A player in sustainable development - Dalkia

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