Veolia Environnement : Annual report - Comments on Consolidated Financial Statements December 2020 (currently being reviewed by statutory auditors)

CONTENTS

1 PROPOSED MERGER WITH SUEZ ................................................................................................... 3

• 1.1 Acquisition of a block of 29.9% of Suez shares ............................................................................................. 4

• 1.2 Filing of a public tender offer on Suez shares .............................................................................................. 4

• 1.3 Employee commitments .............................................................................................................................. 5

• 1.4 Merger control authorizations ..................................................................................................................... 6

• 1.5 Transaction financing ................................................................................................................................... 6

• 1.6 Ongoing legal proceedings ........................................................................................................................... 6

• 1.7 Impacts of the investment in Suez on the consolidated financial statements for the year ended

  December 31, 2020 ...................................................................................................................................... 7

• 2 MAJOR EVENTS OF THE PERIOD ................................................................................................... 9

  • 2.1 General context .......................................................................................................................................... 10

  • 2.2 Changes in Group structure ........................................................................................................................ 13

  • 2.3 Group financing .......................................................................................................................................... 16

  • 2.4 Performance Share Plan and Group savings .............................................................................................. 18

• 3 ACCOUNTING AND FINANCIAL INFORMATION .......................................................................... 20

  • 3.1 Key figures ................................................................................................................................................. 21

  • 3.2 Group revenue ........................................................................................................................................... 22

  • 3.3 Group EBITDA ............................................................................................................................................ 28

  • 3.4 Other income statement items ................................................................................................................. 31

4 FINANCING ...................................................................................................................................... 38

• 4.1 Change in net Free Cash Flow and Net Financial Debt ............................................................................... 39

• 4.2 Net Industrial Investments ........................................................................................................................ 41

• 4.3 Operating Working Capital ........................................................................................................................ 43

• 4.4 External financing ...................................................................................................................................... 44

5 OTHER ITEMS .................................................................................................................................. 46

• 5.1 Return on Capital Employed (ROCE) .......................................................................................................... 47

• 5.2 Statutory auditors' fees .............................................................................................................................. 48

• 5.3 Related‐party transactions ........................................................................................................................ 48

• 5.4 Subsequent events .................................................................................................................................... 48

• 5.5 Risk factors ................................................................................................................................................. 48

• 5.6 Outlook ...................................................................................................................................................... 49

• 5.7 Reconciliation of GAAP indicators and the indicators used by the Group ................................................ 49

• 5.8 Definitions .................................................................................................................................................. 51

VEOLIA ENVIRONNEMENT

OPERATING AND FINANCIAL

REVIEW

Consolidated Financial Statements for the year ended December 31, 2020

2020

Draft under review by the statutory auditors

VEOLIA ENVIRONNEMENT / OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED DECEMBER 31, 2020 1

2 VEOLIA ENVIRONNEMENT / OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED DECEMBER 31, 2020