A player in sustainable development - Dalkia

Annual report 2007

CONTENTS
1 Profi le
2 Interview with Henri Proglio,
Chairman and Chief Executive Offi cer
of Veolia Environnement
6 Our clients
8 Our expertise
10 Our operations
12 2007 economic performance
16 2007 social performance
18 2007 environmental performance
20 A growth stock off ering strong visibility
22 Relations shaped by trust
24 The Board of Directors
25 The Executive Committee
28 Growth and the human resources
challenge
34 The technological challenges
of the environment
39 Observation and debate
to invent the future
42 An integrated approach for public
authorities and companies
46 Water
52 Waste Management
58 Energy Services
64 Transportation
70 Exploration of sectors at the edge
of our core business
71 Consolidated fi nancial statements

The global benchmark
in environmental solutions
Conserving resources, combating climate change, and working
for sustainable and equitable growth: Veolia Environnement wants
to find answers to these great challenges for the 21st century.
Veolia Environnement off ers public and private sector clients a broad array
of services under a single brand, designed to protect the environment
and conserve natural resources. Water cycle management, waste recovery
and recycling, energy effi ciency, transportation of people and goods – all
over the world Veolia Environnement supplies comprehensive solutions
that reconcile economy with ecology in pursuit of sustainable
development. Our performance-based contractual approach, long
experience in the public-private partnership model, the shared expertise
of our 319,502 employees and the quality of our research have made us
a benchmark in our businesses.
Four areas of expertise
Water cycle management
Waste recovery and recycling
Energy effi ciency
Transportation solutions
1

Henri Proglio,
Chairman and Chief Executive Offi cer of Veolia Environnement
“Throughout the world and particularly
in fast-growing countries, the crucial question
today is how to reconcile economic growth with
environmental protection. Veolia Environnement
is the only company that can offer high quality
industrial solutions to both local authorities
and corporations, which will help them to
reconcile these two imperatives. We are
the entrepreneurs of sustainable development
in an increasingly urbanized world.”
2 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT

INTERVIEW WITH THE CHAIRMAN
Interview with
Henri Proglio
Chairman and Chief Executive Offi cer of Veolia Environnement
What is your analysis
of the 2007 results?
H. P.: 2007 was a year in which we
continued to improve the company’s
performance. This is the result of our
strategic choices of the past few years.
The growth in our revenue confi rms yet
again that our business is being driven
by a strong underlying trend toward
the expansion of environmental services
all over the world.
All our key performance indicators are
positive and growing.
Revenue increased by 14.9% over 2006
to €32.6 billion. Excluding acquisitions,
revenue still grew by 7.8%, in spite of
weather conditions in Europe that had
a negative impact on water and energy
services.
Operating income increased by 11.9%,
from €2,222 million to €2,469 million.
And our net income jumped by 22.5%
to reach €933 million, after rising 22%
between 2005 and 2006.
This boosted profi tability, with return
on capital employed reaching 10.9%
after tax. Our shareholders will
benefi t from the company’s good
health as the Board of Directors has
decided, on my recommendation,
to propose a 15.24% dividend
increase to the Annual Shareholders
Meeting.
4 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
The four divisions (Water, Waste
Management, Energy Services and
Transportation), as well as our
multiservices, have all contributed to
these good results. Veolia Environnement
is more than the sum of its parts – it is
a company that has only one core
business, that of environmental services,
and it is continuously working to develop
synergies between its divisions.
We have an increasingly good track
record of profi table growth and have
strengthened our hand by some
signifi cant acquisitions. We are in the
process of integrating TNAI, the leader
in heating networks in the United States,
we have purchased several of the nonregulated
businesses of Thames Water
in the United Kingdom, and we have
acquired Sulo, the second largest waste
management company in Germany,
and TMT, the leading Italian operator in
thermal waste treatment. In Sweden,
the acquisition of People Travel Group
has strengthened our transportation
business.
What is the impact of these major
acquisitions on the company’s fi nancial
position and particularly on its debt?
H. P.: We have spent almost €4 billion
on these new projects and acquisitions.
Thanks to the €2.6 billion capital
increase in June 2007, which was a great
success, we have been able to fund
a part of these acquisitions without
increasing our gearing. Our net debt has
increased by only 3% and represents only
3.3 times our cash fl ow from operations,
which has increased by 9.8%. So at the
end of the year we still had substantial
leeway for further movements and
greater fi nancial fl exibility.
What are the major trends in your
geographic expansion?
H. P.: In France, we posted good revenue
growth of 6.4%, but the fastest rates
of growth have been outside France.
In Europe, which is now our domestic
market, we’ve seen a big increase of
22.6%. In Asia-Pacifi c, we saw growth
of 34.8% and in North America – where
growth was purely internal as TNAI was
acquired at the end of the year only – our
revenue increased by 7.6%. Demand in
the Middle East is also increasingly
vigorous, particularly for our seawater
desalination and cooling solutions.
In all these regions we have been
able both to win new long-term
contracts and renew existing ones.
Overall therefore, the company
is becoming more and more international.
Ten years ago, 100% of our business was
in France. At the end of 2007, 56% of our

usiness was outside France and
that fi gure will exceed 80% in 2013.
Already, two-thirds of our employees
are not French.
It is clear that, throughout the world and
particularly in fast-growing countries,
the crucial question today is how
to reconcile economic growth
with environmental protection.
Veolia Environnement is the only
company that can off er high quality
industrial solutions to both local
authorities and corporations, which
will help them to reconcile these two
imperatives. We are the entrepreneurs
of sustainable development in an
increasingly urbanized world.
Is that why you launched the
Observatory of Urban Lifestyles?
H. P.: Yes, indeed. Since 2006, half the
world’s population lives in cities and
most of the global demographic growth
in the future will be urban. There will be
an increasing number of very large cities,
sometimes with a population of tens of
millions, entailing an inevitable
industrialization of human activities,
including agriculture. These cities will
need infrastructure and highly effi cient,
industrially managed water and
wastewater services. They will also need
intelligent management of their entire
waste cycle. And to avoid asphyxiating,
they will need to rethink their energy
and transportation systems. By doing a
survey of 14 cities throughout the world,
the Observatory of Urban Lifestyles has
revealed that more and more city
dwellers are calling for mobility solutions
that will allow them to cut down on the
use of their car.
In addition, our world is facing a
shortage of the resources, raw materials
and energy needed to fuel future
growth. Greenhouse gas emissions must
be reduced to avert catastrophic
changes in our climate. Veolia
Environnement is able to propose
solutions that turn waste into a resource,
save energy, use more renewable energy
sources and develop non-polluting
mobility.
Sustainable development is the thread
that binds this company together and
underpins its business model; and it is
equally relevant to both local authorities
and corporations.
What is the outlook for the company?
H. P.: Our ambition is to grow by about
10% in 2008, excluding acquisitions,
and to improve our cash fl ow from
operations by at least 10%. We are also
confi dent about achieving double-digit
growth in earnings and ROCE of more
than 10%, in spite of the dilution from
acquisitions. Even in a tougher global
economic environment, our company
has great prospects because it off ers
a wide range of high quality, joined-up
services, which are unique in the world
and meet people’s most essential needs.
What will be the keys to your success?
H. P.: Our people are the biggest key to
success. We can only provide top-quality
services if we have the right people.
Today, Veolia Environnement has
320,000 employees. To double our
business in the next seven years, given
the natural turnover, we will need to hire
and train some 500,000 people. We
therefore need to make considerable
eff orts to organize and transfer skills and
are set to become a global powerhouse
of skills and expertise management.
This will also be a big contribution
to sustainable development, because
we will be hiring locally.
Our challenge will be to integrate all
these new employees while maintaining
and even improving our safety record.
This is why I have insisted that 2008 be
a year in which the whole company
focuses on employee safety. And the
more numerous our employees are, the
more international they will be and the
more this company will and must
become a company of diversity. Diversity
is a major asset and we have initiated
a determined policy to promote diversity
in all its dimensions.
Research and Development is the second
key to success, as it will guarantee that
our technology is always state of the art
and that we remain able to off er the best
solutions in seawater desalination,
the taste of drinking water, and in waste
recycling and biofuel manufacturing.
Other avenues are improvements to
incineration techniques and personalized
mobility services, like enabling
customers to receive information and
buy tickets on their mobile phones.
Our advantage over the solutions off ered
by internal company or local authority
departments is that ours have been
developed thanks to the technological
and industrial momentum generated
by serving thousands of similar
customers around the world.
That is why so many loyal clients have
once again this year renewed their trust
in us. My gratitude goes to all of them.
5

6 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT

2007 revenue breakdown
by type of client
INDUSTRIAL
AND TERTIARY
COMPANIES
33%
67%
OUR CLIENTS
OUR EXPERTISE
OUR OPERATIONS
LOCAL
PUBLIC AUTHORITIES
Veolia Environnement serves local
public authorities contending with
expanding cities, and industrial and
tertiary companies seeking to reduce
their resource consumption and
environmental impacts. Our water,
waste management, energy and
transportation services are delivered
at a local level for public authorities,
while for companies, they are often
delivered at the global level. In all cases,
they are accompanied by clearly defi ned
commitments. Most of our activities
are covered by long-term – sometimes
decades-long – contracts. This creates
partnerships based on shared objectives,
a commitment to service on our part
and rigorous control by the client.
7

Veolia Environmental Services:
oilrig dismantling in the United Kingdom.
8 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT

319,502 employees
€32.6 billion in
consolidated revenue in 2007
2007 revenue breakdown
by division
VEOLIA
ENERGY
VEOLIA
TRANSPORT
21%
17%
28%
34%
VEOLIA
ENVIRONMENTAL SERVICES
OUR CLIENTS
OUR EXPERTISE
OUR OPERATIONS
VEOLIA
WATER
Veolia Environnement’s core business is
environmental services, which are
provided by its four specialized divisions.
Veolia Water covers the entire water
cycle from withdrawal to recycling,
including the management of public
water and wastewater services,
construction of facilities and design
of technological solutions.
Veolia Environmental Services provides
integrated waste management, with
design and implementation of tailormade,
environmentally sound solutions.
Veolia Energy (Dalkia) assumes
responsibility for energy management
at its clients’ sites, with a commitment
to optimizing consumption and
environmental impacts.
Veolia Transport employs and
coordinates a wide range of
transportation methods to improve
urban and regional mobility.
In addition, Veolia Environnement is
developing new activities: wind energy,
green fuel and home services.
9

Canada
United States
UNITED STATES
Las Vegas
Mexico
UNITED STATES
Milwaukee
UNITED STATES
TNAI Inc.*
UNITED STATES
Pinellas
Guadeloupe
Martinique
Colombia
Chile
Venezuela
Argentina
10 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
French
Guiana
Brazil
FRANCE
Vandœuvre
FRANCE
Morbihan islands
FRANCE
Bartin Recycling*
FRANCE
Mâcon
SPAIN
Campo de Dalias
MOROCCO
Témara
BRAZIL
São Paulo
BRAZIL
Petrobras*
REVENUE CONTRIBUTION
BY DIVISION
EMPLOYEES
BY GEOGRAPHIC AREA
2005 In % 2007 2005
In %
36.0
VEOLIA WATER
VEOLIA
26.0 ENVIRONMENTAL 28.0
SERVICES
21.0
17.0
UNITED KINGDOM
Switzerland
Monaco
Senegal
MAURITANIA
Nouakchott
VEOLIA ENERGY
VEOLIA
TRANSPORT
Shropshire
United Kingdom
Ireland
Belgium
Luxembourg
Portugal
Morocco
Mauritania
34.0
21.0
17.0
Burkina
Faso
100% TOTAL
100%
Denmark
Netherlands
France
Spain
Tunisia
Niger
Benin
Côte d’Ivoire
SWEDEN
Setra*
Norway
Gabon
Sweden
Italy
Slovenia
Lebanon
Israel
Libya
(Great
Socialist
Egypt
People’s
Libyan Arab
Jamahiriya)
South
Africa
POLAND
Warsaw
BAHRAIN
Finland
Estonia
Lithuania
Bahrain Bay
39.5 FRANCE 36.5
33.0 REST OF EUROPE 35.5
10.0 NORTH AMERICA 9.0
6.0 SOUTH AMERICA 6.0
6.5 ASIA-PACIFIC 7.5
5.0 AFRICA/MIDDLE EAST 5.5
Czech Republic
Slovakia
Hungary
Romania Bulgaria
Austria
Serbia
Croatia
Turkey
Saudi
Arabia
Mayotte
Mauritius
Reunion
Island
2007
100% TOTAL
100%
GERMANY
Sulo*
GERMANY
Rail 4chem*
United Arab
Emirates
UNITED ARAB
EMIRATES
Fujairah
Oman

India
Russia
ITALY
TMT*
Thailand
Singapore
AUSTRALIA
Sydney
Veolia Water
Veolia Environmental Services
Veolia Energy
Veolia Transport
COUNTRY
Region/city or
*company acquired
CHINA
Jiamusi
CHINA
Tianjin
CHINA
Jiujiang
Vietnam
Malaysia
Main contracts
or *acquisitions
in 2007
Taiwan
Philippines
Australia
Japan
AUSTRALIA
Queensland
Aluminium Ltd*
SOUTH KOREA
Seoul
New
Caledonia
French Polynesia
New
Zealand
68 operating
countries
2007 revenue breakdown
by geographic area 2007
NORTH
AMERICA
EUROPE
(EXCLUDING
FRANCE)
ASIA-
PACIFIC
8%
36%
7%
REST
OF THE
WORLD
5%
44%
OUR CLIENTS
OUR EXPERTISE
OUR OPERATIONS
FRANCE
Wherever it operates, Veolia Environnement
provides solutions that are adapted
to the local context and based on high
standards of quality. Every one of our
clients benefi ts from the professionalism
and experience of a global company
whose teams share their expertise
and skills. All of our divisions are
growing internationally and at the
same time strengthening their position
in France.
11

OUR KEY FIGURES
2007 economic performance
REVENUE GREW 14% AND OPERATING INCOME 17.1% AT CURRENT EXCHANGE RATES: Veolia Environnement’s
growth strategy is primarily focused on long-term contracts, balanced geographic exposure and a positive
refocusing of its business portfolio. In 2007, the strategy led to a further significant increase in business
and results. This performance, achieved despite difficulties including unfavorable weather conditions,
underscores the company’s ability to generate savings and synergies as well as renew its contracts.
2007 REVENUE
CONSOLIDATED REVENUE (1)
AT DECEMBER 31, 2007
in millions of euros
32,628
28,620
2006 2007
(1) Revenue from ordinary activities under IFRS.
+14.9% at
constant
exchange
rates
REVENUE (1) BY DIVISION
AT DECEMBER 31, 2007
in millions of euros
ENERGY
SERVICES
TRANSPORTATION
6,896
5,590
9,214
WASTE
MANAGEMENT
Revenue grew 14.0% at current exchange rates and 14.9% at constant exchange rates, with 7.8% internal growth (including 10.1%
outside France) and 7.1% external growth.
External growth mainly resulted from a number of acquisitions. Veolia Environmental Services acquired Cleanaway UK, the
No. 3 British waste management company, in 2006; Sulo, the No. 2 waste treatment company in Germany, on July 2, 2007; and
TMT in Italy, the largest private operator in the thermal waste treatment market, on October 3, 2007. Veolia Energy made
acquisitions in Central and Eastern Europe and Australia (smaller companies). Veolia Transport made acquisitions in France (SNCM
in 2006) and the United States (SuperShuttle in 2006, one of the world leaders in transportation-on-demand services for airports).
In the United Kingdom, Veolia Water acquired some of the unregulated business activities of Thames Water on November 28, 2007.
And Veolia Energy acquired TNAI, the largest portfolio of district heating and cooling networks in the United States, in December
2007, the initial eff ects of which on revenue and income will appear in 2008. These transactions, targeted on Veolia
Environnement’s core business and set to generate synergies and cut costs, have enabled the company to extend its range of
business lines in countries where until now it operated only some of its activities. Accordingly, Veolia Environnement accelerated its
growth outside France, with €18.4 billion in revenue, which covered 56.3% of its total business versus 53.2% at December 31, 2006.
All divisions contributed to the company’s growth. The Water business grew 8.3% (including 7.9% internal growth), Waste
Management 23.5% (7.5%), Energy Services 12.7% (7.9%) and Transportation 12.9% (8.1%). Such signifi cant increases constantly
bolster the vision of a company that is a benchmark in environmental services.
All the company’s priority operating regions contributed to the growth in business: France (6.4%), Europe excluding France
(22.6% at constant exchange rates), North America (7.6% at constant exchange rates), Asia-Pacifi c (34.8% at constant exchange
rates), and the rest of the world (38.5% at constant exchange rates).
12 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
10,928
WATER

“Our 2007 performance confi rms our expansion strategy, which is based on the ability
of Veolia Environnement’s teams to generate steady and sustainable organic growth
in buoyant markets. This was complemented in 2007 by a policy of making selective
acquisitions, which strengthen our leadership position.”
REVENUE (1) BY GEOGRAPHIC AREA
AT DECEMBER 31, 2007
in millions of euros
NORTH
AMERICA
EUROPE
(EXCL. FRANCE)
ASIA-
PACIFIC
2,790
REST
OF THE
WORLD
1,631
2,269
11,682
OPERATING INCOME
14,256
OPERATING INCOME
in millions of euros
2,133
2,497
2006 2007
+17.9% at
constant
exchange
rates
FRANCE
Growth in business, the steady improvement in
productivity and the increased maturity of the
portfolio of contracts built up in the last few years
contributed to the increase in operating income.
It was boosted by the Water business (up 9.2% at
current exchange rates), the Waste Management
business (up 23.9% at current exchange rates) and
the Transportation business (up 858.1% at current
exchange rates given the exceptional provisions
booked in Germany in 2006). Veolia Energy’s
operating income grew 5.6% at current exchange
rates, as it was aff ected by the mild weather in
the fi rst months of 2007 in Europe and by a smaller
contribution of sales of CO 2 emission allowances.
OPERATING INCOME BY DIVISION
AT DECEMBER 31, 2007
as %
ENERGY
SERVICES
WASTE
MANAGEMENT
TRANSPORTATION
15%
31%
5%
Jérôme Contamine,
Senior Executive Vice President
49%
WATER
13

OUR KEY FIGURES
NET INCOME
CONSOLIDATED NET
INCOME
in millions of euros
759
928
2006 2007
+22.3% at
current
exchange
rates
3.3x
The debt
coverage ratio (1)
at December 31,
2007 was 3.3x
versus 3.4x
at December 31,
2006
(1) Ratio: net fi nancial debt /
(cash fl ow from operations +
repayment of operating
fi nancial assets)
14 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
Given the good operating
performance, the fact that
tax expenses were kept in
check (tax cuts in Germany
and the United Kingdom
in particular), and stringent
management of fi nancial
expenses despite a more
volatile external environment,
net income rose to €928
million compared with
€759 million in 2006.
Excluding non-recurring
items, consolidated
net income climbed to
€933 million from
€762 million in 2006.
CAPITAL EXPENDITURES AND FINANCING
2007 BREAKDOWN
OF CAPITAL EXPENDITURES
in millions of euros
OPERATING FINANCIAL
ASSETS
GROWTH CAPITAL
EXPENDITURES
4,974
334
1,590
MAINTENANCE CAPITAL
EXPENDITURES
AFTER-TAX RETURN
ON CAPITAL EMPLOYED –
TANGIBLE AND
INTANGIBLE ASSETS (ROCE)
in %
10.8 10.9
2006 2007
CASH FLOW
FROM OPERATIONS
in millions of euros
3,844
4,219
2006 2007
+9.8%

Enhanced fi nancial fl exibility
To ensure lasting business growth of more than 40% over the past
three years and improve its fi nancial fl exibility, Veolia
Environnement successfully launched a €2.6 billion cash capital
increase with preferential subscription rights in June 2007. Now
that it has strengthened its capital position, Veolia Environnement
can draw on an investment capacity of €15 billion to €20 billion
between 2007 and 2009 to seize growth opportunities in its core
business, while complying with its profi tability criteria and its
balance sheet commitments (NFD/CFO + repayment of operating
fi nancial assets ranging between 3.5x and 4x).
Proactive and appropriate fi nancial management
Thanks to the centralized and proactive management of Veolia
Environnement’s cash and debt, implemented as early as 2000,
the subprime crisis that turned into a global fi nancial crisis during
summer 2007, had no impact on the company’s liquidity and credit.
The maturity of the company’s net fi nancial debt (including
short-term debt) increased by over one year to 9.2 years at the end
of 2007 compared with 7.8 years at the end of 2006.
Cash fl ow from operations, up 9.8%, refl ected the improvement in performance and growth in business. After taking into account
the repayment of operating fi nancial assets, total cash generation amounted to €4,614 million in 2007 versus €4,282 million in 2006.
In addition to its proactive asset management policy, with divestitures in 2007, the company also implemented a risk diversifi cation
policy, by getting third parties, in particular multilateral organizations, to acquire stakes in some of its subsidiaries. The cash fl ow
thereby generated covered all maintenance capital expenditures (€1,590 million), current growth and development capital
expenditures of €1,001 million, new operating fi nancial assets (€334 million), and the change in working capital requirement resulting
from growth in business in addition to fi nancial expenses and current tax. Accordingly, free cash fl ow before new projects came to
€906 million. Investments in new projects and targeted acquisitions together amounted to €3,973 million. A signifi cant part was used
as follows: in the Waste Management business, acquisition of Sulo in Germany & TMT in Italy; in Energy Services, acquisition of TNAI
in the United States; in the Water business, the award of the Lanzhou, Haikou and Tianjin Shibei contracts in China and acquisition of
some of the unregulated business activities of Thames Water in the United Kingdom; and in the Transportation business, acquisition
of People Travel Group in Sweden. After these investments and taking into account the €2.6 billion capital increase in July 2007 and the
payment of dividends, net fi nancial debt totaled €15.1 billion at December 31, 2007 versus €14.7 billion at December 31, 2006.
The company thus was able to fi nance all its growth while improving its fi nancial structure: the ratio of net fi nancial debt to cash fl ow
from operations + repayment of operating fi nancial assets improved and stood at 3.3x at December 31, 2007 versus 3.4x at December
31, 2006. Despite the dilutive eff ect of some of these new development and acquisition projects, due to the combined impact of
the increased maturity of contracts, as well as continued eff orts to drive effi ciencies and control capital employed, the after-tax return
on capital employed further increased from 10.8% to 10.9%.
15

OUR KEY FIGURES
2007 social performance
CONTROLLED GROWTH IN WORK FORCE AND PROGRESS IN SAFETY: the total work force, with 319,502 employees,
increased 7% from 2006. Its growth was driven by Europe, where 72% of the company’s staff work. Nearly two-thirds
of employees are fi eld operatives. Safety indicators improved further.
BREAKDOWN OF WORK FORCE BY DIVISION
TRANSPORTATION
(26%)
ENERGY
SERVICES
(17%)
BREAKDOWN OF WORK FORCE
BY GEOGRAPHIC AREA
NORTH
AMERICA
(9%)
ASIA-
PACIFIC
(8%)
SOUTH
AMERICA
(6%)
24,684
28,868
81,532
54,375
Total number of employees
at December 31, 2007: 319,502 (3)
AFRICA /
MIDDLE
EAST
(5%)
16,845
19,216
100,032
82,867
229,889 (4)
16 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
WATER (2)
(26%)
WASTE
MANAGEMENT (2)
(31%)
EUROPE
(72%)
(4) Including 117,434 in France (excluding French overseas departments and territories) or 37%.
For comparison purposes: work force at December 31, 2006
WASTE ENERGY
WATER MANAGEMENT SERVICES TRANSPORTATION TOTAL
77,841 89,502 48,789 81,897 298,498 (1)
(1) Including 469 for Veolia Environnement SA and Campus Veolia Environnement.
(2) The 8,789 employees of Proactiva have been allocated to Water (1,939 employees)
and Waste Management (6,850 employees) based on the business activity
of the companies concerned.
(3) This fi gure includes 696 employees in France working for corporate headquarters,
the Environmental Analysis Center and Campus Veolia Environnement.
WORK FORCE BY GRADE
MANAGERS
8.5%
15.3%
SUPERVISORY/
TECHNICAL
BLUE COLLAR,
OPERATIVES 64.6%
11.6%
WHITE
COLLAR

“Our social responsibility policy combines economic performance with progress
in human resources. When a company is at the service of the environment,
it is only natural to take care of the human environment.”
WORK FORCE
BY GENDER
253,983
65,519
239,352
59,146
218,570
52,583
2005 2006 2007
26.05
24.67
23.94
2005 2006 2007
Men
Women
CHANGE IN FREQUENCY
RATE (1) OF WORK
ACCIDENTS
(1) “Frequency” is the number of work accidents
per million hours worked.
298,008
21,494
278,597
19,901
251,842
19,311
2005 2006 2007
CHANGE IN SEVERITY
RATE (2) OF WORK
ACCIDENTS
0.74
Véronique Rouzaud,
Senior Vice President, Human Resources
FIXED-TERM AND
UNLIMITED-TERM CONTRACTS
0.72 0.71
2005 2006 2007
Unlimited term
Fixed term
(2) “Severity” is the number of days lost due to work
accidents per million hours worked.
17

OUR KEY FIGURES
2007 environmental performance
PROGRESS TO HELP OUR CLIENTS’ PERFORMANCE: our Environmental Management System is used to check and reduce
the environmental impact of our activities at the service of our clients.
THE ENVIRONMENTAL MANAGEMENT
SYSTEM (EMS)
% OF RELEVANT REVENUE
COVERED BY AN EMS
(incl. ISO 14001-certifi ed facilities)
66%
72% 75%
2005 2006 2007
2008 Target:
80%
The Environmental Management System (EMS) is the tool used to apply the
environmental policy implemented by the company to curb the environmental
impact of its activities. Compliant with the main international requirements
(ISO 14001 standards and the Global Reporting Initiative), the EMS is applied to all
its businesses and is structured around three levels of responsibility (company,
divisions and business units) while seeking to mobilize all employees around shared
environmental improvement objectives. An Environmental Management
Committee brings together representatives of the corporate and divisional
Environmental Departments. The committee oversees the deployment and
running of the EMS, works to make sure that information and best practices are
shared between divisions, and ensures consistency is achieved with respect to
targets and operations in the 239 business units. The company has set two targets
to be met by the end of 2008: deploy the EMS in 80% of relevant activities (1) and
carry out environmental audits in all of its priority facilities (2) . At December 31,
2007, the EMS had been rolled out in 75% of relevant activities and environmental
audits had been carried out at 89% of priority facilities. Drawing on these results,
the company is drafting its next environmental management plan. It is studying
how the scope of relevant activities for the rollout of an EMS could be widened,
as well as the scope of priority facilities in which environmental audits are to be
carried out. New targets for the period 2009-2011 will be set in 2008.
18 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
% OF PRIORITY
FACILITIES AUDITED
(cumulative total since Jan. 1, 2002)
80%
87% 89%
2005 2006 2007
2008 Target:
100%
OUR PERFORMANCE
UNIT EMISSIONS OF CO, HC AND
PARTICLES BY PASSENGER
TRANSPORTATION VEHICLES
(VEOLIA TRANSPORT)
CO (g/km)
2.69
2.53
2.51
2005 2006 2007
HC (g/km)
0.73
0.69
0.65
2005 2006 2007
Particles (g/km)
0.36
0.33
0.31
2005 2006 2007
2008 target:
2.48
2008 target:
0.62
2008 target:
0.30

WATER DISTRIBUTION NETWORK
EFFICIENCY RATE
80.7%
77.0%
81.1%
77.7% 81.7%
75.3%
2005 2006 2007
WASTE-TO-ENERGY
(IN GWH)
1,156
6,664
622
5,569
766
5,963
2005 2006 2007
Veolia Transport is lowering the polluting emissions
of its passenger transportation vehicle fl eet.
With respect to the base scope set in 2005
(80% of the vehicle fl eet), the reduction targets set
for 2008 are 8% for carbon monoxide (CO),
14% for hydrocarbon (HC) and 15% for particles.
■
■
Energy sold from
landfilled waste
Energy sold from
incinerated waste
EU-15
2008 target: 80%
World
The heat and electricity produced by waste-to-energy plants and
landfi lls provide alternative sources to fossil fuels and contribute
to the overall decrease in greenhouse gas emissions.
4
Veolia Water maintains the effi ciency rate of
the water distribution networks it operates in
the European Union above 80%, in compliance
with the commitment made in 2002 and
extended through 2011. This demonstrates the
division’s high level of performance in mature
markets. Its expansion in countries where the
water services require considerable upgrading
is incompatible with the targets set at the
world level. In 2007, the start-up of a new
contract covering a city with a population
of 1.5 million and a water distribution network
effi ciency rate of 15.4% lowered our world
effi ciency rate by 2 points. Without this impact,
the rate would be 78.5%, showing an increase
over 2006.
OVERALL REDUCTION IN CO 2 EMISSIONS
(VEOLIA ENERGY)
in millions of metric tons
4.2
4.6
2005 2006 2007
Veolia Energy is able to reduce CO 2 emissions due to the
following factors: primary energy savings resulting from the
combined production of heat and electricity (cogeneration);
provision of energy services combining choice of fuel,
production effi ciency and integrated energy management;
the good use of production equipment (energy effi ciency);
and the use of renewable energy sources.
(1) Relevant activities (world scope – EMS defi nition):
– water production and distribution, municipal wastewater collection
and treatment;
– waste treatment activities (sorting, composting, incineration,
landfi ll, hazardous waste treatment);
– energy services (heating and cooling networks, thermal and
multitechnical services, industrial utilities and facilities management);
– passenger and goods transportation.
(2) Facilities with the most signifi cant environmental impacts.
19

STOCK MARKET
A growth stock off ering strong visibility
Stock market sentiment, more uncertain since summer 2007, has paved the way for an increase in volatility.
Against this backdrop, the Veolia Environnement stock has far outperformed the Paris exchange’s CAC 40,
benefi ting from its double status as a growth stock and a defensive stock.
Return of stock market volatility
After rising for four straight years,
the Paris exchange’s CAC 40 inched up
in 2007 by just 1.3%. The US subprime
mortgage crisis has rocked investor
confi dence in the effi ciency of the
international fi nancial system. In Europe,
the MSCI Europe index stagnated
in 2007, refl ecting the contrasting
developments in the main European
indices, with performances ranging from
-6.9% for Milan’s MIB 30 to +22.3% for
Frankfurt’s DAX 30.
Veolia Environnement stock
held up well in 2007
Against this backdrop, the Veolia
Environnement stock gained 8.8%
in 2007, closing the year at €62.45
compared with €57.42 at December 29,
2006 (1) . Veolia Environnement’s intrinsic
qualities, such as the recurrence and
visibility of its income from long-term
contracts, the steady increase in
20 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
dividends paid out, its positioning
in fast-growing markets as well as its
growth prospects, mean it is now
a defensive stock as much as a growth
stock.
Capital increase over-subscribed
Confi dent in the upside potential of the
global environmental services market,
Veolia Environnement launched
a €2.6 billion cash capital increase with
preferential rights in June 2007, on the
basis of one new share for eight existing
shares at a unit price of €49.70 per share
(€5 par value and €44.70 issuance
premium).
With this rights issue, the company has
improved its fi nancial fl exibility to be
able to seize growth opportunities in its
core business. Despite the tough stock
market context, its capital increase was
over-subscribed 1.5 times, illustrating
shareholders’ high level of confi dence
in the company.
BREAKDOWN OF VEOLIA ENVIRONNEMENT’S SHARE
OWNERSHIP AT DECEMBER 31, 2007
Other institutional investors
Capital Research &
Management Company
Caisse des dépôts
Natixis Asset Management
Groupama
EDF
Treasury stock
Individual shareholders
Employee shareholders
49%
(1) After taking into account all of Capital
Research’s entities.
1%
7%
12% (1)
4%
4%
10%
6%
7%
THE VEOLIA
ENVIRONNEMENT STOCK
Stock market listings
Paris, New York
Codes (Paris)
ISIN: FR 0000124141-VIE
Reuters: VIE.PA
Bloomberg: VIE.FP
Codes (New York)
CUSIP: 92334N103
NYSE Symbol: VE
Number of shares outstanding
470,719,806 at December 31, 2007
Inclusion in stock market indexes
Veolia Environnement has been part
of the CAC 40 index since August 2001.
It is a socially responsible investment;
the stock was again selected in stock
market indexes taking into account
ethical, environmental and social criteria:
the Dow Jones Sustainability Index (DJSI)
and the FTSE4Good index when they
were updated in September 2007.
It is also included in the ASPI Eurozone
(Advanced Sustainable Performance
Index), an extra-fi nancial international
index that assesses the social
and environmental performance
of companies.
The quality of the social and
environmental information released by
Veolia Environnement is acknowledged
by independent reference organizations.
In its 2007 classifi cation, the CFIE
(“French corporate information center”)
ranked Veolia Environnement fi rst for
the quality of its 2006 sustainable
development report published in
response to the requirements of France’s
NRE, or new economic regulations, law.
(1) Adjustment in closing prices in previous years,
following the €2.6 billion cash capital increase
with preferential rights fi nalized in July 2007.

STOCK MARKET DATA
2007 IFRS (1) 2006 IFRS (1) 2005 IFRS (1) 2004 IFRS (1)
Year’s highest price (in euros) 66.25 57.42 38.49 26.18
Year’s lowest price (in euros) 49.75 35.88 24.79 20.67
Closing price on last trading day of the year (in euros) 62.45 57.42 37.60 26.18
Average daily trading volume (2) (thousands) 1,867 1,704 1,574 1,399
Number of shares outstanding at December 31 (millions) 470.7 418.1 413.2 411.8
Average number of undiluted shares in circulation (millions) 430.0 398.8 395.6 401.5
Market capitalization at December 31 (in billions of euros) 29.4 24.0 15.6 10.8
Recurring net earnings per share (in euros) 2.17 1.91 1.59 1.19
Consolidated net earnings per share (in euros) 2.16 1.90 1.57 0.97
Dividend per share (in euros) 1.21 1.05 0.85 0.68
Payout ratio 59% 54% 53% 77%
(1) After application of IFRIC 12 on the accounting treatment of concessions under IFRS and IFRS 5 on Danish transportation operations .
(2) Not including transactions carried out outside the market.
After the €2.6 billion capital increase with preferential subscription
rights on the basis of one new share against eight existing ones
at the unit price of €49.70 (or €5 par value and €44.70 issuance
premium), the prices, the number of shares traded by session, the
number of shares issued, the average undiluted number of shares
outstanding, undiluted net recurring income per share and net
consolidated undiluted income per share in 2006, 2005 and 2004
were adjusted in accordance with IAS 33.
VEOLIA ENVIRONNEMENT
SHARE PRICE PERFORMANCE (4)
(DECEMBER 29, 2006 = 100)
115
110
105
100
95
90
85
80
12/29/2006
01/29/2007
02/28/2007
03/29/2007
04/29/2007
05/29/2007
06/29/2007
NET DIVIDEND PER SHARE
Increase in net dividend per share
15.2% for fi scal 2007, subject to approval
by the Annual Shareholders Meeting
of May 7, 2008 (3) .
Net dividend per share
(in euros)
2000 ...................................................................................... 0.55
2001 ...................................................................................... 0.55
2002 ...................................................................................... 0.55
2003 ...................................................................................... 0.55
2004 ..................................................................................... 0.68
2005 ..................................................................................... 0.85
2006 ..................................................................................... 1.05
2007 ..................................................................................... 1.21
2007 payout ratio: 59%
(3) Date of dividend payment: May 27, 2008
(ex-dividend date: May 22, 2008)
(4) Share prices closed on December 29, 2007 and adjusted for the €2.6 billion capital increase with preferential subscription rights finalized in July 2007 .
07/29/2007
08/29/2007
09/29/2007
10/29/2007
11/29/2007
12/29/2007
Veolia Environnement
MSCI Europe
CAC 40
21

OUR SHAREHOLDERS
Relations shaped by trust
All Veolia Environnement shareholders, individual and institutional alike, can rapidly gain access to precise
and regular information about the company. To meet their expectations and enhance the quality of its
dialogue with shareholders, Veolia Environnement proposes a series of resources: a purpose-designed Web
site, quarterly newsletters, the guide for individual shareholders, an annual conference on a specifi c
theme, meetings, conference calls and roadshows.
Simple, clear information
In 2007, around 8% of Veolia
Environnement’s share capital was held
by 225,000 individual shareholders, with
employee shareholders holding 1.6%.
Reaching out to these shareholders,
Veolia Environnement held briefi ngs
for them in Lille and Nice and took part
in the Actionaria investors’ event in Paris.
The Shareholders’ Consultative
Committee was set up in April 2003
to forge stronger links between the
company and its individual shareholders.
The committee consists of 11 unpaid
members, two of whom represent
employee shareholders, and works on
improving communications. It met fi ve
times in 2007, and worked on preparing
the Annual Shareholders Meeting
as well as on creating and approving
communication tools for individual
shareholders.
22 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
A proactive Shareholders’ Club
The Shareholders’ Newsletter provides
regular information for the 25,000
members of the Shareholders’ Club.
In addition to fi nancial results,
it presents the company’s strategy,
news, Research and Development
projects and its commitments in favor
of sustainable development.
The company publishes the Shareholder’s
Guide every year. For the past four years,
in partnership with the Institut Veolia
Environnement, the Shareholders’ Club
has held an annual conference
on environmental issues.
In 2007, 360 Club members met to talk
about The environment: friend or enemy
of our health? This conference gave
shareholders an opportunity to get to
know better the company’s approach
and its achievements in these crucial
fi elds, which are at the core of its
business.
Meetings with the fi nancial community
In 2007, Veolia Environnement improved
the information it provides to the
fi nancial community. In addition to
regular meetings and conference calls
at the time of publication of annual
and interim fi nancial statements,
the Investor Relations Department
individually met many fi nancial analysts
and investors.
Veolia Environnement’s senior
executives presented the company,
its strategy, prospects and business
development model in roadshows
in the main European fi nancial centers
(Paris, London, Frankfurt, Stockholm,
Edinburgh, Geneva, etc.) as well
as in North America (New York, Boston,
Toronto and Montreal).
Internet: daily news
The www.veolia-fi nance.com site
is a common portal dedicated to all
shareholders, whether individual
or institutional, as well as fi nancial
analysts. Daily updated, it provides
real-time stock market data, press
releases and all types of information
about the company. Its documents
can be downloaded.

“Our corporate governance methods foster respect for diversity;
the defense of our values, which are based on our employees’ responsibility;
and fi delity to our commitments to our clients and shareholders.”
SHAREHOLDERS’ 2008 DIARY
May 6
First-quarter revenue
May 7
Annual Shareholders Meeting
at the Grande Arche de La Défense in Paris
May 27
Payment of 2007 dividend
June 5
Shareholders’ briefi ng in Annecy, France
August 7
2008 half-year results
November 7
Third quarter revenue
November 21 and 22
Actionaria investors’ event, at the Palais des Congrès in Paris
Actionaria investors’ event in Paris.
SHAREHOLDER
CONTACTS
Alain Tchernonog,
General Secretary
The Shareholders Department is
available to answer your questions
and requests for documents at
service.actionnaires@veolia.com
A hotline is available to provide
information at 0 805 800 000
(toll-free for landline calls
in France)
Financial information is available
for consultation at
www.veolia-fi nance.com
23

CORPORATE GOVERNANCE
The Board of Directors
The Board of Directors
at March 31, 2008
Henri Proglio
Jean Azema (1)
Daniel Bouton (1)
Jean-François Dehecq (1)
Augustin de Romanet
de Beaune (1)
Jean-Marc Espalioux (1)
Paul-Louis Girardot (1)
Philippe Kourilsky
Serge Michel
Baudouin Prot (1)
Georges Ralli (1)
Paolo Scaroni (1)
Louis Schweitzer (1)
Murray Stuart (1)
Eleven of the 14 Board members
are independent directors.
A representative of the Works
Council attends meetings
and has a consultative voice.
(1) Independent member.
24 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
Wide-ranging powers
of supervision and control
Chaired by Henri Proglio, the Board of
Directors is responsible for setting the
company’s strategy and overseeing its
implementation. Furthermore, under the
company’s articles of association, certain
signifi cant decisions are submitted for
the committee’s approval. For instance,
out of the 11 sessions held in 2007,
4 exceptional sessions were dedicated
to acquisition projects and the June 2007
capital increase. The average attendance
rate was 77.9%.
On March 29, 2007 the Board co-opted
Augustin de Romanet de Beaune,
Chairman and Chief Executive Offi cer
of Caisse des Dépôts, in replacement
of Francis Mayer. The Ordinary
and Extraordinary Shareholders Meeting
held on May 10, 2007 ratifi ed the
appointment as well as that of
Paolo Scaroni, co-opted by the Board
on December 12, 2006.
Directors can meet senior executives,
background fi les are prepared on topics
scheduled to come up for discussion,
and the Senior Executive Vice President
and General Secretary attend Board
meetings. In 2007, the Board was kept
fully briefed and informed about the
company’s fi nancial situation and cash
position by the reports drafted
by the Accounts and Audit Committee.
It dedicated a session to a review of the
company’s main strategic guidelines,
which took the form of a presentation
and discussion of the long-term plan
and included presentations by the heads
of the four divisions.
Three specialized committees for better
decision-making
The Accounts and Audit Committee
reviews the appropriateness of the
accounting methods used and expresses
an opinion on the half-yearly and annual
consolidated fi nancial statements. It is
informed of the means implemented
and organization in place for internal
audits and control and expresses an
opinion on the Statutory Auditors’ work
plan and fees. The committee met
six times in 2007 with an average
attendance rate of 77.8%. Members:
Murray Stuart (Chairman), Jean-Marc
Espalioux and Paul-Louis Girardot.
The Nominations and Compensation
Committee annually assesses the
independence of Board members and
makes proposals to the Board concerning
the remuneration of the Chairman and
Chief Executive Offi cer. In 2007, it
proposed the cooptation of Augustin de
Romanet de Beaune as a director and
carried out a formal assessment of the
operation of the Board of Directors.
The committee met three times, with a
100% attendance rate. Members: Serge
Michel (Chairman), Daniel Bouton and
Louis Schweitzer.
The Strategy, Research, Innovation and
Sustainable Development Committee
was set up in 2006 and met 10 times
in 2007 with a 100% attendance rate.
The committee analyzes and assesses
the company’s strategy in innovation,
technology watch and Research and
Development, and identifi es areas
for improvement. Members: Philippe
Kourilsky (Chairman), Jean-Marc
Espalioux and Paul-Louis Girardot.

The Executive Committee
A team focused on operations
The Executive Committee meets roughly
once every two weeks under the
chairmanship of Henri Proglio. It is
the body responsible for considering,
consulting and deciding on the
company’s broad strategic options.
Its membership consists of the company’s
four divisional heads, the Senior
Executive Vice President, the Senior Vice
President, Human Resources and the
General Secretary. A Management
Committee regularly meets, bringing
together the main functional
department managers and the Senior
Executive Vice President.
Three cross-divisional committees
support the Executive Committee
The Disclosure Committee is responsible
for the collection and compilation of
information, in particular fi nancial
information, submitted to the French
and American stock market authorities.
It met twice in 2007. In June, it revised
the process for drafting the 2006 US
Form 20-F and validated it. In December,
it reviewed regulatory changes liable
to aff ect the communication and
publication of information aimed at the
markets and initiated work on gathering
information and drafting the 2007
annual reports.
At its four meetings in 2007, the Risk
Management Committee reviewed the
deployment of specifi c action plans to
address material operating risks such as:
ensuring the reliability and security of
information systems, crisis communication
within the company, the integration
and management of human skills in the
company, business continuity plans,
the detection and prevention of the risk
of fraud, and the deployment of the
company’s insurance policy.
The Ethics Committee, set up in 2004,
considers all issues connected with the
Ethics, Belief and Responsibility program
launched in 2003. This program is a fullscale
corporate project intended to
guide the daily conduct of company
employees in each of the 68 countries
in which it operates. The program
expresses the fundamental values of
Veolia Environnement such as respect
for human rights, strict compliance with
national laws, fair treatment of clients
and consumers, commitment to
sustainable development, and solidarity.
This committee has a duty of
independence and confi dentiality,
and all employees can refer any ethicsrelated
question to it, or the committee
may take up issues itself.
Listed in the United States and France,
Veolia Environnement complies with
the French Financial Security Act of
August 1, 2003 (Loi de Sécurité Financière)
and the 2002 Sarbanes-Oxley Act in the
United States. The company has an
Internal Audit Department and an
Internal Control Department. It has also
deployed a risk mapping system and
runs action plans, coordinated by the
Risk Management Department (1).
(1) See the 2007 AMF registration document.
25

1 – Henri Proglio
Chairman and Chief Executive Offi cer
2 – Jérôme Contamine
Senior Executive Vice President
3 – Olivier Barbaroux
Executive Vice President, Chairman
of Dalkia
4 – Cyrille du Peloux
Executive Vice President, Chief
Executive Offi cer of Veolia Transport
5 – Denis Gasquet
Executive Vice President,
Chief Executive Offi cer of Veolia
Environmental Services
6 – Antoine Frérot
Executive Vice President,
Chief Executive Offi cer of Veolia Water
7 – Véronique Rouzaud
Senior Vice President,
Human Resources
8 – Alain Tchernonog
General Secretary
26 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
Snapshots
2 3
1
4

5
7 8
6
27

OUR EMPLOYEES
Growth and the human resources challenge
Veolia Environnement is going to have to meet a huge challenge: how to help ever more clients in a
growing number of countries better manage increasingly scarce resources. We intend to develop all
segments of our core business activity, and operate throughout the world. Our success depends on the
professionalism of the people who work for us. Off ering them job satisfaction and fair compensation
is fundamental to our growth.
Campus Veolia
Environnement.
28 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
Bolstering the company’s growth
Veolia Environnement’s work force in
2015 will be close to 600,000 employees,
up from 320,000 currently. Threequarters
will be working outside France.
To off set work force attrition and help
the company grow, more than
500,000 employees will have to join
Veolia Environnement by 2015. The
additions to the work force will be
ensured by recruitment, acquisitions,
and taking over business units and
their teams. Our management is
working on how to steer this growth
under the best conditions. It is
determined to ensure that our
corporate culture, based on premium
service and quality, is maintained
and shared by all new employees
throughout the world by blending
respect for local values and
compliance with the most
demanding professional standards.
Attracting talent
In a tough job market, Veolia
Environnement is striving to attract
and train the best employees in all the
socioprofessional categories and in all
the employment areas where the
company operates.
In line with this approach, we favor a
proactive recruitment drive that
provides training for future employees
regardless of their age and initial
educational background. As part of
this policy, a recruitment drive was
launched in France, called Veolia
Compétences. It resulted in nearly
6,600 people being hired in 2007.
Similar initiatives are being
implemented throughout the world,
such as the so-called Sherpa program
for up-and-coming international
managers of Veolia Energy (Dalkia)
that covers more than 30 countries, or
the European recruitment campaign
conducted by Veolia Transport.
Promoting employee loyalty via
training and career development
Veolia Environnement puts great
emphasis on professional training
as a way to enhance the skills of all
its employees and ensure their career
development within the company.
We provide them with the know-how
they need to deal with changes in
their business activities and enable
them to move ahead and maintain,
or even improve, their employability.
We also encourage job mobility within
the company.

Our company boasts an outstanding
training instrument: Campus Veolia
Environnement. It is a true skills
incubator that off ers both initial workstudy
and on-the-job training programs.
In 2007, in France, three apprenticeship
training centers were opened and
became the fi rst operational structures
of new regional campuses being
set up. In the United States, Veolia
Environnement has opened a campus
in Chicago. In the Czech Republic,
the Environmental Services Institute
in Prague has widened its curriculum
to all business activities.
Campus Veolia Environnement already
runs a network of 18 campuses in
11 countries. It also draws on a growing
number of academic partnerships forged
between company subsidiaries and local
universities.
Pro’formance: for initial
qualifi cation levels
Right from the lowest levels of qualifi cation,
the quality of our labor force is crucial to our
company’s performance. Our employees must
permanently acquire new skills to be able to
cope with developments in our diff erent sectors
of activity and meet clients’ expectations.
The three Rs (reading, writing and arithmetic)
are a prerequisite for an employee to be able to
improve his or her work-related skills and career
prospects. We have designed a method and tools
to assess the extent to which our least qualifi ed
employees master such basic knowledge
without exposing them to the risk of derision.
Every employee carries out a series of exercises
that are always set within the scope of his or
her business activity. Subsequently, they have
a face-to-face interview with their hierarchical
superior. This leads to a proposal for a career
path that is tailored according to their needs.
29

OUR EMPLOYEES
Apprentices at the Jouy-le-Moutier
Campus.
30 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
Building and maintaining
trust-based relationships
The company builds its external growth
on several kinds of transactions,
including mergers and acquisitions, joint
ventures with industrial partners, and
contracts for the management of public
services signed with local public
authorities.
No matter what the characteristics of
such transactions, in a service business
such as the one Veolia Environnement
operates in, the work force is a key factor
of success. The challenge is to take over
and integrate staff in an existing
business unit in an approach based on
achieving progress at all levels of the
unit and all the stages of corporate life.
Several criteria need to be taken into
account: employees’ status, training,
optimization of know-how,
compensation and welfare benefi ts.
Our business is, by defi nition, strongly
anchored in local reality and labor
relations are built in business units to be
as close as possible to staff and the
situation on the ground. It is within this
framework that employer and employee
representatives can best provide
appropriate solutions with respect
to the organization of work and working
conditions, developing skills and
performance-based compensation.
Employee-employer dialogue takes place
in all the countries in which the company
operates. After the creation of the
French Works Council and, subsequently,
the European Works Council, which
brings together representatives of the
personnel of 21 European countries,
labor relations are organized on three
levels: inside each subsidiary, the
traditional bargaining forum; in each
country for joint employer and employee
bodies to debate national issues; and
within the European Works Council,
a transnational body for consultation
and information on issues concerning
all employees.
Guaranteeing fair
and equitable compensation
In all the countries where it operates,
Veolia Environnement implements a
remuneration policy aimed at attracting
and keeping talented employees. We
off er attractive compensation relative to
local standards, making due allowance
for individual eff ort as well. Staff
benefi ts include sickness and disability
cover, as well as additional guarantees
regarding the payment of pensions,
depending on the country. We also
encourage employee stock purchase
plans. This remuneration policy has led
to the signature of 1,020 collective
agreements in the various countries
where we operate.
In 2007, our company broadened its
policy on employee stock purchase plans.
Another capital increase was proposed
to 195,500 employees in 27 countries,
which was 33,000 employees and eight
countries more than in 2006. After this
shareholding transaction, the share of
Veolia Environnement’s equity held by
employees (more than 56,900 at the end
of 2007) stands at 1.63%.
Priority to safety
Because of the nature of their work,
Veolia Environnement employees face
many hazards. The company is working
on how to ensure their physical safety,
regardless of the country and business
unit in which they work. Despite the
progress achieved in the last few years
and the improvement in safety material
and personal protective equipment,
work accident frequency and severity
indicators need to be further improved.
The Executive Committee has decreed
2008 to be World Safety Year for Veolia
Environnement. This mobilization gives
priority to the prevention of
occupational health and safety risks.
The campaign is to be conducted at an
international level while drawing on
existing best practices.

Safeguarding employees’ health
Protecting the health of employees in their work is a major concern of Veolia Environnement in
all the countries in which it operates. Its health policy translates into concrete initiatives on the
ground. We run awareness and prevention campaigns. In 2006, we conducted an international
campaign, “Hygiene for Health,” to remind employees of the need to wash their hands regularly.
This practice is crucial given the nature of their work and is the fi rst preventive measure to protect
against pandemics. According to the review carried out in 2007, this campaign, focused on
dialogue and the exchange of information, reached out to more than 100,000 employees of Veolia
Environnement business units throughout the world. Moreover, a survey was conducted among
operational supervisors and safety, health and risk prevention instructors to identify the risks
facing employees at the company’s work sites. Three overriding themes were detected:
musculoskeletal disorders, chemical risks, and psychosocial risks. They will be addressed with
company-wide action programs in 2008.
Moreover, we have drawn up a plan to prepare for the possible outbreak of a wide-scale health
crisis such as a fl u pandemic. To be ready to contend with such a risk, business units have drafted
specifi c action plans that will ensure crucial community services are maintained in such an event
while protecting their employees.
Veolia Environmental Services in Italy.
5 fl agship initiatives
in Health & Safety
• Defi ning and deploying the
company’s mandatory
Health & Safety standards.
• Materializing the Executive
Committee’s commitment
with regard to these issues.
• Introducing a system of
targets and performance
reviewing for managers.
• Making Health & Safety a
compulsory component of
the training curriculum and
employees’ career
promotion programs.
• Supervising and monitoring
the implementation of
the Health & Safety policy
by taking into account
the progress achieved
by business units’ action
plans.
31

OUR EMPLOYEES
In August 2007, torrential rain
in North Korea led to fl oods
and landslides. One million people
were aff ected, with 170,000
left homeless. Water treatment
and distribution facilities
were damaged.
Veolia Water Force provided its
technical expertise to Unicef –
which rehabilitates pumping
stations – providing emergency
repairs and rehabilitating
damaged stations.
32 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
Diversity: a pillar of our growth
Because its business units are located
throughout the world and its work
anchored in local contexts, Veolia
Environnement boasts wide-ranging
cultural, economic and social diversity.
It employs people representing more
than a hundred nationalities and the
proportion of employees of a foreign
origin is signifi cant in many business
units.
This trend is set to gather momentum
and has to be managed around a nucleus
of shared values. In 2007, a wide-spread
campaign called “Promoting diversity and
equal opportunities” was launched.
Following an initial diagnosis, several
guidelines to achieve progress were
defi ned: keeping handicapped workers in
their jobs or fi nding them employment,
facilitating women’s access to specifi c
business activities and positions
of responsibility, and ensuring the
internationalization of management
teams.
Several projects have been started. They
focus on equal opportunities and the
implementation of best practices aimed
at guaranteeing non-discriminatory
access to employment; fundamental
employment rights the company has to
undertake to comply with in all
countries; and the various kinds of
discrimination that need to be combated
as a priority in business units.
At the same time, the Company
Disability Team, set up in 2006, has been
reinforced. It works on raising awareness
among recruiters and designing tools
shared by the four business activities by
running division-wide working groups on
how to employ and retain disabled
people.
Acting in a humanitarian and socially
responsible way
Veolia Environnement is a socially
committed and responsible company.
The diversity of its humanitarian
initiatives underscores the extent to
which it seeks to tackle social problems.
We are a member of international
partnerships working on giving
disadvantaged categories of the
population access to essential services.
We also run health and environmental
education programs; and we back
non-profi ts involved in humanitarian
work, via the Veolia Environnement
Foundation, such as facilitating access
to employment and protecting the
environment as well as emergency relief
operations and development aid
projects.
Such initiatives are long-term
commitments and are implemented
with local players (institutional partners,
experts and NGOs): examples include
programs aimed at providing
hygiene-related education or assessing
the impact on health of clean drinking
water and wastewater treatment
delivered by Veolia Morocco.
They can result from an initiative taken
by company employees, such as
educational tutoring schemes in schools
in disadvantaged French suburbs or
charity operations for underprivileged
categories of the population in China.
The emergency humanitarian action cell
Veolia Water Force set up in 1998 is a
leading partner of NGOs and major
institutions, including the French Red
Cross, UNICEF, Secours Catholique, and
others. Since its inception, it has carried
out more than 60 interventions in
40 countries. It draws on a network
of more than 500 volunteer employees
of Veolia Water who can be rapidly
mobilized. In addition to emergency
humanitarian initiatives, it is continuing
its aid development programs via the
Waterdev program, aimed at ensuring
the supply of water and sanitation
for poor categories of the population.

The Veolia Environnement Foundation
Since its inception in 2004, the Veolia Environnement Foundation has backed more than
600 projects. Each of these projects is sponsored by a Veolia Environnement employee.
Among the 183 projects selected in 2007, 76 come under the heading of work in the community,
67 under employment and 40 under the environment. Several illustrate the Foundation’s
international expansion. Some countries appear for the first time in its scope of action. For
instance, in Slovakia the Foundation is sponsoring an institute for minorities that provides health,
educational and socioprofessional services in Lomnicka to the Rom community. Other examples
include the United States, where the Foundation is subsidizing the purchase of a refrigerated truck
to distribute food to people living under the poverty threshold in the suburbs of Chicago, and
Canada where it is supporting another food bank in Montreal. In Chile, it is helping build and
outfi t an all-purpose sports ground for youth in disadvantaged areas of Santiago. In India, a fi rst
Indian sponsor is supporting a program aimed at fi ghting the sexual exploitation of young girls in
collaboration with around 10 local NGOs. In Afghanistan, Sterience, a Veolia Energy subsidiary
specializing in sterilization services for hospitals, is providing its expertise to help the Foundation
back the building of a center for severe burn victims in the hospital of Herat. The Environment
Book Prize was awarded in 2007 to Jared Diamond for his book Collapse: How Societies Choose to Fail
or Succeed, published by Gallimard in France. After four years of operation, the Foundation asked
the BMJ Ratings Agency to assess its governance practices and rate its performances. The agency
gave the Foundation an A++ rating.
Veolia Water Force
and Waterdev in 2007
Thirty-seven emergency
humanitarian and
development aid initiatives
in 25 countries were carried
out by Veolia Water Force and
Waterdev to provide access
to water, sanitation and
electricity. Forty volunteers
took part in missions in the
fi eld and 20 more helped
prepare them in France.
The organization provided
its expertise to the United
Nations in North Korea and the
Democratic Republic of Congo.
It cooperated with NGOs, such
as Première Urgence and
Solidarités, in Bangladesh,
Pakistan, North Korea and
Sudan, as well as with the Red
Cross. Veolia Water Force took
part in the solidarity initiatives
launched by the French Foreign
Ministry and is a partner in the
French Alliance for
Development, contributing to
its programs in Madagascar,
Niger and Vietnam. It supported
French local governments
involved in international
development aid ventures,
primarily in Western Africa.
33

OUR RESEARCH AND DEVELOPMENT
The technological
challenges of the environment
Our business lies at the convergence of major challenges facing today’s world: urbanization, access
to drinking water, dwindling resources and combating climate change. Solving these challenges in a context
of population growth requires a comprehensive, industrialized approach. This multi-disciplinary dimension
is at the heart of Veolia Environnement’s research.
Modeling atmospheric pollution.
34 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
Technological and industrial
solutions for the environment
Research is a priority for Veolia
Environnement, as evidenced by the
45% increase in the resources
allocated to it since 2003.
The research teams strive to provide
their company with a competitive
edge in environmental solutions. The
main focuses of their work are
managing and saving resources,
limiting environmental impacts,
protecting public health and people’s
living environments, and developing
renewable sources of energy. The
combat against climate change,
another core topic, involves several
of these areas and drives research into
optimizing our energy facilities,
capturing and storing CO2, the
development of bioenergies and clean
modes of transportation.
Much of our expertise and technology
is interlinked, involving several
divisions: sludge treatment, biomass,
biofuels, Legionellosis prevention and
industrial wastewater treatment.
Given this fact, R&D has progressed
signifi cantly toward developing
programs involving several divisions.
A new center for research
into water treatment
In September 2007, Veolia Environnement
opened a testing center alongside
the Annet-sur-Marne water production
plant in the Paris area (France).
Specifi cally designed to study
high-performance water treatment
processes, it houses some 20 pilot units.
The main objectives are to reduce
organic matter and the downsides
of chlorination, especially water taste
and the formation of undesirable
byproducts (trihalomethanes, etc.);
and to contain health risks and
emerging sources of pollution
(pharmaceutical residues, endocrine
disruptors, etc.). Research into
technological performance is backed
by establishing energy and
environmental balances to help select
the most viable processes.

KEY FIGURES
800 experts
(400 researchers and
400 fi eld developers)
3 research centers
in France with international
associate units
A budget of
€118 million
200 scientifi c partners
(industrial companies,
and private or public
organizations)
More than 100 research
pilot units
to validate technology and
improve its performance
Capturing, transporting, recovering
and storing CO 2
The geological capture and storage
of carbon is a strategic avenue for
combating climate change. It should
contribute to reducing greenhouse gas
(GHG) emissions by 20 – 30% by 2050.
We began a research program in 2007
using experiments carried out by other
players involved in this approach.
The program aims to identify capturing
solutions commensurate with the types
and sizes of our facilities, and to study
transportation and recovery processes
in line with their geographic dispersion.
It also includes the establishment of
a framework that is acceptable to
everyone given the risks and issues
this solution entails. Under the program,
pilot units will be installed in 2008
to provide us with real expertise
in this area.
Water: new test center
in Annet-sur-Marne, France
In this 1,000-square meter center, located
alongside the water production plant,
two families of treatment processes are being
studied:
– hybrid processes, combining a conventional
process and membrane treatment. Brought
together in the Opaline treatment process,
they combine resin or activated carbon
adsorbents with ultrafi ltration membranes
with pores of 0.01 microns. They are tested
on an industrial scale to treat water with
a high organic matter content;
– nanofi ltration. In this process, the membrane
pores are 10 times smaller than in ultrafi ltration.
The research aims to improve this solution,
which has been in use for around
a decade, with a focus on reducing energy
consumption, avoiding clogging phenomena
and limiting the impact of its effl uent.
Bioenergies: turning our waste
into an energy resource
The use of solid and liquid waste as an
energy resource is one way of saving fossil
fuels and promoting renewable energy.
One of the aims of Veolia’s R&D is
to develop, assess and validate the use
of bioenergy sources, such as solid
recovered fuels, landfi ll biogas,
wastewater sludge and biofuels,
while minimizing environmental
and health risks.
35

OUR RESEARCH AND DEVELOPMENT
7 major areas
of research
Water: resource protection, water
and wastewater treatment.
Energy: energy solutions to reduce
consumption and combat climate
change.
Waste Management: waste
treatment and recovery.
Transportation: logistics, electronic
ticketing and payment, clean vehicles
and new services.
Analysis: steering analytical research
and coordinating a network of
laboratories.
Health: assessment of health risks
and benefi ts for specifi c population
groups (employees, users and
consumers, and residents near
facilities) associated with company
activities.
Environment: steering research
programs on water resource
management and protection,
environmental modeling, and the
evaluation of risks and
environmental impacts (LCA).
36 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
Modeling atmospheric pollution
Launched in 2006, the research program
on modeling atmospheric pollution
involves developing software that
can be applied to all of our activity areas.
The aim is to build a better
understanding of the mechanisms
involved in the propagation of emissions
and pollution in the atmosphere in order
to contain pollutant concentration levels
in the environment. This approach
should lead to an innovative solution
that will make it possible to defi ne in real
time the concentration of pollutants at
a given point. It will therefore be possible
to modulate activity, and so emissions,
in response to the modeled or measured
concentrations, and integrate these
parameters into plant design. Modeling
is based on an array of data: outfl ow,
meteorology, topography, land use, etc.
Reduced pollution emissions
in composting centers
Research by Veolia Environnement’s
teams aims to improve the design of
composting centers, control and limit
their health and environmental impacts,
and to guarantee compost traceability,
farm-use quality and safety. We are
developing composting centers for
urban organic waste comprising
wastewater sludge and household
and similar waste. It combines the
modeling of windrow aeration systems
with a patented composting technique.
This innovative solution guarantees
the compost’s sanitary safety, reduces
the energy consumption of industrial
composting centers, and limits odors.
It also cuts greenhouse gas emissions,
in particular nitrogen protoxide (N2O), which has a global warming eff ect
310 times higher than CO2. Progress in the use of biofuels
The use of biofuels can reduce the
environmental impacts of transportation
and decrease its greenhouse gas
emissions.
With this in mind, researchers have
tested, evaluated and validated biodiesel
with 30% rapeseed ester, or diester,
recognizing its ability not to undermine
engine performance. Particle fi lter trials
on engines running on biodiesel are
currently under way and we are
examining the possibility of a more
extensive rollout of biofuels to Veolia
Transport’s fl eets.
Green fuels provide Veolia
Environmental Services with a potential
outlet for used oil and researchers are
testing an esterifi cation process for used
oil mixed with petroleum diesel.
Dedicated centers for industrial
saline effl uent
Veolia Environnement is developing
innovative technology to help the
industrial sector treat its effl uent under
the best environmental and economic
conditions possible. The avenues being
explored include analytical methods,
process improvements and
comprehensive treatment process
confi gurations, with a particular focus
on saline effl uent, which is complex to
treat and present in many industrial
sectors.
In Bouqueval (France), various
technologies used to treat industrial
wastewater are being tested on landfi ll
leachate. In Lapouyade (France), another
trial is testing the Cogelix® process that
collects and uses the biogas given off by
waste to generate electricity and the
energy needed to treat the leachate,
thereby reducing treatment costs by
25%. Other research trials have been
carried out with the same goal in mind,
in particular in Bailleul-sur-Thérain
(France) and Xingfeng (China).

From research to an innovative solution:
recovery of metal from industrial waste
It all began with zinc and nickel, two metals that are widely used in industry. Their growing
extraction is damaging the environment and depleting resources, causing the price of these
essential metals to soar. This is a paradoxical situation given that industrial waste contains a large
quantity of these metals. However, a way had to be found to extract them from the waste.
Our research teams, in partnership with the University of Metz (France), took up the challenge and
developed technology to recover these metals. The scientifi c journey started in 1997 and lasted
seven years. A pre-industrial unit, built at the Cedilor site (a Sarp Industries subsidiary), validated
and improved the technology’s reliability. Three patents have been fi led. This innovation opens
the way to recovering many other metals.
600 metric tons
of metal-containing waste
is extracted from industrial
waste and recovered each
year at the Cedilor
(Sarp Industries) facility,
a Veolia Environnement
subsidiary. For each type
of waste containing
complex metals,
Veolia Environnement’s
research teams are designing
specifi c treatment
and recovery technologies.
37

OUR RESEARCH AND DEVELOPMENT
For ecological and healthy buildings
R&D work on new and existing buildings
targets the reduction of energy
consumption and dividing greenhouse
gas emissions by four by 2050. To this
end, Dalkia has employed thermoaeraulic
simulation tools to determine the
optimum position of ventilation outlets
and intakes in hospital operating rooms.
This simulation approach is transposable
to large volume premises, such as
shopping malls, sport and cultural
facilities, and warehouses.
Optimize light rail electricity
consumption
Free of local pollution, quiet, elegant and
providing very high-quality service, light
rail has been making a comeback to cities
since the 1990s. However, its electricity
consumption is still one area that is not
fully mastered. After several
measurement campaigns on the light
rail systems in Rouen and Saint-Étienne,
France, Veolia Transport’s Research and
Innovation Center compiled a complete
energy review for the rolling stock.
This report highlighted the prime role
of the heating system in the winter, for
example, and even the eff ect of driving
Protection of water resources
and development of
alternative resources
The artifi cial recharge of aquifers
using surface water infi ltration from
lake and riverbanks or infi ltration ponds
is an old and widespread practice.
Veolia Environnement has been carrying
out research in Germany to consolidate
this approach and produce drinking
water. The teams are studying the
natural mechanisms that reduce
or remove risky substances
(pharmaceutical residues, pathogenic
microorganisms and blue-green algae
and their toxins) as the surface water
passes underground. Analog and digital
models have been developed to simulate
how the contaminants react and
what happens to them. This experiment
has been transposed to Delhi (India).
38 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
style on a unit’s consumption. These
analyses have formed the basis for
energy-saving policies. The next focus
will be on the positive aspects of onboard
electricity storage.
“Stop & Start” system for buses
With this new system, the engine stops
when the bus stops, for example,
at a red light; then starts up again
automatically as soon as the driver
pushes on the accelerator. This system,
already used on some private vehicles,
is being trialed on the Gruau Microbus
in partnership with Valeo and RATP,
the Paris transit authority. The tests
carried out in Bourges, France, revealed
a fuel saving of 10–20% depending
on the route, with CO2 emission
reductions of a similar order.
Since 1997, our researchers
have been testing
in Adelaide (South Australia),
groundwater recharging
using stormwater and
wastewater that has
undergone thorough
treatment. The aquifer
is used as an underground
reservoir to ensure a steady
supply of irrigation water
for the region’s horticultural
businesses. Research has
revealed an improvement
in the water after storage
in the geological strata.
Part of this research is being
carried out in conjunction
with the European
Reclaim Water project.

Observation and debate
to invent the future
Veolia Environnement has an active policy of listening, taking part in discussions and
forming partnerships in order to provide decision-makers with environmental advice
and services that solve current problems but also look ahead to future challenges.
The Institut Veolia Environnement works with the scientifi c community and, through
its international partnerships, the company works with leading institutions around the world.
In 2007, Veolia Environnement established the Observatory of Urban Lifestyles.
39

VEOLIA OBSERVATORY
OF URBAN LIFESTYLES
A new world,
unprecedented issues
As of 2006, half the world’s population
is urban. This trend is set to accelerate:
by 2030, 60% of humanity will live
in cities, which will absorb almost
all population growth. This urban
growth is creating unprecedented
challenges for decision-makers.
How will it aff ect lifestyles in large
metropolises? What will be the eff ect
of this trend on the relationship between
city dwellers and their city? What will be
the common social, economic and
environmental aspirations of all
inhabitants of large cities? And their
diff erences? Urban planning, organization
and management of public services – there
will be new challenges in all these areas.
A tool for sustainable development
Veolia Environnement established the
Veolia Observatory of Urban Lifestyles
to gain a better understanding of the
urban environment, identify city
dwellers’ expectations through their
perceptions and comments, and
to invent the future. A fi rst study
of 8,500 people in 14 cities was carried
out by the survey-based research fi rm
Ipsos. The Observatory will perform
further research every two years.
The Observatory’s indicators include
transportation, perception of public
services, assessment of the practical and
cultural services provided by the city, the
desire to remain in the city, confi dence
in the future, and so on. They provide
a comparable method for tracking a
wide variety of criteria across cities.
This lively study includes numerous
personal accounts and points of view.
The Observatory contributes to the ideas
that Veolia Environnement suggests to
its partners – political decision-makers,
heads of local authorities and industry –
as they all prepare for the city of the
future.
40 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
INTERNATIONAL
PARTNERSHIPS
Capitalizing on its expertise in the
management of urban services, Veolia
Environnement is contributing to the
United Nations’ Millennium Development
Goals. Its cooperation with international
organizations has been extended.
The Access to Basic Services for All
approach steered by UN-Habitat was
presented at the 62nd session of the
General Assembly. Its Committee of
Experts, of which Veolia Environnement
is a member, is drawing up directives
and tools to provide a better framework
for public-private partnerships (PPPs).
The company’s initiatives in combating
the root causes of climate change have
been recognized by the United Nations’
Global Compact and by UNEP (1) , which
included them in its 11 Exemplary
Corporate Practices in the world.
In Asia, the company attended the
second World Congress of the United
Cities and Local Governments
organization in South Korea, and sat on
a panel of experts at the Planning Urban
Sanitation and Wastewater conference
in Manila (Philippines) organized by the
Asian Development Bank. It was also
involved in the creation of a global
databank by Citynet, an association
of Asian cities, to improve pollution
abatement. A partner of Unitar (2) ,
Veolia Environnement helped boost the
rollout of the CIFAL (3) network that helps
municipal councilors improve the quality
of their urban services: a new entity has
been established in Tallin (Estonia).
14 cities included
in the fi rst
Observatory study:
Alexandria, Berlin,
Beijing, Chicago,
London, Los Angeles,
Lyons, Mexico City,
New York, Paris,
Prague, Shanghai,
Sydney and Tokyo.
Four concerns:
the cost of living,
safety, the
environment
and transportation.

INSTITUT VEOLIA ENVIRONNEMENT
The Institut Veolia Environnement,
led by its Foresight Committee, helps
anticipate the challenges that lie ahead
in the coming decades. Through its
research partnerships, international
conferences and publications, it adds
depth to the company’s approach,
nurtures its long-term vision and
contributes to its dialogue with the
academic world and civil society.
A major meeting in 2007, the fourth
Conference on Environmental Foresight
Climate 2050: Technology and Policy
Solutions, organized by the Pew Center
on Global Climate Change and
NRTEE (4) , was attended by almost
400 participants from 12 countries,
under the patronage of Pierre-Marc
Johnson. Guests of honor included
Jean Charest, Premier of Quebec;
Thierry Vandal, CEO Hydro-Quebec;
and Sheila Watt-Cloutier, an Inuit
militant nominated for the Nobel
Peace Prize.
The Institute has an ambitious editorial
policy, publishing conference abstracts
and research reports to promote its
work, and the scientifi c reviews SAPIENS (5)
and FACTS (6) to share its latest fi ndings.
It is extending its network of partners
and developing a program of studies,
such as the project with Jean-Paul
Fitoussi (Paris Institute of Political
Studies) on the public performance of
a private company, or that with TERI (7)
on the ecological footprint of cities,
especially those in India and China.
The institute is also exploring new areas
of study: for example, environmental
ethics with the Collège International
de philosophie, and the link between
health, environment and the economy
with MIT (8) .
More details can be found on Institut
Veolia Environnement’s work in
its Activity Report and on its Web
site www.institut.veolia.org/en/.
(1) United Nations Environment Program.
(2) United Nations Institute for Training
and Research.
(3) International Training Center for
Local Authorities/Actors.
(4) National Round Table on the Environment
and the Economy, Canada.
(5) Surveys and Perspectives Integrating
Environment and Society.
(6) Field Action Science (FACTS).
(7) The Energy and Resources Institute, India.
(8) Massachusetts Institute of Technology,
United States.
Institut Veolia Environnement’s
Foresight Committee
HÉLÈNE AHRWEILER
Historian, President of the
University of Europe, former
rector of the Paris Academy,
Unesco social and human
sciences expert.
HARVEY FINEBERG
President of the United States
Institute of Medicine, former
Dean of the Harvard School of
Public Health, advisor to the WHO.
PIERRE-MARC JOHNSON
Lawyer and physician, former
Prime Minister of Quebec,
advisor on environmental issues
to international organizations.
PHILIPPE KOURILSKY
Biologist, professor at the Collège
de France, Honorary Director
General of the Institut Pasteur,
member of the French Académie
des Sciences.
MAMPHELA RAMPHELE
Physician and anthropologist,
former Managing Director
of the World Bank, former
Vice-Chancellor of Cape
Town University.
AMARTYA SEN
Economist, Nobel laureate in 1998,
former master of trinity College,
Cambridge, Lamont University
professor, professor of economics
and philosophy at Harvard
University.
41

OUR CLIENTS
An integrated approach for public
authorities and companies
The environment is at the heart of public policy and corporate strategy. Careful management of the water
cycle, waste treatment and recovery, limiting energy consumption to reduce greenhouse gas emissions,
and the organization of effi cient, economical and clean transportation: all these objectives share the same
economic and ecological goals underpinning sustainable development.
Boston.
42 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
The challenge of urban growth
Cities are growing and their residents
expect services that make their lives
easier. They are also increasingly
attentive to their environment,
expecting it to be clean and healthy.
For their water and wastewater
services, waste management, energy
consumption and transportation, they
can rely on the services provided by
Veolia Water, Veolia Environmental
Services, Veolia Energy (Dalkia) and
Veolia Transport, backed by extensive
experience and expertise.
Operating in 68 countries and serving
a population of 225 million people,
two-thirds of Veolia Environnement’s
revenue is derived from local public
authorities. The water services
in Berlin (Germany) and Shanghai
(China), waste management services
in Alexandria (Egypt), transportation
in Las Vegas (United States) and
district heating system management
in Lodz (Poland) are global
benchmarks.
Long-term partner
to local public authorities
Each public authority requires its
specifi c solution, and our essentially
local personnel adapt their services
to suit each situation. But wherever
we work, we are committed to
a sustainable, fl exible and adaptable
partnership under which the services
provided are closely monitored and
continually improved.
The basic model is the contract for
public service management: this
allows the authority to retain control
over the general public interest and
invests the company with the
responsibility for operation under
diff erent contractual formats. Publicprivate
partnerships (PPPs) are on the
rise, as they provide high levels of
quality, safety, cohesion and access
to essential services, within the secure
legal framework of results-based
contracts.

Customer focus,
an everyday commitment
Customer focus is one of the underlying
values adopted by our personnel in their
daily activity. Spanning all urban
environmental services (water, energy,
transportation and waste management),
we understand city dwellers’
expectations and develop close relations
with them. We facilitate contact and
simplify access to services through
call centers and dedicated teams, and
conform to users’ demands for quality
and transparency through our passenger
charters, customer service charters,
and so on. We implement tangible
solutions designed to improve quality
of service, safety and wellbeing for all.
Veolia Environnement is particularly
attentive to processing complaints and
incidents, as well as assessing quality of
service. End-user customer satisfaction
is tracked closely though surveys.
We stress the need for dialogue with our
clients to ensure our services meet their
needs and expectations, while providing
them with access to our advice and
expertise.
Industrial business increases
as needs grow
Veolia Environnement’s business in
the industrial and tertiary sectors has
been increasing by over 10% a year for
the past six years, and now accounts
for around one-third of its consolidated
revenue. This growth – particularly
in large industrial segments – is directly
linked to increasingly stringent
environmental standards that are forcing
companies to lower their polluting
emissions, reduce their water and energy
consumption, and treat, recycle and
dispose of their waste.
The municipality of Vémars in France is
developing an eco-district involving four of
Veolia Environnement’s specialized areas of
expertise. Initially, the eco-district will have
13 energy-saving warehouses, integrated into
the environment and connected to a heating
system using a wood-fi red boiler. Veolia Water
will manage the water cycle (drinking water,
stormwater, discharges and sanitation); Veolia
Environmental Services will manage the waste
cycle, from collection through to recycling;
and Veolia Transport will draw up the traffi c
plan and manage services. All overseen by
a single eco-management contract signed
by Veolia Energy (Dalkia) under which it
guarantees to meet the environmental
performance stipulated by the municipality.
KEY FIGURES
Each team (here Nice)
provides its local authority
client with access to
the strengths of a global
company, namely the
ability to raise fi nance
and transfer best practices
through the development
of global networks
of experts.
€489 million
in annual revenue
generated by multiservice
companies in industry
€3.3 billion
in cumulative revenue
(backlog) for multiservice
companies in industry
43

OUR CLIENTS
Vestalia teams at Renault
in the Île-de-France region.
KEY FIGURES
€397 million in revenue
for new contracts signed in
2007 with major industrial
clients
€3.16 billion
in cumulative revenue
(backlog) from new contracts
signed in 2007 with major
industrial clients
44 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
All these tasks are beyond the scope
of these companies’ core business,
so they opt to outsource them to
improve competitiveness. Further,
given the rise in the cost of primary
energy, they are seeking more
innovative, effi cient, fl exible and
economic approaches to their energy
needs. Hence, there is also growing
recourse to renewable energy sources.
Consistent quality and service levels
for industrial sites worldwide
Our services cover the entire range
of environmental services, from water
supply through to wastewater
treatment, site and freight logistics,
energy management, waste treatment,
and occupant or building services.
The share of business contracted
with international industrial groups
is increasing. These clients are gradually
changing the way in which they do
business and are seeking higher levels of
effi ciency and consistency across all their
sites. They are therefore tending toward
more comprehensive multiservice and
multisite calls for tender. For these
partnerships with major industrial
clients, which involve permanent teams
on site, Veolia Environnement started
in 2007 to roll out its 10 service
commitments. A document details the
relationship and how the work is to be
carried out to ensure the same level
of quality throughout, in accordance
with our image. These 10 commitments
refer in particular to optimizing costs,
ensuring safety and containing
environmental risks, service quality
and continuity, continuous improvement
plans and employee integration.
The commitments have been broken
down into 30 professional practices.
Start-up of the Renault contract
In 2007, Veolia Environnement continued
the implementation of its multiservice
contracts with Arcelor in Brazil and in
Montataire (France), with Futuroscope
in Poitiers (France), Schenectady in
Béthune (France), Visteon in Germany,
Corus Packaging in the United Kingdom,
and with PSA Peugeot Citroën in
Mulhouse, Sochaux, Vesoul and Belfort
(France) and in Trnava (Slovakia).
In 2007, it also started implementing
the contract signed with Renault for
the operation of the automaker’s tertiary
sites in the Île-de-France region
(the headquarters, Technocenter and
technical center). This contract, our
largest in the tertiary sector, is
implemented by the subsidiary Vestalia,
and covers a wide range of services:
management of 1 million square meters,
60 buildings, 20,000 users, management
of energy utilities, management of
a fl eet of 8,000 carshare vehicles,
cleaning, waste treatment, inter-site
logistics, services for buildings and their
occupants. The aim is to raise internal
user satisfaction and cut costs by 20%
in fi ve years. An Economic Interest
Grouping has been set up with Renault
to administer the employees concerned,
all of whom have retained their existing
employment contracts.
In 2007 Socata, a subsidiary of EADS,
outsourced to Veolia Environnement
the management of energy and services
at its Tarbes (France) site. Started up
in 2007, this contract covers the supply
of gas, electricity and water to the
buildings and manufacturing process,
and includes the use of the clean fuel
Lipofi t2.
Advances in the chemicals industry
in Portugal
Discussions with Artenius, a subsidiary
of La Seda de Barcelona, led to a
contract being signed in 2008. Veolia
Environnement will design, build, fi nance
and operate utilities for the chemicals
plant producing purifi ed terephthalic
acid (PTA) under construction in Sines
(Portugal). Under the 15-year contract,
we will be responsible for the supply of
demineralized water, wastewater
treatment, operation of a natural
gas cogeneration plant producing
high-pressure water vapor for the plant
and generating electricity sold to
the national grid, and the production
of industrial gases (nitrogen, hydrogen
and compressed air).

Novartis: renewal of a historic contract
In 2000, pharmaceuticals group Novartis signed with Veolia Environnement the largest industrial
services outsourcing contract ever for its sites in Basel (Switzerland). This contract included the
transfer of 300 employees to a subsidiary called Valorec and was a fi rst at the time.
We succeeded in our mission – the contract has been renewed for seven years and covers the
same wide scope: energy production and distribution, water management, solvent regeneration,
and waste treatment and incineration. The contract includes Novartis, Ciba and Huntsmann, all
operating out of the same site.
The success of this contract has encouraged Valorec to extend its service off er of waste recovery,
energy optimization and the supply of industrial utilities to other industrial companies operating
in the Basel region.
45

WATER
“The challenges in water management are due
primarily to population growth and the eff ects
of urban concentration: local pollution and
industrial agriculture, for example. Therefore
we have to manage water resources diff erently,
and come up with a fi nely balanced, concerted
plan for supplying the various uses, and local
governance that ensures coherence between
the institutions and the technical management
of water.”
Antoine Frérot,
Executive Vice President of Veolia Environnement
and Chief Executive Offi cer of Veolia Water
46 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT

Frans Schulting,
Managing Director of
Global Water Research
Coalition, Netherlands
“In 2030, the population living in cities
should be close to 5 billion, compared
with an estimated 3.3 billion in 2008.
Domestic, industrial and agricultural
uses are competing for freshwater
resources. […] The world water
community is facing a twofold
challenge: on the one hand, to
improve people’s access to water
and sanitation, and on the other,
safeguarding and optimizing the
performance of existing water and
sanitation systems. These challenges
are driving us to reassess our
traditional approach to urban water
management, which can no longer
keep up with all our needs.
How can we fi nd a sustainable
balance between all these needs
and all the players involved at
the regional, national and even
international levels? The only solution
is to institute ‘integrated water
resource management.’
This comprehensive approach would
be based on economic, environmental
and social objectives.”
47

BUSINESS ACTIVITIES
Water
Veolia Water experienced brisk growth in 2007, ranging
as high as 47% in Asia-Pacifi c. The Water division provides
answers to the current needs created by population growth
and increased urbanization, while anticipating future needs
by introducing new services.
KEY FIGURES
€10,927.4 million in revenue
60 operating countries
82,867 employees
78 million people provided
with water service
53 million people provided
with wastewater service
More than 4,400 contracts
managed around the world
The global benchmark
in water services
Veolia Water manages water and
wastewater services on behalf of local
public authorities and companies;
it also designs the technological
solutions and builds the infrastructure
needed to provide such services.
Its business activities cover the entire
water cycle: raw water withdrawal;
production and distribution of drinking
water and industrial water;
and collection, transportation and
treatment of wastewater to recycle
it or return it to nature.
Veolia Water also takes action upstream
to protect water resources, and
downstream to protect receiving
environments.
48 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
Design-build and technological
expertise
In some world regions, population
growth and rapid urbanization are
heightening pressure on water resources.
These factors are generating massive
infrastructure needs, opening up new
markets for the design-build activities
in which Veolia Water rolls out all its
technological expertise.
Its Sade and Veolia Water Solutions
& Technologies subsidiaries signed some
very big contracts in 2007, including one
in Mauritania for Sade and several in
the Middle East (Ajman, Oman,
Marafi q and Fujairah) for VWS.
Infrastructure needs are very high in
Asia, China in particular, and in the
Middle East, where the urban population
is undergoing very strong growth.
There are also signifi cant needs in
Eastern Europe, where countries are
having to upgrade their systems to
meet the European Union’s
environmental standards.
Demand is also brisk in North Africa,
southern Europe – where Spain is building
seawater desalination plants – and
North America, which needs to renew
its infrastructure and serve its
densely populated coastal areas.
Western Europe is not following this trend
and is experiencing a structural decline in
consumption levels, which have dropped
from a daily average per person of 170 liters
to 135 liters in the space of twenty-fi ve years.
Very active R&D and a broadened
service off er
Looking ahead to tomorrow’s needs,
Veolia Water has broadened its off er of
services, partly thanks to work in R&D.
Examples include the optimization of
desalination and recycling processes, and
the development of enzymatic methods
for immediate measurement of bathing
water quality. The division also off ers
home services for domestic customers,
especially for independent wastewater
systems (consulting, diagnosis and
inspections).

29 million
people
are now served in China by Veolia Water,
following the signature of contracts
with Lanzhou, Haikou and Tianjin,
and the major Shenzhen extension.
The Water division has strengthened
its leadership position in Asia.
China: accompanying growth
At the gateway to Hong Kong, Veolia Water
signed a public service management contract
in 2003 with Shenzhen Water Group to produce
and distribute water to 2.6 million people,
provide customer service, and collect and treat
wastewater. In 2007, Veolia Water was serving
7.6 million people, following Shenzhen
Water Group’s extension of its area of activity.
Maintenance has improved thanks to Aquadiag,
a vehicle that runs through the streets
collecting data on the state of the network
and the water quality. This innovation is a fi rst
in China. Wastewater odors are kept in check
with the Aquilair process. The quality
of customer service has advanced, with morerapid
communications using text messaging
in particular. Veolia Water has also set up
a central laboratory that can analyze more
than 100 parameters for water, wastewater
and sludge.
49

BUSINESS ACTIVITIES
Water
50 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
Contract with Tampa Bay Water renewed
and expanded
Tampa Bay Water renewed its contract with Veolia Water in 2007
and, under the largest design-build-operate contract ever signed
in the United States, put it in charge of extending the capacity
of its surface water treatment plant from 272,500 cu.m/day to
454,200 cu.m/day.
The existing Tampa Bay plant was designed and built, and is now
operated, by Veolia Water under a contract won in 2000. It is one of
the world’s most technologically sophisticated facilities and is the
Florida regional water authority’s biggest plant. It supplies
Hillsborough, Pasco and Pinellas counties and the cities of New
Port Richey, St. Petersburg and Tampa, providing water of a quality
far better than required by federal and state standards.
The new plant will be equipped with a proven multi-barrier
process train: Actifl o® ballasted fl occulation from Veolia Water
Solutions & Technologies, ozonation, fi ltration through granular
activated carbon gravity fi lters, disinfection, and sludge treatment.
Scheduled for handover in 2010, it will be operated for thirteen years
by Veolia Water.

Veolia Water is also looking at new
opportunities, such as the control of
rainwater runoff in increasingly dense,
pavemented urban areas, which require
new ways of managing water in cities.
Strengthened market positions
in Europe
In France, the many contracts that
were renewed integrated recent
technical innovations in environmental
protection. This was the case, for
example, for the contract to operate
water, wastewater and stormwater
services in Mâcon and for the water
services contracts for Beauvais and the
Nice-Côte d’Azur joint district authority.
The division consolidated its market
positions in Europe, especially in Ireland,
where the city of Limerick awarded it
the contract to upgrade and operate
the Clareville water production plant.
In the United Kingdom, where it serves
3 million customers in southeast
England, Veolia Water acquired several
of Thames Water’s non-regulated
businesses. It is also upgrading the Shell
Green wastewater sludge incineration
center in Widnes. In Eastern Europe,
business was strengthened with two
new contracts in the Czech Republic,
where Veolia Water now serves
more than 40% of the population.
Important breakthroughs in the
United States
Already present in water service in
Indianapolis, Veolia Water was awarded
a 10-year management contract for
wastewater service in the Milwaukee
District (1.1 million inhabitants in
28 municipalities). The division will operate
the main sewers, the pumping stations
and the network of retention tunnels that
control overfl ows during wet weather. It
will also manage the plant that produces
fertilizer by drying the wastewater sludge.
In 2007, Veolia Water also won the designbuild-operate
contract for the extension of
Tampa Bay Water’s regional surface water
treatment plant. The division also holds
the biggest partnership contracts to be
concluded in these fi elds in the United
States, where there is very high demand
for technological solutions and new
infrastructure.
Municipal and industrial contracts
in Asia
In Asia, Veolia Water is shoring up its
leadership position in water. In China,
following in the wake of the Lanzhou and
Haikou contracts and the major Shenzhen
extension, the division signed its 25th
municipal contract, this time covering the
29 million residents of Tianjin. In Japan,
it concluded its three fi rst public service
management contracts in that country
with Chiba, Hiroshima and Saitama.
The management model favored
by public authorities is now spreading
to the industrial sector and bolstering
the division’s expansion. In China,
Tianjin Soda and PTTPE awarded it the
construction and operation of their
treatment plants, and Quingdao
Soda awarded it the operation of its
demineralization unit.
World-recognized expertise
in seawater desalination
The division selected the MED (1) thermal
process for the Jubail plant in Saudi
Arabia (800,000 cu.m/day of desalinated
water) and the reverse osmosis process
for the plants it will build and operate
in Campo de Dalias (Spain), Sydney
(Australia) and Sur (Oman). In Fujairah
(UAE), it has chosen to implement
its exclusive hybrid desalination
solutions, which combines the MED
thermal process and the reverse osmosis
process (590,000 cu.m/day).
Installation of water mains
in Mauritania (Sade).
THE YEAR IN BRIEF...
– Signifi cant advance in
desalination: contracts in Marafi q,
Saudi Arabia; Sydney, Australia
and Campo de Dalias, Spain.
– Completion of research work on
Actifl o Turbo®.
– Growth in northern Asia, with
25th contract in China, signed
with the city of Tianjin, and three
fi rst contracts for public service
management in Japan.
– Continued expansion in United
States, with, in particular, the
Milwaukee contract.
– Consolidation of market
positions in Europe, in particular
Ireland and the United Kingdom,
and high rate of contract
renewals in France.
– Beginning of public service
management contracts in
the Middle East, with the signing
of several large contracts (Ajman,
Sur, Marafi q and Fujairah).
– Acquisition by the EBRD of 10%
of the share capital of Veolia
Voda (the Veolia Water subsidiary
in Eastern and Central Europe),
marking Veolia Water’s position
as a preferred partner.
(1) Multiple Eff ects Distillation.
A player in sustainable development
The Braunschweig wastewater plant digests sludge and food fats to produce biogas that is sent to a cogeneration plant,
which uses the biogas from Braunschweig and other facilities to supply heat to a thousand households and electricity to
4,000. The digested sludge and treated wastewater are also recovered: it is sprayed on surrounding fi elds to water and fertilize
them. Shortly, some of the corn and rye grown in the fi elds will be used in an anaerobic digester to obtain additional biogas.
51

WASTE MANAGEMENT
“We owe our performance to the quality of
our teams, which are made up of innovative
and unrelenting specialists. Everywhere they
work around the world, they know how to
form relationships of closeness and trust
with their customers, and to share our vision
of protecting the environment and saving
resources.”
Denis Gasquet,
Executive Vice President of Veolia Environnement
and Chief Executive Offi cer of Veolia Environmental Services
52 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT

Philippe Chalmin,
professor at
Paris-Dauphine
University, Chairman
and founder of Cyclope,
a research institute specializing in markets
for raw materials and commodities,
co-author of Panorama mondial des déchets
2006 (Global waste overview 2006),
and member of the French Prime Minister’s
Economic Analysis Committee.
“The price of paper pulp has risen,
oil prices are sky-high, and we are
seeing a lot of pressure on the markets
for certain metals, such as nickel and
copper. Even the price of an old metal
like lead, which would no longer seem
to be of much interest, has soared due
to the upsurge in world demand for
batteries: in the space of four years,
it has gone from around $400 to $4,000
per metric ton! We had lost all sense
of scarcity, and the markets are now
calling us to order. In these conditions,
waste is increasingly coming to be seen
as a source of useable resources.
It is gradually gaining the status of
a secondary raw material with
a commercial value. […] As raw
materials become more expensive,
we change scale. Recycling is becoming
more and more profi table.”
53

BUSINESS ACTIVITIES
Waste Management
Veolia Environmental Services underwent strong growth
of 23.5% in 2007. With operations in 35 countries,
the division expanded its geographic footprint.
It also broadened its range of expertise, especially
in Europe, its domestic market.
KEY FIGURES
€9,214.3 million in revenue
35 operating countries
100,032 employees
60 million people served*
749,058 industrial and
tertiary clients*
40.6 million metric tons
of waste collected*
65.7 million metric tons
of waste treated*
796 treatment facilities managed
*Excluding Proactiva.
Benchmark in waste
management
Veolia Environmental Services operates
all around the world in the management
of liquid and solid, non-hazardous
and hazardous wastes (with the
exception of nuclear waste). Its services
range from waste collection and
transfer to recovery and recycling
on behalf of companies and public
authorities. The division also provides
cleaning services: pipe systems
maintenance, street cleaning, industrial
cleaning, equipment and production
tool maintenance, and soil remediation.
Its waste treatment methods include
various recovery methods: materials
recovery and recycling, agricultural
recovery and energy recovery.
54 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
Saving materials and energy resources
The growing awareness that energy
resources and primary raw materials are
fi nite is validating Veolia Environmental
Services’ strategy of continuously upping
its investment in waste-to-energy and
materials recovery.
As concerns recycling, the division
strengthened its positions in paper and
plastic through the acquisition of Sulo,
the German No. 2 in waste
management, which also operates in the
Baltic States and Eastern Europe. The
division expanded in scrap metal
recovery by acquiring Bartin Recycling
Group, the French No. 3 in the sector,
which raised its metal recycling capacity
to over 1 million metric tons per year.
In the energy recovery sector, Veolia
Environmental Services consolidated its
capabilities, in particular through the
acquisition of TMT, the leading private
operator in the Italian thermal waste
treatment market.
In the United States, the division signed
its 11th contract for energy recovery
with Pinellas County, Florida. The wasteto-energy
plant that it will be operating
is the biggest in the country, with an
incineration capacity of 1 million metric
tons per year and electricity production
to supply 45,000 homes and premises.
Developing environmental services
for the marine world
Marine pollution needs to be prevented,
and at the same time regulations are
gaining in complexity. Veolia
Environmental Services is responding
by off ering more services to ship-owners,
oil and gas platform operators, port
authorities, and so on.
Present around the world via a global
team of experts, Veolia Environmental
Services is a crucial player in the
management of waste from marine
activities (collection and treatment of

10 million
metric tons of waste
recycled in 2007
+34% compared with 2006.
Recycling: a virtuous circle
Scrap metal now accounts for over 40%
of steel production in Europe and more than 57%
in North America. Production in Europe of
recycled aluminum has tripled in 20 years.
As for recovered cellulose fi bers, their use
in global paper production hit the 50% mark
in 2007. Secondary raw materials are therefore
now indispensable in the manufacture of
a growing number of products.
They will become increasingly so as demand
becomes more infl uenced by globalization,
primary raw materials become scarcer and
more expensive, and recycling technologies
become more effi cient. Veolia Environmental
Services’ strengthened positions in the paper
and cardboard and scrap metals markets are
an integral part of its sustainable strategy
for “turning waste into a resource.”
55

BUSINESS ACTIVITIES
Waste Management
The Limay hazardous
waste treatment plant.
56 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
Sarp Industries: story of a pioneer
The Sarp Industries story began in 1975, when a handful of
visionaries decided to work together to protect water resources
by treating waste that was not biodegradable or that could be
toxic for the environment. Over the years, the company set up
hazardous-waste treatment activities and developed the associated
techniques, including physical-chemical processes and specialized
incineration. Its clients were mainly big companies that generated
large amounts of liquid and solid waste. In the 1990s,
Sarp Industries, which by then had become a global benchmark
in its industry, began exporting its expertise to countries faced
with environmental issues associated with industrialization.
During this period, new solutions were devised for smaller
companies generating smaller amounts of waste with more
technically complicated and very diverse characteristics.
Sarp Industries tackled the problem by concentrating the polluting
elements in order to neutralize them better. Sarp Industries is now
developing new treatment processes, based mainly on recovery,
viewing waste as a potential source of secondary raw materials:
metals, plastics, solvents, hydrocarbons, biofuels, etc.
This fundamental change also requires more work on expanding
the company’s expertise in the wide diversity of sources of
hazardous wastes, in particular household hazardous waste,
which is a major challenge for the 21st century. Ever the pioneer,
Sarp Industries is continuing to anticipate macroeconomic changes
to secure its position in a rapidly growing market and remain
the benchmark for a fi eld in which it has created the deontology,
culture and practices.
4 million
metric tons
of hazardous waste were treated by
Veolia Environmental Services in 2007.
30.3%
of treated hazardous waste
was recovered.

Marpol waste, dismantling of ships and
platforms), as well as in industrial
cleaning and the maintenance of marine
infrastructure.
In 2007, the division augmented its fl eet
of support vessels for its Marine Services
Group (United States), opened a new
Marpol waste treatment center in
Dunkirk (France), and built the fi rst
French site for dismantling end-of-life
ships in Bassens.
Tailor-made solutions
for public authorities
Around the world, Veolia Environmental
Services’ teams design and implement
tailor-made services that enable
its clients, whether public authorities
or industrial companies, to manage
their waste in strict compliance with
national and international regulations.
The leading private waste management
operator in the United Kingdom,
the division has made its mark in the
booming market for PFI contracts.
Its fourth contract, signed for
twenty-seven years, covers integrated
management of municipal waste
in four districts of Shropshire. It includes
construction of a waste-to-energy plant,
a composting center and two integrated
waste management facilities with
waste transfer stations and household
recycling centers. The goal is to recycle
50% of waste by 2012.
In Mataro, Spain, Veolia Environmental
Services is to build and operate a
waste-to-energy plant to deal with the
waste from 27 districts in the Maresme
area. A biological treatment facility
that will digest, recover and stabilize
organic waste will be added to the plant.
In China, the division signed a 30-year
concession contract with the Foshan
A player in sustainable development
municipality to build and operate
a medical waste incineration facility.
The city of Jiujiang awarded it a build
and operate contract for the household
waste landfi ll facility, and for processing
sludge from the wastewater treatment
plant.
Meeting the requirements
of each industrial company
In the United States, Veolia Environmental
Services signed a 10-year contract with
the Dow Corning chemical company’s
Midland plant to convert the plant’s
reusable acid and gas waste.
In Australia, the division took over waste
management at more than 770 of
Coles Myer’s sites as well as a number
of services for Queensland Alumina,
which operates the world’s biggest
aluminum refi nery, and for BHP Billiton
Ravensthorpe Nickel Operations,
the country’s biggest nickel mine.
In France, Veolia Environmental
Services obtained a three-year extension
of the contract it fi rst signed ten years
ago with the automaker Renault.
It covers 20 sites in France and services
in non-hazardous and hazardous waste
management, metals trading, industrial
and technical cleaning, tertiary cleaning
and pipe systems maintenance.
Swordfi sh, the Marine Services Group’s
fi fth support ship.
THE YEAR IN BRIEF...
– Acquisition of Germany’s
Sulo and introduction of an
effi cient integration process.
– Award of the 27-year PFI
contract for integrated waste
management in Shropshire
County (United Kingdom).
– Award of the operating contract
for the biggest waste-to-energy
plant in the United States,
in Pinellas County, Florida.
– Deployment of career paths to
professionalize recruitment
and improve the integration
of blue-collar workers.
– Establishment of VES@tech,
a forum where technical experts
exchange ideas and experiences,
created to capitalize on the
division’s technical expertise.
Veolia Environmental Services has contributed to the global public debate by putting forward seven proposals for a
responsible approach to waste management, accompanied by tangible actions to improve policies and practices. The
division has committed to reducing greenhouse gas emissions through Veolia Environmental Services North America
Corp.’s (VESNA) membership in the Chicago Climate Exchange (CCX). Its eff orts in behalf of the environment have been
awarded: Xi’an Jiangcungou and Nanjing Shuige, its two Chinese biogas recovery sites, were ranked fi rst and second in
the Top 10 Bluesky Ranking of the Waste Landfi ll Gas Power Plant, organized by the United Nations and China’s National
Development and Reform Commission.
57

ENERGY SERVICES
“Dalkia’s business is positioned at the point
of convergence of three major challenges:
the spread of urbanization with the resulting
industrialization, the growing scarcity and
increasing prices of fossil fuels, and climate change.
Dalkia’s off er is now based mainly on the
systematic search for energy savings for its clients,
the reduction of polluting emissions and the
development of renewable energy sources.”
Olivier Barbaroux,
Chief Executive Offi cer of Veolia Environnement
and Chairman of Dalkia
58 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT

Françoise-Hélène
Jourda, architect
“Overall, the building industry consumes
half of the planet’s resources in water,
materials, energy and so on.
And it also produces half of all polluting
elements. Nowadays, it costs from 10%
to 17% more to construct a zero-energy
building. But I believe that building
and living diff erently will, in the future,
bring as much change as the industrial
revolution did. It will completely
transform our society. This is very clear,
but we do not necessarily consider it.
In our societies, it is going to totally
transform our ways of thinking, and
for those of us who are architects,
it is going to transform architecture.”
59

BUSINESS ACTIVITIES
Energy Services
Veolia Energy (Dalkia) again recorded double-digit
growth between 2006 and 2007. Revenue rose 12.7%
to €6.9 billion and the division continued its vigorous
external growth.
KEY FIGURES
€6,896.4 million in revenue
38 operating countries
54,375 employees
700 local heating
and cooling networks
102,700 energy systems managed
3,900 industrial sites
21,500 educational, cultural,
sport and leisure establishments
5,000 healthcare institutions
European leader
in energy services
Dalkia’s positioning is underpinned
by its two main areas of expertise –
its original expertise as an operator
off ering performance guarantees and
that of a designer of high-performance
systems. Building on that expertise,
Dalkia is now positioning itself as
an integrator of tomorrow’s energy
solutions. Its job is to take responsibility
for energy management at its clients’
sites, while guaranteeing to optimize
both consumption and the
environmental impacts. Dalkia’s goal
is to be a crucial player in the
development of innovative energy
solutions that will reduce polluting
and greenhouse gas emissions.
60 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
Energy and environmental
optimization
The reality of climate change has been
fi rmly established. There are two other
planetary challenges as well: growing
urbanization and the increasing scarcity
of fossil fuels, which is causing their
prices to rise.
Dalkia, which manages more than
100,000 energy systems, is placed at the
point where these three challenges
converge. The division works very closely
with its clients, within their energy
systems and buildings, and in the heart
of cities, to purchase, transform and
optimize energy. Its activities range from
defi ning needs to upgrading and
operating equipment and systems.
Whenever possible, Dalkia employs
solutions based on renewable energy
sources. The gains made in both energy
and environmental performance by
working with Dalkia enable clients to
take advantage of the opportunities
associated with managing CO2 emission
quotas and energy saving certifi cates.
Dalkia’s model reinforced
Dalkia is continuing to expand in Central
and Eastern Europe. It acquired EKO
(the Kolin heating network) in the Czech
Republic, and Pannonpower and Sinesco
in Hungary. The division set up in Bulgaria
through the acquisition of the district
heating company in Varna, the country’s
third-largest city. In the United Kingdom
and Ireland, its business in energy
management continued to grow, with
the acquisition of cogeneration systems.
Similar developments took place in Latin
America, where energy services are
provided as well as management of
shopping malls and hospitals.
Veolia Energy became a major operator
in the United States by acquiring
Thermal North America Inc., that
country’s leading manager of heating
and cooling networks. It is also active in
China, where it manages two large
heating networks, in Jiamusi and Harbin.

5 main
R&D areas:
– energy effi ciency
– recovery of
byproduct energy
– air quality
– modeling of building
heating systems
– renewable energy sources
Jiamusi in China: a heating
network to deal with extreme cold
Jiamusi, a city with 2.5 million residents,
is located in the northeast of China, where
conditions in winter are extremely harsh,
with the average temperature in December
and January reaching –18 °C. The city’s heating
network is 25 years old. Made of simple primary
networks and with no computerized
management system, it had become obsolete.
In May 2007, the municipality turned to
Dalkia to operate and develop the network.
It was the fi rst heating network in China
for which operation was awarded under
a concession model.
Fast action was needed. Around 30 employees
carried out the annual service, applied technical
modifi cations, and prepared for the installation
of around 100 substations. The heat came back
on on October 15. This success will play a part
in Dalkia’s expansion in China.
The network now provides heating for
250,000 people, as well as for stores and
municipal buildings—in all, a total surface of
5.5 million square meters. By 2020, the network
should be heating close to 15 million square
meters of buildings.
61

BUSINESS ACTIVITIES
Energy Services
62 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
Health institutions have confi dence in Dalkia
Health institutions need complex and impeccable logistics
that ensure top-quality, reliable and uninterrupted service.
Dalkia has made a specialty of meeting these needs. In Italy,
many hospitals have for a long time outsourced their general
services to Siram, a Dalkia subsidiary that is the leader in its sector.
Dalkia’s practices in France have built on this expertise.
In 2006, Dalkia signed a contract for a wide range of services
with the Saint-Joseph Foundation in Paris. It covers all technical
and non-technical services, including surgical instrument
sterilization, which is the specialty of its Sterience subsidiary.
In 2007, Dalkia’s expertise in medical support services crossed
the Atlantic. After exchanging experiences with their French
counterparts, managers at Brazil’s Santa Casa de Misericordia
Foundation asked Sterience to carry out an audit of sterilization
practices in its hospital. In 2007, it awarded Dalkia a full-service
contract, one of the most comprehensive in the healthcare sector.
Dalkia manages the hospital’s utilities, air conditioning,
electricity, environmental services, infrastructure
quality improvement, health safety, and support services,
such as medical equipment, telephony and parking.

Heating and cooling networks
for all climates
These systems off er the advantage of
a choice of fuels and proven effi ciency.
In China, the division made a striking
breakthrough in heating networks.
In addition to the Jiamusi concession
contract, it took over the Harbin network
being built in the far north of the
country, where temperatures reach
–24 °C in January. The system will serve
more than 17 million square meters of
buildings in an area covering 52 square
kilometers.
In Central and Eastern Europe, where this
type of system is widely used, Dalkia
operates some very large district heating
networks. The division is expanding its
networks in Poznan and Lodz, which are
the biggest in Poland. At the beginning of
2008, Dalkia also bought Praterm, which
manages 260 kilometers of network in
around 20 medium-sized Polish cities.
In Slovakia it took over the municipal
network in Lucenec and set up in Bulgaria
by acquiring the company operating the
32-km Varna network. This system has two
boiler plants (124 MWth) and satisfi es 10%
of the heating needs of Bulgaria’s thirdlargest
city. Cooling networks are of
particular interest in the Middle East. In
Bahrain, Dalkia is to build cooling plants
and networks and will operate them for
twenty-fi ve years.
More services for healthcare
institutions
Other than managing technical services,
Dalkia has extended its off er to cover all
medical support services. Its Sterience
subsidiary takes care of sterilizing
instruments for healthcare institutions.
For the Riuniti hospitals in Trieste, Italy,
Dalkia is in charge of building maintenance,
technical systems management and fuel
supply for the standby generators. It
provides the same services for six health
authorities in Cagliari.
In South Korea, the division won
contracts with the Soonchunhyang
A player in sustainable development
teaching hospital and two hospitals in
Seoul. It is also beginning to develop this
business in Latin America, where it
delivers services to one of Brazil’s biggest
hospitals, the Santa Casa. In Mexico, the
division is a member of a consortium
that won the Ciudad Vitoria publicprivate
partnership (PPP) contract,
including energy management with
performance guarantees. In Portugal,
under another PPP, the Centro de
Medicina de Reabilitação do Sul hospital
awarded it a contract for technical
building management. In Sweden, the
Östergötland region outsourced
multitechnical maintenance to Dalkia
for its 3 hospitals and 42 dispensaries.
In France, Dalkia will set up a wood-fi red
boiler plant covering 66% of heating
needs at the Limoges teaching hospital.
In Belgium, the Erasme hospital in
Anderlecht awarded Dalkia a technical
management contract, including
management of the wastewater
treatment plant, which is provided by
Veolia Water. The contract includes
energy saving guarantees.
Environmental quality for the tertiary
and industrial sectors
Dalkia won the comprehensive building
management contract for Société
Générale’s HQE Granite tower in the La
Défense business quarter of Paris,
France. In Brazil, the division will provide
comprehensive management, including
energy, for fi ve university campuses in
Rio de Janeiro and will also manage
energy for fi ve shopping malls.
For industrial companies, Dalkia provides
its expertise in energy management and
CO2 emissions quota trading. In Sweden,
the division is to build and maintain
a 16 MW wood-fi red boiler for Setra, the
country’s leading timber producer, under
a 15-year energy effi ciency contract.
In Chile, Dalkia manages the energy
utilities of Ralun, a food processing and
preparation specialist, and is to build an
11 MWe wood-fi red cogeneration facility
for the chipboard manufacturer, Masisa.
THE YEAR IN BRIEF...
– Acquisition of Thermal North
America, the US leader in heating
networks.
– Marked breakthrough in China
with the Jiamusi and Harbin
heating networks.
– Increased use of renewable
energy sources, especially
biomass and solar power.
– Expansion in the healthcare sector
in France and Latin America.
– Deployment of a diversifi ed range
of energy management services,
in particular in Central Europe,
building on sound positions
in the heating network markets.
– Global safety campaign to
promote the use of personal
protective equipment.
– Step-up in training programs.
Dalkia is increasingly using biomass in its heating systems. For example, the division manages the biggest biomass
power plant in Hungary. Built in 2004, the 50 MWe plant is Dalkia’s biggest wood-fi red facility and one of the largest
in Central Europe. The plant feeds Hungary’s second largest heating network and satisfies the heating needs of
30,000 homes.
63

TRANSPORTATION
“With its effi cient management of train, light rail,
bus and coach operations, Veolia Transport
is becoming fi rmly established as a mobility
organizer. By ensuring comfort and simplicity
for its passengers, satisfying their requirements
for on-time service and real-time information,
and expanding its mobility off er to include
alternative modes, the company off ers options
to suit every passenger. It helps make public
transit people’s fi rst choice, rather than something
they have to put up with.”
Cyrille du Peloux,
Executive Vice President of Veolia Environnement
and Chief Executive Offi cer of Veolia Transport
64 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT

Jacques Barrot,
Vice President of the
European Commission,
Transport Commissioner
“To ensure that mobility – which
is a value and essential lever
in competitiveness – becomes
sustainable in a context of increasing
international trade […] there are
three requirements. First, the most
appropriate transportation modes
must be chosen. […] Rail, river and
maritime modes will replace trucking
for moving goods over long distances.
[…] Second, road transportation has
to become green. […] The European
Union must pave the way for a
planned and managed rollout of
biofuel through dialgoue with the
stakeholders in this fi eld. […]
Our third imperative is to organize
more-intelligent transportation
by combining new communications
technology and satellite navigation.
[…] Urban mobility will gain
enormously from the real-time
information revolution. […] Reliable
information on a city’s traffi c fl ow
must go hand in hand with the
growth in comfortable, dependable
public transportation organized
around all of the other means
of mobility.”
65

BUSINESS ACTIVITIES
Transportation
Veolia Transport saw a year of strong growth in France,
where revenue increased nearly 10%, as well as in
its international markets, where it gained close to 15%.
After its major acquisitions of SNCM in France and
SuperShuttle in the United States, the division is focusing
on consolidating its positions.
KEY FIGURES
€5,590.1 million in revenue
1.7 billion kilometers
traveled in 2007
38,078 vehicles operated
30 operating countries
81,532 employees
2.5 billion trips in 2007
5,000 local authority clients
worldwide
The leading private European
public transportation operator
Veolia Transport is well established
in Europe and North America, where
it develops and operates urban mobility
solutions based on buses, light rail,
metros and taxicabs, as well as regional
public transportation using coaches,
trains and ferries, under public service
management contracts. The division
employs information and assistance
services to help passengers organize
their trips. For industrial companies
in Europe, Veolia Transport off ers rail
freight services with related logistics.
Veolia Transport works with its clients
to combat air pollution, integrate transit
into urban planning, improve their
systems’ accessibility and enhance
safety. Its sights are set on inventing
the mobility of today and of the future
so that it can assist in and prepare
for its clients’ growth.
66 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
Public transportation, a solution in the
interest of environmental balance
Growing environmental concerns
and the soaring price of oil have made
transportation a bigger issue in public
policy than ever before. Public
authorities and individuals are taking
another look at transportation practices,
particularly in cities, as well as personal
and community behavior.
Major international initiatives, such as
the UN conference on climate change
in Bali; national initiatives, such as the
Grenelle de l’Environnement process
in France; and regional initiatives, such
as California’s adoption of morestringent
standards for cars, have shown
the importance of transportation in
preserving the planet’s environmental
balance. Public transportation emits less
greenhouse gas, pollutes less, frees up
public space and is economically
equitable, making
it the inevitable solution for sustainable
mobility.
Sustainable mobility,
Veolia Transport’s core business
To facilitate mobility and protect the
environment, Veolia Transport applies
its expertise in all transport modes
in many countries, in particular, its
expertise in dedicated-lane systems
such as light rail and bus rapid transit.
The division develops solutions to
organize intermodality. It coordinates
the diff erent transit modes, increases
ridership, is developing transportation
on demand, promotes alternative modes
and makes life simpler for passengers.
The company is focusing its expertise
on increasing its use of biofuels, which
by 2020 should account for 10% of its
fuel consumption in Europe.
Through its Veolia Cargo subsidiary,
it off ers European fi rms competitive rail
freight transportation solutions that
will meet the European Union’s target
for 2020 of reducing greenhouse gas
emissions 20% from their 1990 level.

Winner in Las Vegas
In 10 years
NordWestBahn has become the leading
private operator of regional passenger
trains in Germany. It carries more
than 21 million people per year on
a network of 1,065 km of track. Its
100 rail cars travel 12.8 million km
annually, and the company employs
440 people.
In Las Vegas, Citizens Area Transit’s bus rapid
transit system Max and its Deuce, which serves
the Las Vegas Strip, are run by the same operator,
Veolia Transportation. A team of 1,200 employees
has been running 48 routes and 350 vehicles
since 1993 for the Regional Transportation
Commission (RTC) of Southern Nevada.
Rated one of the top 10 in the United States,
the system has received numerous prizes from
the American Public Transportation Association
for its service and safety. In fi fteen years, ridership
has increased from 15 million to 60 million a year.
At the end of 2007, RTC decided to increase
ridership on its routes without adding
any vehicles. The program calls for changes
in the routes and stops, increased frequency,
the introduction of double-decker buses, training
for all drivers, supervisors and radio operators,and
information campaigns. For this new challenge,
RTC again turned to Veolia Transportation.
67

BUSINESS ACTIVITIES
Transportation
Nice call center.
68 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
Switching from mass transportation
to individual transportation
The passenger services developed by Veolia Transport
are designed to attract passengers through providing personalized
information that allows them to plan their journeys.
The division has mobility centers in several countries, answering
customers’ questions to help them organize their trips.
Better yet, customers can access information on their mobile
phone. After conducting trials of the NFC (Near Field
Communication) technologies in Nice and the Bouches-du-Rhône
region, Veolia Transport, partnering with Orange, decided
to deploy a smartcard ticketing system on the Bordeaux network.
With B’Pass, customers can access information about delays
and the network’s intermodal solutions, as well as validate, order
and pay for tickets. That’s not all: they can also download maps
of the neighborhood and helpful information provided through
interactive tags embedded in street furniture. They can even
pay for purchases in certain stores and access municipal services.
This experiment will serve as the model for extending this
technology to other European cities.
Global public transportation
market
€460 bn
in 2008, with 15% open
to competitive tendering
€750 bn
in 2016, with €150 bn
to €200 bn open
to competitive tendering

Bus service, our core business
Veolia Transport is one of the world’s
leading private operators of bus routes.
In France, it operates systems in about
60 metropolitan areas outside of Paris, and
is the number one private operator in the
Paris suburbs. In 2007, its subsidiary
TRA was awarded a contract to operate
the 27 routes of the Seine-Saint-Denis
département’s system. Its bid was singled
out for its proposed innovations, measures
to combat fare evasion, quality of service,
accident prevention and improvement
plans. In Belgium, 17 regional contracts,
involving 300 employees for 236 vehicles,
were renewed. In the United States, the
contract for the management of the
Las Vegas system was also renewed.
We also made inroads in airport bus
service, with our acquisition of People
Travel Group, in Sweden, which serves
two ports and seven airports.
Growth in commuter
and regional rail transportation
Veolia Transport is rolling out regional
and commuter rail services in many
countries. In the United States, the
division began operating Tri-Rail,
a shuttle service between Miami
International Airport and West Palm
Beach. It was the fourth contract of this
type for the company, after Los Angeles
(Metrolink), Oceanside (Sprinter) and
Boston, which was renewed in 2007.
Every day, 150,000 people travel on the
Boston commuter network, with its
600 km of track and 125 stations.
Another renewal: the commuter trains
in Auckland, New Zealand.
The metro: another success in Asia
Veolia Transport, which operates
the metro in Stockholm, Sweden
(800,000 passengers per day),
has entered the South Korean market.
The division will bring Line 9 of the Seoul
metro into service and begin operating
it in 2009. It will recruit and train
550 people. 2009 will also mark the start
of its operation of the fi rst metro line
in Mumbai, India.
A player in sustainable development
New ferry activities
Veolia Transport operates ferries in
Europe. In 2007, the Morbihan
departmental council awarded it a
seven-year contract to serve the islands
of Groix, Houat, Hoëdic and Belle-Ile-en-
Mer. With 1.6 million passengers per
year, this is the biggest public ferry
service in France after service to Corsica.
Transportation on demand continues
to grow and diversify
Veolia Transport’s transportation-ondemand
(TOD) business continues to grow,
with close to 70 of these contracts in France
and the renewal of the PZN contract
in the Netherlands, its biggest in TOD.
With SuperShuttle in the United States,
the division off ers people the possibility of
sharing a vehicle to make the trip between
their home or hotel and the airport. In 2007,
Nashville became the 22nd city to welcome
the SuperShuttle service.
Rail freight for companies gaining
ground
Having brought a fi rst train, with a capacity
of 100,000 to 170,000 metric tons per year,
into service for Lafarge Ciments, Veolia
Cargo has introduced a second, this time
between Dunkirk and Le Havre. By reducing
truck traffi c and the associated CO2 emissions, combined rail transportation
off ers an economical and ecological
solution that Veolia Cargo is expanding
in Germany and starting up in Italy
and Belgium.
The subsidiary specializing in maritime
container shipment by rail, Veolia Cargo
Link (a joint subsidiary with CMA CGM),
launched fi ve shuttles from the Dourges
multimodal center (road-rail-water)
in the Nord-Pas-de-Calais region,
to Le Havre and Lyons, in France;
Mannheim, in Germany; and Zeebrugge
and Antwerp, in Belgium.
The Nice light rail system.
THE YEAR IN BRIEF...
– Award of the operating contract
for line 9 of the Seoul metro
(25 km, 25 stations): operation
to begin in 2009.
– Contract to serve the Morbihan
islands (9 vessels, 250 employees).
– Inauguration of the light rail
system in Nice (8.7 km, 21 stations).
– Renewal of the Las Vegas urban
transit contract (350 vehicles,
48 routes): 60 million passengers
carried per year.
– Acquisition of People Travel
Group to serve airports
in Sweden (900 employees,
230 buses).
– New contract with Lafarge
for Veolia Cargo: 170,000 metric
tons carried per year.
Veolia Transport is the only mobility operator to have adopted an Environmental Management System. The “journey
eco-effi ciency indicator” established in 2007 evaluates the greenhouse gas emissions avoided by the division in 2007
compared with private cars at 3.7 million metric tons of carbon dioxide equivalent. The evaluation was based on 92%
of the trips and 80% of the kilometers covered by Veolia Transport during the year.
69

BUSINESS ACTIVITIES
Exploration of sectors
at the edge of our core business
In sectors close to its core business in environmental services, Veolia Environnement
off ers its clients innovative solutions that respond to their sustainable development issues.
Green fuels
In this market, which is growing by 15%
to 20% annually, Veolia Environnement
favors green fuel production from used
food oils. This solution off ers a positive
environmental balance, and recovering
these oils is an integral part of the waste
treatment train. This project draws
on Sarp Industries’ long-standing
competencies and is based on the Waste
Management division’s recycling and
collection activities. Most of the fuel
produced will be used to supply
Veolia Environnement’s vehicle fl eets.
The fi rst plant to produce green fuel
from used food oils will be
commissioned in 2008 in Limay, France.
Its capacity will be increased from
40,000 to 80,000 metric tons per year.
Wind energy
The market for wind energy is also
experiencing strong growth, driven
by incentive policies in several European
countries. There is substantial growth
potential in the United States and Asia.
In 2007, Veolia Environnement acquired
a 50% interest in Eolfi , the French leader
in mutual funds dedicated to wind
power. The acquisition has given us
70 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
the resources to satisfy local authority
and industrial clients interested in
including a wind park in their sustainable
development plan. It will also enable
us to put spaces to better use when they
are suitable for wind farms.
Through its venture capital funds (FCPR)
and local mutual funds (FIP), Eolfi
is currently generating 26 MW of wind
power in France and building 12 farms
with a total capacity of 120 MW.
Its production capacity is expected to
exceed 150 MW by the end of 2008.
Eolfi also has several projects in Greece,
Poland and Asia.
Veolia Habitat Services for homes
Through its Proxiserve subsidiary,
Veolia Environnement is number two
in domestic boiler maintenance in
France. Proxiserve recently rolled out
more home services, primarily in
plumbing, a profi table activity
experiencing strong growth. The
subsidiary’s millionth assistance contract
was signed in November 2007.
As the next step, Veolia Environnement
wants to develop a range of home
services based on environmentally
friendly homes: energy diagnosis;
installation and maintenance of
renewable energy equipment, such
as heat pumps and solar panels;
assistance and repairs for heating,
plumbing and electricity. All of the
new home services will be marketed
under the Veolia Habitat Services brand.

Consolidated fi nancial statements
71

CONSOLIDATED FINANCIAL STATEMENTS
Consolidated balance sheet
Assets
Consolidated balance sheet: Assets (in millions of euros) 12/31/2007 12/31/2006 12/31/2005
Goodwill 6,913.2 5,705.0 4,752.3
Intangible assets linked to concessions 2,989.2 2,345.6 2,091.8
Other intangible assets 1,706.4 1,379.8 1,281.4
Tangible assets 9,203.2 7,918.7 6,885.7
Investments accounted for using the equity method 292.1 241.0 201.5
Non-consolidated investments 256.1 181.7 209.5
Long-term operating fi nancial assets 5,272.4 5,133.4 5,337.4
Derivative instruments – Assets 123.7 201.6 249.0
A – Of which revaluation of treasury instruments – 28.8 161.1
Other long-term fi nancial assets 746.0 637.5 691.6
Deferred tax – Asset 1,468.1 1,355.7 1,134.7
Non-current assets 28,970.4 25,100.0 22,834.9
Inventories and work in progress 839.4 731.8 635.2
Accounts receivable 12,459.4 10,968.7 10,083.3
Short-term operating fi nancial assets 355.2 326.2 208.0
Other short-term fi nancial receivables 330.0 205.3 221.2
Marketable securities – 66.4 60.7
Short-term derivative instruments – Assets 114.4 – –
B – Cash and cash equivalents 3,115.6 2,658.0 2,336.1
Current assets 17,214.0 14,956.4 13,544.5
Assets held for sale 122.5 67.3 1.6
Total assets 46,306.9 40,123.7 36,381.0
Net fi nancial debt = C + D + E + F – A – B
Given the evolution of the company, certain line item details in the balance sheet have been modifi ed to allow for a more pertinent analysis of the accounts and one
that is consistent with the evolution of the accounting standards in the past years. These modifi cations do not impact the shareholders’ equity or net income of the company.
The Notes to the Consolidated Financial Statements (available in French in the 2007 AMF registration document, or document de référence, and in English in the 2007
Form 20-F annual report) form an integral part of the Consolidated Financial Statements.
72 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT

Liabilities
Consolidated balance sheet: Liabilities (in millions of euros) 12/31/2007 12/31/2006 12/31/2005
Share capital 2,358.8 2,063.1 2,039.4
Additional paid-in capital 9,179.5 6,641.2 6,499.1
Retained earnings and net income (3,925.4) (4,343.5) (4,748.3)
Minority interests 2,577.8 2,192.6 1,888.0
Shareholders’ equity 10,190.7 6,553.4 5,678.2
Non-current provisions 2,138.9 2,196.6 1,648.0
Other long-term debt – 207.3 203.7
C – Long-term fi nancial debt 13,948.0 14,001.6 13,722.8
Derivative instruments – Liability 163.8 145.9 154.5
Deferred tax – Liability 1,794.7 1,504.9 1,205.0
Non-current liabilities 18,045.4 18,056.3 16,934.0
Accounts payable 12,944.8 11,268.6 10,369.8
Current provisions 825.7 825.9 754.0
D – Short-term fi nancial debt 3,805.0 2,904.1 2,138.2
Short-term derivative instruments – Liability 34.0 – –
E – Of which revaluation of treasury instruments 27.7 – –
F – Bank overdrafts 459.4 456.0 506.8
Current liabilities 18,068.9 15,454.6 13,768.8
Liabilities held for sale 1.9 59.4 –
Total liabilities 46,306.9 40,123.7 36,381.0
73

CONSOLIDATED FINANCIAL STATEMENTS
Consolidated income statement
(in millions of euros) 12/31/2007 12/31/2006 12/31/2005
Revenue from ordinary activities 32,628.2 28,620.4 25,570.4
Of which revenue from operating fi nancial assets 345.1 351.0 325.8
Costs of sales (26,929.6) (23,427.1) (20,869.9)
Selling costs (551.3) (515.2) (478.5)
General and administrative costs (2,757.0) (2,611.2) (2,394.9)
Other costs and operating income 106.6 66.0 65.8
Operating income 2,496.9 2,132.9 1,892.9
Cost of fi nancial debt (969.6) (783.8) (774.0)
Income from fi nancial debt 152.5 82.8 63.3
Other fi nancial income and expenses 1.4 (34.0) 28.1
Income tax expense (420.1) (409.6) (422.4)
Equity in net income of affi liates 16.9 6.0 6.5
Income before earnings from discontinued
operations and minority interests 1,278.0 994.3 794.4
Net income from discontinued operations (23.2) 0.6 0.7
Net income before minority interests 1,254.8 994.9 795.1
Minority interests 326.9 236.2 172.9
Net income 927.9 758.7 622.2
Net earnings per share (in euros) (1)
Diluted 2.13 1.89 1.56
Non-diluted 2.16 1.90 1.57
Net earnings per share
from continuing operations (in euros) (1)
Diluted 2.19 1.88 1.56
Non-diluted 2.21 1.90 1.57
Average number of diluted shares (in millions) 435.0 402.4 397.6
Average number of non-diluted shares (in millions) 430.0 398.8 395.6
(1) Following the increase in capital completed on July 10, 2007, the earnings per share calculation, for both the basic and diluted, has been adjusted retroactively for all periods
given in compliance with the IAS 33 standard.
The Notes to the Consolidated Financial Statements (available in French in the 2007 AMF registration document, or document de référence, and in English in the 2007 Form
20-F annual report) form an integral part of the Consolidated Financial Statements.
74 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT

Consolidated cash fl ow statement
(in millions of euros) 12/31/2007 12/31/2006 12/31/2005
Net income attributable to equity holders of the parent 927.9 758.7 622.2
Share of minority interests 326.9 236.2 172.9
Operating depreciation, amortization,
provisions & impairment losses 1,816.7 1,831.0 1,690.7
Financial amortization & impairment losses 8.0 9.4 (21.0)
Capital gains/losses on disposals and dilution (173.5) (73.3) (70.0)
Share of net income of associates (16.9) (6.0) (14.9)
Dividends received (8.8) (9.7) (6.5)
Cost of net fi nancial debt 817.1 701.0 712.4
Income tax expense 420.1 357.1 422.4
Other (including IFRS2) 101.9 40.0 33.7
Cash fl ow from operations 4,219.4 3,844.4 3,541.9
Of which cash fl ow from discontinued operations (1.5) (8.0) 4.3
Change in net working capital requirements (167.1) (111.8) (39.4)
Tax paid (417.7) (343.0) (338.8)
Cash fl ow provided by operating activities 3,634.6 3,389.6 3,163.7
Purchase of intangible assets, property, plant and equipment (2,518.7) (2,017.6) (1,837.1)
Proceeds on disposals of intangible assets, property,
plant and equipment 212.9 141.3 168.8
Financial investments (1,835.4) (1,291.5) (944.1)
Proceeds from sale of fi nancial assets 181.7 206.7 154.0
Operating fi nancial assets
New operating fi nancial assets (404.1) (360.6) (513.4)
Principal payments on operating fi nancial assets 360.7 438.1 320.6
Dividends received 15.3 13.8 16.8
New long-term loans granted (65.0) (69.4) (62.1)
Principal payments on long-term loans 61.6 29.2 55.7
Change in short-term loans (27.4) 2.6 115.0
Purchases/sales of marketable securities – 3.4 118.2
Cash fl ow provided by investing activities (4,018.4) (2,904.0) (2,407.6)
Change in short-term fi nancial debt (1,534.5) (239.2) (2,936.2)
New loans and other long-term debt 2,060.4 1,997.2 3,134.8
Principal payments on loans and other long-term debt (1,362.9) (1,000.8) (2,319.6)
Increases in capital 3,039.2 246.5 81.0
Purchase of treasury shares 18.9 0.4 –
Dividends paid (564.3) (479.2) (374.0)
Interest paid (716.0) (596.4) (738.8)
Cash fl ow provided by fi nancing activities 940.8 (71.5) (3,152.8)
Opening cash and cash equivalents position 2,202.0 1,829.3 4,240.2
Currency eff ects and miscellaneous (102.8) (41.4) (14.2)
Closing cash and cash equivalents position 2,656.2 2,202.0 1,829.3
Cash and cash equivalents 3,115.6 2,658.0 2,336.1
– Bank overdrafts and other cash position items 459.4 456.0 506.8
Closing cash and cash equivalents position 2,656.2 2,202.0 1,829.3
The Notes to the Consolidated Financial Statements (available in French in the 2007 AMF registration document, or document de référence, and in English in the 2007 Form
20-F annual report) form an integral part of the Consolidated Financial Statements.
75

FOR FURTHER INFORMATION
FOR FURTHER INFORMATION
For investors and fi nancial analysts
Nathalie Pinon
Head of Investor Relations
Tel.: +33 1 71 75 01 67
Fax: +33 1 71 75 10 12
E-mail: nathalie.pinon@veolia.com
Brian Sullivan
Vice President
US Investor Relations
Tel.: +1 630 371 2749
E-mail: brian.sullivan@veoliaes.com
For individual shareholders
Telephone (toll-free number from fi xed line
within France only): 0 805 800 00
Veolia Environnement
38, avenue Kléber – 75116 Paris – France
service.actionnaires@veolia.com
Web sites
www.veoliaenvironnement.com
www.veolia-fi nance.com
www.sustainable-development.veolia.com
www.veoliaenvironnement-rh.com
wwww.fondation.veolia.com
www.institut.veolia.org
www.observatoire.veolia.com
www.canyousea.com
www.veolia.com/globe
76 2007 ANNUAL REPORT VEOLIA ENVIRONNEMENT
Documents available
The document de référence (in French only) has
been registered with the AMF, the French
fi nancial markets authority.
The Form 20-F annual report will be registered
with the US Securities and Exchange
Commission.
2007 Sustainable Development Report.
2007 Human Resources Report.
2007 Corporate Foundation Report.

Design and production:
Coordination:
Philippe Méchet, director of Communications
Géraldine Fort, chief Editor
Editorial consulting and writing:
Doussot Conseil (Patrick Doussot – Anne de Beco)
English texts: ALTO
Photos: Benhur Sanchez/Getty Images (couverture) – HumaniTerra – Les Enfants gâtés
Veolia Environnement photo library: Frédéric Béraud/Veolia Propreté; Stéphane Citerne; Olivier Culmann/Tendance Floue;
Olivier Guerrin; Christophe Majani d’Inguimbert; Geoff roy Mathieu/Sterience, Antoine Muller;
Michel Mullot/Sarp Industries; Manolo Mylonas; Sade; Veolia Water Force; Chen Xiaowei/Dalkia
Infographics: Henry Ortega/IDE
This report was printed in France using plant-based inks on Condat silk paper with ISO 9001 certifi cation and PEFC label.
This label certifi es that the product is make from pulp sourced from sustainably managed forests and is a guarantee
for consumers that they are not contributing to deforestation.

Veolia Environnement
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75116 Paris Cedex, France
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www.veoliaenvironnement.com