-current assets 11 0.5 - 

Deferred tax assets 12 322.9 392.2 

Non-current assets 8 476.7 8,853.8 

Inventories and work in progress 13 173.3 144.9 

Operating receivables 13 2,690.5 2,788.1 

Current operating financial assets 10 68.6 44.3 

Current Derivative Instruments - assets 29 0.5 0.8 

Current financial assets in loans and receivables 14 3.6 1.1 

Other current financial assets 14 2.3 2.6 

Cash and cash equivalents 15 264.5 312.0 

Current assets 3,203.3 3,293.7 

Assets classified as held for sale 4.3 18.6 

Total assets 11,684.3 12,166.2 

CONSOLIDATED BALANCE SHEET EQUITY AND LIABILITIES (€ million) Notes As of Dec. 31, 2008 As of Dec. 31, 2007 

Share capital 143.5 143.5 

Additional paid-in capital 1,640.8 1,638.1 

Reserves and retained earnings attributable to equity holders of the parent (201.7) 449.6 

Minority interests 79.8 75.4 

Equity 16 1 662.4 2,306.6 

Non-current provisions 17 667.4 663.0 

Long-term borrowings 18 5,449.5 5,298.5 

Non-current Derivative instruments – liabilities 29 14.5 2.3 

Other non-current liabilities 19 0.7 0.8 

Deferred tax liabilities 12 487.7 506.3 

Non-current liabilities 6,619.8 6,470.9 

Operating payables 13 2,611.3 2,675.4 

Current Derivative instruments – liabilities 29 2.8 0.1 

Current provisions 17 204.5 210.6 

Short-term borrowings 20 473.7 372.4 

Bank overdrafts and other cash position items 21 109.8 130.2 

Current liabilities 3,402.1 3,388.7 

Liabilities directly associated with assets classified as held for sale - - 

Total equity and liabilities 11,684.3 12,166.2 

The accompanying notes are an integral part of these consolidated financial statements. 


Consolidated income statement 

(€ million) Notes As of Dec. 31, 2008 % As of Dec. 31, 2007 % 

Revenue 22 10,131.8 9,195.3 

o/w Revenue from operating financial assets 22 67.9 58.4 

Cost of sales (8,661.8) (7,327.8) 

Selling costs (174.7) (165.4) 

General and administrative expenses (1,013.1) (940.7) 

Other operating expenses and revenue 3.4 32.4 

Operating income 23 278.8 2.8% 793.8 8.0% 

Finance costs, net 24 (344.1) (278.9) 

Other financial revenues and expenses 25 (26.1) (17.9) 

Income tax expense 26 (239.0) (179.1) 

Share of net income from associates 8 5.2 3.3 

Net income from continuing operations (325.2) -3.2% 321.3 4.8% 

Net income from discontinued operations - - 

Net income for the year (325.2) 321.3 

Minority interests 27 20.3 23.2 

Attributable to equity holders of the parent 28 (345.5) 298.0 


Consolidated 



Consolidated 


Consolidated cash flow statement 

(€ million) Notes As of Dec. 31, 2008 As of Dec. 31, 2007 

Net income for the year attributable to equity holders of the parent 28 (345.5) 298.0 


Operating depreciation, amortization, provisions and impairment losses 1,077.9 693.7 

Financial amortization and impairment losses (9.1) (0.1) 

Other calculated revenues and expenses 25.0 21.7 

Latent gains and losses linked to change of Fair Value 7.4 (1.3) 

Gains (losses) on disposal and dilution (17.3) (53.2) 

Share of net income from associates 8 (5.2) (3.3) 

Dividends received (0.9) (1.2) 

Finance costs, net 24 344.1 278.9 

Income tax expense 26 239.0 179.1 

Operating cash flow before changes in working capital 1,335.7 1,435.5 

Changes in working capital 13 51.5 (18.1) 

Income tax paid (171.0) (261.2) 

Net cash flow from operating activities 1,216.2 1,192.5 

Purchases of intangible, property, plant and equipment (924.0) (745.3) 

Proceeds on disposal of intangible, property, plant and equipment 45.9 84.3 

Purchases of investments (333.4) (654.3) 

Proceeds on disposal of financial assets 18.0 208.7 

Operating financial assets: 

New operating financial assets (including payables relating to 

10 

acquisition of OFA) 

Principal payments on operating financial assets (including 

(55.3) (32.0) 

receivables on disposal of OFA) 47.8 63.3 

Changes effect in consolidation scope 4.1 36.3 

Dividends received 4.9 5.0 

Net decrease (/ increase) in current loans 5.3 (4.0) 

Net cash from investing activities (1,186.7) (1,037.9) 

Net increase (/ decrease) in short-term borrowings (37.1) (108.6) 

New long-term borrowings and other debts 605.9 1,333.4 

Principal payments on long-term borrowings and other debts (148.5) (1,326.7) 

Increase in capital subscribed by Veolia Environnement 0.0 350.0 

Increase in capital subscribed by minority holders 1.4 0.6 

Dividends paid (172.0) (148.5) 

Interests paid (331.9) (264.4) 

Net cash from financing activities (82.2) (164.2) 

Net cash at the beginning of the year 181.8 158.1 

Changes effect in foreign exchange rate 25.6 33.3 

Net cash at the end of the year 154.7 181.8 

Cash and cash equivalents 15 264.5 312.0 

- Bank overdrafts and other cash position items 21 109.8 130.2 

Net cash at the end of the year 154.7 181.8 



Statement of recognized revenues 

and expenses 

(€ million) As of Dec. 31, 2008 As of Dec. 31, 2007 

Net income for the year (325.2) 321.3 

Actuarial gains or losses on pensions obligations (36.3) 38.3 

Fair value adjustments on available-for-sale assets - - 

Fair value adjustments on cash flow hedge derivative instruments 

Foreign exchange gains and losses: 

On translation of the financial statements of subsidiaries drawn up 

(4.1) 2.0 

in a foreign currency (103.2) (98.3) 

On the net financing of foreign investments 

Others 

(0.3) 0.9 

Revenues and expenses directly recognized in equity (143.9) (57.1) 

Total recognized revenues and expenses (469.1) 264.2 

Attributable to equity holders of the parent (489.1) 240.1 

Attributable to minority interests 20.0 24.1 


Consolidated 



Consolidated 


Note 1 

Accounting principles and methods 

1 n 1 Accounting standards framework 

1.1.1 Basis underlying the preparation of the financial 

information 

Pursuant to Regulation No.1606/2002 of July 19, 2002, the 

consolidated financial statements for the year ended 

December 31, 2008 are presented in accordance with 

International Financial Reporting Standards (IFRS), as adopted 

by the European Union and as published by the 

International Accounting Standards Board (IASB). These 

financial statements included, for comparative purposes, 

the fiscal year 2007 presented in accordance with the same 

standards framework. 

Since the year ended December 31, 2006, the group has 

been applying the interpretation IFRIC12 “Service 

Concession Arrangements” published by the IASB on 

November 30th, 2006 and adopted by the European Union on 

March 26th, 2009 on its concession activities. 

In absence of IFRS standards or interpretations and in 

accordance with IAS 8 “Accounting Policies, Changes in 

Accounting Estimates and Errors”, Veolia Environmental 

Services has been using other standards, American standards 

in particular. 

1.1.2 Standards, standard amendments and interpretations 

applicable since the fiscal year 2008 

The accounting principles and valuation rules applied by the 

group on the consolidated financial statements for the year 

ended December 31, 2008 are identical to those applied as of 

December 31, 2007 except for the following standards, standard 

amendments and interpretations that became enforceable 

as of January 1, 2008 or July 1, 2008: 

n IFRIC 11 “IFRS2 – Group and treasury share transactions”; 

n IFRIC 14 “IAS19 – The Limit on a Defined Benefit Asset. 

Minimum Funding Requirements and their Interaction”; 

n Amendment to IAS39 “Financial Instruments: Recognition 

and Measurement” and IFRIC 7 “Financial Instruments: 

Disclosures”, on financial instrument reclassifications. 

The implementation of these standards and interpretations 

did not have any material impact. 


1.1.3 Standards, standard amendments and interpretations 

applicable after the fiscal year 2008 and not being anticipated 

Veolia Environmental Services did not elect for an early 

application of the following standards, standard amendments 

and interpretations that were published as of 

December 31, 2008 (adopted or in the course of being adopted 

by the European Union): 

n IAS 1 Revised “Presentation of financial statements”; 

n IFRS 8. “Operating segments” 

Veolia Environmental Services does not expect the implementation 

of these standards and interpretations to have 

any material impact; 

n IFRIC 13 “Customers Loyalty Programmes” is applicable 

from January 1 st , 2008 but will not be applied in the Group; 

n IFRIC 15 “Agreements for the Construction of Real Estate”; 

n IFRIC 16 “Hedges of a Net Investment in a Foreign Operation”; 

n IFRIC 17 “Distributions of Non-Cash Assets to Owners”; 

n IAS 23 Revised “Borrowing costs” 

Veolia Environmental Services does not expect the implementation 

of these standards and interpretations to have 

any material impact; 

n Amendments to IAS 32 and IAS 1 “Financial Instruments – 

Presentation: Financial Instruments repayable on holder’s 

demand or in case of liquidation”; 

n Amendments to IFRS 1 and IAS 27 on determining the cost 

of an investment on first-time adoption of IAS/IFRS; 

n Amendment to IFRS 2 “Share-based Payment – Vesting 

Conditions and Cancellations”; 

n Amendments resulting from the 2006-2008 annual improvement 

process. 

Subject to their definitive adoption by the European Union, 

these standards, standard amendments and interpretations 

are enforceable as of January 1, 2009 (except for certain 

annual amendments applicable as of July 1, 2009). The 

group does not currently anticipate any material impact 

consequently to the first-time application of these new texts. 

n IFRS 3 Revised “Business combinations”; 

n Amendments to IAS 28 and IAS 31 following to the publication 

of IFRS 3; 

n Amendment to IAS 27 “Consolidated and Separate 

Financial Statements”; 

n Amendment to IAS 39 “Financial Instruments: Recognition 

and Measurement – Eligible Hedged Items”.

These standards and standard amendments will be enforceable 

as of July 1, 2009, that is as of January 1, 2009 for 

Veolia Environmental Services. The group is currently assessing 

the potential impact of their application. n 

1 n 2 General principles underlying the 

preparation of the financial statements 

The accounting methods presented below have been applied 

consistently for all periods presented in the consolidated 

financial statements. 

The consolidated financial statements are presented on the 

basis of historical cost, with the exception of assets and liabilities 

recognized at fair value: derivative instruments, 

financial instruments held for trading, financial instruments 

designated at fair value and available-for-sale financial instruments 

(in accordance with IAS 32 “Financial Instruments: 

Presentation” and IAS 39). 

The Veolia Environmental Services consolidated financial 

statements for the year ended December 31, 2008 were closed 

by the Board of Directors on March 19th, 2009 and will 

be approved by shareholders on May 14th, 2009. 

1 n 3 Basis of presentation as of December 

31, 2008 

The consolidated financial statements are presented in millions 

of euro, unless stated otherwise. 

The consolidated financial statements include the financial 

statements of Veolia Propreté SA and its subsidiaries as of 

December 31 of each year. The financial statements of 

subsidiaries are drawn up on the same reference period as 

those of the parent company, in accordance with uniform 

accounting methods. 

All inter-company balances and transactions, together with 

all income and expense items and unrealized gains and 

losses included in the carrying value of assets, resulting 

from internal transactions, are eliminated in full. 

Subsidiaries are consolidated from the date of acquisition, 

which is the date on which the Group obtains control, up to 

the date on which it ceases to exercise control. 

Minority interests represent the share of net income or loss 

and of net assets not held by the Group. They are presented 

separately in the Income Statement and separately from 

equity attributable to equity holders of the parent in Equity in 

the Consolidated Balance Sheet. n 

1 n 4 Principles of consolidation 

Consolidated 


Veolia Environmental Services fully consolidates all entities 

over which it exercises control. Control is defined as the ability 

to govern, directly or indirectly, the financial and operating policies 

of an entity in order to obtain the benefit of its activities. 

Companies in which Veolia Environmental Services exercises 

significant influence over financial and operating policies are 

accounted for using the equity method. Significant influence is 

presumed to exist where the Group holds at least 20% of share 

capital or voting rights. 

Companies over which Veolia Environmental Services exercises 

joint control as a result of a contractual agreement between 

partners are consolidated using the proportionate method in 

accordance with IAS 31. 

Pursuant to SIC 12, Special Purpose Entities (SPEs) are consolidated 

when the substance of the relationship between the SPE 

and Veolia Environmental Services or its subsidiaries indicates 

that the SPE is controlled by Veolia Environmental Services. 

Control may arise through the predetermination of the activities 

of the SPE or through the fact that, in substance, the financial 

and operating policies are defined by Veolia Environmental 

Services or Veolia Environmental Services benefits from most 

of the economic advantages and/or assumes most of the economic 

risks related to the activity of the SPE. 

Pursuant to IAS 27, potential voting rights available for exercise 

attached to financial instruments which, if exercised, would 

confer voting rights on Veolia Environnemental Services and its 

subsidiaries, are taken into account where necessary in assessing 

the level of percentage control or significant influence 

exercised. n 

1 n 5 Translation of Foreign Subsidiaries’ 


Balance sheets, income statements and cash flow statements 

of subsidiaries whose functional currency is different from 

that of the Group are translated into the reporting currency 


Consolidated 


at the applicable rate of exchange (i.e., the 2008 year-end rate 

for balance sheet items and the 2008 average annual rate for 

income statement and cash flow items) for the year ended 

December 31, 2008. Foreign exchange translations are 

recorded in equity. The exchange rates of the major currencies 

of non-euro countries used in the preparation of the 

consolidated financial statements were as follows: 

Year-end exchange rate As of As of 

(one foreign currency December December 

unit = € xx) 31, 2008 31, 2007 

U.S. Dollar 0.7185 0.6793 

Pound sterling 1.0499 1.3636 

Average annual Average Average 

exchange rate rate rate 

(one foreign currency 2008 2007 

unit = € xx) 

U.S. Dollar 0.6782 0.7248 

Pound sterling 1.2433 1.4550 

1 n 6 Foreign currency transactions 

Foreign currency transactions are translated into euros at 

the exchange rate prevailing at the transaction date. At yearend, 

foreign currency-denominated monetary assets and 

liabilities are remeasured in euro at year-end exchange 

rates. The resulting foreign exchange gains and losses are 

recorded in net income for the period. 

A loan to a subsidiary the settlement of which is neither 

planned nor probable in the foreseeable future represents, 

in substance, a portion of the Group’s net investment in this 

foreign operation. Foreign exchange gains and losses on 

monetary items forming part of a net investment are 

recognized directly in equity as foreign exchange translation 

adjustments and are released to income on the disposal of 

the net investment. 

Exchange gains and losses on foreign currency-denominated 

borrowings or on foreign currency derivatives, that qualify as 

hedges of net investments in foreign subsidiaries, are 

recognized directly in equity as foreign exchange translation 

adjustments. Amounts recognized in equity are released to 

income on the sale of the relevant investment. 

Foreign currency-denominated non-monetary assets and 


liabilities recognized at historical cost are translated using 

the exchange rate prevailing as of the transaction date. 

Foreign currency-denominated non-monetary assets and 

liabilities recognized at fair value are translated using the 

exchange rate prevailing as of the date the fair value is 

determined. 

In the case of a net investment in a foreign operation, foreign 

exchange gains or losses on loans denominated in a 

currency that is not the functional currency of the lending or 

borrowing company must be recognized in foreign exchange 

translation reserves. The impact on the Veolia 

Environmental Services consolidated financial statements is 

not material. n 

1 n 7 Property, plant and equipment (IAS 16 

and IAS 17) 

Property, plant and equipment are recorded at historical 

acquisition cost to the Group, less accumulated depreciation 

and any accumulated impairment losses. 

Property, plant and equipment are recorded by component, 

with each component depreciated over its useful life. 

Useful lives are as follows: 

Useful life (in years)* 

Buildings 20 to 50 

Technical systems 7 to 24 

Transportation equipment 3 to 25 

Other plant and equipment 3 to 12 

* The useful period of life expectancies results from the variety of the concerned 

fixed assets. 

Borrowing costs attributable to the acquisition or 

construction of identified installations, incurred during the 

construction period, are included in the cost of those assets 

in accordance with IAS 23 (Borrowing costs). 

A finance lease contract is a contract that substantially 

transfers to the Group all the risks and rewards related to 

the ownership of an asset. 

Pursuant to IAS 17, leases, assets financed by finance leases 

are recorded in property, plant and equipment at the present 

value of minimum lease payments less accumulated 

depreciation and any accumulated impairment losses or, if 

lower, fair value and depreciated over the shorter of the

lease term and the expected useful life of the assets, unless 

it is reasonably certain that the asset will become the 

property of the lessee at the end of the contract. 

Given the nature of the Group's businesses, the group 

entities do not own investment property in the normal 

course of their operations. n 

1 n 8 Government grants 

Investment grants for property, plant and equipment 

In accordance with the option offered by IAS 20, investment 

grants are deducted from the gross carrying value of 

property, plant and equipment to which they relate. 

They are recognized as a reduction in the depreciation 

charge over the useful life of the depreciable asset. 

When the construction of an asset covers more than one 

period, the portion of the grant not yet used is recorded in 

Other liabilities in the Balance Sheet. 

Grants relating to concession contracts 

Grants received in respect of concession contracts (see Note 

1.21 for further details) are generally definitively earned and, 

therefore, are not refundable. 

Pursuant to the option offered by the standard IAS20, these 

grants are presented as a deduction of intangible assets or 

financial assets depending on the model agreed further to 

the interpretation of the concessions contract (IFRIC12). 

Under the intangible asset model, grants reduce the 

amortization charge in respect of the concession intangible 

asset over the residual term of the concession contract. 

Under the financial asset model, investment grants are equated 

to a method of repayment of the operating financial asset. 

Operating Grants 

Operating grants concern, by definition, operating items. 

When operating grants are intended to offset costs incurred, 

they are recognized as a deduction from the cost of goods 

sold, over the period that matches them with related costs. 

When operating grants represent additional contractual 

remuneration of a recurring nature, such as contributions or 

compensations for incapacity of receipts planned in certain 

delegation contracts of public utility, they are recognized as 

revenue. n 

1 n 9 Intangible assets excluding goodwill 

Intangible assets are identifiable non-monetary assets 

without physical substance. They are recorded at acquisition 

cost less accumulated amortization and any accumulated 

impairment losses. 

Intangible assets mainly consist of certain assets recognized 

in respect of concession arrangements (IFRIC12), entry fees 

paid to local authorities for public service contracts, the 

value of contracts acquired through business combinations, 

patent, licenses, software and operating rights. n 

1 n 10 Business Combinations and Goodwill 

All business combinations are recorded in accordance with 

the purchase accounting method as set out in IFRS 3. Under 

this method, assets acquired and liabilities and contingent 

liabilities assumed are recorded at fair value. The excess of 

the purchase price over the share of the value of assets 

acquired and liabilities and contingent liabilities assumed, if 

any, is capitalized as goodwill. 

Goodwill is not amortized under IFRS Standards. n 

1 n 11 Asset impairment 

Consolidated 


The Group performs impairment tests on intangible assets 

and property, plant and equipment if there is internal or 

external indication of impairment loss (IAS 36). 

Goodwill and other intangible assets with indefinite life 

expectancy are tested, at least once a year, in order to seize 

any loss of value calculated on the cash generating unit 

basis ("CGU"). The cash generating unit from which they 

depend within the Group mostly corresponds to a geographic 

zone or a segment of activity in a geographic zone. This is 

usually determined by the level at which Veolia 

Environmental Services’ direction manages operations. 

Veolia Environmental Services performs systematic annual 


Consolidated 


impairment tests in respect of goodwill and other intangible 

assets with an indefinite useful life following the preparation 

of a long-term plan, or whenever there is an identified 

indication of decrease in value. In such cases, the long-term 

prospects of an activity are reviewed, a valuation is 

performed and impairment is recorded in priority against 

goodwill in interim financial reporting if necessary. 

The net book value of an asset or group of assets is reduced 

to its recoverable amount (higher of the fair value less costs 

to sell and the value in use), when it is inferior. 

The value in use is determined by discounting the future cash 

flows expected to be derived from the asset, cash generating 

unit (CGU) or group of CGUs considered, taking into account, 

when appropriate, the residual value, discounted using the 

discount rate determined for each asset, CGU or group of 

CGUs and corresponding to the risk-free rate plus a risk 

premium weighted for business-specific risks. 

Impairment losses can be reversed, with the exception of 

goodwill. 

Note 4 Goodwill provides details of the conditions of the 

impairment tests’ implementation. n 

1 n 12 Inventories 

In accordance with IAS 2, inventories are stated at the lower 

of cost and net realizable value. Net realizable value is the 

estimated selling price in the ordinary course of business 

less the estimated costs of completion and the estimated 

costs necessary to make the sale. n 

1 n 13 Assets classified as held for sale and 

Liabilities directly associated with 

assets classified as held for sale, 

discontinued operations 

Assets and liabilities directly associated with assets 

classified as held for sale are stated at the lower of their net 

book value and fair value less costs to sell. 

The net income or loss realized by discontinued operations is 

reported on a separate line of the Income Statement (IFRS 5). 


n 

1 n 14 Provisions 

Pursuant to IAS 37, a provision is recorded when, at the year 

end, the Group has a current legal or implicit obligation to a 

third party as a result of a past event, and it is probable that 

an outflow of resources embodying economic benefits will be 

required to settle the obligation and the amount of the 

obligation can be reliably estimated. 

In the event of a restructuring, an obligation exists if, prior to 

the period end, the restructuring has been announced and a 

detailed plan produced or implementation has started. 

Future operating costs are not provisioned. 

In the case of provisions for the rehabilitation of final waste 

storage sites, Veolia Environmental Services accounts for the 

obligation to restore a site as waste is buried, recording a 

non-current asset component and taking into account 

inflation and the date on which expenses will be incurred 

(discounting). The asset is amortized based on its depletion. 

Provisions giving rise to a cash outflow after more than one 

year are discounted if the impact is material. Discount rates 

reflect current assessments of the time value of money and 

the risks specific to the liability. Effects on the unwinding of 

the discount are recorded in the Income Statement in “Other 

financial revenues and expenses”. n 

1 n 15 Financial instruments 

The Group has been applying the standard IFRS7 on financial 

disclosures since December 31, 2007. 

Financial assets and liabilities 

Financial assets include assets classified as available-forsale, 

held-to maturity and assets at fair value through profit 

and loss, asset derivative instruments, loans and receivables 

and cash and cash equivalents. 

Financial liabilities include borrowings, other financing and 

bank overdrafts, liability derivative instruments and 

operating payables. 

The recognition and measurement of financial assets and 

liabilities is governed by IAS 39 “Financial Instruments: 

Recognition and Measurement”.

Recognition and measurement of financial assets 

Financial assets are recognized at the settlement date. 

Financial assets are initially recognized at fair value, net of 

transaction costs. In the case of assets measured at fair 

value through profit and loss, transaction costs are expensed 

directly to net income. 

The Group classifies financial assets in one of the four 

categories identified by IAS 39 on the acquisition date: 

1 - Held-to-maturity assets 

Held-to-maturity assets are financial assets with fixed or 

determinable payments and fixed maturities, other than 

loans and receivables that the Group acquires with the 

positive intention and ability to hold to maturity. After initial 

recognition at fair value, held-to-maturity assets are 

recognized and measured at amortized cost using the 

effective interest method. 

Held-to-maturity assets are reviewed for objective evidence 

of impairment. An impairment loss is recognized if the 

carrying value of the financial asset exceeds its recoverable 

amount, as estimated during impairment tests. The 

impairment loss is recognized in the Income Statement. 

Net gains and losses of assets Held-to-maturity correspond 

to interest products and value losses. 

2 - Available-for-sale assets 

Available-for-sale assets mainly consist of non-consolidated 

investments and marketable securities that do not qualify 

for inclusion in other financial asset categories. They are 

measured at fair value, with fair value movements 

recognized directly in equity, unless an impairment test 

leads to the recognition of an unrealized capital loss 

compared to the historical acquisition cost and this is 

equated to a material and long-term loss. In this case, the 

impairment loss is recognized in the Income Statement. 

Impairment reversals are recognized in the Income 

Statement for debt securities only (receivables and interest 

rate bonds). 

Amounts recognized in equity are released to income on the 

sale of the relevant investment. Fair value is equal to market 

value in the case of listed securities and an estimate of the 

value in use in the case of unlisted securities, determined on 

the basis of financial criteria most appropriate to the specific 

situation of each security. Non-consolidated investments 

Consolidated 


which are not listed on an active market and for which the 

fair value cannot be measured reliably, are recorded as a last 

resort by the Group at historical cost less any accumulated 

impairment losses. 

Net gains and losses of available-for-sale assets consist of 

interest income, dividends, impairment losses and capital 

gains and losses on disposals. 

3 - Loans and receivables 

This category includes loans to non-consolidated investments, 

other loans and receivables and trade receivables. After initial 

recognition at fair value, these instruments are recognized and 

measured at amortized cost using the effective interest method. 

An impairment loss is recognized if the carrying value of these 

assets exceeds the recoverable amount, as estimated during 

impairment tests. The impairment loss is recognized in the 

Income Statement. 

The depreciation of commercial receivables is based on two 

methods: 

n A statistical method: based on past losses, it conducts to apply a 

depreciation rate per category of the aged trial balance. The 

analysis is realized on homogeneous group of receivables, with 

similar credit characteristics as a result of their belonging to a 

category of customer and to a country. 

n An individual method: the appreciation of both probability and 

loss is made case by case (anteriority of the delay of payment, 

other balance-sheet positions with the counterpart, rating 

issued by an external agency, a geographical location). 

Net gains and losses on loans and receivables consist of interest 

income and impairment losses. 

4 - Assets and liabilities at fair value through profit and loss 

This category includes: 

n Trading assets and liabilities acquired by the Company for 

the purpose of selling them in the near term in order to 

realize a capital gain, which form part of a portfolio of 

identified financial instruments that are managed together 

and for which there is evidence of a recent actual pattern of 

short-term profit-taking. Derivative instruments not 

qualifying for hedge accounting are also considered trading 

assets and liabilities. 

n Assets designated at fair value. These mainly include the 

portfolio of cash UCITS whose performance and management 

are based on fair value. 


Consolidated 


Changes in the value of these assets are recognized in profit 

and loss. 

Net gains and losses on assets at fair value through profit 

and loss consist of interest income, dividends, fair value 

adjustments and capital gains and losses on disposals. 

Net gains and losses on derivatives entered into for trading 

purposes consist of exchanged flows and changes in the 

instrument value. 

Cash and cash equivalents 

Cash equivalents are held to meet short-term cash 

commitments. Cash and cash equivalents include all cash 

balances, deposits with a maturity of less than 3 months 

when initially recorded in the Balance Sheet, monetary UCITS 

and negotiable debt instruments. These investments can be 

converted into cash or sold in the very short term and do not 

present any material risk of loss in value. Cash equivalents 

are designated as assets at fair value through profit and loss. 

Bank overdrafts repayable on demand which form an integral 

part of the Group’s cash management policy represent a 

component of cash and cash equivalents for the purposes of 

the cash flow statement. 

Recognition and measurement of financial liabilities 

With the exception of trading liabilities and liability derivative 

instruments which are measured at fair value, borrowings 

and other financial liabilities are recognized initially at fair 

value less transaction costs and subsequently measured at 

amortized cost using the effective interest method. 

The effective interest rate is the rate that exactly discounts 

estimated future cash payments or receipts through to 

maturity or the next market-price fixing date, to the net 

carrying value of the financial asset or liability. 

When the financial liability issued includes an embedded 

derivative which must be recognized separately, the 

amortized cost is calculated on the debt component only. 

The amortized cost at the acquisition date is equal to the 

proceeds from the issue less the fair value of the embedded 

derivative. 

Minority interest put options 

Pursuant to IAS 27, minority interests in fully consolidated 

subsidiaries are considered a component of equity. 


Furthermore, in accordance with IAS 32, minority interest 

put options are considered liabilities. 

Pending an IFRIC interpretation or a specific IFRS, the Group 

has adopted the following treatment: 

n The present value of purchase commitments is recorded in 

borrowings in the Balance Sheet, through minority interests 

and if necessary in goodwill for the residual balance. 

n Gains or losses resulting from the unwinding of the 

discount on the liability are recorded in finance costs and, 

when the put exercise price varies, changes in the value of 

the instrument resulting from changes in valuation 

assumptions concerning the promise are recorded in 

borrowings through goodwill. 

If the minority interests have not been purchased on the 

expiry of the commitment, minority interests in equity are 

reconstituted though goodwill and the liability recognized in 

respect of the commitment (no longer necessary). 

Recognition and measurement of derivative instruments 

The Group uses various derivative instruments to manage its 

exposure to interest rate and foreign exchange risks 

resulting from its operating, financial and investment 

activities. Certain transactions performed in accordance 

with the Group interest rate and foreign exchange risk 

management policy do not satisfy hedge accounting criteria 

and are recorded as trading instruments. 

Derivative instruments are recognized in the balance sheet 

at fair value. Other than the exceptions detailed below, 

changes in the fair value of derivative instruments are 

recorded through profit and loss. The fair value of derivatives 

is estimated using standard valuation models which take 

into account active market data. 

Net gains and losses of instruments at fair value through 

profit and loss (trading instruments) consist of exchanged 

flows and changes in the instrument value. 

Derivative instruments may be designated as hedges under one 

of three types of hedging relationship: fair value hedge, cash 

flow hedge or net investment hedge in a foreign operation: 

n The fair value hedge is a hedge of exposure to changes in 

fair value of a recognized asset or liability, or an identified 

portion of such an asset or liability, that is attributable to 

a particular risk (notably interest rate or foreign exchange 

risk), and could affect net income for the period.

n The cash flow hedge is a hedge of exposure to variability in 

cash flows that is attributable to a particular risk 

associated with a recognized asset or liability or a highly 

probable forecast transaction (such as a planned purchase 

or sale) and could affect net income for the period. 

n The net investment hedge in a foreign operation hedges 

the exposure to foreign exchange risk of the net assets of 

a foreign operation including loans considered part of the 

investment (IAS 21). 

An asset, liability, firm commitment, future cash-flow or net 

investment in a foreign operation qualifies for hedge 

accounting if: 

n The hedging relationship is precisely defined and 

documented at the inception date; 

n The effectiveness of the hedge is demonstrated at 

inception and by regular verification of the offsetting 

nature of movements in the market value of the hedging 

instrument and the hedged item. The ineffective portion of 

the hedge is systematically recognized in the Income 

Statement. 

The use of hedge accounting has the following consequences: 

n In the case of fair value hedges of existing assets and 

liabilities, the hedged portion of these items is measured 

at fair value in the Balance Sheet. The gain or loss on 

remeasurement is recognized in the Income Statement, 

where it is offset against matching gains or losses arising 

on the fair value remeasurement of the hedging financial 

instrument, to the extent it is effective; 

n In the case of cash flow hedges, the portion of the gain or 

loss on the fair value remeasurement of the hedging 

instrument that is determined to be an effective hedge is 

recognized directly in equity, while the gain or loss on the 

fair value remeasurement of the underlying item is not 

recognized in the balance sheet. The ineffective portion of 

the gain or loss on the hedging instrument is recognized 

in the Income Statement. Gains or losses recognized in 

equity are released to income in the same period or 

periods in which the asset acquired or liability issued 

impacts the income; 

n In the case of net investment hedges, the effective portion 

of the gain or loss on the hedging instrument is 

recognized in translation reserves in equity, while the 

ineffective portion is recognized in the Income Statement. 

Gains and losses recognized in foreign exchange 

translation reserves are released to the income when the 

foreign investment is sold. 

Embedded derivatives 

An embedded derivative is a component of a host contract 

that satisfies the definition of a derivative and whose 

economic characteristics are not closely related to that of the 

host contract. An embedded derivative must be separated 

from its host contract and accounted for as a derivative if, and 

only if, the following three conditions are satisfied: 

n The economic characteristics and risks of the embedded 

derivative are not closely related to the economic 

characteristics and risks of the host contract; 

n The embedded derivative satisfies the definition of a 

derivative laid down in IAS 39; 

n The hybrid instrument is not measured at fair value with 

changes in fair value recognized in the Income Statement. 

n 

1 n 16 Pension plans and other post-employment 

benefits obligations 

Veolia Environmental Services and its subsidiaries have 

several pension plans. Pension obligations are calculated 

using the projected unit credit method. This method is based 

on the probability of personnel remaining with companies in 

the Group until retirement, the foreseeable changes in 

future compensation, and the appropriate discount rate. 

Specific discount rates are adopted for each monetary zone. 

This results in the recognition of pension-related assets or 

liabilities, and the recognition of the related net expenses. 

As Veolia Environmental Services elected to offset actuarial 

gains and losses against equity as of January 1, 2004 and for 

early adoption as of January 1, 2005 of IAS 19 (revised), 

actuarial gains and losses are recognized directly in equity 

and are not amortized in the Income Statement. n 

1 n 17 Share-based payments 

Consolidated 


Pursuant to IFRS 2 “Share-based Payment”, an expense is 

recorded in respect of share purchase or subscription plans 

and other share-based compensation granted by the Group 

to its employees. The fair value of these plans on the grant 

date is expensed in the Income Statement and recognized 

directly in equity in the period in which the benefit is vested 

and the service is rendered. 

The fair value of purchase and subscription options is 

calculated using the Black and Scholes model, taking into 


Consolidated 


account the expected life of the options, the risk-free 

interest rate, observed volatility in the past and dividends 

expected on the shares. 

The compensation expense in respect of employee savings 

plans is equal to the difference between the subscription 

price and the average share price at each subscription date, 

less a discount for non-transferability. n 

1 n 18 Revenue (IAS 18) 

Revenue represents sales of goods and services measured 

at the fair value of the counterparty received or receivable. 

Revenue from the sale of goods or services is recognized 

when the following conditions are satisfied: 

n The amount of revenue can be measured reliably; 

n The significant risks and rewards of ownership of the 

goods have been transferred to the buyer; 

n The recovery of the counterpart is considered probable; 

n The costs incurred or to be incurred in respect of the 

transaction can be measured reliably. 

Sales of goods 

Sales of goods consist of sales of products related to 

recycling activities. 

Revenue relating to these sales is recognized on physical 

delivery of the goods, which represents the transfer of the 

inherent risks of ownership of these goods. 

Sales of services 

The provision of services concerns the collection, processing 

and disposal of waste. 

Revenue from these activities is recognized when the service 

is rendered and it is probable that the economic benefits will 

flow to Group entities. 

These activities involve the performance of a service agreed 

contractually (nature, price) with a public sector or industrial 

customer, within a set period. Billing is therefore based on 

the waste tonnage processed/ incinerated, multiplied by the 

contractually agreed price. 

Note that fees and taxes collected on behalf of local 

authorities are excluded from Revenue when there is no risk 

of payment default by third parties for the Group. 


Construction contracts (excluding concession contracts) 

Related revenue is recognized in accordance with IAS11 

(refer to note 1.23) 

IFRIC 4 Contracts 

Contracts falling within the scope of IFRIC 4 (see Note 1.22) 

involve services generally rendered to industrial/private 

customers. All service components to which the parties have 

agreed are detailed in contracts such as BOT (Build Operate 

Transfer) contracts. 

Services include the financing of the construction of a 

specific asset/installation on behalf of the customer and the 

operation of the asset concerned. 

Revenue relating to the construction of the asset is 

recognized in the frame of construction contracts in 

accordance with the provisions of IAS 11 and the asset is 

recorded in operating financial assets. Revenue is 

recognized on a completion basis at each period end, based 

on actual and expected costs. 

The financing of construction work involves finance costs 

that are invoiced to the customer and recognized in Revenue, 

under Revenues from operating financial assets. This 

interest is recognized in Revenue from the start of 

construction work and represents remuneration received by 

the builder/lender. 

Revenue relating to the operation of the asset is recognized 

on delivery of goods or on performance of the service 

depending on the operating activity. 

Concession contracts (IFRIC 12) 

See Note 1.21 on concession contracts. n 

1 n 19 Financial items in the Income 

Statement 

Finance costs consist of interest payables on borrowings 

calculated using the amortized cost method and losses on 

interest rate derivatives, both qualifying and not qualifying as 

hedges. 

Interest costs included in payments under lease finance 

contracts are recorded using the effective interest method. 

Finance revenues consist of gains on interest rate derivatives,

whether qualifying or not qualifying as hedges and income 

from cash investments and equivalents. 

Interest revenues are recognized in the Income Statement 

when earned, using the amortized cost method. 

Other financial revenues and expenses notably include 

income on financial receivables, calculated using the 

amortized cost method, dividends, foreign exchange gains 

and losses, impairment losses on financial assets and the 

unwinding of discounts on provisions. 

1 n 20 Income taxes (IAS 12) 

The income tax expense (credit) includes the current tax 

charge (credit) and the deferred tax charge (credit). 

Deferred tax assets are recognized on deductible temporary 

differences, tax loss carry forwards and/or tax credit carry 

forwards. Deferred tax liabilities are recognized on taxable 

temporary differences. 

Deferred tax assets and liabilities are adjusted for the effects 

of changes in prevailing tax laws and rates at the year end. 

Deferred tax balances are not discounted. 

A deferred tax asset is recognized to the extent that is 

probable for the Group to generate sufficient future taxable 

profits against which the asset can be offset. Deferred tax 

assets are impaired to the extent that is no longer probable 

that sufficient taxable profits will be available. 

1 n 21 Concession contracts 

Within its activities, Veolia Environmental Services provides 

collective services to local authorities in return for a remuneration 

based on services rendered. 

These collective services (also known as services of general 

interest or general economic interest or public services) are 

generally managed by Veolia Environmental Services under 

contracts entered into at the request of the public entities 

which retain control thereof. 

Concessions contracts involve the transfer of operating 

rights for a limited period, under the control of the local 

authority, using dedicated installations built by Veolia 

Consolidated 


Environmental Services or made available to it with or 

without a fee: 

n These contracts define "public services obligations" in return 

for remuneration. The remuneration is based on operating 

conditions, continuity of services, price rules and 

obligations with respect to the maintenance/replacement 

of installations. The contract determines the conditions 

for the transfer of installations to the local authority or a 

successor at its term. 

n Veolia Environmental Services can, in certain cases, be 

responsible for a given service as it holds the services 

support network. Such situations are the result of full or 

partial privatizations. Conditions impose public services 

obligations and modalities by which the local authority 

may recover control of the concession holder. 

These contracts generally include price review clauses. 

These clauses are mainly based on the cost trends, inflation, 

changes in tax and/or other legislation and occasionally on 

changes in volumes and/or the occurrence of specific events 

changing the profitability of the contract. 

In addition, the Group generally assumes a contractual obligation 

to maintain and repair facilities managed under 

public services contracts. The resulting maintenance and 

repair costs are analyzed in accordance with IAS 37 relative 

to provisions and, if necessary, a provision for contractual 

commitments is recorded where there is outstanding work 

to be performed. 

The nature and extent of the Group’s acquired rights and 

obligations under these various contracts differ according to 

public services rendered. 

The accounting analysis for concession contracts is disclosed 

in Notes 5 and 10. 

Both in France and abroad, the main concession contracts 

entered into by Veolia Environmental Services concern the 

treatment and valorization of waste in sorting, storage and 

incineration units. They have an average term from 18 to 30 

years. 

Recognition of concession contracts 

Since 2006, concession contracts are recognized in 

accordance with IFRIC12 Service Concession Agreement 

published in November 2006, as Veolia Environmental 

Services elected for the early adoption of this interpretation 


Consolidated 


as the preferred method. This interpretation is of mandatory 

application for periods beginning on or after January 1st, 

2008. The change in accounting method was applied 

retrospectively in accordance with IAS 8 on changes in 

accounting methods. Thus, Veolia Environmental Services 

consolidated financial statements as of December 31, 2005 

were adjusted for the retrospective application of IFRIC12. 

IFRIC12 is currently in the process of being approved at the 

European level. 

A substantial portion of the Group’s assets is used within the 

framework of concession or affermage contract granted by 

public sector customers (“grantors”) and/or by concession 

companies purchased by the Group on full or partial 

privatization. The characteristics of these contracts vary 

significantly depending on the country and activity 

concerned. 

Nonetheless, they generally provide, directly or indirectly, for 

customer involvement in the determination of the service 

and its remuneration, and the return of the assets necessary 

to the performance of the service at the end of the contract. 

IFRIC 12 is applicable to concession contracts comprising a 

public services obligation and satisfying all of the following 

criteria: 

n The concession grantor controls or regulates the services 

to be provided by the operator using the asset, the 

infrastructure, the beneficiaries of the services and prices 

applied ; 

n The grantor controls the significant residual interest in the 

infrastructure at the end of the term of the arrangement. 

Pursuant to IFRIC 12, such infrastructures are not 

recognized in assets of the operator as property, plant and 

equipment but in financial assets (“financial asset model”) 

and/or intangible assets (“intangible asset model”) 

depending on the remuneration commitments given by the 

grantor. 

“Financial asset model” 

The financial asset model applies when the operator has an 

unconditional right to receive cash or another financial asset 

from the grantor. 

In the case of concession services, the operator has such an 

unconditional right if the grantor contractually guarantees 

the payment of: 


n Amounts specified or determined in the contract, or 

n The shortfall, if any, between amounts received from 

users of the public services and amounts specified or 

determined in the contract. 

Financial assets resulting from the application of IFRIC 12 

are recorded in the Balance Sheet under the heading 

“Operating financial assets” and recognized at amortized 

cost. 

Unless otherwise indicated in the contract, the effective 

interest rate is equal to the weighted average cost of capital 

of the entities carrying the assets concerned. 

Pursuant to IAS 39, an impairment loss is recognized if the 

carrying value of these assets exceeds the fair value, as 

estimated during impairment tests. Fair value is estimated 

based on the recoverable amount, calculated by discounting 

future cash flows (value in use method). 

The portion falling due within less than one year is presented 

in “Current operating financial assets”, while the portion 

falling due within more than one year is presented in the 

non-current heading. 

Revenue associated with this financial model includes: 

n Revenue determined on a completion basis in the case of 

construction operating financial assets (in accordance 

with IAS 11); 

n The remuneration of the operating financial asset 

recorded in Revenue from operating financial assets 

(excluding principal payments); 

n Service remuneration. 

“Intangible asset model” 

The intangible asset model applies when the operator is paid 

by the users or when the concession grantor has not 

provided a contractual guarantee in respect of the amount 

recoverable. The intangible asset corresponds to the right 

granted by the concession grantor to the operator to charge 

users of public services. 

Intangible assets resulting from the application of IFRIC 12 are 

recorded in the Balance Sheet under the heading “Concession 

intangible assets” and are amortized, generally on a straightline 

basis, over the contract term. However, fees paid to local 

authorities that are an integral part of the cost of the intangible 

asset are disclosed under item “Other intangible assets”.

Under the intangible asset model, Revenue includes: 

n Revenue from the construction of the infrastructure (in 

accordance with IAS11); 

n Operating revenue of the infrastructure. 

“Mixed (or bifurcation) model” 

The choice of the financial asset or intangible asset model 

depends on the existence of payment guarantees granted by 

the concession grantor. 

However, certain contracts may include a payment commitment 

on the part of the concession grantor covering only part of 

the investment, with the balance covered by royalties 

charged to users. 

Whenever it is the case, the investment amount guaranteed 

by the concession grantor is recognized under the financial 

asset model and the residual balance is recognized under 

the intangible asset model. n 

1 n 22 Financial lease contracts 

IFRIC 4 seeks to identify the contractual terms and conditions of 

agreements which, without taking the legal form of a lease, 

convey a right to use a group of assets in return for payments 

included in the overall contract remuneration. It identifies in 

such agreements a lease contract which is then analyzed and 

accounted for in accordance with the criteria laid down in IAS 17, 

based on the allocation of the risks and rewards of ownership. 

The contract operator therefore becomes the lessor vis-àvis 

its customers. Where the lease transfers the risks and 

rewards of ownership of the asset in accordance with IAS 17 

criteria, the operator recognizes a financial asset to reflect 

the corresponding financing, rather than an item of property, 

plant and equipment. 

These financial assets are recorded in the Balance Sheet 

under the heading “Operating financial assets”. They are 

initially recorded at the lower of fair value and total future 

flows and subsequently at amortized cost using the effective 

interest rate of the contract. 

The portion falling due within less than one year is presented 

in “Current operating financial assets”, while the portion 

falling due within more than one year is presented in the 

non-current heading. 

Consolidated 


Contracts falling within the scope of IFRIC 4 are either 

outsourcing contracts with industrial customers, BOT (Build 

Operate Transfer) contracts, or incineration or cogeneration 

contracts under which, notably, demand or volume risk is, in 

substance, transferred to the prime contractor. 

During the construction phase, a financial receivable is 

recognized in the balance sheet and revenue in the Income 

Statement, in accordance with the percentage completion 

method laid down in IAS 11 for construction contracts. 

The financial receivables resulting from this analysis are 

initially measured at the fair value of lease payments and 

then amortized using the effective interest method. 

After a review of the contract and its financing, the implied 

interest rate on the financial receivable is based on either 

the Group financing rate and /or the borrowing rate 

associated with the contract. n 

1 n 23 Construction contracts (IAS 11) 

Veolia Environmental Services recognizes revenues and 

expenses associated with construction contracts in 

accordance with the percentage of completion method 

defined in IAS 11. 

These contracts are entered into with local authorities or 

private partners for the construction of infrastructures 

necessary for the provision of services. They are generally 

fixed-price contracts as defined by IAS 11. 

Revenue generated by construction services rendered by the 

Group is measured at the fair value of the consideration 

received or receivable, since total revenues and expenses 

associated with the construction contract and the stage of 

completion can be determined reliably. 

The percentage of completion is determined by comparing 

costs incurred as of the balance sheet date with total 

estimated costs under the contract. Costs incurred are 

recognized as production cost and do not include either 

administrative or selling costs. 

When total contract costs exceed total contract revenue, the 

expected loss is recognized as an expense immediately via a 

provision for losses to completion, irrespective of the stage 


Consolidated 


of completion and based on a best estimate of forecast 

results including, if appropriate, rights to additional income 

or compensation, insofar as they are probable and can be 

determined reliably. Provisions for losses to completion are 

recorded as liabilities in the Balance Sheet. 

Partial payments received under construction contracts 

before the corresponding work has been performed, are 

recognized in liabilities in the Balance Sheet under advances 

and down-payments received. 

The amount of costs incurred, plus profits and less losses 

recognized (notably in provisions for losses to completion) 

and intermediary billings is determined on an individual 

contract basis. Whether positive, this amount is recognized 

under assets as “amounts due from customers for 

construction contract work”. 

Whether negative, it is recognized under liabilities as “amounts 

due to customers for construction contract work”. n 

1 n 24 Segment reporting (IAS 14) 

For confidentiality reasons, Veolia Environmental Services 

does not report any information by segment. n 

1 n 25 Principles of fair value determination 

The fair value of all financial assets and liabilities is determined 

at the balance sheet date, either for recognition in the accounts 

or disclosure in the notes to the financial statements. 

The fair value is determined: 

I. based on quoted prices in an active market, or 

II. using internal valuation techniques involving standard 

mathematical calculation methods integrating observable 

market data (forward rates, interest rate curves, etc…), or 

III. using internal valuation techniques integrating parameters 

estimated by the Group in absence of observable market 

data. 

Quoted prices in an active market 

When quoted prices in an active market are available, they 

are adopted in priority for the determination of the market 

value. Marketable securities and certain quoted bond issues 

are valued in this way. 


Fair values determined from models integrating observable 

data on markets 

Most of derivative financial instruments (swaps, caps, floors, 

etc…) are negotiated on mutual agreement markets where 

there are no quoted prices. Valuations are therefore 

determined using models commonly used by market 

participants to value such financial instruments. 

Valuations calculated internally in respect of derivative 

instruments are tested every six months for their being 

consistent with valuations issued by our counterparts. 

The fair value of the unquoted borrowings is calculated by 

discounting contractual flows at the market interest rate. 

The net carrying value of receivables and payables falling 

due within less than one year and certain variable-rate 

receivables and payables is considered as a reasonable 

estimate of their fair value considering the short payment 

and settlement periods applied by Veolia Group. 

The fair value of fixed-rate loans and receivables depends on 

movements in interest rates and in the credit risk of the 

counterpart. 

Valuations calculated by these models are adjusted to take 

into account changes in Veolia Group credit risk. 

Fair values determined from models integrating certain 

non-observable data 

Derivative instruments valued using internal model 

integrating certain non-observable parameters include 

some electricity derivative instruments for which there are 

neither quoted prices in active markets (notably for 

electricity purchase options with very long maturity), nor 

observable market data (forward prices for component 

materials, interest rate curves, etc…), in particular for 

distant maturities. n

The preparation of financial statements requires Veolia 

Environmental Services management to make estimates 

and assumptions that affect the reported amounts of assets, 

liabilities, revenue and expenses, and the disclosures of 

contingent assets and liabilities. Future results may differ 

significantly from these estimates. 

Underlying estimates and assumptions are determined 

based on past experience and other factors considered as 

reasonable given the circumstances. They are used as a 

basis for making the judgment necessary to determine the 

carrying value of assets and liabilities, which cannot be 

obtained directly from other sources. Future values could 

differ from these estimates. 

Underlying estimates and assumptions are reviewed on an 

ongoing basis. The impact of changes in accounting estimates 

is recognized in the period the change is made if it affects this 

period only, or in the period the change is made and in the 

subsequent periods if they are also affected by the change. 

Notes 1.10 and 4 on goodwill and business combinations 

present the method adopted for the allocation of the purchase 

price on business combinations. This allocation is 

based on future cash flow assumptions and discount rates. 

Notes 1.11 and 4 concern goodwill and non-current asset 

impairment tests. The group management performed tests 

based on best forecasts of future valuation of activities of the 

cash generating units concerned and taking into account 

discount rates. 

Note 1.25 describes the principles adopted for the determination 

of financial instrument fair values. 

Note 29 on derivative instruments describes their accounting 

treatment. Veolia Environmental Services valued these 

derivative instruments, allocated them and tested their 

effectiveness whenever necessary. 

Notes 17 and 32 on provisions and employee commitments 

detail the provisions recognized by Veolia Environmental 

Consolidated 


Note 2 

Use of management estimates in the application of Group 

accounting standards 

Services. Veolia Environmental Services determined these 

provisions based on best estimates of these obligations. 

Note 26 on the income tax expense presents the tax position 

of the Group and is notably based in France and in the United 

States on best estimates available to the Group of trends in 

future tax results. 

All these estimates are based on organized procedures for 

the collection of forecast information on future flows, validated 

by operating management, and on expected market data 

based on external indicators and used in accordance with 

consistent and documented methodologies. 

The methodology to calculate the discount rates that were 

adopted in the estimates presented above was analyzed 

regarding the financial crisis. 

The following discount rates were adopted: 

n Application of IAS36 “Impairment of assets”: In accordance 

with group practices, the discount rates used correspond to 

the weighted-average cost of capital, calculated annually in 

June. The review of these rates as of December 31, 2008 did 

not call into question this practice. 

n Application of IAS37 “Provisions, Contingent Liabilities 

and Contingent Assets”: The discount rates applied to 

these liabilities take into account the decrease in risk-free 

interest rates and a theoretical risk factor recalculated to 

adjust the volatility witnessed after September 15, 2008. 

These calculations produce rates close to those 

determined as of June 30, 2008. 

n Application of IAS 19 “Employee Benefits”: Discount rates 

relating to these liabilities were, in prior years, generally 

based on the iBoxx index, which has since become highly 

volatile due to the financial crisis. In this context, the 

Group has temporarily suspended the direct use of the 

iBoxx index as of December 31, 2008 and, in relation to its 

actuaries, has determined discount rates to be used 

based on a financial market benchmark. The rates used 

are therefore based on actuarial recommendations and 

are close to the adjusted iBoxx index published on January 

2, 2009. n 


Consolidated 


Note 3 

Significant events 

n 2008 was marked by the consequences of the financial crisis 

and its initial repercussions on economic activity: 

- the extent in monetary exchange rates fluctuations 

which significantly impacted the contribution of businesses 

out of the euro area; 

- the increased volatility of raw materials prices which 

may temporarily make standard regulation mechanisms 

ineffective (indexation, price adjustments, etc…) and 

impact inventory values (recycled materials, etc…); 

- the deterioration in the credit market and liquidity which 

make the access to financial resources more difficult 

and costly; 

- the business slowdown which affects volumes in environmental 

services and which, in certain business segments, 

may exert downwards pressure on selling 

prices; 

- the deterioration in the financial position of economic 

players, which weighs on tariff negotiations with certain 

public customers and on payment terms. 

Note 4 

Goodwill 

Goodwill is broken down as follows: 


n On November 19, 2007, Veolia Environmental Services 

announced the signature of an agreement for the acquisition 

of the entire share capital of Bartin Recycling group, specialized 

in the collection and the valorization of industrial waste 

and particularly in the recycling of ferrous and non-ferrous 

metals. This transaction represents an investment of €149.3 

million for Veolia Environmental Services. It was finalized on 

February 13, 2008. The contribution of Bartin to the group 

revenue for the year ended December 31, 2008 amounted to 

€246.6 million (refer to Note 33 Main acquisitions). 

n Considering the deterioration in performance noted throughout 

the year in environmental services activity in Germany, 

a new business plan was worked out and led the group to 

revise the value of both goodwill and intangible assets recognized 

when the Sulo group was acquired. The goodwill was 

therefore depreciated by €343 million, intangible assets by 

€62.6 million (€44 million, net of tax) and deferred tax 

assets by €42 million. n 

(€million) As of December 31, 2008 As of December 31, 2007 

Gross 3 172.7 3 145.3 

Impairment losses (357.5) (13.7) 

Net 2 815.2 3 131.6 

Movements in the net book value of goodwill during 2008 are as follows: 

(€million) As of Changes in Foreign Impairment As of 

December consolidation exchange losses and Other D e c e m b e r 

31, 2007 scope (1) translation negative goodwill (2) movements 31, 2008 

France 426.6 120.0 - - 0.1 546.7 

International 2,705.0 91.9 (186.0) (343.0) 0.6 2,268.5 

Goodwill 3,131.6 211.9 (186.0) (343.0) 0.7 2,815.2 

(1) In 2008, changes in consolidation scope concerned Veolia Environmental Services acquisitions realized in the year (Bartin Recycling group: €121.7 million). 

(2) Impairment test led to depreciate by - €343 million the goodwill in the Germany cash generating unit (discount rate 6.6% and long-term growth rate 1.9%).

The main acquisition of the year is presented in note 33. The 

opening Balance Sheet of the Bartin group acquired in 2008 

is provisional. 

The provisional Balance Sheet of the Sulo group acquisition 

in 2007 was adjusted by €35.5 million, notably further to the 

adjustment of fair values on tangible fixed assets acquired 

(including asset depreciation) for an amount of - €14.4 million 

and on intangible fixed assets (consequently to the law 

concerning the recyclable packaging in 2008) for an amount 

of - €7.3 million. 

Impairment tests as of December 31, 2008: 

Veolia Environmental Services performs systematic annual 

impairment tests in respect of goodwill and other intangible 

assets with an indefinite useful life, or whenever there is 

indication of decrease in value. 

The recoverable value of a cash generating unit (CGU) is 

estimated according to the procedure defined in note 1.11. 

The main assumptions on which the value in use of a cash 

generating unit is based are the discount rate and trends in 

volumes, prices and direct costs (inflation) over the period. 

Discount rates (weighted-average cost of capital) are estimated 

by management for each cash generating unit and 

reflect current market assessments of the time value of 

money and the specific risks to which the cash generating 

unit is exposed. The methodology to determine rates in 

period of financial crisis is presented in note 2 “Use of 

management estimates in the application of group accounting 

standards”. Trends in volumes, prices and direct costs 

are based on past trends and on the future market outlook. 

Impairment tests are based on future cash flows taken, for the 

first six years, from the long-term planning process in June 

Consolidated 


2008. The terminal value is then calculated by discounting the 

forecast flows of the last year (2014). These flows include an 

organic growth rate such as inflation from 1.5% to 4.1% 

depending on the activities. Considering the current economic 

context, the deterioration in the cash flows in the Budget 2009 

drawn up at the end of the year 2008, by 10% and more compared 

to the year 2009 in the long-term plan, led the group to 

adjust its business plans of certain cash generating units. 

Discount rates used in 2008 reflect the country or geographical 

area of the cash generating unit in accordance with the 

criteria disclosed in Notes 1.11 and 2. The average discount 

rates of the main geographical area in 2008 were as follows: 

n France: 6.6% 

n United-States: 6.6% 

n United-Kingdom: 7.2% 

n Germany: 6.6% 

Sensitivity of impairment tests: 

The sensitivity of impairment tests were tested on the basis 

of a discounting rate increased by 1% and of a growth rate 

lessened by 1%. 

A 1% increase in the discount rate would generate recoverable 

values of the invested capital below their net carrying 

value for certain cash generating units. The corresponding 

amount totalled - €164 million (including - €143 million for 

the Germany cash generating unit and - €21 million for the 

Benelux cash generating unit). 

A 1% decrease in the growth rate to perpetuity would generate 

recoverable values of the invested capital capital below their 

net carrying value for certain cash generating units. The corresponding 

amount totalled - €128 million (including - €110 

million for the Germany cash generating unit and - €18 million 

for the Benelux cash generating unit). n 


Consolidated 


Note 5 

Concession intangible assets 

Movements in the net book value of concession intangible assets during 2008 are as follows: 

(€million) 

As of Asof 

December December 

31, 2007 31, 2008 

Concession intangible 

assets, gross 

Amortization and 

352.5 26.6 (1.7) 37.9 (17.8) (7.1) 390.4 

impairment losses 

Concession intangible 

(109.8) 1.7 (17.3) (9.3) 2.2 1.2 (131.3) 

assets, net 242.7 26.6 - (17.3) 28.6 (15.6) (5.9) 259.1 


Additions 

Disposals 

Impairment losses 

and Amortizations 

Reversals 

Changes in 

consolidation 

scope 

Foreign exchange 

translation 

Other 

movements

Note 6 

Other intangible assets 

Movements in the net book value of other intangible assets during 2008: 

(€million) 

As of As of 


31, 2007 31, 2008 

Contractual Rights 303.1 (110.5) (10.7) (5.1) 176.8 

Software 38.7 11.3 (9.9) (4.2) (1.8) 0.9 35.0 

Others 68.3 4.3 0.1 (14.1) 0.1 23.1 (0.6) (2.8) 78.4 

Other intangible assets 410.1 15.6 0.1 (134.5) 0.1 8.2 (7.5) (1.9) 290.2 

Additions 

Disposals 


Amortizations 

Reversals 

Changes in 

consolidation 

scope 

The impairment losses recognized in the year include the depreciation of the intangible assets in the Germany cash generating 

unit for an amount of - €62.6 million. 

The line “Others” corresponds to acquired intangible rights (customer lists, etc…). 

Other intangible assets break down as follows: 


translation 

Consolidated 


(€million) As of December 31, 2007 As of December 31, 2008 

Intangible assets with a definite useful life, gross 608.5 618.8 

Amortizations (198.2) (265.9) 

Impairment losses (0.2) (62.7) 

Intangible assets with a definite useful life, net 410.1 290.2 

Other movements 


Consolidated 


Note 7 

Property, plant and equipment 

Movements in the net book value of property, plant and equipment during 2008 are as follows: 

(€ million) 

As of As of 


31, 2007 31, 2008 

Property plant 

and equipment, gross 7,924.3 914.0 (280.1) 146.9 (302.9) 76.2 8,478.4 

Depreciation 

Property, plan 

(4,284.7) 252.8 (645.6) 4.9 (52.7) 147.3 (60.2) (4,638.2) 

and equipment, net 3,639.6 914.0 (27.3) (645.6) 4.9 94.2 (155.6) 16.0 3,840.2 

The geographical break down of property, plant and equipment is as follows: 


Additions 

Disposals 


and Amortizations 

Reversal 

Changes in 

consolidation 

scope 

Foreign exchange translation essentially concerns the depreciation of the US Dollar and the Pound Sterling compared to 

December 31, 2007. 

(€ million) Net book 

value as of 


December 31, Gross Depreciation and 

2007 book value impairment losses Net book value 

France 1,139.6 3,382.4 (2,081.2) 1,301.2 

International 2,500.0 5,096.0 (2,557.0) 2,539.0 

Total 3,639.6 8,478.4 (4,638.2) 3,840.2 

The breakdown of property, plant and equipment by class of assets is as follows: 

(€ million) Net book 

value as of 


December 31, Gross Depreciation and 

2007 book value impairment losses Net book value 

Land 635.2 1,219.1 (551.2) 667.9 

Buildings 729.4 1,296.8 (574.4) 722.4 

Technical installations and systems 1,046.5 2,878.5 (1,733.4) 1,145.1 

Assets under construction 328.5 355.8 (1.8) 354.0 

Others (including vehicles) 900.0 2,728.2 (1,777.4) 950.8 

Property, plant and equipment 3,639.6 8,478.4 (4,638.2) 3,840.2 


translation 

Other 

movements

Note 8 

Investments in associates 

The principal investments in associates are as follows: 

(€ million) As of December 31 

% Holding Share in equity Share of net income 

2008 2007 2008 2007 2008 2007 

Städtereinigung Holtmeyer Gmbh (1) 40.0% 0.0% 12.3 - 1.0 - 

Tiru 24.0% 24.0% 11.4 13.1 0.1 0.0 

Stadtreinigung Dresden Gmbh 49.0% 49.0% 10.1 9.6 1.3 0.5 

Shanghai Laogang Landfill 30.0% 30.0% 6.8 5.7 1.4 0.9 

EVG Entsorgungs- Und Verwertun 50.0% 50.0% 6.4 2.0 0.1 0.5 

Gud Gerarer Umweltdienste Gmbh 49.0% 49.0% 4.5 4.5 0.3 0.1 

EPFD 50.0% 50.0% 4.2 4.0 0.4 0.3 

Effeh Landfill Ltd 25.0% 25.0% 4.1 3.8 0.0 0.2 

Tallinna Prügila As 65.0% 65.0% 4.0 7.2 0.8 0.4 

TWZ 42.9% 42.9% 1.9 1.8 0.1 0.2 

Tecnoparco Val Basento 15.0% 15.0% 1.7 1.7 0.0 0.0 

Cleanaway Kleipeda Uab 100.0% 100.0% 1.4 0.2 0.0 0.0 

GEREP 50.0% 50.0% 1.2 1.6 ( 0.4) ( 0.1) 

SAT Sonderabfall Und Transport 50.0% 50.0% 1.1 0.4 ( 0.1) 0.0 

Ta Ho Onyx Rsea Envt (Yunlin) 33.3% 33.3% 0.6 1.8 ( 1.2) ( 1.6) 

CGS Macau Tratamento Residuos 30.0% 30.0% 0.8 0.9 ( 0.1) 0.1 

Biocycling Gmbh 50.0% 50.0% 0.4 1.4 0.2 0.1 

RZS Recycling-Zentrum Stade 50.0% 50.0% 0.1 1.1 ( 0.1) 0.2 

Wertstoffaufbereitung Dresden 50.0% 50.0% 0.4 2.9 0.4 0.2 

SRR Recycling Gmbh 50.0% 50.0% 0.1 1.2 ( 0.3) ( 0.1) 

ATIC 50.0% 50.0% 1.0 1.6 0.1 ( 0.1) 

Others (unit value < €1 million) 6.8 9.0 1.2 1.6 

Investments in associates 81.3 75.5 5.2 3.3 

(1) German entity integrated in 2008. 

Consolidated 



Consolidated 


Movements in investments in associates in 2008 are as follows: 

(€ million) 

Städtereinigung Holtmeyer Gmbh (1) 40.0% - 1.0 - - 11.3 - 12.3 

Tiru 24.0% 13.1 0.1 - (0.9) - (0.9) 11.4 

Stadtreinigung Dresden Gmbh 49.0% 9.6 1.3 ( 1.0) - 0.2 - 10.1 

Shanghai Laogang Landfill 30.0% 5.7 1.4 ( 1.1) 0.8 - - 6.8 

Evg Entsorgungs-Und Verwertun 50.0% 2.0 0.1 - - 4.3 - 6.4 

Gud Gerarer Umweltdienste Gmbh 49.0% 4.5 0.3 - - (0.3) - 4.5 

EPFD 50.0% 4.0 0.4 ( 0.2) - - - 4.2 

Effeh Landfill Ltd 25.0% 3.8 0.0 - 0.3 - - 4.1 

Tallinna Prügila As 65.0% 7.2 0.8 (0.6) - (3.4) - 4.0 

TWZ 42.9% 1.8 0.1 - - - - 1.9 

Tecnoparco Val Basento 15.0% 1.7 0.0 - - 0.0 - 1.7 

Cleanaway Kleipeda Uab 100.0% 0.2 0.0 - - 1.2 - 1.4 

GEREP 50.0% 1.6 (0.4) - - 0.0 - 1.2 

Sat Sonderabfall Und Transport 50.0% 0.4 (0.1) - - 0.8 - 1.1 

Ta Ho Onyx Rsea Envt (Yunlin) 33.3% 1.8 (1.2) - 0.0 - - 0.6 

CGS Macau Tratamento Residuos 30.0% 0.9 (0.1) - 0.0 - - 0.8 

Biocycling Gmbh 50.0% 1.4 0.2 ( 0.2) - (1.0) - 0.4 

RZS Recycling-Zentrum Stade 50.0% 1.1 (0.1) ( 0.1) - (0.8) - 0.1 

Wertstoffaufbereitung Dresden 50.0% 2.9 0.4 - - (2.9) - 0.4 

SRR Recycling Gmbh 50.0% 1.2 (0.3) - - (0.8) - 0.1 

ATIC 50.0% 1.6 0.1 - - (0.7) 1.0 

Others (unit value < € 1 million) 9.0 1.2 ( 0.8) (0.2) (3.8) 1.4 6.8 

Investments in associates 75.5 5.2 (4.0) (0.0) 4.8 (0.2) 81.3 

(1) German entity integrated in 2008. 

Summarized financial information for the main investments in associates is as follows (100% of amounts): 

(€ million) As of December 31, 2007 As of December 31, 2008 

Non-current assets 336.2 418.3 

Current assets 264.0 300.6 

Total assets 600.2 718.9 

Equity attributable to equity holders of the parent 157.7 195.4 

Minority interests 0.8 (1.1) 

Non-current liabilities 319.0 335.2 

Current liabilities 122.7 189.4 

Total equity and liabilities 600.2 718.9 

Consolidated income statement 

Revenue 224.9 390.8 

Operating income 16.8 37.7 

Net income for the year 3.6 11.2 


% Holding 

Equity 2007 

Net Income 

2008 

Dividend 

distribution 

Foreign 

exchange 

translation 

Changes in 

consolidation 

scope 

Others 

Equity 2008

Note 9 

Non-consolidated investments 

Pursuant to IAS 39, non-consolidated investments are classified as available-for-sale and, as such, recognized at fair value. 

Unrealized gains and losses are taken directly to equity, except for unrealized losses considered long-term which are expensed 

in the Income Statement. 

Movements in the fair value of non-consolidated investments during 2008 are as follows: 

(€ million) 

As of As of 


31, 2007 31, 2008 

Non-consolidated 

investments 18.1 6.5 (1.1) (1.4) - (0.1) (0.1) 0.9 23.8 

Additions 

Non-consolidated investments are broken down as follows: 

Non-consolidated investments (€ million) 

Disposals 

Changes in 

consolidation 

scope 

Fair value 

adjustments 

Impairment 

losses, net 


translation 

Other 

movements 

Net book 

As of value as of 


31, 2007 31, 2008 

MARIUS PEDERSEN ENGINEERING - 65% 10.6 10.6 

EGEMA Gmbh 4.8 19.80% 3.5 3.5 

Ents. Soest GmbH 1.2 21.00% 1.2 1.2 

Beteiligungen 1.5 - - - 

Phyto Environnement (1) 1.2 100.00% - 

Others (unit value < 1 € million) for 2008 9.4 12.7 (4.2) 8.5 

Non-consolidated investments 18.1 28.0 (4.2) 23.8 

(1) Consolidated in 2008. 

No latent gain or loss was recognized in 2007 and 2008. 

% holding as of 

December 31, 2008 

Gross book value 

as of December 

31, 2008 


Consolidated 


Fair value 

adjustments 


Consolidated 


Note 10 

Non-current and current operating financial assets 

Operating financial assets consist of financial assets resulting from the application of IFRIC 12 on accounting for concession 

contracts (refer to Note 1.21) and from the application of IFRIC 4 (refer to Note 1.22). 

Movements in the net book value of non-current and current operating financial assets during 2008 are as follows: 

(€ million) 

As of As of 


31, 2007 31, 2008 

Gross 902.4 62.8 (47.8) - (4.6) (85.5) 9.7 837.0 

Impairment 

Non-current and current 

- - 

operating financial assets 902.4 62.8 (47.8) - (4.6) (85.5) 9.7 837.0 

Operating financial assets maturity schedule: 

(€ million) 2 to 3 4 to 5 After 

1 year years years 5 years Total 

Total IFRIC 4 10.0 20.1 19.9 27.2 77.2 

Total IFRIC 12 58.6 123.6 119.1 458.5 759.8 


New financial 

asset 

Repayments / 

Disposals 

Impairment 

losses 

Changes in 

consolidation 

scope 


translation 

Other 

movements

Note 11 

Other non-current financial assets 

Movements in the value of other non-current financial assets during 2008 are as follows: 

(€ million) 

As of As of 


31, 2007 31, 2008 

Non-current financial assets in 

loans and receivables, gross 

Impairment losses on non-current 

48.4 6.4 (9.2) (0.1) (0.3) (1.3) 43.9 

financial assets in loans and receivables (0.7) 

Non-current financial assets in loans 

0.3 0.1 (0.3) 

and receivables, net 

Other non-current financial assets in 

47.7 6.4 (9.2) 0.2 (0.3) (1.2) 43.6 

loans and receivables, gross 

Impairment losses on other non-current 

38.1 26.2 (4.8) (34.8) (1.1) 8.0 31.6 

financial assets in loans and receivables 

Other non-current financial assets in 

(0.1) (0.2) 0.1 (0.2) 

loans and receivables, net 

Other non-current 

38.0 26.2 (4.8) (35.0) (1.1) 8.1 31.4 

financial assets, net 85.7 32.6 (14.0) (34.8) (1.4) 6.9 75.0 

Additions 

Repayments / 

Disposals 

Changes in 

consolidation 

scope 

Movements in the value of other non-current assets during 2008 are as follows: 

(€ million) 

Additions 

Repayments / 

Disposals 

Changes in 

consolidation 

scope 

As of As of 


31, 2007 31, 2008 

Other non-current assets, gross 

Impairment losses on other 

- 0.5 - - - - - - 0.5 

non-current assets - - - - 0.5 (0.5) - 

Other non-current assets, net - 0.5 - - - 0.5 - (0.5) 0.5 



Fair value 

adjustments 

Fair value 

adjustments 


translation 


translation 

Consolidated 





Consolidated 


Note 12 

Deferred tax assets and liabilities 

Movements in deferred tax assets and liabilities during 2008 are as follows: 

(€ million) 

As of As of 


31, 2007 31, 2008 

Deferred tax assets, gross 527.5 (25.8) 18.2 15.8 (16.1) (29.7) 489.9 

Deferred tax assets not recognized (*) (135.3) (32.8) 0.2 1.4 (0.5) (167.0) 

Recognized deferred assets 392.2 (58.6) 18.4 15.8 (14.7) (30.2) 322.9 

Deferred tax liabilities 506.3 13.6 13.2 0.1 (24.6) (20.9) 487.7 

Deferred tax, net (114.1) (72.2) 5.2 15.7 9.9 (9.3) (164.8) 

Deferred tax assets and liabilities are broken down as follows: 

(€ million) As of December 31, 2008 As of December 31, 2007 

Deferred tax assets 

Tax losses, Income tax credits 170.0 197.8 

Provisions 120.5 115.1 

Employee benefits 39.6 22.1 

Foreign exchange translation 30.6 28.1 

Fair value of assets acquired 25.7 25.5 

Finance lease / Assets 12.7 12.4 

Other deductible temporary differences 90.8 125.7 

Gross deferred tax assets 489.9 527.5 

Deferred tax assets not recognized (167.0) (135.3) 

Recognized deferred tax assets 322.9 392.2 

Deferred tax liabilities 

Deferred tax on amortization differential 195.4 174.7 

Finance leases / Liabilities 58.0 3.9 


Foreign exchange translation 10.6 3.5 

Fair value of assets acquired 5.9 99.8 

Other taxable temporary differences 182.6 194.8 

Deferred tax liabilities 487.7 506.3 

Deferred tax, net (164.8) (114.1) 


Changes in 

operations through 

profit or loss 

Changes in 

consolidation 

scope 

Changes in 

business through 

equity 

(*) Including, in changes in operations through profit and loss, deferred tax assets which were depreciated in Germany for an amount of €42 million following to 

the adjustment of the Sulo business plan (refer to Notes 3 and 26). 


translation 

Other movements

Note 13 

Working capital 

Movements in net working capital during 2008 are as follows: 

(€ million) 

STOCKS (€ million) 

Movements 

in operations 

Changes in 

operations 

Consolidated 


As of As of 


31, 2007 31, 2008 

Inventories and work-in-progress, net 144.9 20.5 (10.4) 23.1 (4.9) 0.1 173.3 

Operating receivables (including other tax 

receivables except current tax receivables) 

Operating payables (including other tax 

2,687.3 (130.7) (21.4) 123.1 (89.3) 6.7 2,575.7 

payables except current tax payables) 2,355.6 (90.5) 0.0 114.0 (71.9) (7.6) 2,299.6 

Operating net working capital (*) 

476.6 (19.7) (31.8) 32.2 (22.3) 14.4 449.4 

Current tax receivables 94.5 28.1 0.0 2.9 (16.3) 1.2 110.4 

Current tax payables 107.5 23.1 0.0 3.0 (18.0) (1.2) 114.4 

Current tax net working capital (13.0) 5.0 0.0 (0.1) 1.7 2.4 (4.0 ) 

Receivables on disposal of assets 6.3 2.9 0.0 0.0 (0.1) (4.7) 4.4 

Payables relating to acquisition of assets 212.3 (23.5) 0.0 0.2 (12.5) 20.8 197.3 

Investment net working capital (206.0) 26.4 0.0 (0.2) 12.4 (25.5) (192.9) 

Net working capital 257.6 11.7 (31.8) 31.9 (8.2) (8.7) 252.5 

As of As of 


31, 2007 31, 2008 

Raw materials and supplies 114.0 23.3 3.6 (5.3) 0.3 135.9 

Work-in-progress 6.1 2.0 0.5 (0.4) 0.0 8.2 

Finished products inventories 27.0 (4.8) 19.0 (0.1) (0.2) 40.9 

Contracts in progress - - 

Inventories and work-in-progress, gross 147.1 20.5 - 23.1 (5.8) 0.1 185.0 

Impairment losses on raw materials 

and supplies (1.9) (7.4) 0.6 0.9 (7.8) 

Impairment losses on work-in-progress 

Impairment losses on finished products 

(0.1) (0.1) 

inventories 

Impairment losses on inventories and 

(0.2) (3.6) (3.8) 

work-in-progress (2.2) - (11.0) 0.6 - 0.9 - (11.7) 

Inventories and work-in-progress, net 144.9 20.5 (11.0) 0.6 23.1 (4.9) 0.1 173.3 

Impairment 

losses 


Changes in 

consolidation 

scope 

Reversals 

Changes in 

consolidation 

scope 

Foreign 

exchange 

translation 

(*) The change in net working capital presented in the Consolidated Cash Flow Statement includes the movements in operations and the net impairment losses for 

the operating net working capital. In the above statement, a negative sign represents a resource, a positive sign a requirement at the opposite direction of the Cash 

Flow Statement. 


translation 


Other 

movements 


Consolidated 


OPERATING RECEIVABLES (€ million) 

As of As of 


31, 2007 31, 2008 

Trade accounts receivables 2,263.3 (83.5) 0.0 0.0 109.8 (82.1) 16.4 2,223.9 

Impairment losses on trade accounts 

receivables (95.1) 0.0 (48.4) 27.6 (2.0) 1.0 (12.5) (129.4) 

Trade accounts receivables 2,168.2 (83.5) (48.4) 27.6 107.8 (81.1) 3.9 2,094.5 

Other current operating receivables (1) (2) (3) Impairment losses on other current 

186.7 (3.9) 0.0 0.0 6.1 (4.5) (3.0) 181.4 

operating receivables (15.5) 0.0 (1.3) 0.7 0.0 0.3 1.7 (14.1) 

Other current operating receivables, net 171.2 (3.9) (1.3) 0.7 6.1 (4.2) (1.3) 167.3 

(2) (4) 

Other receivables 75.3 (2.9) 0.0 0.0 2.9 (3.6) 0.1 71.8 

Tax receivables (3) 

373.4 (9.4) 0.0 0.0 9.2 (16.8) 0.5 356.9 

Operating receivables, net 2,788.1 (99.7) (49.7) 28.3 126.0 (105.7) 3.2 2,690.5 

OPERATING PAYABLES (€ million) 


Changes in 

business 

Impairment 

losses 

Reversals 

Changes in 

consolidation 

scope 

Foreign 

exchange 

translation 

(1) From now on, the other current operating receivables include the other operating receivables and the receivables on disposal of fixed assets and of operating 

financial assets. 

(2) The receivables recognized as work in progress were reclassified in other receivables for an amount of €9.2 million. 

(3) The current tax receivables and the other tax receivables except corporation tax were reclassified in tax receivables for an amount of €94.5 million. 

(4) The prepaid expenses were added in other receivables for an amount of €66.1 million. 

Movements in 

operations 

Changes in 

consolidation 

scope 

Foreign 

exchange 

translation 

As of As of 


31, 2007 31, 2008 

Trade accounts payables 1,254.9 (42.9) 60.4 (48.0) (12.6) 1,211.8 

Other current operating liabilities (5) (6) 898.3 (59.1) 49.9 (29.7) 20.0 879.4 

Other liabilities (8) 92.2 0.3 0.4 0.8 (0.1) 93.6 

Tax and social liabilities (6) (7) 430.0 10.8 6.5 (25.5) 4.7 426.5 

Operating payables 2,675.4 (90.9) 117.2 (102.4) 12.0 2,611.3 

(5) From now on, the other current operating liabilities include the other operating liabilities and the payables related to the acquisition of fixed assets and of financial 

operating assets. 

(6) The current tax liabilities were reclassified in tax and social liabilities for an amount of €14.8 million. 

(7) The current tax liabilities and the other tax liabilities except corporation tax were reclassified in tax and social liabilities respectively for €92.7 and 322.5 million. 

(8) The deferred income was added in other liabilities for an amount of €92.2 million. 

Other 

movements 

Other 

movements

Note 14 

Current financial assets 

Movements in other short-term loans and receivables during 2008 are as follows: 

(€ million) 

Changes in 

business 

Changes in 

consolidation 

scope 

As of As of 


31, 2007 31, 2008 

Current financial assets in loans 

and receivables, gross 

Impairment losses on current financial 

2.0 (0.2) (0.7) 3.1 4.2 

assets in loans and receivables 

Current financial assets in loans 

(0.9) 1.7 (1.4) (0.6) 

and receivables, net 1.1 1.5 (0.7) 1.7 3.6 

Other current financial assets, gross 

Impairment losses on other current 

2.6 (7.2) 7.1 2.5 

financial assets (0.2) (0.2) 

Other current financial assets, net 2.6 (7.4) 7.1 2.3 

Current financial assets, net 3.7 (5.9) (0.7) 8.8 5.9 

Note 15 

Cash and cash equivalents 

Movements in cash and cash equivalents during 2008 are as follows: 

(€ million) 

Changes in 

business 

Changes in 

consolidation 

scope 

As of As of 


31, 2007 31, 2008 

Cash 247.8 (43.6) 14.1 (11.2) (2.9) 204.2 

Cash equivalents 64.2 2.8 14.8 0.4 (21.9) 60.3 

Cash and cash equivalents 312.0 (40.8) 28.9 (10.8) (24.8) 264.5 

Impairment 

losses 

Fair Value 

adjustments 


translation 


translation 

Consolidated 


Other 

movements 

Other 

movements 


Consolidated 


Note 16 

Equity 

A - EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 

(€ million) 

As of December 31, 2007 143.5 1,638.1 - 558.3 (108.0) (0.7) 2,231.2 

Increase in Share Capital 

of the parent company 0.0 

Stocks options 0.8 0.8 

Dividends distribution (165.0) (165.0) 

Foreign exchange translation adjustments (104.9) (104.9) 

Fair value adjustments (3.3) (3.3) 

Actuarial gains or losses on pension obligations (35.9) (35.9) 

Other changes 2.7 1.4 0.3 0.8 5.2 

Net income for the year 2008 (345.5) (345.5) 

As of December 31, 2008 143.5 1,640.8 - 14.1 (212.6) (3.2) 1,582.6 

1. Share capital: 


Share capital 

Additional 

paid-in capital 

Treasury shares 

Consolidation 

reserves and 

retained earnings 


translation 

reserves 

Fair value 

reserves 

Equity 

attributable to 

equity holders 

of the parent 

Number of shares outstanding: 

8,563,375 shares were outstanding as of December 31, 2006. In 2008, 8,967,090 shares were outstanding after the capital 

increase as of December 31, 2007. 

Share Capital increase: 

On December 31, 2007, Veolia Environmental Services share capital increased by €6,459,440 from €137,014,000 in 2006 to 

€143,473,440. 

On December 31, 2007, Veolia Environmental Services premium were increased by €343,540,560. 

2. Allocation of net income and dividend distribution: 

A €165 million dividend distribution was paid in 2008 out of 2007 net income attributable to equity holders of the parent of 

€298 million. The residual balance of €163 million was transferred to Veolia Environmental Services consolidated reserves.

3. Foreign exchange translation reserves: 

Consolidated 


Accumulated foreign exchange translation reserves were transferred on January 1, 2004 to consolidated reserves, in accordance 

with the option adopted by the Group on IFRS first-time adoption. 

Accumulated foreign exchange translation reserves as of December 31, 2006 are negative and amount to - €10.0 million due to 

the US dollar up to - €28.1 million. 

Accumulated foreign exchange translation reserves as of December 31, 2007 are negative and amount to - €108.0 million due 

to the US dollar up to - €89.7 million. 

Accumulated foreign exchange translation reserves as of December 31, 2008 are negative and amount to - €212.6 million due 

to the US dollar up to - €59.1 million and to the Pound Sterling to - €119.2 million. 

Movements in foreign exchange translation reserves attributable to equity holders of the parent are as follows: 

(€ million) 

As of December 31, 2007 

Foreign exchange translation differences issued from the financial 

Gross Deferred tax Net 

statements of subsidiaries drawn up in a foreign currency (106.6) - (106.6) 

Foreign exchange translation differences issued from net investments (0.5) (0.9) (1.4) 

Total 

Movements for the year 

Foreign exchange translation differences of the financial 

(107.1) (0.9) (108.0) 

statements of subsidiaries drawn up in a foreign currency (104.3) - (104.3) 

Foreign exchange translation differences issued from net investments (0.9) 0.6 (0.3) 

Total 


Foreign exchange translation differences of the financial 

(105.2) 0.6 (104.6) 

statements drawn up in a foreign currency (210.9) - (210.9) 

Foreign exchange translation differences issued from net investments (1.4) (0.3) (1.7) 

Total (212.3) (0.3) (212.6) 

Foreign exchange translation reserves attributable to equity holders of the parent are broken down per currency as follows: 

(€ million) As of December 31, 2007 Movements As of December 31, 2008 

US Dollar (89.7) 30.6 (59.1) 

Sterling pound (23.9) (95.3) (119.2) 

Czech Crown 6.3 (0.3) 6.0 

Norwegian Crown 2.5 (18.2) (15.7) 

Swiss Francs (3.6) 4.3 0.7 

Australian Dollar (1.4) (15.6) (17.0) 

Canadian Dollar 1.1 (7.6) (6.5) 

Hong-Kong Dollar 4.1 (4.2) (0.1) 

Chinese Yuan (1.9) (4.1) (6.0) 

Other currencies (1.5) 5.8 4.3 

Total (108.0) (104.6) (212.6) 


Consolidated 


4. Fair value adjustments: 

These adjustments are mainly due to changes in fair value issued from interest rate derivative instruments qualified as cashflow 

hedges. 

(€ million) Available- Interest rate Foreign exchange rate Attributable to 

for-sale derivative instruments derivative instruments equity holders 

assets as cash-flow hedge as cash-flow hedge Total of the parent 

As of December 31, 2007 0.4 (1.6) 0.5 (0.7) (0.4) 

Change in Fair Value - (3.6) (0.5) (4.1) (3.3) 

Other changes - (0.6) - 0.6 0.5 

As of December 31, 2008 0.4 (4.6) - (4.2) (3.2) 

Amounts are reported tax, net. 

5. Other changes: 

Other adjustments mainly concern the allocation of actuarial variances changes on employee’s commitments and the recognition 

in reserves of the counterpart of employee expenses relating to subscription share options. 

B - MINORITY INTERESTS 

(€ million) As of December 31, As of December 31, 

2008 2007 

Minority interests as of January 1 74.5 84.4 

Changes in consolidation scope (0.9) (4.2) 

Consolidated subsidiaries net income attributable to minority interests 20.3 23.2 

Dividends paid by consolidated subsidiaries (16.2) (18.3) 

Impact of foreign exchange fluctuations on minority interests 1.2 1.3 

Other changes - (1.1) 

Minority interests as of December 31 79.8 75.4 


Note 17 

Non-current and current provisions 

Pursuant to IAS 37, provisions maturing after more than one year are discounted. Discount rates used are as follows: 

Discount rates 

As of December 31, 2007 As of December 31, 2008 

Euro 

2 to 5 years 5.27% 5.67% 

6 to 10 years 5.52% 5.97% 

After 10 years 

US Dollar 

6.04% 6.65% 

2 to 5 years 4.35% 4.95% 

6 to 10 years 4.94% 5.75% 

After 10 years 

Pound Sterling 

5.84% 6.82% 

2 to 5 years 5.51% 6.13% 

6 to 10 years 5.66% 6.40% 

After 10 years 5.88% 6.46% 

Discount rates went on increasing between December 31, 2007 and December 31, 2008. The increase in provisions discount rate 

results in lower charges to provisions. 

Movements in non-current provisions in 2008 are as follows: 

(€ million) 

Annual charges 

Annual expenses 

As of As of 


31, 2007 31, 2008 

Employee related, tax and 

others litigations 

Provisions for unfavourable and 

12.9 2.3 (1.5) (1.3) - - - 0.5 12.9 

loss-making contracts 72.6 0.1 (21.3) - 2.6 17.3 - (1.2) 70.1 

Closure and post closure costs 

Pension obligations and 

400.3 (0.0) (9.7) (0.6) 25.4 2.1 (16.6) 11.6 412.5 

assimilated benefits 90.0 11.9 (7.9) (1.2) 0.7 0.9 (12.4) 50.6 132.6 

Others 87.2 0.3 (2.8) (0.9) 1.4 1.1 (6.4) (40.6) 39.3 

Non-current provisions 663.0 14.6 (43.2) (4.0) 30.1 21.4 (35.4) 20.9 667.4 

Groundless 

reversals 

Unwinding of 

discount 

Changes in 

consolidation 

scope 


translation 

Consolidated 




Consolidated 


Litigation provisions 

These provisions include all losses considered as probable 

and related to all kinds of litigation arising in the normal 

course of Veolia Environmental Services’ business operations. 

Provisions for unfavourable and loss-making 

contracts 

The changes in consolidation scope resulted mainly from the 

adjustment in fair value of VSA Tecnitalia‘s acquisition balance 

sheet. 

Closure and post-closure costs 

The Group has financial obligations relating to closure and 

post-closure costs when closing the final waste storage sites it 

operates or for which it is otherwise responsible. The Group 

sets up reserves for these estimated future costs in proportion 

Movements in current provisions during 2008 are as follows: 

(€ million) 



to the tons of waste buried over the authorized term of sites. 

Increase in provisions for sites restoration results from new 

commitments, the unwinding of discount and the change in 

discount rates respectively impacting on non-current provisions 

up to €26.7million, €25.4 million and - €18.2 million. 

Foreign exchange translation is mainly due to the Pound 

Sterling. 

Pensions obligations 

Refer to Note 32. The positive impact on actuarial variances 

in reserves relating to pension obligations rose to €50 million 

in 2008, deferred tax excluded. 

Others 

Other provisions include miscellaneous obligations reported 

by VES subsidiaries. The other movements are mainly due to 

reclassification in Closure and post-closure costs. 

As of As of 


31, 2007 31, 2008 

Employee related, tax and others 

litigations 

Provisions for unfavourable and 

47.6 24.2 (10.9) (11.8) 0.5 (0.4) (13.4) 35.8 

loss-making contracts 16.4 0.1 (5.6) (8.0) - (0.7) 8.5 10.7 

Closure and post-closure costs 52.4 3.3 (26.2) 0.3 (4.5) 31.2 56.5 

Restructuring charges (*) 3.7 14.3 (0.1) (2.5) - (0.2) - 15.2 

Pension commitments and assimilated - - 

Self-insurance provisions 28.3 7.1 (8.6) - - 0.6 - 27.4 

Other 62.2 18.5 (18.6) (3.9) 0.3 (2.4) 2.8 58.9 

Current provisions 210.6 67.5 (70.0) (26.2) 1.1 (7.6) 29.1 204.5 

(*) Refer to Note 23 (c). 


Groundless 

reversals 

Change in 

consolidation 

scope 

Self-insurance provisions cover deductibles in insurance agreements taken out for employees and operating vehicles in the United-States. 

The other movements in Closure and post closure costs mainly result from reclassifications from non-current to current provisions. 

Pension commitments and assimilated were reclassified in non-current provisions. 


translation 

Other movements

Note 18 

Long-term borrowings 

Long term borrowings 

(€ million) 

As of As of 


31, 2007 31, 2008 

Bond loans 134.6 0.5 (16.0) 2.9 122.0 

Other long-term borrowings 4,928.7 635.8 (32.9) 44.0 (307.8) (115.6) 5,152.2 

Sale agreements granted by a third party 82.2 (28.6) 1.8 (8.1) 47.3 

Non-current financial liabilities 

on the behalf of a third party 153.0 (2.0) 0.9 (23.9) 128.0 

Long-term borrowings 5,298.5 636.3 (34.9) 15.4 1.8 (322.9) (144.7) 5,449.5 

Long-term bond loans breakdown by maturity is as follows: 

(€ million) As of As of 


31, 2008 Maturity 31, 2007 

1 to 2 years 3 to 5 years after 5 years 

Montgomery Bond loan 40.5 16.2 15.5 8.8 45.8 

Selch’p Bond loan 20.3 2.9 3.0 14.4 27.9 

Tyseley Bond loan 46.6 5.8 6.3 34.5 47.0 

VES TS Bond loan 14.6 - - 14.6 13.9 

Long-term bond loans 122.0 24.9 24.8 72.3 134.6 

Bond loans are broken down by main component: 

OPERATION (€ million) 

Net book value 

Montgomery Bond loan 01/11/2014 USD 73.8 5.00% 40.5 

Tyseley Bond loan 07/30/2018 GBP 71.5 6.67% 46.6 

Selch’p Bond loan (49%) 12/31/2021 GBP 34.4 7.14% 20.3 

VES TS Bond loan 05/01/2028 USD 20.6 variable 14.6 

Main Bond loans 200.3 122.0 

(*) original exchange rate of the operation used. 

Final 

maturity 

date 

Increases / 

Subscriptions 

Repayments / 

Disposals 

Currency 

Changes in 

consolidation 

scope 

Nominal 

amount 

in €M (*) 

Fair value 

adjustments 

Consolidated 


Foreign 

exchange 

translation 

Nominal 

rate 

Other 

movements 


Consolidated 


Limited recourse financing 

The bond loan, taken out to finance the Selch'p household waste-to-Energy plant in London suburbs, is a non-recourse loan, 

that is, it is exclusively secured on the financed assets. The debt counterpart is in tangible assets in the balance sheet. 

Other long-term borrowings are broken down by main component: 

(€ million) As of December As of December 

31, 2008 Maturity 

31, 2007 

1 to 2 years 3 to 5 years after 5 years 

Veolia Environment loans 4,611.0 682.2 1,630.9 2,297.9 4,318.9 

Finance leases 397.2 121.2 113.5 162.5 436.1 

Others 144.0 71.2 28.5 44.3 173.7 

Other long-term borrowings 5,152.2 874.6 1,772.9 2,504.7 4,928.7 

The Group debt is partly taken out at Veolia Environnement, 

which provides both financing lines and risks hedge. 

The loan agreements signed between Veolia Environmental 

Services and Veolia Environnement include: 

n A €550 million long-term loan at IBOR rate +1.5% repayable 

on December 31, 2022, a €600 million long-term loan at 

IBOR rate +1% repayable on December 1, 2017 and a €900 

million medium-term loan at IBOR rate +0.5% repayable 

on December 31, 2012. 

n A €400 million cash agreement at eonia rate +0.15%. 

n A €200 million prefinancing line related to building projects 

at IBOR rate 3-month+0.25%. 

Regarding Veolia Environmental Services development, new 

Veolia Environnement financing lines are to being set up. 

The financing needs exceeding existing loans are financed by 

a Veolia Environnement cash advance. 

The Group long-term debts are mainly based on variable 

rates (for 89.65% of them). 

Long-term debts notably include the financing related to 

Waste-To-Energy plants: in France, 11 WTE plants are financed 


through leasing on the behalf of local authorities and consist 

of assets to be returned to the local authorities, for an amount 

of €264.8 million in 2007 compared to €261.6 million in 

2008. 

The fixed part of the debt is essentially linked to our Waste- 

To-Energy plants, their financing being provided either 

through finance lease at fix rate, or through bond issues. 

Long-term borrowings are broken down by original currency 

(SWAP transactions excluded) according to the amortized 

cost or to the fair value method as follows: 

(€ million) As of As of 


31, 2008 31, 2007 

Euro 3,215.5 2,816.1 

U.S. Dollar 712.3 788.9 

Pound Sterling 987.0 1,247.5 

Australian Dollar 141.9 143.5 

Norwegian Crown 78.8 94.6 

Czech Crown 20.2 12.5 

Others 293.8 195.4 

Long-term borrowings 5,449.5 5,298.5 

Increase in long-term borrowings in 2008 mainly results from 

Bartin Recycling acquisition’s financing. n

Note 19 

Other non-current liabilities 

Movements in other non-current liabilities during 2008 are as follows: 

(€ million) As of Changes in Foreign As of 

December Movements consolidation exchange Other December 

31, 2007 in operations scope translation movements 31, 2008 

Other non-current liabilities 0.8 (1.6) 0.1 - 1.4 0.7 

Note 20 

Short-term borrowings 

Movements in short-term borrowings during 2008 according to the amortized cost or to the fair value method are as follows: 

(€ million) As of Changes in Fair value Foreign Other As of 

December Increases/ Repayments/ consolida- adjust- exchange move- December 

31, 2007 subscriptions disposals tion scope ments translation ments 31, 2008 

Short-term borrowings 333.2 (128.3) 13.7 8.4 6.2 189.4 422.6 

Current financial liabilities on 

on the behalf of a third party 39.2 19.7 (23.3) 15.5 51.1 

Short-term borrowings and 

other current liabilities 372.4 19.7 (151.6) 13.7 8.4 6.2 204.9 473.7 

Note 21 

Bank overdrafts and other cash position items 

Movements in bank overdrafts and other cash position items during 2008 are as follows: 

Consolidated 


(€ million) As of Changes in Foreign As of 

December Movements consolidation Fair value exchange Other December 

31, 2007 in operations scope adjustments translation movements 31, 2008 

Bank overdrafts and 

other cash position items 130.2 16.1 24.2 - 2.0 (62.7) 109.8 


Consolidated 


Note 22 

Revenue 

Revenue is broken down as follows: 


Sales of goods 1,118.4 744.6 

Services rendered 8,856.1 8,350.1 

Revenue from operating financial assets 67.9 58.4 

IFRIC 12 construction contracts 88.0 41.7 

IFRIC 4 construction contracts 1.4 0.5 

Revenue 10,131.8 9,195.3 

Note 23 

Operating Income 


Revenue 10,131.8 9,195 .3 

Net operating depreciation, amortization, 

impairment losses and provisions (a) (755.1) (699.4) 

Personnel costs (including employee benefits) (b) (3,167.1) (2,960.3) 

Restructuring costs (c) 

Impairment losses on intangible assets with 

(13.7) (2.9) 

an indefinite useful life (d) (343.0) - 

Capital gains and losses on asset sale 17.3 53.2 

Other operating expenses (5,591.4) (4,792.1) 



Operating depreciation, amortization, impairment losses and provisions in the Cash flow statement are broken down as follows: 

(a) Net operating depreciation and provisions 

(€ million) As of December 31, 2008 As of December 

Net Charges Reversal 31, 2007 

Total operating depreciation, amortization and 

provisions (755.1) (924.2) 169.1 (699.4) 

Depreciation and amortization (724.0) (731.2) 7.2 (672.0) 

Property, plant and equipment (634.8) (642.0) 7.2 (602.5) 

Intangible assets (89.2) (89.2) - (69.5) 

Impairment losses (96.9) (127.8) 30.9 (36.9) 

Property, plant and equipment (1.7) (3.5) 1.8 (29.0) 

Intangible assets (63.4) (63.5) 0.1 (1.0) 

Inventories (10.4) (11.1) 0.7 (0.4) 

Trade accounts receivables (20.8) (48.4) 27.6 (1.6) 

Other operating accounts receivables 

Other non-current and current provisions 

(0.6) (1.3) 0.7 (4.9) 

excluding renewal 65.8 (65.2) 131.0 9.5 

Non-current 32.2 (14.5) 46.7 (4.3) 

Current 

Total operating depreciation and provisions of 

33.6 (50.7) 84.3 13.8 

discontinued activities - - 

Renewal expenses - - 

Others 

Total operating depreciation, amortization, 

- - 

impairment losses and provisions (755.1) (924.2) 169.1 (699.4) 

(b) Personnel costs 


Employee costs (3,133.8) (2,923.9) 

Employee profit sharing (32.7) (30.6) 

Share-based compensation (IFRS 2) (0.6) (5.8) 

Personnel costs (3,167.1) (2,960.3) 

(c) Restructuring costs 


Restructuring expenses (2.1) (5.0) 

Net charges to restructuring provisions (11.6) 2.1 

Restructuring costs (13.7) (2.9) 

The net charges to restructuring provisions were mainly due to the reorganization of the Sulo group. 

Consolidated 



Consolidated 


(d) Impairment losses on goodwill and intangible assets with an indefinite useful life 

The amount involved concerns the impairment losses recognized in respect of the goodwill in the Germany CGU (refer to note 4). 

(e) Research and development costs 

Research and development costs, including personnel costs and net charges to provisions, amounted to €11.5 million in 2008 

compared to €8.9 million in 2007. 

Note 24 

Finance costs, net 

Finance costs, net include the cost of Net financial debt, gross, related gains and losses resulting from interest rate and foreign 

exchange rate hedging and gains and losses of net cash and cash equivalents. 


Finance revenues 15.6 28.6 

Finance costs (359.7) (307.4) 

Finance costs, net (344.1) (278.9) 

The financing rate (expressed in percentage of finance costs, net compared to average net financial debt) amounting to 6.1% 

increased in 2008 compared to 5.7% in 2007. 

Note 25 

Other financial revenues and expenses 


Revenues on loans and financial receivables 3.0 2.0 

Dividends 1.5 1.9 

Foreign exchange gains (losses), net (0.2) 2.4 

Net depreciation on financial provisions 9.2 0.4 

Effects on unwinding of discount related to closure and 

post-closure costs, to provisions for unfavourable and 

loss-making contracts and to depreciation on non-current assets (28.9) (22.7) 

Effects on unwinding of discount related 

to pensions provisions (0.7) (0.2) 

Other revenues and expenses (*) (10.0) (1.7) 

Other financial revenues and expenses (26.1) (17.9) 

(*) The amount involved includes the changes in fair value of derivatives not qualified as hedge. 


Note 26 

Income tax expense 

Analysis of the income tax expense 

The income tax expense is broken down as follows: 


Current income tax expense (166.7) (184.8) 

France (71.4) (74.1) 

Other countries (95.3) (110.7) 

Deferred income tax expense (credit) (72.3) 5.8 

France 0.5 (3.2) 

Other countries (1) (2) (3) (72.8) 9.0 

Total income tax expense (239.0) (179.1) 

Some French subsidiaries opted in in Veolia Environnement consolidated tax group as of January 1, 2001. Veolia Environnement 

is sole liable to the French treasury department for the full income tax charge, calculated on the basis of the group tax return. 

Any tax saving is recognized at Veolia Environnement SA level. 

Tax rate reconciliation 

As of December 31, 2008 As of December 31, 2007 

Legal tax rate 34.43% 34,43 % 

Permanent differences between accounting and tax results (2) (4) (221.7)% (10.7)% 

Changes in deferred tax assets provisions (1) (43.9)% 14.8% 

Differences in rates (29.4)% (2.4%) 

Effective tax rate (a) 

(260.6)% 36.03% 

(a) The effective tax rate is computed by dividing current and deferred tax expenses by the net income before tax plus the share of net income from associates. 

(1) In Germany, the adjustment of the Sulo business plan generated a depreciation of deferred tax assets for an amount of €42 million; 

(2) A change in regulations regarding the deductibility of amortization and depreciation in the United Kingdom generated a negative impact of €35 million; 

(3) Including the lack of deferred tax assets in certain loss-making subsidiaries due to insufficient tax income forecasted in the next five years; 

(4) Impairment losses recognized for an amount of €343 million in respect of the goodwill in the Germany Cash Generating Unit. 

. 

Note 27 

Share of net income from associates 

Consolidated 


The minority interests in the net income amounted to €20.3 million in 2008 and included essentially minority shareholders in 

Marius Pedersen (€10 million in 2008 compared to €9.1 million in 2007), in VES Hong-Kong (€5.1 million in 2008 compared to 

€5.7 million in 2007) and in VES Australia (€2.5 million in 2008 compared to €2.9 million in 2007). 


Consolidated 


Note 28 

Net income for the year attributable to equity holders of the parent 

Net income for the year 2008 attributable to equity holders of the parent is broken down as follows: 

(€ million) Recurring Non-recurring Total 

Operating income (1) 621.8 (343.0) 278.8 



Income tax expense (2) (197.0) (42.0) (239.0) 

Share of net income from associates 5.2 5.2 


Minority interests (20.3) (20.3) 

Net income for the year 2008 attributable to equity 

holders of the parent 39.5 (385.0) (345.5) 

Net income for the year 2007 attributable to equity holders of the parent is broken down as follows: 

(€ million) Recurring Non-recurring Total 




Income tax expense (2) (179.1) (179.1) 

Share of net income from associates 3.3 3.3 


Minority interests (23.2) (23.2) 

Net income for the year 2007 attributable to equity holders 

of the parent 298.0 - 298.0 

(1) refer to Note 4 Good will. 

(2) refer to Note 3 Significant events. 


Note 29 

Financial instruments as of december 31 

Veolia Environmental Services uses various financial derivative instruments to hedge against the financial risks relating to its 

business and financial operations. Veolia Environnemental Services does not anticipate any counterparty default that could 

have a material effect on its financial positions and transactions results. 

Changes in derivative instruments fair value are broken down as of December 31, 2008 as follows: 

Consolidated 


As of As of 


31, 2007 31, 2008 

(€ million) Assets Liabilities Assets Liabilities 

Interest rate derivative instruments 0.4 2.2 - 9.3 

Fair value hedge - - 

Cash flow hedge - 2.2 - 6.8 

Derivatives non qualified as hedge 0.4 - - 2.5 

Instruments financiers dérivés de change 0.8 0.2 0.6 8.0 

Fair value hedge - 5.2 

Cash flow hedge 0.8 0.2 0.6 0.7 

Derivatives non qualified as hedge - - - 2.1 

Total derivative instruments 1.2 2.4 0.6 17.3 

HEDGING INSTRUMENTS AS OF DECEMBER 31, 2008 Derivative instruments’ 

(€ million) Fair Value 

As of December 31 

2 to 5 More than 

Total 1 year years 5 years Assets Liabilities 

Hedging against interest rate risks 

Fixed rate payer – floating rate receiver swaps 

Notional amount 107.1 0.2 1.0 105.9 - 6.8 

Floating rate payer – fixed rate receiver swaps 

Notional amount - - - 

Hedging against foreign exchange rate risks 

Forward exchange contracts 

(swaps, forward sales and purchases) 

Notional amount 59.9 22.5 37.4 0.6 5.9 


Consolidated 


The foreign exchange transaction portfolio as of December 31, 2008 is as follows: 

(Currency million) Foreign exchange swaps Foreign exchange swaps 

and forward purchases and forward sales 

USD 26.0 - 

NOK - 327.0 

AUD 27.6 - 

CHF - 2.8 

GBP - 0.2 

HEDGING INSTRUMENTS AS OF DECEMBER 31, 2007 Derivative instruments Fair Value 

(€ million) As of December 31 

Less than 1 to 5 More than 

Total 1 year years 5 years Assets Liabilities 

Hedging against interest rate risks 

Fixed rate payer – floating rate receiver swaps 

Notional amount 

Floating rate payer – fixed rate receiver swaps 

122.8 1.5 - 121.3 - 2.2 

Notional amount 

Foreign exchange rate derivative instruments 

Forward exchange contracts 

(swaps, forward sales and purchases) 

- - - - - - 

Notional amount 33.2 33.2 - - 0.8 0.2 

The foreign exchange transaction portfolio as of December 31, 2007 is as follows: 

(Currency million) Foreign exchange swaps Foreign exchange swaps 

and forward purchases and forward sales 

USD 20.5 1.0 

GBP 3.3 - 

RON 27.6 13.8 

Note 30 

Credit risk management 

The credit risk results from a potential incapability of the customers to fulfill their payment obligation. 

The credit risk has to be analyzed differently whether they regard operating financial assets or operating receivables. The credit 

risk on the operating financial assets is appraised through the “rating” of customers mainly belonging to the public category. 

Regarding the nature of its activities and customers, the Group considers that the credit risk has no significant potential impact. 

As a result, approximately 51.1% of the customers outstanding currently concerned public counterparts (delegating authority 

and public customers (excluding subscribers)), with whom the credit risk is limited to possible delays in payment. 

The nominal value of financial assets, net of potential impairment losses, is considered as the maximum exposure of the Group. 


(€ million) As of Decembre 31, 2008 Breakdown by customer category 

Gross Net 

book Depre- book 

Note value ciation value 

Non-current and current operating financial assets 10 837.0 - 837.0 807.4 - 25.0 4.6 

Trade accounts receivables 13 2,223.9 (129.4) 2,094.5 343.0 187.0 373.8 1,190.7 

Other current operating receivables (*) 13 181.4 (14.1) 167.3 22.2 11.2 22.2 111.7 

Non-current financial assets in loans and receivables 11 43.9 (0.3) 43.6 5.3 7.7 1.3 29.3 

Other non-current assets 11 0.5 - 0.5 - - - 0.5 

Current financial assets in loans and receivables 14 4.2 (0.6) 3.6 - - 1.0 2.6 

Loans and receivables 3,290.9 (144.4) 3,146.5 1,177.9 205.9 423.3 1,339.4 

Other non-current financial assets 11 31.6 (0.2) 31.4 13.7 0.7 9.3 7.7 

Other current financial assets 14 2.5 (0.2) 2.3 - 1.2 - 1.1 

Financial assets maturity schedule 

Consolidated 


(€ million) As of December 31, 2008 

Gross Net Non 

book Depre- book outstanding 0-6 6 months > 1 

Note value ciation value assets months - 1 year year 

Non-current and current operating financial assets 10 837.0 - 837.0 837.0 - - - 

Trade accounts receivables 13 2,223.9 (129.4) 2,094.5 1,367.5 630.6 48.6 47.8 

Other current operating receivables (*) Overdue assets net 

of depreciation 

13 181.4 (14.1) 167.3 103.5 31.3 9.3 23.2 

Non-current financial assets in loans and receivables 11 43.9 (0.3) 43.6 43.6 - - - 

Other non-current assets 11 0.5 - 0.5 0.5 

Current financial assets in loans and receivables 14 4.2 (0.6) 3.6 3.6 - - - 

Loans and receivables 3,290.9 (144.4) 3,146.5 2,355.7 661.9 57.9 71.0 

Other non-current financial assets 11 31.6 (0.2) 31.4 31.4 - - - 

Other current financial assets 14 2.5 (0.2) 2.3 2.3 - - - 

(*) From now on, the other current operating receivables include the other operating receivables and the receivables on disposal of fixed assets and of operating 

financial assets (refer to Note 13). 

Overdue assets older than 6 months (€128.9 million) essentially concerned trade accounts receivables (€96.4 million in 2008). 

Delays in payments superior to 6 months are concentrated in Italy where terms of payment are exceptionally long: 

The net "trade accounts receivables" for all VES italian subsidiaries amounted to €38.1 million as of December 31, 2008 for receivables 

overdue for more than 6 months, that is 49.3% of the customers outstanding. This delay is bound to the country payment 

habits. Moreover, in Italy 90.2% of customers were delegating authorities and public customers for which collection period is long. 

Finally, in France, net trade accounts receivables overdue for more than 6 months represented €39.8 million at the end of 2008, 

that is 3.8% of the customers outstanding (among which €8.3 million are overdue for more than a year). 

Public customers - 

delegating authority 

Private customers - 

individuals 

Public customers - 

others 

Private customers - 

companies 


Consolidated 


Financial assets maturity schedule for 2007 is as following: 

(€ million) As of December 31, 2007 

Gross Net Non 

book Depre- book outstanding 0-6 6 months > 1 

Note value ciation value assets months - 1 year year 

Non-current and current operating financial assets 10 902.4 - 902.4 902.4 - - - 

Trade accounts receivables 13 2,263.3 (95.1) 2,168.2 1,340.3 756.5 33.3 38.1 

Other current operating receivables (*) 13 186.7 (15.5) 171.2 137.7 27.0 1.8 4.7 

Non-current financial assets in loans and receivables 11 48.4 (0.7) 47.7 47.7 - - - 

Current financial assets in loans and receivables 14 2.0 (0.9) 1.1 1.1 - - - 

Loans and receivables 3,402.8 (112.2) 3,290.6 2,429.2 783.5 35.1 42.8 

Other non-current financial assets 11 38.1 (0.1) 38.0 38.0 - - - 

Other current financial assets 14 2.6 - 2.6 2.6 - - - 

(*) Other current operating receivables include other operating receivables and receivables on disposal of tangible, intangible and operating financial assets (refer 

to Note 13). 

Note 31 

Additional information on financial assets and liabilities 

Principles of fair value determination are presented in Note 1.25. 

Financial assets 

Following schedules describe the net book value and the fair value for the group financial assets as of December 31, 2008 and 2007: 


Book value by IAS39 category Fair value 

Note Total Total 

Non-consolidated investments 9 23.8 23.8 - - 23.8 23.8 - - 

Current and non-current operating 

financial assets 10 837.0 - 837.0 - 808.6 - 808.6 - 

Other non-current financial assets 11 75.0 31.4 43.6 - 75.0 31.4 43.6 - 

Other non-current assets 11 0.5 0.5 0.5 0.5 

Trade accounts receivables 13 2,094.5 - 2,094.5 - 2,094.5 - 2,094.5 - 

Other current operating receivables (1) 13 167.3 - 167.3 - 167.3 - 167.3 - 

Current financial assets 14 5.9 2.3 3.6 - 5.9 2.3 3.6 - 

Cash and cash equivalents 15 264.5 - - 264.5 264.5 - - 264.5 

Total 3,468.5 57.5 3,146.5 264.5 3,440.1 57.5 3,118.1 264.5 


Available-for-sale 

assets 

Loans and 

receivables 

Assets at fair value 

through profit and 

loss on option 


assets 

Loans and 

receivables 




(*) From now on, the other current operating receivables include the other operating receivables and the receivables on disposal of fixed assets and of operating 

financial assets (refer to Note 13).

Financial liabilities 

Following schedules describe the net book value and the fair value for the group financial liabilities as of December 31, 2008 and 2007: 


Book value by 

IAS39 category Fair Value 

Liabilities at amortized 

cost 


Borrowings and other financial liabilities: 

Bond loans 18 122.0 122.0 - - 110.8 110.8 - - 

Other long-term borrowings 18 5,327.5 5,327.5 - - 5,266.8 5,266.8 - - 

Short-term borrowings 20 473.7 473.7 - - 473.7 473.7 - - 

Bank overdrafts and other cash 

position items 21 109.8 109.8 - - 109.8 109.8 - - 

Other non-current liabilities 19 0.7 0.7 - - 0.7 0.7 - - 

Trade accounts payables 13 1,211.8 1,211.8 1,211.8 1,211.8 

Other current operating liabilities (3) 13 879.4 879.4 - - 879.4 879.4 - - 

Total 8,124.9 8,124.9 - - 8,053.0 8,053.0 - - 

Liabilities at fair value through 

profit and loss on option 

Liabilities at fair value 

through profit and loss and 

held for transactions 

Consolidated 



Book value by IAS39 category Fair value 


assets 

Loans and 

receivables 





Non-consolidated investments 9 18.1 18.1 - - 18.1 18.1 - - 

Current and non-current operating 

financial assets 10 904.2 - 904.2 - 902.1 - 902.1 - 

Other non-current financial assets 11 85.7 38.0 47.7 - 85.7 38.0 47.7 - 

Trade accounts receivables 13 2,168.2 - 2,168.2 - 2,168.2 - 2,168.2 - 

Other current operating receivables (2 ) 13 274.9 - 274.9 - 274.9 - 274.9 - 

Current financial assets 14 3.7 2.6 1.1 - 3.7 2.6 1.1 - 

Cash and cash equivalents 15 312.0 - - 312.0 312.0 - - 312.0 

Total 3,766.8 58.7 3,396.1 312.0 3,764.7 58.7 3,394.0 312.0 


assets 


cost 

Loans and 

receivables 






(2) Other current operating receivables included other operating receivables and receivables on disposal of tangible, intangible and operating financial assets for 

an amount of €171.2 million (refer to Note 13). 


profit and loss and held for 

transactions 

(3) From now on, the other current operating liabilities include the other operating liabilities and the payables related to the acquisition of fixed assets and of financial 

operating assets. 


Consolidated 



Book value by 

IAS39 category Fair Value 

Note 32 

Employee benefits obligations 

Employees share-based plans 

Veolia Environnement has set up share-based plans, classic 

and with leverage, which enable numerous employees 

of Veolia Environnement and its subsidiaries (Veolia 

Environmental Services included) to subscribe for Veolia 

Environnement shares. Employees generally benefit from 

a 20% discount compared with Veolia Environnement middle 

share price in the 20 working days before the authorization 

date of these plans by the Board of Directors. 

Shares subscribed by employees for these plans are subject 

to certain restrictions regarding their sale or transfer 

by employees. 



cost 


Borrowings and other financial liabilities: 

Bond loans 18 134.6 134.6 - - 160.3 160.3 - - 

Other long-term borrowings 18 5,163.9 5,163.9 - - 5,156.6 5,156.6 - - 

Short-term borrowings 

Bank overdrafts and other cash 

20 372.4 372.4 - - 372.4 372.4 - - 

position items 21 130.2 130.2 - - 130.2 130.2 - - 

Other non-current liabilities 19 0.8 0.8 - - 0.8 0.8 - - 

Trade accounts payables 13 1,254.9 1,254.9 - - 1,254.9 1,254.9 - - 

Other operating liabilities (4) 13 913.1 913.1 - - 913.1 913.1 - - 

Total 7,969.9 7,969.9 - - 7,988.3 7,988.3 - - 



Liabilities at fair value 

through profit and loss and 

held for transactions 


cost 




profit and loss and held for 

transactions 

(4) Other current operating receivables included other operating receivables and payables related to the acquisition of fixed assets and of financial operating assets 

for an amount of €898.3 million. 

In 2008, the group did not set up any share-based plans. 

Information related to shares subscribed by Veolia 

Environmental Services employees are as follows: 

2008 2007 

Number of shares 0 204 418 

Subscription price (€million) 0 9.8 

In 2006 and 2007, shared-based compensation recorded in 

accordance with IFRS2 amounted respectively to €2.0 million 

and €7.7 million. No impact was recognized in 2008.

Pension plans and other post-employement benefits 

(€ million) Pension plans 


Changes in benefits obligations 

Actuarial debt at the beginning of the year 582.2 635.4 

Current services cost 18.0 21.4 

Interests cost 30.7 29.6 

Plan participants’ contributions 4.1 4.3 

Obligations assumed on acquisition of subsidiaries 0.7 8.6 

Obligations transferred on disposal of subsidiaries 0.0 (0.5) 

Curtailments / liquidations (2.6) (1.1) 

Actuarial loss (gain) (53.7) (51.3) 

Benefits paid (22.8) (17.6) 

Plan amendments 

Other (including changes in consolidation scope and foreign 

2.9 (0.1) 

exchange translation) (79.2) (46.6) 

Benefits obligations’ actuarial debt at the end of the year 

Changes in plan assets 

480.3 582.2 

Fair value at the beginning of the year 497.7 487.1 

Expected return on plan assets 30.3 29.2 

Actuarial gains (losses) (101.9) 2.9 

Group contributions 15.5 30.4 

Plan participants’ contributions 4.1 4.3 

Plan assets assumed on acquisition of subsidiaries 0.4 0.3 

Plan assets transferred on disposal of subsidiaries 0.0 (0.3) 

Curtailments / liquidations (1.6) (1.7) 

Benefits paid 

Other (including changes in consolidation scope and foreign 

(21.4) (16.2) 

exchange translation) (67.4) (38.3) 

Plan assets’ fair value at the end of year 355.7 497.7 

Funded plan status (a) (124.6) (84.5) 

Unrecognized past services cost (b) 10.9 9.7 

Others (c) (2.1) 0.0 

Net liability recognized in the balance sheet (-a-b-c) 115.8 74.8 


Prepaid benefits (2.7) (2.6) 

The Group plans to invest up to €14.9 million to defined benefits plans in 2009. 

Consolidated 


The Projected Benefit Obligation (PBO) is €22.5 million for unfunded defined benefits plans and €457.9 million for partially and 

fully funded plans as of December 31, 2008, compared to respectively €22.8 million and €559.4 million as of December 31, 2007. 


Consolidated 


Net benefits cost for the period are as follows: 

(€ million) Pension plan 


Current services cost 18.0 21.4 

Interests cost 30.7 29.6 

Expected return on plan assets (30.3) (29.2) 

Expected return on repayment entitlement 0.2 (0.2) 

Past services cost recognized in the year 1.1 0.9 

Curtailments / liquidations (0.5) 0.7 

Others (0.3) (0.1) 

Net benefits cost 18.9 23.1 

Actuarial assumptions used for calculation purposes vary depending on the country in which the plan is set up. Group assets in 

France are invested in insurance companies and the long-term rate of return on these assets is directly linked to observed past 

returns. Assets in the United Kingdom are primarily invested in shares and bonds via a trust and long-term rates of return are 

based on long-term market performance statistics. 

Employees’ benefits obligations as of December 31, 2008 and 2007 are based on the following average assumptions: 

Pension obligations 


Discount rate 5.9% 5.5% 

Expected rate of salary increase 3.9% 3.7% 

Periodic movements in benefits obligations in 2008 and 2007 are based on the following average assumptions: 

Pension obligations 


Discount rate 5.5% 4.8% 

Expected return on plan assets 6.6% 6.4% 

Expected rate of salary increase 3.9% 3.6% 

Average residual active life expectancy (in years) 10.7 10.0 


Shares 56% 63% 

Bonds and debts 34% 29% 

Insurance risk free funds 10% 7% 

Cash 0% 0% 

Others 0% 1% 


Note 33 

Main acquisitions in 2008 

Acquisition of Bartin Recycling group 

Consolidated 


On November 19, 2007, Veolia Environmental Services announced the signature of an agreement for the acquisition of the entire 

share capital of Bartin Recycling group, specialized in the collection and the valorization of industrial waste and particularly in the 

recycling of ferrous and non-ferrous metals. 

This transaction represents an investment of €189 million for Veolia Environmental Services. It was finalized on February 13, 2008. 

This transaction was recognized in accordance with the business combinations standard (IFRS 3). In accordance with IFRS 3, the 

group has to finalize the recognition of the business combination concerned within 12 months since the acquisition date. Assets 

and liabilities’ fair values recorded at the period end are likely to be modified in 2008 and broken down as follows: 

(€ million) Net book value Net book Acquisition 2008 provisional 

excluding IFRS5 IFRS5 value method fair value 

Assets 

Intangible assets 44.0 - 44.0 (43.8) 0.2 

Property, plant and equipment 43.4 43.4 43.4 

Non-current financial assets 1.2 1.2 - 1.2 

Deferred tax assets 1.8 1.8 - 1.8 

Working capital assets 108.8 108.8 2.3 111.1 

Cash 2.0 2.0 2.0 

Assets classified as held for sale - 3.8 3.8 3.8 

Liabilities 

Minority interests (0.4) (0.7) (1.1) (1.1) 

Non-current provisions (1.2) (1.2) (1.2) 

Long-term borrowings (28.4) (28.4) (28.4) 

Deferred tax liabilities (4.6) (4.6) (0.8) (5.4) 

Other long-term borrowings (0.1) (0.1) - (0.1) 

Current provisions (0.5) (0.5) (0.5) 

Working capital liabilities (85.3) (85.3) (85.3) 

Short-term borrowings (6.9) - (6.9) - (6.9) 

Bank overdrafts and other cash position items (6.0) - (6.0) - (6.0) 

Liabilities classified as held for sale - - - - - 

Total net assets 67.8 3.1 70.9 (42.3) 28.6 

Net assets purchased (100%) 28.6 

Residual goodwill 120.7 (*) 

Purchase price 149.3 

Business combination cost 149.3 

Cash flows related to the acquisition 153.3 


Cash transferred in (4.0) 

Enterprise value 188.6 


Current and non-current financial liabilities - Cash 39.3 

(*) This goodwill was recognized in the accounts “Goodwill” and “Investements in associates” for respective amounts of €121.6 and - €0.9 million. 


Consolidated 


The goodwill corresponds to operational and commercial synergy to be carried out with the existing activities in France and to futur 

Group developments in the recycling activity. The Bartin group contributed up to €246.6 million to the Group revenue in 2008. 

Note 34 

Finance leases and operating leases 

Assets financed by finance and operating leases 

Assets funded by finance or operating leases as of December 31, 2008 are broken down as follows: 

(€ million) Finance lease Operating lease 

Gross book value Accumulated depreciation Net book value 

Intangible Assets I12 123.8 (54.8) 69.0 0.0 

Intangible Assets 123.8 (54.8) 69.0 0.0 

Land 1.4 0.0 1.4 51.5 

Buildings 46.5 (31.0) 15.5 234.3 

Technical systems 215.6 (106.2) 109.4 185.3 

Transportation equipment 173.8 (92.9) 80.9 81.3 

Other property, plant and equipment 38.7 (20.9) 17.8 78.1 

Assets under construction 0.0 0.0 0.0 0.0 

Private property, plant and equipment 476.0 (251.0) 225.0 630.5 

Financial Assets I12/I14 207.2 (40.5) 166.7 0.0 

Financial Assets 207.2 (40.5) 166.7 0.0 

Total 2008 807.0 (346.3) 460.7 630.5 

Total 2007 727.1 (238.9) 488.2 407.1 

Minimum lease payments 

Veolia Environmental Services acquires some operating assets and properties through finance lease reported in the assets of the 

Balance sheet. Future minimum lease payments totalized €595.6 million as of December 31, 2008 compared to €636.9 million as 

of December 31, 2007. They are recognized at their current value as of December 31, 2008 up to €397.3 million in long-term 

borrowings and for €76 million in short-term borrowings. 

Moreover, Veolia Environmental Services has been entering into operating leases (mainly for transportation equipment). 

As of December 31, 2008, future minimum lease payments under these contracts are as follows: 

(€ million) Operating lease Finance lease [in the BS] 

2008 135.2 97.9 

2009-2010 208.6 154.6 

2011-2012 138.0 138.3 

2013 and thereafter 148.7 204.8 

Total future minimum lease payments 630.5 595.6 

Interest 122.3 

Current value of minimum lease payments (finance leases) 473.3 


Note 35 

Proportionaly consolidated companies 

Summarized financial information in respect of proportionately consolidated companies is set out below: 

Consolidated 



Non-current assets 295.4 252.0 

Current assets 203.7 186.2 

Total assets 499.1 438.2 

Equity attributable to equity holders of the parent 127.6 101.8 


Financial debt 106.6 115.9 

Provisions and other liabilities 262.8 218.1 

Total equity and liabilities 499.1 438.2 


Income Statement data 

Revenue 378.8 350.3 


Net income for the year (*) 20.8 18.7 

Financing data 

Operating cash flow 59.9 61.1 

Investing cash flow (25.1) (12.2) 

Financing cash flow (32.0) (20.1) 

(* ) Contribution of the companies to Net income for the year attributable to equity holders of the parent 

Note 36 

Tax reviews 

In the normal course of their business, the Group's subsidiaries 

are subjected to regular tax reviews in France and 

abroad. 

In 2008, a restricted number of Veolia Environmental 

Services French companies were subject to fiscal controls. 

For those whom an additional tax remained chargeable to 

the Group, appropriate reserves were set up. 

The Group operates in thirty-five countries abroad and has 

regularly tax reviews outside France. In the entities where 

these controls gave place to notification of adjustment in 

2008, the control was followed with a local fiscal counselor. 

If necessary, reserves are set up for these tax adjustments 

or for the identified outstanding tax positions not yet being 

subject to adjustment, with amount calculated to the best of 

the Group’s knowledge. n 


Consolidated 


Note 37 

Commitments and contingencies 

Other commitments given 

Commitments and contingencies do not include collateral guarantees supporting borrowings. 

In accordance with AMF recommendations, other commitments and contingencies are as follows: 


31, 2007 31, 2008 Maturity 


1 year years 5 years 

Operational guarantees including 

performance bonds (618.3) (504.0) (185.6) (223.8) (94.6) 

Financial guarantees (106.2) (97.3) (33.0) (38.3) (26.0) 

Debt guarantees (105.6) (96.1) (33.0) (37.1) (26.0) 

Warranty obligations given (0.6) (1.2) 0.0 (1.2) 0.0 

Commitments given (148.6) (30.8) (9.0) (21.6) (0.2) 

Obligations to buy (132.1) (19.5) (5.5) (13.9) (0.2) 

Obligations to sell (16.5) (11.3) (3.6) (7.7) 0.0 

Other commitments given (271.9) (271.5) (140.8) (112.5) (18.2) 

Letters of credit (226.7) (238.2) (138.5) (99.7) 0.0 

Other commitments given (45.2) (33.3) (2.3) (12.8) (18.2) 

Total (1,145.0) (903.6) (368.4) (396.2) (139.0) 

Operational guarantees: Operational guarantees are any 

commitment not linked to financing transactions required by 

contracts or markets, and generally in the course of group 

companies’ operation and activity. These guarantees include 

bid bonds, deposits for installment repayment, performance 

bonds or contract bonds within the framework of conclusion 

of contracts or concessions. 

Debt guarantees: These relate to guarantees given to financial 

institutions relating to financial debt of non-consolidated 

companies, equity associates, or proportionately consolidated 

companies. 

Warranty obligations given: They mainly included guarantees 

given on disposal. 

Obligations to buy: They include commitments given by group 

companies in order to acquire shares in other companies or 

to invest. 


Letters of credit: Letters of credit delivered by financial 

institutions to Group creditors, customers and suppliers as 

guarantee for their operating activities. 

Commitments and contingencies notably include: 

Commitments and closure and post-closure costs 

In pursuance to environmental texts and legislation related 

to the operation of waste storage sites, the group is required to 

give financial guarantees to local authorities / governmental 

agencies. These guarantees notably cover the supervision and 

the restoration of the site for 30 years and more depending 

on the national legislation (60 years in the United Kingdom) 

after its closure. 

In this context, performance bonds, letters of credit are open 

in favor of local authorities and other public bodies. 

These guarantees cover, depending on the contract, the costs 

required to the partial or the whole restoration of the site 

and its 30-year supervision.

The appraisal of these guarantees is defined by legal or 

contractual clauses. These guarantees, provided for the global 

costs at the start of the operation, are extinguished by the 

fulfillment of the requirement (end of restoration works and 

of supervision of the sites). 

Therefore, the amount of the commitment in respect of our 

requirements for the restoration and the supervision of the 

storage sites is generally different from the amount of the 

provision recognized in the group accounts. 

Provisions calculated by the group are based on different 

evaluations (resulting from internal policies to securitize the 

sites with a better environmental protection) and taking into 

account the progressiveness of the requirement: the operation 

of the storage site generate a progressive damage of the site 

and as a result the related liability is recognized as the operation 

progresses. 

At the closing date, if the amount of the commitment is 

lower than the provision, no off-balance sheet commitment is 

recognized. At the opposite, if the amount of the commitment 

is superior to the provision, an off-balance sheet commitment 

is recognized for the part above. 

Veolia Environmental Services lease contracts are analyzed 

in Note 34. 

Commitments given related to concession contracts 

In pursuance to public services contracts signed with a public 

entity, the group may be led / required to carry out investments 

in infrastructures that will be operated and remunerated 

afterwards within the contract. 

The contractual commitment may cover both the financing 

of operating installations and works and the maintenance 

Consolidated 


and replacement of the operating infrastructures. 

Therefore, the expenses resulting from the replacement or from 

the restoration of installations are controlled and recognized 

through any potential time differences between the total 

contractual commitment during the contract and its realization 

in accordance with the standard IAS 37 on Provisions. The 

expenses resulting from the construction, the maintenance or 

the renovation of concession assets are reviewed in accordance 

with the interpretation IFRIC12 and described in Note 10. 

Litigation not entered in the accounts 

The Group is subject to various litigation in the normal 

course of its business. Although it is not possible to predict 

the outcome of such litigation with certainty, based on the facts 

known by the Group and after consultation with counsel, the 

management believes that such litigation will not have a 

material adverse effect on the Group’s financial position, nor 

on its operating results. 

Commitments received 

As of December As of December 

31, 2007 31, 2008 

Guarantees 

received 624.8 771.8 

Debt guarantees 

Warranty obligation 

161.5 87.9 

received 

Other guarantees 

40.6 273.5 

received 322.9 328.6 

Credit lines 99.8 81.8 


Consolidated 


Note 38 

Collateral given supporting borrowings 

As of December 31, 2008, borrowings were secured by collateral guarantees up to €76 million. The breakdown by type of 

asset is as follows (in €million): 

Type of pledge / mortgage Amount Total balance Corresponding % 

pledged (a) sheet amount (b) (a) / (b) 

On intangible assets 1.2 549.3 0.2 

On property, plant and equipment 10.5 3,840.2 0.3 

On financial assets (*) 63.3 948.6 6.7 

Total non-current assets 75.0 5,338.1 1.4 

On current assets 1.0 3 203.3 0.0 

Total assets 76.0 8,541.4 0.8 

(*) The pledge on MIC fixed assets, which is reclassified via IFRIC12 in financial assets, is reported in securities given onto investments (amount of €47.6 million 

according to Montgomery's factory financing). 

The breakdown by maturity is as follows: 


31, 2007 31, 2008 Maturity 


1 year years 5 years 

Intangible assets 0.5 1.2 0.2 1.0 0.0 

Property, plant and equipement 19.7 10.5 4.6 3.4 2.5 

Mortgages 5.1 5.1 5.1 

Other pledge son Property, plant and equipment 69.7 58.2 13.3 38.5 6.4 

Financial assets 74.8 63.3 13.3 38.5 11.5 

Current assets 0.2 1.0 0.0 0.0 1.0 

Pledges on receivables 0.2 0.1 0.0 0.0 0.1 

Pledges on inventories 0.0 0.9 0.0 0.0 0.9 

Total 95.3 76.0 18.1 42.9 15.0 


Note 39 

Related party transactions 

Chairman and Chief Executive Officer 

Consolidated 


The following table presents the total gross compensation (fixed and variable compensation, directors’ fees and employee 

benefits) paid to Henri Proglio during 2007 and 2008. 

(in Euros) Compensation Directors 

fees’ 

paid by Total 

VE directors’ controlled Benefits gross 

Fixed Variable fees companies in kind (a) compensation 

Compensation paid in 2008 992,000 1,423,020 (c) 40,000 62,969 3,050 2,521,039 

Compensation paid in 2007 992,000 1,275,000 (b) 40,000 64,079 2,954 2,374,033 

a. Company car. 

b. Variable compensation paid in 2007 in respect of 2006. 

c. Variable compensation paid in 2008 in respect of 2007. 

Henri Proglio is a member of the collective pension plan granted to Group Executive management. 

n Global Remuneration of directors in common with Veolia Environment (except CEO) 

The attendance fees paid to directors in common with Veolia Environment in 2008 and 2007 was €16.000 a year. 

n Remuneration of executive committee members (except CEO) 

Remuneration for members belonging to the executive committee of Veolia Environmental Services are €3,805,349 in 2007 

and €3,880,712 in 2008 (fixed parts, variable parts and benefits). 


Consolidated 


Note 40 

Consolidated employees 

Consolidated employees (*) break down is as follows: 

BY CATEGORY As of December 31, 20008 As of December 31, 2007 

Executives 6,678 6,056 

Employees 88,721 80,453 

Consolidated employees 95,399 86,509 

(*) Employees of companies consolidated according to the proportional integration method are included in proportion to the percentage of consolidation. Employees 

of equity associates are not included. 

BY SEGMENT As of December 31, 2008 As of December 31, 2007 

France 35,487 33,579 

International 59,912 52,930 

Total for consolidated companies 95,399 86,509 

BY METHOD OF CONSOLIDATION As of December 31, 2008 As of December 31, 2007 

Fully consolidated companies 92,977 84,212 

Proportionately consolidated companies 2,422 2,297 

Total 95,399 86,509 

Abroad, the increase in the average number of employees was mainly due to the 6-month impact of Sulo (+3.517) and to the extension 

of our activities in Europe (+1.685 mainly in Czech republic, Poland and Italy). In France, the rise in the average weighted number 

of employees resulted from new contracts for the industrial cleaning division (+1.661) and from the integration of Bartin (+452). 

Note 41 

Auditor fees 

The fees of the signatory statutory auditors for the consolidated financial statements of Veolia Environmental Services for the 

year 2008 for all the consolidated companies is broken down as follows: 

(€ million) KPMG Ernst & Young 

As of December As of December As of December As of December 

31, 2007 31, 2008 31, 2007 31, 2008 

Legal audit (1) 3.3 3.4 3.9 4.1 

Audit mission (2) 0.2 0.2 0.2 0.1 

Other services 0.6 0.6 0.6 1.4 

Auditor fees 4.1 4.2 4.7 5.6 

(1) Presented fees also include fees concerning companies consolidated by proportional integration. 

(2) Including fees related to establishment of letters of comfort, issued certificates, acquisition due diligence and IFRS review. 


Consolidated 


Note 42 

Main companies included in the consolidated financial statements 2008 

In 2008, Veolia Environmental Services consolidated 763 companies (753 in 2007) listed above: 

FC: Fully integrated companies 

PC: Proportionally integrated companies 

EM: Companies integrated by equity method 

TOTAL VEOLIA ENVIRONMENTAL SERVICES 

Number of Integration Opening New Exit Merging Closure 

consolidated Method Count Changes Count 

companies New in method Exit 

FC 647 60 -15 -38 2 656 

PC 52 5 -4 53 

EM 54 6 -4 -2 54 

Total 753 71 -23 -38 2 -2 763 

The main companies consolidated are listed above: 

COMPANIES AND ADDRESSES Registration n° Integration % interest 

(Siret) method 

VEOLIA ENVIRONMENTAL SERVICES 

Including in France 

Veolia Propreté 57 222 103 400 778 FC 100 

Parc des Fontaines - 163 / 169, avenue Georges Clémenceau 

92000 NANTERRE 

Société d’Assainissement Rationnel 77 573 481 700 353 FC 99,56 

et de Pompage (S.A.R.P.) and its subidiaries 

52, avenue des Champs Pierreux - 92000 NANTERRE 

SARP Industries and its subidiaries 30 377 298 200 029 FC 99,85 

427, route du Hazay - Zone Portuaire Limay-Porcheville 78520 LIMAY 

Veolia Propreté Nettoyage et Multiservices and its subidiaries 334 516 895 000 11 FC 100 

Parc des Fontaines – 163 / 169, avenue Georges Clémenceau 

92000 NANTERRE 

ROUTIERE DE L'EST PARISIEN 61 200 696 500 026 FC 100 

ZI rue Robert Moinon 95190 GOUSSAINVILLE 

ONYX AUVERGNE RHONE ALPES 30 259 089 800 169 FC 100 

105, avenue du 8 mai 1945 - 69140 RILLIEUX-LA-PAPE 

VALNOR 41 030 116 200 302 FC 100 

5 rue de Courtalin - Val d'Europe - 77450 MAGNY LE HONGRE 

OTUS 62 205 759 400 336 FC 100 

26 avenue des Champs Pierreux - 92000 NANTERRE 

BARTIN RECYCLING GROUP and its subidiaries 48 141 629 500 014 FC 100 

15 Rue Albert et Paul Thouvenin - 18100 VIERZON 


Consolidated 


COMPANIES AND ADDRESSES Registration n° Integration % interest 

(Siret) method 

Including abroad 

Veolia ES Holding PLC and its subidiaries FC 100 

Veolia house - 154A Pentonville Road 

N1 9PE - LONDON (United-Kingdom) 

Veolia ENVIRONMENTAL SERVICES NORTH AMERICA CORP. FC 100 

700 E. Butterfield road - Suite 201 

IL 60148 LOMBARD (USA) 

Veolia ES Solid Waste Inc FC 100 

One Honey Creed Corporate Center - 125 South 

84th Street - Suite 200 

WI 53214 MILWAUKEE (USA) 

MONTENAY INTERNATIONAL Corp. FC 100 

One Pennsylvania Plaza - Suite 4400 

NY 10119 NEW YORK (USA) 

Veolia ES TECHNICAL SOLUTIONS LLC FC 100 

Butterfield Center - 700 East Butterfield Road, #201 

60148 LOMBARD (USA) 

VES INDUSTRIAL SERVICES INC FC 100 

1980 North Hwy 146 

LA PORTE 77571 Texas (USA) 

Veolia ES CANADA SERVICES INDUSTRIELS INC FC 100 

1705 3rd Avenue - Canadian Corporate Office - 80 Birmingham Street 

L8L 6W5 HAMILTON (Canada) 

Veolia ENVIRONMENTAL SERVICES Australia Pty Ltd FC 100 

Level 4, Bat Center - 65 Pirrama Road - P.O. Box H126 

NSW 2009 - PYRMONT (Australia) 

Veolia ENVIRONMENTAL SERVICES Asia Pte Ltd FC 100 

50 Robinson Road - 16-00 building Centennial Tower - SINGAPORE 

Veolia ENVIRONMENTAL SERVICES CHINA LTD FC 100 

7/F Allied Kajima Building 

138 Gloucester Road - Central - HONG-KONG 

Marius Pedersen / Veolia Miljøservice Holding A/S FC 65,00 

Danemark and its subidiaries 

Ærbaekvej 495863 FERRITSLEV (Danemark) 

Veolia MILJØ AS FC 100 

Box 567 Skoyen 

0214 OSLO (Norway) 

Veolia ENVIRONMENTAL SERVICES Belgium NV and its subidiaries FC 100 

642 Mechelsesteenweg - 1800 VILVORDE (Belgium) 

Veolia Umweltservice GmbH FC 100 

Hammerbrookstrasse 69 

20097 HAMBURG (Germany) 

Veolia Servizi Ambientali SpA and its subidiaries FC 100 

Piazza della Repubblica 7 

MILANO 20121 (Italy) 


Consolidated 


Subsidiaries of Veolia Umweltservice Deutschland GmbH group (ex Sulo) are consolidated in the financial statements herewith 

presented. In accordance with § 246B of German commercial laws (HGB) , these entities may benefit from the exemption of 

publishing financial report and consolidated financial statements pursuant to German GAAP. Subsidiairies that have opted for 

this exemption are listed below: 

Publication 

exemption Name Country Currency 

Sulo Group 

SULO Verwaltungsgesellschaft mbH Germany EUR 

SULO Regionalholding Verwaltungs GmbH (former: SULO Kreislaufwirtschaft GmbH) Germany EUR 

SULO GmbH Germany EUR 

SULO Beteiligungsverwaltungs GmbH Germany EUR 

SULO Asia Pacific Enterprises Pte. Ltd. Singapore SGD 

yes SULO West GmbH & Co. KG (former: Städtereinigung West Nolting GmbH & Co. KG) Germany EUR 

SULO West Verwaltungs GmbH (former: Städtereinigung West Nolting Verwaltungs GmbH) Germany EUR 

HRH Recycling GmbH Germany EUR 

Krankenhaus-Abfallbeseitigung Schleswig-Holstein verwaltungsgesellschaft mbH Germany EUR 

yes Peter Schad GmbH & Co. KG Entsorgungswirtschaft Germany EUR 

Peter Schad Entsorgungswirtschaft Verwaltungs GmbH 

SULO Süd Verwaltungs GmbH (former: 

Germany EUR 

Nordbayerische Städtereinigung Altvater Verwaltungs GmbH) Germany EUR 

Heinz Gehrlicher Haus- und Betriebs-Müllabfuhr Verwaltungsgesellschaft mbh Germany EUR 

Jakob Altvater Transporte Verwaltungs-GmbH Germany EUR 

yes SULO Süd-West GmbH & Co. KG (former: 

Rheinpfälzische Städtereinigungsbetriebe Altvater GmbH & Co. KG (RPS)) 

SULO Süd-West Verwaltungs GmbH (former: 

Germany EUR 

Rheinpfälzische Städtereinigungsbetriebe Altvater Verwaltungs GmbH) 

SULO Wertstoffmanagement GmbH 

Germany EUR 

(former: SULO Wertstoff GmbH; Merkator Dienstleistungen GmbH) Germany EUR 

Kunststoffaufbereitung Blumenrod GmbH Germany EUR 

Kurz Dienstleistungs GmbH Germany EUR 

yes SULO Städtereinigung Nord-West GmbH & Co. KG Germany EUR 

yes SULO Süd GmbH & Co. KG (former: NBS und ALCO SÜD) Germany EUR 

yes TBG GmbH & Co. KG Germany EUR 

Altvater Ternopil Ukraine UAH 

Altvater Chernivzy Ukraine UAH 

Altvater Krym Ukraine UAH 

Altvater Kiev Ukraine UAH 

VBG Verwaltungs- und Beteiligungsgesellschaft mbH Germany EUR 

yes SULO Regionalholding GmbH & Co. KG (former:Cleanaway Deutschland AG & Co. KG) Germany EUR 

Cleanaway Unternehmensverwaltung GmbH für Auslandsbeteiligungen Germany EUR 

yes Lüro Lüneburger Rohstoffverwertung GmbH & Co. KG Germany EUR 

yes Rohstoffhandel Kiel GmbH & Co. KG Germany EUR 

yes SULO Dienstleistungs GmbH & Co. KG (former Cleanaway Dienstleistungs GmbH & Co. KG) Germany EUR 

Rewood Gesellschaft für Holzrecycling mbH Germany EUR 

yes Grundstücksgesellschaft Sanne & Jörg GmbH & Co. Germany EUR 

Lüneburger Rohstoffverwertung GmbH Germany EUR 

Cleanaway PET International GmbH Germany EUR 


Consolidated 


Publication 


Sanne & Jörg GmbH Germany EUR 

Recycling & Rohstoffverwertung Kiel GmbH 

SULO Dienstleistungs Verwaltungs GmbH 

Germany EUR 

(former: Verwaltung Cleanaway Dienstleistungs GmbH) Germany EUR 

yes PSI Personal Service-Industrie-Dienstleistungen GmbH & Co. KG Germany EUR 

SULO Recycling Hoyerswerda GmbH (former: Cleanaway Hoyerswerda GmbH) Germany EUR 

yes Recycling Centrum Chemnitz GmbH & Co. KG Germany EUR 

SULO Ost Verwaltungs GmbH (former:Verwaltung Cleanaway Süd GmbH) Germany EUR 

Verwaltung Cleanaway Dresden GmbH Germany EUR 

RecyPet AG 

SULO Städtereinigung Nord-West Verwaltungs GmbH 

Switzerland CHF 

(former: Verwaltung Cleanaway Rostock GmbH) Germany EUR 

Verwaltung PSI Personal-Service-Industrie-Dienstleistungen GmbH Germany EUR 

Cleanaway AS Estonia EEK 

Verwaltung Cleanaway Logistics GmbH West Germany EUR 

yes Cleanaway Logistics GmbH & Co. KG West Germany EUR 

SULO Rhein-Ruhr GmbH (former: Cleanaway Herne GmbH & Co. KG) Germany EUR 

MABEG Holding Gesellschaft für Entsorgungswirtschaft Verwaltungs mbH Germany EUR 

SULO Westfalen GmbH (former: Cleanaway West GmbH) Germany EUR 

yes Cleanaway Ahrenshöft GmbH & Co. KG Germany EUR 

Verwaltung Cleanaway Ahrenshöft GmbH Germany EUR 

Cleanaway PET Svenska AB Sweden SEK 

SULO Nord-West GmbH (former: Cleanaway Hamburg GmbH & Co. KG) Germany EUR 

yes Henning Recycling GmbH & Co. KG Germany EUR 

Beteiligungsgesellschaft Henning Recycling mbH Germany EUR 

BioRec Gesellschaft für Entsorgung und Abfallwirtschaft mbH Germany EUR 

Pöhlmann & Partner Umwelt Management Consulting GmbH Germany EUR 

yes Verlo GmbH & Co. KG Germany EUR 

re-point Geschäftsführungsgesellschaft mbH Germany EUR 

Verwaltung Norddeutsche Entsorgungslogistik GmbH Germany EUR 

yes NEL Norddeutsche Entsorgungslogistik GmbH & Co. KG Germany EUR 

SULO Nord-Ost GmbH (former: Cleanaway Ost GmbH & Co. KG) Germany EUR 

yes SULO Ost GmbH & Co. KG (former: Cleanaway Süd GmbH & Co. KG) 

Former VUS Germany 

Germany EUR 

Veolia Umweltservice GmbH Deutschland Germany EUR 

Krüger WABAG GmbH Germany EUR 

yes Veolia Umweltservice Industrie-Reinigung GmbH & Co. KG Germany EUR 

Veolia Umweltservice Industrie-Reinigung Geschäftsführungs- GmbH Germany EUR 

Veolia Umweltservie CCS GmbH Container Clearing & Service Germany EUR 

yes Onyx Rohr- und Kanal-Service GmbH & Co. KG Germany EUR 

ORKS Geschäftsführungs- GmbH Germany EUR 

Onyx Kanalsanierungstechnik GmbH Germany EUR 

yes Kanalbetriebe Fritz Withofs GmbH & Co. KG Germany EUR 

yes Veolia Umweltservice Industrie- und Gebäudedienstleistungen GmbH & Co. KG Germany EUR 

Veolia Umweltservice Industrie- und Gebäudedienstleistungen Geschäftsführungs-GmbH Germany EUR 

yes GLOBALIS Service GmbH & Co. KG Germany EUR 


Consolidated 


Publication 


GLOBALIS Beteiligungsgesellschaft mbH Germany EUR 

OPTIMA Gebäude- Service GmbH Germany EUR 

SSG Saar Service GmbH Germany EUR 

SOLIS GmbH Germany EUR 

yes RST Veolia GmbH & Co. KG Germany EUR 

RST Veolia Verwaltungs-GmbH Germany EUR 


Consolidated 


Statutory auditors’ report on the 

consolidated financial statements 

Year ended December 31, 2008 

KPMG Audit ERNST & YOUNG et Autres 

1, cours Valmy 41, rue d’Ybry 

92923 Paris La Défense Cedex 92576 Neuilly-sur-Seine Cedex 

France France 

SA au capital de 5497100 € SAS au capital variable 

Statutory Auditors Statutory Auditors 

Member of the Compagnie Régionale de Versailles Member of the Compagnie Régionale de Versailles 

This is a free translation into English of the statutory auditors’ report issued in the French language and is provided solely for the 

convenience of English speaking readers. The report includes information specifically required by French law in all audit reports, 

whether qualified or not, and presented below is the opinion on the consolidated financial statements. This information includes 

explanatory paragraphs discussing the auditors’ assessment of certain significant accounting matters. These assessments were 

made for the purpose of issuing an opinion on the consolidated financial statements taken as a whole and not to provide separate 

assurance on individual account captions or on information taken outside of the consolidated financial statements. The report also 

includes information relating to the specific verification of information in the group management report. 

This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards 

applicable in France. 

To the Shareholders, 

In compliance with the assignment entrusted to us by your Annual General Meeting, we have audited the accompanying consolidated 

financial statements of Veolia Propreté for the year ended December 31, 2008. 

The consolidated financial statements have been approved by the Company’s Board of Directors. Our role is to express an opinion 

on these financial statements based on our audit. 

1 OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS 

We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan and 

perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material 

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial 

statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, 

as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for 

our opinion. 

In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities, of the financial position 

of the Group and of the results of its operations for the year then ended in accordance with IFRS as adopted by the EU. 


2 JUSTIFICATION OF OUR ASSESSMENTS 

In accordance with the requirements of article L.823-9 of the French Commercial Law (Code de Commerce) relating to the 

justification of our assessments, we bring to your attention the following matters: 

n Note 1-15 to the consolidated financial statements describes the accounting policy for minority interest put options in the 

absence of a specific position under IFRS adopted by the EU. We also verified the appropriateness of the information presented 

in note 1-15 regarding the method used by Veolia Propreté. 

n Note 2 to the consolidated financial statements sets out judgments and estimates made by the management, including those 

related to the methodology of discount rate calculation which was analyzed in the context of the actual financial crisis. In 

connection with our audit, we considered that those judgments and estimates relate principally to: 

n - Goodwill and other intangible assets with an indefinite useful life that are subject to impairment tests annually or whenever 

there in an identified indication of decrease in value according to the procedures set out in notes 1-11 and 4. We have examined 

both the methods put in place for conducting these tests as well as the hypotheses used to determine future cash flow. 

We have also verified that notes 4 and 6 present sufficient information relating to this subject. 

n - Tangible assets and those intangible assets with indefinite useful life (notes 1-11, 1-21, 5, 6 and 7), financial assets (notes 

1-15, 1-21, 10, 11, 14, 30 and 31), differed tax assets and tax expense (notes 1-20, 12 and 26), provisions and pension benefits 

(notes 1-14, 1-16, 17 and 32) and financial instruments (notes 1-15, 1-25, 30 and 31). Our work included the evaluation of the 

data and assumptions on which those judgments and estimates were based, the review of the calculation, on a test basis, 

made by the company, and the review of the appropriateness of the information presented in the notes to the consolidated 

financial statements. Within the framework of the justification of our assessments, we ensured the reasonableness of these 

estimates. 

These assessments were made in the context of our audit of the consolidated financial statements taken as a whole, and therefore 

contributed to the opinion we formed which is expressed in the first part of this report. 

3 SPECIFIC VERIFICATION 

In accordance with professional standards applicable in France, we have also verified the information given in the group's 

management report. We have no matters to report as to its fair presentation and its consistency with the consolidated financial 

statements. 

The Statutory Auditors 

Paris-La-Défense and Neuilly-sur-Seine, on April 28, 2009 


member of KPMG S.A. 

Bernard CATTENOZ Jean BOUQUOT 

Consolidated 




Parent company 

financial statements, 

Veolia Propreté SA, 

as of December 31, 2008 

Income Statement........................................ p.84 

Balance sheet ............................................... p.86 

Notes I, II and III: 

Appendix to balance sheet and income statement 

for the year ended December 31, 2008...... p.88 

Note IV: 

Additional information on the balance 

sheet.............................................................. p.90 

Note V: 

Additional information on the income 

statement ......................................................p.95 

Statutory auditors’ report on the 

financial statements .................................. p.108 


financial statements 




Income Statement 


(in thousand euros) 

December 31, Ref. December 31, 

2007 Notes 2008 % 

Operating Revenues: 

2,743 Sale of Goods 2,802 

Sold production (goods) 

132,840 Sold production (services) 101,385 

135,583 Revenue V - 3 104,187 (23,2)% 

2,876 Capitalized production 4,105 

260 Operating grants 18 

17,747 Provisions reversals and expenses transferred 3,312 

129,805 Other revenues (incl. Management fees) 146,735 

286,271 Total Operating Revenues (I) 258,357 (9,8)% 

Operating Expenses 

5,122 Purchases of stocks of supplies 4 535 

(125) - or + stock variations (147) 

168,672 Other purchases and external expenses 158,136 

15,282 Taxes and related payments 10,894 

79,610 Salaries and wages 70,102 

37,634 Employer contributions 32,999 

Depreciation, amortization and provisions: 

9,793 - on fixed assets: depreciation and amortization IV - 2 9,634 

- on fixed assets: provisions IV - 5 

351 - on current assets: provisions 133 

3,975 - for contingencies and charges: provisions 2,251 

482 Other expenses 274 

320,796 Total Operating Expenses (II) 288,811 (10,0)% 

(34,525) Net Operating Income ( I-II) (30,454) 

Shares of result from joined operations 

1 Transferred loss (III) 1 

58,045 Transferred profit (IV) 40,446 





December 31, Ref. December 31, % 

2007 Notes 2008 

Financial revenues: 

151,134 Participations from investments in other companies 95,650 

96,448 Other marketable securities and receivables from the fixed assets 92,541 

10 Other interests and related revenues 45 

116,967 Provisions reversals V - 5 86,612 

133,321 Foreign axchange gains 103,705 

Net income on transfers marketable securities 

497,880 Total Financial Revenues (V) 378,553 (24,0)% 

Financial expenses: 

67,685 Depreciation, amortization and provisions V - 5 391,656 

131,034 Interests and related expenses 139,462 

196,388 Foreign exchange losses 114,863 

395,107 Total Financial Expenses (VI) 645,981 63,5% 

102,773 Net Financial Income ( VI-V) (267,428) 

126,292 Current Income Before Income Tax ( I-II+III+IV+V-VI) (257,437) 

Non-current revenues: 

109 On operating transactions 2,997 

44,236 On capital transactions 2,554 

4,520 Provisions reversals IV - 5 215 

48,865 Total Non-current Revenues (VII) V - 6 5,766 

Non-current Expenses: 

2,337 On operating transactions 104 

44,884 On capital transactions 31,961 

6,377 Depreciation, amortization and provisions IV - 5 6,878 

53,598 Total Non-current Expenses (VIII) V - 6 38,943 

(4,733) Net Non-current Income ( VII-VIII) (33,177) 

0 Employees profit-sharing (IX) 0 

(1,307) Income Tax (X) V - 7 (2,123) 

891,061 Total Revenues ( I+III+V+VII) 683,122 (23,3)% 

768,195 Total Expenses (II+IV+VI+VIII+IX+X) 971,613 26,5% 

122,866 Net Income (288,491) 




Balance sheet 



December 31, 2007 December 31, 2008 

Amortization, 

Ref. Gross depreciation, Net 

Net ASSET Notes amount provisions amount 

Fixed assets 

Intangible assets: 

- Research and development expenses 165 165 0 

- Business goodwill 563 563 0 

51,058 Other intangible assets 110,876 58,224 52,652 

9,057 Intangible assets in process 5,231 5,231 

60,115 Total intangible assets III - 1 and III 2 116,835 58,952 57,883 

Property, plant and equipment: 

4,394 Land 5,699 1,729 3,970 

13,049 Building 21,912 10,093 11,819 

3,248 Technical installations and industrial equipments 13,779 10,424 3,355 

12,879 Transportation equipment 31,604 21,216 10,388 

3,572 Other 15,319 12,139 3,180 

4,712 Property, plant and equipment in process 5,852 5,852 

41,854 Total property, plant and equipment III - 1 and III - 2 94,165 55,601 38,564 

Investments: 

2,677,790 Investments in other companies 3,107,324 416,436 2,690,888 

1,753,455 Receivables related to investments III - 3 1,905,130 69,782 1,835,348 

- Other long-term investments 17 17 0 

71 Loans III - 3 46 46 

559 Other III - 3 498 1 497 

4,431,875 Total investments III - 3 5,013,015 486,236 4,526,779 

4,533,844 Total fixed assets (I) 5,224,015 600,789 4,623,226 

Current assets 

Stocks and work in progress: III-4 

667 Stocks of raw materials and other supplies 542 3 539 

150 Advances and deposits paid on orders 305 305 

Operating receivables: 

99,729 Trade receivables and related accounts III - 3 108,465 2,091 106,374 

84,776 Other III - 3 74,189 45 74,144 

4,288 Marketable securities / Cash 3,048 3,048 

304 Prepaid expenses 384 384 

189,914 Total current assets (II) 186,933 2,139 184,794 

- Differed expenses (III) 0 0 

- Bond redemption premiums (IV) 0 

39,274 Foreign exchange translation - Assets (V) 40,839 40,839 

4,763,032 Total (I+II+III+IV+V) 5,451,787 602,928 4,848,859 






Before After Ref. Before 

Distribution Distribution EQUITY AND LIABILITIES Notes Distribution 

Equity 

143,473 143,473 Share capital 143,473 

1,666,653 1,666,653 Premiums 1,669,323 

89 89 Revaluation adjustement 89 

Reserves: 

13,701 13,701 Legal reserve 14,348 

10,358 10,358 Other reserves 10,358 

0 0 Regulated reserves 0 

211,866 169,738 Retained earnings 166,421 

(131) (131) Foreign exchange translation adjustments (3) (190) 

122,866 0 Net income for the year: (288,491) 

11 11 Investment grants 51 

3,087 3,087 Regulated provisions 6,370 

2,171,973 2,006,979 Total equity (I) IV - 4 1,721,752 

2,171,973 2,006,979 Total Equity (I) + (II) 1,721,752 

Provisions for contingencies and charges 

20,483 20,483 Provisions for contingencies 9,922 

3,649 3,649 Provisions for charges 4,376 

24,132 24,132 Total provisions for contingencies and charges (III) IV - 5 14,298 

Liabilities 

0 0 Other bond loans (2) IV - 6 0 

213 213 Bank loans and borrowings (1) (2) IV - 6 561 

2,239,922 2,239,922 Veolia Group advances (2) IV - 6 2,769,193 

134,643 134,643 Other loans and financial liabilities (2) IV - 6 149,667 

545 545 Deposits and advances received on orders in progress IV - 6 655 

93,357 93,357 Trade payables and related accounts (2) IV - 6 94,004 

46,147 46,147 Tax and social insurance payables (2) IV - 6 42,504 

5,807 5,807 Payables for fixed assets and related accounts (2) IV - 6 3,906 

12,161 177,155 Other payables (2) IV - 6 8,807 

667 667 Deffered revenues (2) IV - 6 667 

2,533,462 2,698,456 Total liabilities (IV) 3,069,964 

33,465 33,465 Foreign exchange translations liabilities (V) 42,845 

4,763,032 4,763,032 Total (I+II+III+IV+V) 4,848,859 

(1) Including overdrafts, bank accounts and interets: 561 

(2) Payables and prepaid revenues due within one year: 701 709 

(3) Corresponds to the translation in euro of the balance sheet of branches abroad (Impact of change in exchange rates). 




Notes I, II and III: 

Appendix to balance sheet and income statement for the year 

ended December 31, 2008 

I: GENERAL ACCOUNTING PRINCIPLES 

AND RULES 

The financial statements for the year ended December 31, 2008 

have been prepared according to the general chart of accounts. 

The following principles have been applied: 

n Going-concern status, 

n Separation of accounting periods, 

n Conservatism principle, 

n Continuous accounting methods between accounting years. 

Details figures data have been presented as much as possible 

in tables and expressed in thousand of Euros. 

Veolia Propreté establishes consolidated financial statements 

which are fully integrated in those of Veolia Environnement 

which holds 99.99% of VP’s capital. 

II: SIGINFICANT EVENTS 

Two main events occurred in the year 2008: 

n The spinning off of La Reunion affiliate as a subsidiary through 

partial business transfer to the IF8 entity which became VP 

LA REUNION; this spinning off occurred as of 1 January, 2008. 

n The deterioration of performance in the waste management 

activity in Germany led to recognize an impairment of €310 

million of shares provision. 

III: VALUATION METHODS APPLIED TO 

BALANCE SHEET AND INCOME STATEMENT 

ITEMS 

Balance sheet and income statement items have been accounted 

for their historical cost. The valuation methods described below 

have been used for the various items of the financial statements. 


1) Intangible assets 

n Business goodwill is estimated at acquisition cost and amortized. 

It is amortized on a straight-line basis over 20 years for 

goodwill with unit value higher than €150 thousand. 

Goodwill of an unit value lower than €150 thousand is fully 

amortized during the year of acquisition. 

Goodwill mainly concerns the business in Caen and has 

been fully amortized. 

Computer software acquired externally is recognized in “Other 

Intangible assets ". It is amortized on a straight-line basis 

over 3 to 5 years. 

n Work in process (software) is capitalized on the basis of external 

costs of development, installation and technical tests. 

2) Property, plant and equipment 

n Property, plant and equipment are recorded at acquisition 

cost excluding any share of interest charges or overhead 

expenses. 

n The depreciation of property, plant and equipment is calculated 

according to the nature of the assets, either on a 

straight-line basis or on a reducing balance basis according 

to the useful lives of the assets, that is: 

n Buildings … 10 - 20 years linear 

n Structures and installations … 3 - 10 years linear 

n Industrial material and equipment 2 - 10 years linear 

n Operating equipment 3 - 8 years linear 

n Vehicles 4 - 5 years linear 

n Hardware 3 - 5 years linear 

n Office equipment 3 - 5 years linear 

n Office furniture 3 - 10 years linear 

3) Investments 

The gross value of long-term investments corresponds to 

the acquisition price plus transaction costs.

Provisions for the impairment of investments in other companies 

and related receivables are determined according to 

the carrying value of the investments held or the probable 

trading value and the earnings forecasts of the company. 

Other long-term investments are recorder under assets at 

their entry value. 

4) Stocks 

Stocks include fuel and automotive spare parts. They are 

valued at their acquisition cost. 

Considering their nature and their fast turnover, the most recent 

purchase price is used to determine their acquisition cost. 

5) Operating receivables and payables 

Receivables and payables are recorded at their face value. 

An allowance is recognized for collectibility risk. 

6) Investments grants 

Investments grants are funds allocated for the development of 

new techniques in municipal and associated waste treatment. 

7) Regulated provisions 

Regulated provisions include the exceptional depreciation related 

to the possibility to depreciate gas trucks, for tax purpose, over 

12 months. 

8) Foreign exchange translations 

Receivables and payables denominated in foreign currencies 

are revalued at closing rate generating foreign exchange 

translation in assets or liabilities. A provision is recorded for 

unhedged foreign exchange translation in assets. 

9) Provisions for contingencies and charges 

Provisions for contingencies and charges are estimated 

according to the data known for the company at the date of 

the financial statements. 

10) Pension obligations 

A new management contract for future employment termination 

benefits was signed on June 2, 2003 by the parent 

company Veolia Environnement and ARIAL (formerly La 

Mondiale) with a retroactive effect as of January 1, 2003. 

This contract provides the same arrangements and guarantees 

as those provided in the previous contract which was 

cancelled on December 17, 2002. 

The corresponding expenses are covered by the capitalized 

value of contributions paid or by an operating provision. In 

2008, these expenses were covered by a provision amounting 

to €1,414,856. 

Employees’ vested rights to future benefits were determined 

according to their annual salary, to increase assumptions in 

the latter, to demographic assumptions (age, seniority, life 

expectation tables and employee turnover) as well as according 

to actuarial assumptions (discount rate and inflation 

rate) transmitted by Veolia Environnement. The updating of 

the rate employee turnover was provided by SECOIA consultancy 

in 2008. 

11) Long-service medals 

According to CNC recommendation n°2003-R; 01 of April 1, 

2003 and in accordance with IAS 19, an actuarial calculation 

of the commitment was performed in 2008 for long-service 

medals. 

The amount was calculated on the basis of the 2008 bonus 

scale of Veolia Environmental Services for long-service 

medals, of employee turnover rates, of survival rates and of 

an increase in bonuses of 1%. 

This year a provision was recognized for an amount of 

€12,144. 

12) Tax Consolidation 



Veolia Propreté has been tax consolidated by the Veolia 

Environnement consolidated tax group since it opted in on 

January 1, 2001. 




Note IV: 

Additional information on the balance sheet 

1 n FIXED ASSETS (in € thousand) 

Intangible assets 112,303 (167) 4,894 (195) 116,835 

Property, plant and equipment 110,656 (20,456) 9,544 (5,579) 94,165 

Investments 4,604,918 0 12,414 867,972 (472,289) 5,013,015 

Global Total 4,827,877 0 (8,209) 882,410 (478,063) 5,224,015 

The acquisitions of investments concern mainly: 

n The acquisition of shares in Bartin, Cleanaway AS and Cleanaway UAB, Esterra,SCI JAB, Nelsens and Veolia Umwelt 

Service Schweiz, 

n The capital increases of Onyx Méditerrannée, Veolia Uslugi dia Srodowiska, Valnor, Veolia ES Asia, Veolia Propreté Ukraine 

et VUS Verwaltungsgesellschaft GMBH, 

n The movements in current accounts of the group subsidiaries. 

The financial divestments mainly refleet the sale of AVBV as well as the change in the financial receivables of the group subsidiaries. 

2 n AMORTIZATION AND DEPRECIATION (in € thousand) 

Intangible assets 52,189 (150) 6,914 (1) 58,952 

Property, plant and equipment 68,801 (13,972) 6,117 (5,345) 55,601 

Total amortizations of fixed assets 120,990 0 (14,122) 13,031 (5,346) 114,553 


Gross values 

beginning of 

period 

Amortization 

and depreciation 

beginning of 

period 

Iten to item to 

Iten to item to 

Contribution La 

Reunion + differences 

in currencies 

Morocco 

Contribution La 

Reunion + differences 

in currencies 

Morocco 

Additions 

Additions 

Transfers and 

disposals 

Transfers and 

disposals 

Gross values 

end of period 

Amortization 

and depreciation 

end of period

3 n MATURITIES OF RECEIVABLES 

Fiscal year 2006 Fiscal year 2007 

Gross amount 

Fixed assets 

1,807,104 Receivables connected with participations 1,905,130 864,316 1,040,814 1,904,479 

71 Loans 46 10 36 0 

560 Other investments 498 498 0 

Current assets 

104,476 Receivables and related accounts 108,465 106,175 2,290 78,450 

84,840 Other receivables 74,188 74,143 45 33,574 

1,997,051 Total 2,088,327 1,044,644 1,043,683 2,016,503 

4 n CHANGES IN SHAREHOLDERS’ EQUITY (in € thousand) 

Fiscal year 2007 Fiscal year 2008 

Amount Amount 

1,826,312 1. Shareholders’ equity at year-end prioir to Annual shareholders’ meeting 2,171,973 

(130,163) 2. Dividends paid (164,994) 

1,696,149 A) Shareholders’ equity at the beginning period 2,006,979 

Movements during the period: 

6,460 1. Changes in share capital 0 

343,541 2. Premium 0 

0 3. Changes in other reserves 0 

(29) 4. Changes in investments grants 39 

2,970 5. Changes in regulated provisions 3,283 

16 6. Cumulative translation adjustment for currencies of Morocco and Argentina (58) 

122,866 7. Net income (288,491) 

0 8. Rounding effect 0 

475,824 B) Total changes during the period (285,227) 

2,171,973 C) Shareholders’ equities at year-end prior to Annual shareholders’ meeting ( A+B) 1,721,752 

475,824 D) Total changes in shareholders’ equities during the period (C-A) (285,227) 

The legal capital consists of 8,967,090 shares of a €16 nominal amount. 

Gross amount 

Due less than 

1 year 



Due more yhan 

1 year 

Incl. Amount 

concerning 

related parties 

or equity 

investments 




5 n PROVISIONS (in € thousand) 

Type of provisions 

Regulated provisions 

Exceptional amortizations 3,087 3,481 (198) 6,370 

TOTAL I 3,087 0 3,481 (198) 0 6,370 

Provisions for contingencies and charges 

For sites rehabilitation and GER 455 (145) 310 

For litigations 12,964 (174) 823 (2,811) (8,203) 2,599 

For pensions 2,686 (466) 1,415 3,635 

For foreign exchange losses 7,520 (1) 7,232 (7,429) 7,322 

Other provisions for contingencies and charges 508 (88) 12 432 

TOTAL II 24,133 (874) 9,482 (10,240) (8,203) 14,298 

Provisions for depreciation 

On financial assets (investments and current accounts) 173,043 (48) 384,424 (29,661) (41,522) 486,236 

On stocks 0 3 3 

On operating receivables 4,810 (2 666) 131 (110) (29) 2,136 

TOTAL III 177,853 (2,714) 384,558 (29,771) (41,551) 488,375 

GLOBAL TOTAL (I+II+III) 205,073 (3,588) 397,521 (40,209) (49,754) 509,043 

Including allowances and reversals relating to: 

operations 2,384 3,136 

financial items 391,656 86,612 

exceptional items 3,481 215 

Provisions for disputes concern employees disputes and litigations. The reversal of provisions mainly consists of taking into 

account events making unlikely the payment by Veolia Propreté SA of a part of the loan related to Yunlin company for an amount 

of €8 million (in off-balance sheet commitments). 


Amount 

beginning 

of period 

Differences in 

currencies in 

Morocco and 

Argentina 

Increase 


item by item 

Decreases 


Decreases 

Groundless reversals 

Amount 

end of period

6 n MATURITIES OF PAYABLES (in € thousand) 


Gross Amount 

213 Loans and debts with banks 561 561 0 

2,239,922 Groups advances 2,769,193 401,605 951,950 1,415,638 2,769,193 

134,643 Various financial loans and debts 149,667 149,667 146,136 

544 Deposits and advances received on orders running 655 655 0 

93,357 Payables and related accounts 94,004 94,004 67,004 

46,147 Fiscal and social debts 42,504 42,504 0 

5,807 Debts on fixed assets and related accounts 3,906 3,906 255 

12,161 Other debts 8,807 8,807 0 

2,532,794 TOTAL 3,069,297 701,709 951,950 1,415,638 2,982,588 

The other loans and financial liabilities mainly relate to cash management operations between companies of the Group. 

Gross Amount 

Due less than 

1 year 



Due between 

1 and 5 years 

Due after 5 years 

Incl. Amount 

concerning related 

parties or equity 

investments 




7 n FINANCIAL COMMITMENTS (in € thousand) 

The total amount of the company‘s financial commitments is as follows: 

Subsidiaries Investmentsin other 

Category of commitments companies and other related parties Other Total 

Commitments given 

Termination benefits 0 

Approvals and pledges 298,057 166,837 464,894 

Commitments received 

Approvals and pledges 62,500 202 62,702 

8 n LEASE COMMITMENT (in € thousand) 

Fiscal year 2008 

Real estate Furniture Total 

Original value of assets 0 0 0 

Amortization during the period 0 0 0 

Accumulated amortization 0 0 0 

Lease payments during the period 0 0 0 

Payments remaining due 0 0 0 


Note V: 

Additional information on the income statement 

1 n REMUNERATION OF EXECUTIVES (in € thousand) 


Remuneration of members of 

96 Board of Directors 96 

835 Management 897 

2 n AVERAGE NUMBER OF EMPLOYEES 


473 Executives 457 

121 Supervisors and technicians 94 

66 Salaried staff 49 

1,419 Other workers 1,092 

2,079 Total 1,692 

VP executives include all the common departments of the group and the research and development departments. The number 

of employees includes staff working at head office and in VP operations. The decrease in the number of employees in 2008 

reflects the spinning off of La Reunion affiliate as a subsidiary. 

3 n BREAKDOWN OF REVENUES (in € thousand) 




A) By business sector 

135,583 VP services 104,187 

0 Miscellaneous 0 

135,583 Total 104,187 

B) By geographic market 

102,705 Mainland France 103,723 

342 Italy 464 

32,536 French overseas departments (La Reunion) 0 

135,583 Total 104,187 




4 n EXPENSES TRANSFERRED 


15,003 SULO acquisition costs 0 

1,086 BARTIN acquisition costs 87 

0 Retirement benefits received 33 

48 Insurances and social security indemnities 55 

16,137 Total 175 

5 n FINANCIAL REVENUES AND EXPENSES (in € thousand) 

Nature of transactions Total Related parties 

Revenues 

Dividends 95,650 95,650 

Other revenues (excluding foreign exchange gains 92,586 92,541 

Foreign exchange gains 103,705 103,500 

Expenses 

Interests and related expenses (139,462) (138,882) 

Foreign exchange losses (114,863) (114,223) 

Allowances and reversals of amortization and financial provisions: 

Provisions for contingencies and charges 8,197 1,861 

Impairment of investments (297,108) (297,108) 

Impairment of receivables (16,133) (16,133) 

Total (267,428) (272,794) 

Provisions for contingencies and charges correspond to provisions for foreign exchange losses. 

6 n EXCEPTIONAL REVENUES AND EXPENSES (in € thousand) 

Exceptional Exceptional 

Nature of transactions expenses revenues 

Disposals of intangible assets and property, plant and equipment 428 415 

Disposals of investments 31,532 2,139 

Others 105 2,997 

Allowances and reversals of amortization and exceptional provisions: 

Provisions for contingencies and charges 0 17 

Impairment of receivables 0 0 

Exceptional amortizations 6,878 198 

Total 38,943 5,766 

Exceptional revenues and expenses mainly reflect the sale of AVBV shares and exceptional amortizations. 


7 n INCOME TAX (in € thousand) 

The table below describes the situation of VEOLIA PROPRETE, which has been consolidated since January 1, 2001 into VEOLIA 

ENVIRONNEMENT tax group. 

Current Exceptional 

result result Total 

1. Result before income tax (257,438) (33,176) (290,614) 

2. Temporary differences (1,739) (17) (1,756) 

3. Permanent differences 209,846 32,794 242,640 

4. Taxable bases full rate (49,331) (399) (49,730) 

5. Taxable bases reduced rate 0 0 0 

6. Loss carryforwards 0 0 0 

7. Tax income after loss carryforwards (49,331) (399) (49,730) 

8. Income tax 2,123 2,123 

9. Tax saving from tax consolidation and tax credits 0 0 0 

10. Net income after tax (255,315) (33,176) (288,491) 

Temporary differences represent expenses included in the accounting income which will be deductible or deferred to future tax 

periods. 

Permanent differences correspond mainly to dividends received from subsidiaries, to depreciations on shares provisions and to 

gains and losses on shares disposals. 

8 n LATENT TAX POSITION 

The latent tax position essentially consisted of net deferred tax assets calculated: 

n on loss carryforwards and deferred amortization. The related deferred tax amounted to €50.409 million and was fully depreciated. 

n on the temporary not deductible provisions for €3.880 million. 

9 n INTEREST RATE RISK 

The net debt is mainly at floating interest rates. 






10 FINANCIAL DATA OF THE COMPANY FOR THE LAST FIVE YEARS (in € thousand) 

2004 2005 2006 2007 2008 

I - Share capital at year-end 

Share Capital 148,969 137,014 137,014 143,473 143,473 

Number of ordinary shares issued 

II - Results of operations 

9,310,588 8,563,375 8,563,375 8,967,090 8,967,090 

Pretax revenues 

Income before tax, employees profit-sharing 

125,164 125,674 132,882 135,583 104,187 

and net depreciation, amortization and provisions 88,155 99,440 459,497 86,644 29,975 

Income tax 

Employees profit-sharing 

4,675 149 (315) (1,307) (2,123) 

(1) 

Income after tax, employees profit-sharing and 

net depreciation, amortization and provisions 107,957 103,665 337,865 122,866 (288,491) 

Distributions in 

III - Earnings per share (in euros) 

Earnings after tax, employees profit-sharing, 

100,089 110,039 130,163 165,000 140,000 

but before depreciation, amortization and provisions 

Earnings after tax, employees profit-sharing and 

8.97 11.59 53.70 9.81 3.58 

depreciation, amortization and provisions 11.60 12.11 39.45 13.70 -32.17 

Dividends per share 

IV - Number of employees 

10.75 12.85 15.20 18.40 15.61 

Average number of employees during the year 2,068 1,926 1,994 0 0 

Payroll 

Amount of benefits paid during the year 

66,582 70,552 75,436 83,052 73,439 

(Social Security, company benefit schemes) 27,830 29,864 31,846 33,956 29,606 

(1) Remind that Veolia Propeté has subscribed to the profit-sharing agreement of the Group. 


11 CASH FLOW STATEMENT (in € thousand) 




Effects of 

exchange 

translation and 

reorganization 

Amount of the period Total 

122,866 Net income of the period (288,491) (288,491) 

(34,498) Net depreciation, amortization and provisions 320,595 (15,043) 305,552 

649 Gains and Losses on assets disposals 29,406 29,406 

(29) Other (28) (28) 

88,988 Cash flow 61,482 (15,043) 46,439 

32,819 Change in working capital (9,626) 3,652 (5,974) 

121,807 NET CASH FROM OPERATING ACTIVITIES 51,856 (11,391) 40,465 

(14,797) Capital expenditure (14,370) 20,623 6,253 

(375,687) Financial investments (337,131) (4,551) (341,682) 

44,236 Assets disposals 2,554 2,554 

(288,542) Changes in financial receivables (74,636) (7,864) (82,500) 

(634,790) NET CASH FROM INVESTING ACTIVITIES (423,583) 8,208 (415,375) 

294,414 Proceeds from financial liabilities 538,378 538,378 

350,017 Proceeds from the issue of share capital 0 (58) (58) 

(130,163) Dividends paid (164,995) (164,995) 

514,268 NET CASH FROM FINANCING ACTIVITIES 373,383 (58) 373,325 

(2) Feffect of noncash items - rounded (2) (1) (3) 

1,283 NET CASH FLOW 1,654 (3,242) (1,588) 

4,075 NET CASH 5,729 (3,242) 2,487 




12 LIST OF SUBSIDIARIES AND INVESTMENTS 

PORTFOLIO VEOLIA PROPRETÉ AS OF DECEMBER 31, 2007 

Registration n° Numer Net 

Company Registered office (n° siret) of shares % euro value 

A. SUBSIDIARIES 

AVBV Stravinskylaan 3105 

1077 ZX AMSTERDAM (Netherland) - 16,780 100.00 0.00 

CEPH 169, avenue Georges Clémenceau 

92000 NANTERRE 381,685,064 350,000 100.00 5,335,669.85 

CGEA Ireland Balymount Cross - Tallaght 

DUBLIN 24 (Ireland) - 2 100.00 2.55 

CGSP (MAROC) 332, boulevard Brahim Roudani N°12 Mâarif 

CASABLANCA (Morocco) - 130,478 99.98 1,863,575.84 

COMGEN 65 Pirrama Road 

2009 PYRMONT NSW (Australia) - 67,515,050 100.00 50,000,015.24 

ECOPEI SAS 89, rue Henri Cornu - Cambaie 

97460 SAINT PAUL - LA REUNION 5,000 100.00 50,000.00 

ENVIROTRANS 7, rue du Fossé Blanc 

92230 GENNEVILLIERS 438,435,570 2,551 99.96 0.00 

EVOLIA Impasse des Jasons 

30900 NIMES 433,986,304 304,891 100.00 3,048,910.00 

FASSA 163/169 Avenue Georges Clémenceau 

92000 NANTERRE 349,847,731 629,997 100.00 0.00 

GENERIS 26, avenue des Champs Pierreux 

92000 NANTERRE 410,303,481 45,591 78.16 13,307,482.43 

GRS VALTECH 105, rue du 8 mai 1945 

69140 RILLEUX LE PAPE 388,977,068 229,278 68.33 3,668,748.28 

IBKA A/S Orbaekvej 49 - DK 

5863 FERRITSLEV FYN (Denmark) - 502 100.00 1,346,957.36 

IF10 169, Ave Georges Clémenceau 

92000 NANTERRE 487,709,651 3,700 100.00 37,000.00 

IF6 169, Ave Georges Clémenceau 

92000 NANTERRE 440,252,302 2,500 100.00 40,000.00 

IF8 169, avenue Georges Clémenceau 

92000 NANTERRE 487,709,867 3,700 100.00 37,000.00 

IF9 169, avenue Georges Clémenceau 

92000 NANTERRE 487,709,685 3,700 100.00 37,000.00 

IPODEC NORMANDIE 1/3, allée de l'industrie 

76140 LE PETIT QUEVILLY 380,150,185 123,592 99.99 4,226,612.17 

LUXCO 4, rue Dicks 

1417 LUXEMBOURG (Luxembourg) - 62,500 100.00 334,496,527.45 

MARIUS PEDERSEN Orbaekvej 49 - DK 

DANEMARK 5863 FERRITSLEV FYN (Denmark) - 363,701 65.00 84,963,632.39 

MARTINIQUAISE Morne Dillon Sud 

DE VALORISATION 97232 LE LAMENTIN 439,205,428 1,816 69.85 27,240.00 

ONYX ALEXANDRIE Teleiba Street from Karbary Road 

MOHARAM SEK ALEXANDRIA (Egypt) - 699,650 99.95 0.00 

ONYX AQUITAINE Maison Neuve Pompignac 

33370 TRESSES 464,202,373 94,234 99.99 6,220,854.82 

ONYX ARA 235, cours Lafayette 

69006 LYON 302,590,898 345,692 100.00 15,497,333.59 

ONYX EST ZI de la Hardt 

57230 BITCHE 305,205,411 147,960 95.00 13,246,911.25 

ONYX GROUP 47 Arrenway Drive Albany 

AUCKLAND (New Zealand) - 16,200,000 100.00 0.00 

ONYX IRELAND Ballymont Cross, Tallaght 

DUBLIN 24 (Ireland) - 500,000 100.00 13,596,436.14 






ONYX ZI du Camp Laurent - 783, avenue Robert Brun 

MEDITERRANNEE 83500 LA SEYNE S/MER 073,806,440 99,994 100.00 0.00 

ONYX 1, rue Michel Labrousse ZA Basso Cambo 

MIDI-PYRENNEES 31100 TOULOUSE 380,157,875 272,410 100.00 10,408,824.62 

ONYX PACTOM PTE 50 Robinson Road VTB Building 

068882 SINGAPORE - 2 100.00 0.98 

ONYX POLSKA Allée Jon PAWLA II80 Babka Tower 

00175 VARSAW (Poland) - 130,000 100.00 0.00 

ONYX TUNISIE 40, rue de l'Union du Maghreb Arabe 

LA SOUKRA 2036 TUNIS (Tunisia) - 1,494 99.60 0.00 

OTUS 26, avenue des Champs Pierreux 

92000 NANTERRE 622,057,594 291,129 100.00 31,592,395.77 

REP ZI rue Robert Moinon 

95190 GOUSSAINVILLE 612,006,965 91,591 100.00 138,301,496.96 

SACO GRANDJOUAN Avenue Lotz Cosse 

44200 NANTES 867,800,518 74,758 100.00 41,108,214.74 

SARM 26, avenue des Champs Pierreux 

92000 NANTERRE 608,202,727 2,993 99.73 7,306,408.36 

SARP 162/166, boulevard de Verdun 

92413 COURBEVOIE 775,734,817 613,356 99.55 106,119,644.78 

SARP Industries ZP Limay Porcheville 

Route du Hazay - 78520 LIMAY 303,772,982 2,904,499 99.84 76,333,226.85 

SAVED RD139, Route de Moulherne à clefs 

49490 LASSE 438,771,339 1,428,750 100.00 14,287,500.00 

SCI CGEA 2, rue Latérale 7 

94150 RUNGIS 315,320,093 2,990 99.67 457,645.85 

SCI DES AFFOUARDS Route des 4 Vents 

18000 BOURGES 392,898,151 400 89.89 609.80 

SEDIBEX 5, rue Montaigne 

76000 ROUEN 303,687,867 2,992 99.73 13,119,924.78 

SMA (Sud Marseille 1, rue du Val Fleury 

Assainissement) BP30157 06800 CAGNES SUR MER 391,410,206 2,500 100.00 18,324,102.56 

SOCCOIM ZA les Pierrelets - 45610 CHAINGY 086,880,036 26,741 100.00 15,412,566.05 

SOLICENDRE ZP Limay Porcheville - Route du Hazay 

78520 LIMAY 390,189 801 571,259 91.95 6,284,020.00 

TAIS 26, avenue des Champs Pierreux 

92000 NANTERRE 421,345,638 1,312,475 100.00 10,772,000.00 

VALNOR 5, rue de Courtalin Val d’Europe 

77650 MAGNY LE HONGRE 410,301,162 38,016 63.67 5,084,372.94 

VALREP (HESSEMANS) 169, avenue Georges Clémenceau 

92000 NANTERRE 967,200,726 4,991 99.82 0.00 

VEOLIA ENV SCES 125 South 84th Street Suite 800 

NORTH AMERICA Corp. MILWAUKEE 53214 (WI) (USA) - 1,000 100.00 829,909,477.99 

VEOLIA ENV. 50 Robinson Road VTB Building 

SERVICES ASIA 068882 SINGAPORE - 26,000,000 100.00 14,890,108.58 

VEOLIA Env. Sces 8600 Jarry Street ANJOU 

Canada Inc. H1J 1X7 QUEBEC (Canada) - 29,532,470 100.00 38,521,000.00 

VEOLIA MoerStraat 26 Haven 550 

ES BELGIUM NV 2030 ANTWERPEN (Belgium) - 1,352,044 100.00 30,642,720.07 

VEOLIA ES 11 Acutt avenue Briardene 

SOUTH AFRICA 4051 DURBAN (South Africa) - 7,900,000 100.00 1,916,042.70 

VEOLIA MILJO Ulvenveien 91 - 0581 

OSLO (Norway) - 17,968,600 100.00 68,215,014.60 

VEOLIA PROPRETE 132, boulevard de Verdun 

NETTOYAGE ET 

MULTISERVICES 

92400 COURBEVOIE 334 516 895 2,199,991 100.00 43,160,151.80 

VEOLIA PROPRETE 33, avenue Léopold Sedar Senghor 

SENEGAL BP160 DAKAR (Senegal) - 1,000 100.00 15,250.00 

VEOLIA SERVICII Sector 1 B-dul Aviatorilor n°52 

PENTRU MEDIUM BUCHAREST (Romania) - 8,085 90.00 24,280.00 






VEOLIA SERVIZI Piazza Republica 7 20121 

AMBIENTALI MILANO (Italia) - 99,000 99.00 990,000.00 

VEOLIA Monbijoustrasse 1705 

UMWELTSERVICE 

SCHWEIZ AG 

BERN (Switzerland) - 18,140 65.44 13,183,859.85 

VES ISRAEL Street Aba Eban 1 46120 

HERTZLIA PITVAH (Israel) - 999 99.90 223.31 

VES UK Onyx House - 401,Mile End Road 

LONDON E3 4 PB (UK) - 296,512,501 100.00 446,910,936.53 

VOKOL Dunajska 22 1080 

LJUBLJANA (Slovenie) - 14,535 85.00 0.00 

VP CARAIBES 21, ZI Les Mangles 

97232 LE LAMENTIN 487,702,391 3,700 100.00 37,000.00 

VP France RECYCLING 30/34, rue Proudhon 

(ex SOULIER) 93124 LA PLAINE SAINT DENIS 392,164,919 10,000 100.00 4,573,151.29 

VP MEDITERRANEE Route de la Gaude - BP 153 

06803 CAGNES SUR MER Cedex 037,020,344 199,993 100.00 98,580,556.07 

VP NORD NORMANDIE 48/50, avenue du gendarme Castermant 

77500 CHELLES 745,550,111 127,908 99.98 11,297,771.07 

VP NORMANDIE 169, avenue Georges Clémenceau 

92000 NANTERRE 351,735,485 655,946 100.00 0.00 

VPF BIOMASSE 169, avenue Georges Clémenceau 

(ex ORVAL) 92000 NANTERRE 434,043,048 452,500 100.00 0.00 

TOTAL SUBSIDIARIES (A) 2,648,828,408.26 




B. INVESTMENTS 



BIOCOMBUSTIBLES 19, rue Beauvoir 

14280 THURY HARCOURT 403,614,217 5,000 47.85 76,224.51 

CRSP Face au Cimetière Marin RN1 

97460 SAINT PAUL DE LA REUNION 340,748,508 1,249 49.96 0.00 

CYCLEA SA 24, rue P. Brossolette ZAC des Mascareignes 

BP 80 97822 LE PORT 421,119,751 9.95 198,601.41 

ECOLTECH Industrial Zone Hadera - PO BOX 142 

38101 HADERA (Israel) - 499 49.90 0.00 

ESTERRA (TRU) Rue Chanzy Fort de Lezennes 

59260 LEZENNES 455,501,452 19,313 44.93 6,934,286.90 

GEVAL Avenue Lotz Cosse 

44200 NANTES 410,303,085 22,250 12.98 6,042,977.67 

GLOBAL 2, rue Bellot - c/Jacquemoud & Stanislas, avocats 

ENVIRONNEMENT 

SUISSE 

1206 GENEVA (Switzerland) - 5,700 47.50 3,724,806.61 

NT SYSTEMES Zi 9, boulevard Marius et René Gruau 

53940 SAINT BERTHEVIN 414,954,305 5,318 17.00 0.00 

PROACTIVA SANTA FE DE BOGOTA 

DONA JUANA (Colombia) - 55,687 24.75 284,,499.90 

PURE INDUSTRIES ZI, Le Monay - St Eubese 

71210 MONTCHANIN 393,824,867 10,000 20.00 0.00 

SETRAD 169, avenue Georges Clémenceau 

92000 NANTERRE 410,303,697 8,896 15.29 1 ,219,382.09 

SI GEA (SCARL) Viale Lombardia n.12 - C.A.P. 

35043 MONSELICE (Italia) - 1 50.00 60,731.29 

SOMERGIE 8, rue des Serruriers - 57070 METZ 381,009,372 24,995 39.99 456,556.71 

SOVAL 3, avenue des Mondaults 

33270 FLOIRAC 410,303,515 7,638 6.46 19,406.76 

TIRU Tour Franklin 92042 PARIS 

LA DEFENSE CEDEX 334,303,823 23,999 24.00 2,042,274.39 

VALOMED (ex IF7) Front de Cine - Route de Grasse 

06600 ANTIBES 487,709,701 250 6.76 2,500.00 

VALSUD ZI du Camp Laurent - 783 av.Robert Brun 

83500 LA SEYNE S/MER 410,299,721 34,100 33.13 6,430,532.77 

VEOLIA PROPRETE 169, Avenue Georges Clémenceau 

INDUSTRIES SERVICES 92000 NANTERRE 440,189,249 8,333 33.33 166,660.00 

VES EMIRATES Sh Zayed 1st Street PO BOX 45490 

ABU DHABI (United Arab Emirates) - 245 49.00 54,865.20 

VES QATAR PO BOX 13024 

DOHA (Qatar) - 490 49.00 100,145.52 

Z-SKROT AB Karenslyst Alle 11, 

0214 Oslo (Norway) - 4,000 40.00 42,417.82 

TOTAL INVESTMENTS (B) 27,856,869.55 

GLOBAL TOTAL I (A) + (B) 2,676,685,277.81 

MISCELLANEOUS 1,104,679.46 

OTHER INVESTMENTS 0.00 

GLOBAL TOTAL II 2,677,789,957.27 




13 INFORMATION CONCERNING SUBSIDIARIES AND INVESTMENTS 

Companies Currency 

% 

Holding Gross Net 

A) Detailled information on every subsidiary and participation of which the gross value exceeds 1% of the capital of the Company VES 

1. SUBSIDIARIES (held to more than 50%) 2,972,145 2,557,241 

FRENCH SUBSIDIARIES 950,682 886,032 

BARTIN 20,111 41,771 100.00 131,190 131,190 

CEPH 5,336 263 100.00 5,336 5,336 

EVOLIA 3,049 (5,503) 100.00 3,049 3,049 

FASSA 9,450 (18,494) 100.00 3,811 

GENERIS 933 20,544 78.16 13,307 13,307 

GRS VALTECH 5,033 1,144 68.33 3,669 3,669 

IPODEC NORMANDIE 1,978 3,143 99.99 4,227 4,227 

ONYX AQUITAINE 1,437 3,827 99.99 6,221 6,221 

ONYX ARA 6,914 13,363 100.00 15,497 15,497 

ONYX EST 2,492 17,433 95.00 13,247 13,247 

ONYX MEDITERRANEE 3,100 (430) 99.99 8,800 1,500 

ONYX MIDI-PYRENNEES 4,153 6,196 100.00 10,409 10,409 

OTUS 4,658 20,799 100.00 31,592 31,592 

REP 1,465 (7,207) 100.00 138,301 138,301 

SACO 4,560 14,899 100.00 41,108 41,108 

SARM 2,745 3,240 99.77 7,320 7,320 

SARP 9,400 35,610 99.55 106,120 106,120 

SARP INDUSTRIES 81,456 35,892 99.84 76,347 76,347 

SAVED 14,288 (6,474) 100.00 14,288 14,288 

SCI JAB 98.00 17,755 17,755 

SEDIBEX 642 1,211 99.73 13,116 13,116 

SMA (Sud Marseille Assainissement) 40 2,141 100.00 33,410 14,485 

SOCCOIM 6,953 8,037 100.00 15,413 15,413 

SOLICENDRE 4,349 2,752 91.95 6,284 6,284 

TAIS 21,000 (10,249) 100.00 25,580 10,772 

VALNOR 597 (1,031) 63.67 11,652 6,567 

VEOLIA PROPRETE NETTOYAGE MULTISERVICES 35,200 1,405 100.00 43,160 43,160 

VEOLIA PROPRETE NORD NORMANDIE 2,047 10,688 99.98 11,297 11,297 

VEOLIA PROPRETE NORMANDIE 2,700 (948) 100.00 10,148 

VP France RECYCLING 160 468 100.00 4,573 

VP MEDITERRANNEE 3,200 5,684 100.00 98,581 98,581 

VP REUNION 100.00 4,884 4,884 

VP UKRAINE 100.00 13,750 13,750 

VPF BIOMASSE 100.00 7,240 7,240 

FOREIGN SUBSIDIARIES 2,021,463 1,671,209 

AVBV 

VP MAROC EUR 1,159 417 99.99 1,865 1,865 

CLEANAWAY AS 100.00 25,158 25,158 

COMGEN 33,301 (2,604) 100.00 50,000 50,000 


CAPITAL 

Reserves 

and Retained 

earnings 

before net 

income 

appropriation 

Value of 

Shares

Loans and 

advances 

granted by VP 

Revenue Net Income Dividends received 

Currency Currency 2007 2008 2007 2008 2007 2008 

981,063 134,325 2,213,401 2,250,501 64,418 70,787 151,134 95,650 

558,895 55,706 1,663,680 1,675,711 100,914 108,911 141,318 74,975 

7,323 Holding Holding 3,414 

Holding Holding 482 85 298 371 

55,579 9,273 9,855 (855) (2,371) 

9,422 175 (82) 30 

102,702 97,358 (19,349) 7,197 3,647 

54,440 56,524 1,316 1,673 871 734 

17 43,030 44,481 2,289 2,019 1,545 

88,468 65,006 74,862 3,318 4,283 1,414 1,696 

26,315 127 156,960 156,897 11,078 9,549 6,914 8,297 

1 134,417 130,430 10,433 7,675 5,549 7,916 

26,688 59,397 61,109 322 (773) 

45,668 44,544 605 572 1,226 817 

6,108 113,733 114,786 3,015 3,503 

183,342 160,499 55,021 36,928 

32,925 124,679 123,315 2,548 3,607 897 2,093 

72,091 40,252 32,151 1,913 759 

52,857 398 10,036 9,625 3,634 98,136 7,974 

MULTI 132,562 3,427 2,103 974 1,332 10,021 15,105 

37,983 9,641 9,558 (2,143) (2,079) 

16,279 17,182 1,563 1,247 1,400 1,555 

184 7,056 3,500 

39,881 109,612 105,264 3,497 1,016 2,781 2,808 

6,720 6,496 1,333 1,181 1,114 1,228 

109,467 108,131 (1,014) (1,374) 

43,425 47,836 653 3,538 

Holding Holding (4) 1,551 

28,577 90,650 94,131 4,969 10,911 3,837 

4,999 

30,799 31,087 (855) (3) 

1 109,445 136,399 593 (5,136) 50 500 

743 677 9,485 11,301 7,000 14,999 

652,841 78,619 549,721 574,790 (36,496) (38,124) 5,972 10,433 

Holding Holding 305 505 

EUR 2,630 6,218 7,904 12,177 149 487 

2,694 

Pledges and 

approvals 

given by VP 

Holding Holding (1,388) (1,515) 






Companies Currency 

% 

Holding Gross Net 

MARIUS PEDERSEN DANEMARK EUR 3,755 109,710 65.00 84,964 84,964 

ONYX ALEXANDRIE EUR 9,020 (22,833) 99.95 19,896 

VES UK EUR 311,300 (190,929) 100.00 446,911 446,911 

ONYX GROUP 100.00 4,300 

ONYX IRELAND 635 22,703 100.00 13,596 13,596 

ONYX POLSKA EUR 12,898 (9,179) 100.00 16,058 

SIA NIELSENS 100.00 2,044 2,044 

VEOLIA ES BELGIUM NV EUR 28,465 (7,248) 100.00 30,643 30,643 

VEOLIA ES Canada INC EUR 19,136 (30,553) 100.00 38,521 38,521 

VEOLIA ES SOUTH AFRICA ZAR 1,247 (393) 100.00 1,916 1,916 

VEOLIA MILJO EUR 9,215 37,457 100.00 68,215 68,215 

VEOLIA PROPRETE Luxembourg SARL EUR 1,562 (39,537) 100.00 328,891 18,891 

VEOLIA UMWELT SERVCICE DEUTSCHLAND EUR 25 21,732 100.00 

VEOLIA UMWELT SERVCICE SCHWEIZ EUR 26,629 6,246 65.44 21,622 21,622 

VES ASIA EUR 100.00 36,954 36,954 

VESNAO EUR 1 84,517 100.00 829,909 829,909 

2. INVESTMENTS (held between 5 and 50 %) 26,120 26,120 

FRENCH SUBSIDIARIES 22,395 22,395 

ESTERRA (TRU) 8,000 7,053 44.68 7,879 7,879 

GEVAL 1,399 2,314 12.98 6,043 6,043 

TIRU ME ME 24.00 2,042 2,042 

VALSUD 1,647 9,954 33.13 6,431 6,431 

FOREING SUBSIDIARIES 3 725 3 725 

GLOBAL ENVIRONNEMENT SUISSE EUR 8,506 991 47.50 3,725 3,725 

B) Information on investments of which the value does not exceed 1 % of the capital of the Company VEOLIA PROPRETE 

1. Subsidiary held to more than 50 % 

1.1. French subsidiaries 8,352 7,102 

1.2. Foreign subsidiaries 3,685 3,151 

2. Investments (held between 5 and 50 %) 

2.1. In french companies 2,093 1,941 

2.2. In foreign companies 1,054 487 

C) Global information on all subsidiaries and investments. 

1. Subisdiaries 

1.1 French subsidiaries 959,034 893,134 

1.2 Foreign subsidiaries 2,025,148 1,674,360 

2. Investments 

2.1 In french companies 24,488 24,336 

2.2 In foreign companies 4,779 4,212 

Miscellaneous 93,874 94,845 

(1) Includes subsidiaries belonging to subgroups 


CAPITAL 

Reserves 

and Retained 

earnings 

before net 

income 

appropriation 

Value of 

Shares 

3,013,450 2,596,042 

3,107,324 2,690,888

Loans and 

advances 

granted by VP 

Revenue Net Income Dividends received 

Currency Currency 2007 2008 2007 2008 2007 2008 

Holding Holding 15,529 (4,459) 4,365 

EUR 31,538 EGP 9,819 19,416 21,904 (7,350) (4,422) 

22,635 Holding Holding (53,105) (37,448) 

5,667 (4,790) 

EUR 21,179 72,333 65,173 2,935 (119) 

PLN 35,361 PLN 2,245 6,206 (1,561) (1,834) 

18,075 56,286 58,356 (772) (2,580) 

(1) 14,052 

ZAR 1,378 4,486 4,214 605 (92) 

NOK 74,236 29,747 381,385 406,760 8,603 2,712 

EUR 211,338 10,200 Holding Holding (2,670) (8,608) 

Holding Holding 6,940 4,620 

CHF 9,665 Holding Holding 849 1,118 

SGD 14,074 Holding Holding 3,067 1,242 

USD 230,673 (3,843) (37) 1,102 9,191 

14,847 153,922 165,048 25,018 12,970 3,152 9,373 

153,922 165,048 9,014 9,600 2,053 1,998 

97,705 101,174 2,535 2,273 1,037 1,043 

42,339 48,505 2,776 4,327 

ME ME 

13,878 15,369 3,703 3,000 1,466 955 

14,847 16,004 3,370 649 7,375 

CHF 14,847 Holding Holding 16,004 3,370 649 7,375 

1,044 

246,993 13,648 

5 

559,939 55,706 1,663,680 1,675,711 100,914 108,911 

899,834 92,267 549,721 574,790 (36,496) (38,124) 

153,922 165,048 9,014 9,600 

14,852 16,004 3,370 

Miscellaneous 5% 

Pledges and 

approvals 

given by VP 

Total investments 692 869 

417,407 






Statutory Auditors’ Report 

on the Financial Statements 

Year ended December 31, 2008 



1, cours Valmy 41, rue d’Ybry 

92923 Paris La Défense Cedex 92576 Neuilly-sur-Seine Cedex 

France France 

This is a free translation into English of the statutory auditors’ report issued in the French language and is provided solely for the 

convenience of English speaking readers. The report includes information specifically required by French law in all audit reports, 

whether qualified or not, and presented below is the opinion on the consolidated financial statements. This information includes 

explanatory paragraphs discussing the auditors’ assessment of certain significant accounting matters. These assessments were 

made for the purpose of issuing an opinion on the consolidated financial statements taken as a whole and not to provide separate 

assurance on individual account captions or on information taken outside of the consolidated financial statements. The report also 

includes information relating to the specific verification of information in the group management report. 

This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards 

applicable in France. 

Dear Shareholders, 

In compliance with the assignment entrusted to us by your Annual General Meeting, we hereby report to you for the year ended 

December 31, 2008, on: 

n the audit of the accompanying annual financial statements of Veolia Propreté S.A; 

n the justification of our assessments; 

n and the specific verifications and information required by French law. 

These financial statements have been approved by the Board of Directors. Our role is to express an opinion on these financial 

statements based on our audit. 

1 OPINION ON THE FINANCIAL STATEMENTS 

We conducted our audit in accordance with the professional standards applicable in France. Those standards require that we 

plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatements. 

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the annual financial statements. 

An audit also includes assessing the accounting principles used and the significant estimates made by management, as well 

as evaluating the overall presentation of the financial statements. We believe that the evidence we have obtained is sufficient 

and appropriate to provide a basis for our audit opinion.

In our opinion, the annual financial statements give a true and fair view of the Company’s financial position and its assets and 

liabilities as at December 31, 2008, and of the results of its operations for the year then ended, in accordance with the accounting 

rules and principles applicable in France. 

2 JUSTIFICATION OF OUR ASSESSMENTS 

In accordance with the requirements of Article L.823-9 of the French Commercial Code relating to the justification of our 

assessments, we draw attention to the following matters: Note II of the financial statements outlines the significant estimates 

and assumptions made by Management. In connection with our audit, we found that these estimates and assumptions mainly 

concerned the valuation and impairment of investments (note III-3) and provisions for retirement and pension obligations (notes 

III-9, III-10 and IV-5). Our work consisted of assessing the figures and assumptions upon which the estimates were based, reviewing, 

on a test basis, the calculations performed by your Company, and ensuring that the information provided in the notes to the 

financial statements was appropriate. 

We also assessed the significant estimates and ensured that they were reasonable. Our assessments were an integral part of 

our audit of the annual financial statements as a whole, and therefore contributed to the formation of the opinion expressed in 

the first part of this report. 

3 SPECIFIC VERIFICATIONS AND INFORMATION 

We also carried out the specific verifications as required by French law. We have nothing to report on: 

n the fair presentation and the conformity with the financial statements of the information provided in the Management Report 

of the Board of Directors, and in the documents addressed to the shareholders with regard to the financial position and the 

financial statements. 

n the fair presentation of the information disclosed in the Management Report concerning the remuneration and benefits granted 

to Company officers and any other commitments made to them in connection with, or subsequent to, their appointment, 

termination or change in current function. 

In accordance with French law, we have ensured that the required information concerning the purchase of investments and 

controlling interests has been properly disclosed in the Management Report. 

The Statutory Auditors 

Paris La Défense and Neuilly-sur-Seine, April 28, 2009 


Department of KPMG SA 

Bernard CATTENOZ Jean BOUQUOT 





36-38 avenue kléber 

75116 Paris, France 

Tel.: +33 1 71 75 00 00 

www.veolia-environmentalservices.com 

Julio 2009 - Veolia Environmental Services - Communications department - RCS: B 572 221 034 - Production: Omer Sainte.

Financial Report 2008 - Veolia Umweltservice

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