2004, First Half Results

H1, 2004 Results– Paris, September 17th 2004 – Financial Communication 1

Disclaimer
Veolia Environnement is a corporation listed on the NYSE and Euronext Paris. This document
contains "forward-looking statements" within the meaning of the provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Such forward-looking statements are not guarantees of
future performance. Actual results may differ materially from the forward-looking statements as a
result of a number of risks and uncertainties, many of which are outside our control, including but
not limited to: the risk of suffering reduced profits or losses as a result of intense competition, the
risks associated with conducting business in some count ries outside of Western Europe, the United
States and Canada, the risk that changes in energy prices and taxes may reduce Veolia
Environnement's profits, the risk that we may make investments in projects without being able to
obtain the required approvals for the project, the risk that governmental authorities could terminate
or modify some of Veolia Environnement's contracts, the risk that our long-term contracts may limit
our capacity to quickly and effectively react to general economic changes affecting our performance
under those contracts, the risk that Veolia Environnement's compliance with environmental laws
may become more costly in the future, the risk that currency exchange rate fluctuations may
negatively affect Veolia Environnement's financial results and the price of its shares, the risk that
Veolia Environnement may incur environmental liability in connection with its past, present and
future operations, as well as the risks described in the documents Veolia Environnement has filed
with the U.S. Securities and Exchange Commission. Veolia Environnement does not undertake, nor
does it have, any obligation to provide updates or to revise any forward-looking statements.
Investors and security holders may obtain a free copy of documents filed by Veolia Environnement
with the U.S. Securities and Exchange Commission from Veolia Environnement.

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

First half 2004 highlights:
Continued earnings improvement

Internal growth
Ramp-up in contracts signed over past few years
Impact of Veolia 2005 efficiency plan > €45m

EBIT: €975m,
up 15% at constant exchange rates under the new
consolidation scope (1)
Recurring net income: €205m, up 54%

(1) Excluding FCC and US assets sold in 2003 or in the process of being sold: Surface Preparation, Ev erpure,
Culligan, US Filiter equipment and short-ter m services bus inesses.


Execution of disposal program and debt
reduction

Disposal of US non-core assets for over $2 bn, in line with
the stated targets (USF equipment and short-term services
in Q3 and Culligan in Q4)

Sale of stake in B-1998 SL, the holding company controlling
FCC: debt reduction of over €1.1 bn expected in the second
half of the year


Execution of disposal program and debt
reduction
In €m
13 500
Change in net debt
13 000

12 500

12 000

11 500 13 066 Target
€10.5/11bn (*)
11 000
11 804
10 500 (*)

10 000
Dec. 31, 2002 Dec. 31, 2003 Dec. 31, 2004
estimated
(*) Inc luding the reconsolidation of a €325m w ater securitization program and €378m deriv ing from the Berlin
operating lease in accordance w ith the LSF ( French Financial Security Act) of August 1, 2003.

Validation of the financial model
Substantial improvement in free cash flow
In €m

400
+540
2002 +168
-100
2003 H1 2004

-600
Improvement > €2bn
-1 525
-1100
Free cash flow (*) before dividend
payment greater than €500 million at
-1600 30/06/2004
(*) Free cash flow = cash flow from operations +/- change in the w orking capital requirement - effect of the variation
of the securitization and Dailly (i.e. receivables discounting) programs + asset disposals (excluding non-core
asset disposals) - capital expenditures and financial investments +/- changes in the scope of
consolidation.

Strong profitability improvement:
EBIT margin trends (1)

∆ Constant
In €m EBI T EBI T margin
exchange rate
30/06/04 30/06/03 30.06.04/30.06.03 30/06/04 30/06/03

Water 385 353 +9.4% 8.3% 7.7%
Waste 212 179 +22.1% 7.0% 6.1%
Energy Services 200 179 +12.3% 7.8% 7.5%
Transportation 57 41 +41.6% 3.2% 2.2%
Holding -40 -36 n.s n.s n.s
FCC 132 119 +10.3% 8.8% 8.3%
Total (1) including FCC 945 836 +14.3% 7.0% 6.4%
Total (1) excluding FCC 813 716 +15.0% 6.8% 6.1%
(1) Excluding US assets sold in 2003 or in the process of being sold.
.


Our commitment to sustainable development
has been recognized
In 2004, Veolia Environnement has been included in the
2 main international sustainability indexes

Veolia Environnement is included in the
FTSE4Good, an index with rigorous standards,
which selects companies having incorporated
sustainable development as a true governance
tool. Only 24 French companies are part of this
index.

Veolia Environnement has again been
included in the Dow Jones Sustainability Index


Outlook for 2004 confirmed

Double-digit growth in EBIT
Very strong increase in recurring net income
Significant reduction in net debt: €10.5bn - €11bn after
asset disposals (1)
Positive free cash flow
Maintain ROCE (2) target of at least 8% after tax in 2005
despite the disposal of FCC
Significant increase in dividend

(1) Inc luding the reconsolidation of a €325m w ater securitization program and €378m deriv ing from the Berlin
operating lease in accordance w ith the LSF ( French Financial Security Act) of August 1, 2003.
(2) See 2003 Annual Report For m 20- F for a description of the methodology used to calculate ROCE.


Medium-term outlook:
Strong visibility

Continued profitable growth
Through the award of less capital-intensive long-term
contracts (operating and maintenance contracts, public-
private partnerships, etc.)
In Europe, in North America and in Asia (a few targeted
countries, i.e. China, South Korea, Taiwan and Singapore)

Growth in positive free cash flow after increasing
dividend
ROCE target of over 10% by 2008


Key figures at June 30, 2004
In €m
30/06/04 30/06/03 30.06.2004/30.06.2003
change
At current At constant

Revenue 14,243 14,048 +1.4% +2.8%
Excluding revenue from US assets sold in 2003
or in the process of being sold in 2004 (1) 13,507 13,143 +2.8% +3.7%
Under new consolidation scope excl. FCC (2) 11,989 11,682 +2.6% +3.6%

EBITDA 1,875 1,824 +2.8% +4.1%
Excluding EBITDA from US assets sold in 2003
or in the process of being sold in 2004 (1) 1,806 1,731 +4.3% +5.3%
(2)
Under new consolidation scope excl. FCC 1,608 1,551 +3.7% +4.7%

EBIT 975 884 +10.2% +11.6%
Excl. EBIT from US assets sold in 2003
or in the process of being sold in 2004 (1) 945 836 +13.1% +14.3%
(2)
Under new consolidation scope excl. FCC 813 716 +13.6% +15.0%
(1) Surface Preparation and Everpure, w hich w ere sold in 2003, as w ell as Culligan, equipment and short- ter m
ell short-
services
(2) After the aforementioned disposals and the sale of FCC.

From revenue to net income

In €m 30/06/04 ∆
30/06/03
30.06.04/30.06.03

Revenue 14,243 14,048 +1.4%
EBITDA 1,875 1,824 +2.8%
Depreciation and long-term provisions (755) (790)
Renewal expenses (145) (150)
EBIT 975 884 +10.2%
Recurring financial expense (342) (370)
Notional tax charge (224) (182)
Recurring earnings of equity method companies 30 26
Minority interests (143) (112)
Recurring net income before goodwill 296 246 +20.3%
Recurring goodwill amortization (91) (113)

Recurring net income after goodwill 205 133 +54.4%
Non-
Non-recurring income (1) (24) (2,233)
Net income 181 (2,100)
(1) See "2004 First Half Year Results" press release for reconciliation of recurring net income
reconciliation
to net income.

Revenue at June 30 (excluding US assets
sold in 2003 or in the process of being sold) (1)
In €m
14 000
13 507
13 143

30/06/2004
12 000 30/06/2003

10 000

8 000

6 000 4 634
4 592
3 050
4 000 2 553
2 914 1 782
2 388 1 489
1 821
2 000 1 429

0
Water Waste Energy S vcs. Transport FCC Total
At const. exch. rates +1.8% +6.8% +7.1% -1.6% +4.5% +3.7%
At current exch. rates+0.9% +4.6% +6.9% -2.1% +4.2% +2.8%
(1) Excluding Surface Prepar ation and Everpure sold in 2003 and Culligan, equipment and short-ter m services


EBITDA contribution (excluding US assets
sold in 2003 or in the process of being sold) (1)

In €m ∆ 30.06.04/30.06.03
30/06/04 At current At constant EBITDA margin
exch.rates exch. rates June 30, 2004

Water 679 2.1% 2.8% +14.6%
Waste 451 4.4% 6.9% +14.8%
Energy Services 366 2.5% 2.9% +14.3%
Transportation 157 12.4% 13.0% +8.8%
FCC 194 10.8% 10.9% +13.0%
Holdings -39
Total 1 806 +4.3% +5.3% +13.4%
(1) Excluding Surface Preparation, Everpure sold in 2003 and Culligan, equipment and short-ter m services


Change in EBIT at June 30, 2004 (1)

In €m
1 000
30/06/2004 945
30/06/2003
900
836
800

700

600

500
385
400 353

300 212 200
179
200 179 132
119
57
100
41
0
Water Waste Energy Sces Transportation FCC
Total
+41.6% +10.3%
A constant exch. rate +9.4% +22.1% +12.3% +14.3%
At current exch. rates +8.9% +18.5% +11.7% +40.5% +10.6% +13.1%

(1) Excluding Surface Preparation and Everpure, w hich w ere sold in 2 003, as w ell as Culligan, equipment
2003,
and short- ter m services.
short-

Continued commercial success
Examples of contracts won or renewed in 2004
In €m Estimated cumulative revenue

Eastern Moravia (V.A.K. Zlin) 30 yrs Czech Republic 360
Zun Yi (Guizhou province) 35 yrs China 210
Rennes 10 yrs France 150
US Virgin Islands 20 yrs USA 110
St. Petersburg (construction) - Russia 52
Fernwasser 40 yrs Germany 40
Johnson Matthe y (industrial) 10 yrs UK 21
Beijing 20 yrs China 20
Grand Paroisse 10 yrs France 19
MD Papier GmbH 12 yrs Germany 15
Sheffield 5 yrs UK 450
Lao Gang 20 yrs China 260
Pontiac, Michigan 20 yrs USA 205
Dunkerque 11 yrs France 66
Marseille Provence Métropole 5 yrs France 42
La Rochelle 8 yrs France 33
Ku Ring Gail 10 yrs Australia 32
BP (Industrial) 3 yrs USA 25
SAFI 7 yrs Morrocco 20
Abu-Dhabi 5 yrs United Arab Emirates 20

Water Waste Energy Services Transportation Multi-services


Continued commercial success
Examples of contracts won or renewed in 2004
In €m Estimated cumulative revenue

Lyon Villeurbanne 25 yrs France 500
Poznan -- Poland 75/yr
Druskininkai 30 yrs Lithuania 110
Richter Gedeon Rt (industrial) 6 yrs Hungary 80
Montluçon 20 yrs France 62
Brezno 20 yrs Slovakia 50
CHU Nancy 10 yrs France 31
Prince Charles Hospital 25 yrs Wales 20
Heinz (industrial) 15 yrs UK (near Manchester) 18
Melbourne 5 yrs Australia 1 500
Nice 7 yrs France 595
St Etienne 8 yrs France 345
Toulon 8 yrs France 314
Appeldoorn 6 yrs The Netherlands 210
Göthenburg 7+3 yrs Sweden 90
Denver 5 yrs USA 55
Koper - Slovenia 50
PSA Peugeot Citroën 10 yrs France 1 000
Visteon Deutschland GmbH 10 yrs Germany 60

Water Waste Energy Services Transportation Multi-services


Divisional EBIT contributions

Water: €385m, +10% at constant exchange rates (1)
Good level of contribution from France despite high level of comparison
(heatwave effect in June 2003)
Excellent performance in Europe, strong increase in margins not only in
Germany but also in Eastern Europe and Morrocco
North America: new organization of the continuing business
Asia: strong increase in contracts signed over the past fe w years
Significant profitability improve ment from VWS
(1) Excluding US assets sold in 2003 or in the process of being sold: Surface Preparation and
Everpure sold in 2003 and Culligan and the equipment and short-term services businesses; and
excluding water acti vities of Proacti va

Waste: €212m, +22% at constant exchange rates
Strong effect of restructuring me asures and productivity improvement in
France, in particular in the incineration and urban waste business (1 point
increase in margins)
Strong increase from Scandinavia and the UK which continue to grow
both economically and commercially. Good performance in Asia –
volume effect in Hong Kong – and growth in the USA, despite difficult
competitive environment for hazardous waste and industrial services


Divisional EBIT contributions (continued)

Energy Services: €200m, +12% at constant exchange rates
Double-digit growth in French business activities despite unfavorable pricing
(recovery of engineering activities)
Outside France, good contribution from the UK, very good growth in income in
Southern Europe due to the integration of Giglio and sustained internal growth,
as well as a good level of contribution from Eastern Europe

Transportation: €57m ,+42% at constant exchange rates
In France, significant growth in income and commercial success with the
renewal of contracts (Nice, Saint-Etienne, Toulon)

Outside France, growth in Europe (Germany and Netherlands), the USA (very
positive impact from the Boston contract) and in Australia (increased effect
of the new Melbourne contract)


Veolia 2005 efficiency plan:
Target of €300m in recurring savings for 2006
In €m

350,0
€300m
300,0

250,0
€200m Operations
200,0 Support functions
Assets
150,0 Purchasing
€100m
100,0

50,0 €45m

0,0
H1 2004 Target Target Target
2004 2005 2005


Veolia 2005 efficiency plan: over €45 m in
recurring savings accounted for during the first half of
2004
H1 04 Examples of projects underway
Operations Savings Diagnostic analysis and optimization of e fficiency from On yx
• Operational pr ocesses France's incinerators/Use of new technologies to optimize mobile
• Risks/Ins urance €13.1m representative route planning at Dalkia and in the Water di vision
Group-wide redefinition and negotiation of property and casualty
• WCR
insurance premiums
Optimization of billing and collection processes at On yx and in the
Water di vision
Purchasing
Implementation of 50 framework agreements that were
• Gr oup-wide purchases €7.4m renegotiated by the Veolia En vironnement group paving the wa y
• Bus iness-line for the pooling of volumes.
purchases e.g. temporary staffing, fi xed-line and mobile telephony, car
rental, chemical products

Supports functions
• Structures Optimization of head o ffice costs (Communications, Marketing,
€14.0m
• Financial and tax Ta x and Legal, Administration and Finance)
optimization Optimization of financing and liquidtiy
• Information s ystem Streamlining of investments and IT de velopment
savings

Assets
• Real estate €10.9m Streamlining of real estate portfolio b y increasing the office
• Bus iness portfolio occupancy ra te
Clean-up of On yx France's waste collection contract portfolio


Veolia 2005 efficiency plan
Target: more than €100 m in savings during 2004

The Veolia 2005 plan includes over 300 individual
projects

The results for the first half of 2004 and the most
current outlook confirm the minimum targets of:

€100m in recurring savings in 2004

€300m in recurring savings in 2006


Change in financial expense

In €m June 30, 2004 June 30, 2003

Cost of financing (304) (314)

Provisions and other 16 (137)
o/w • USFilter assets - (72)
• Amortization of Océane pre mium (15) (15)
• Treasury stock 2 (10)
• Foreign exchange gains/(losses) - (16)
• Capital gains on sale of mktble sec. 52 -
• Other (23) (24)

Net financial expense (288) (451)

Average interest rate: stable at 4.3%


Control of capital expenditures and investments
In €m
Maintenance Growth Total
30/06/04

Water 310 193 503 Brussels, The Hague

Waste 110 162 272 Major projects in France
and the UK

Energy Services 67 136 203 Poland (Poznan)

Transportation 45 50 95 Other projects in
Germ any, Denm ark,
Australia
FCC + Proactiva 60 79 139

Total capex/investments 592
capex/ 620 1,212

Total at June 30, 2003 597 663 1,260


Cash flow from operations at June 30, 2004

In €m

1 500 +9% + 1 471

1 450 + 141

1 400
1 346
- 13.5
1 350
- 3.7 + 0.6

1 300

1 250

1 200
Cash flow from ops Impact Impact Interest Impact Exchange Performance Cash flow from ops
30/06/2003 disposals Rates Rate 30/06/2004


Strong increase in positive free cash flow

In €m 30/06/2004 30/06/2003 ∆
30.06.04/30.06.03

Cash flow from operations +1,471 +1,346 +9%
Capital expenditures / investments (1,212) (1,260)
Impact of changes in consolidation scope (33) +33
Change in the WCR (1) +159 (57)
Disposal of assets +155 +109

Free cash flow before disposals of
non-core assets +540 +171 X3

(1) Not including the change in the securitization and receivables discounting programs


Strong increase in positive free cash flow

∆
In €m 30/06/2004 30/06/2003 30.06.04/30.06.03

Cash flow from operations +1,471 +1,346 +9%
Capital expenditures / investments (1,212) (1,260)
Impact of changes in consolidation scope (33) +33
Change in the WCR (1) +159 (57)
Disposal of assets +155 +109

Free cash flow before disposals of
non-core assets +540 +171 X3

(1) Not including the change in the securitization and receivables discounting programs


Change in net debt during the first half 2004
In €m 30/06/2004

Net debt at start of period 11,804
Change in receivables discounting program +262
Reclassification of securitization & special purpose entities +703
Net debt after above changes in receivables disc. program
and reclassification during the 1st half-year 2004 (1) 12,769
Cash flow available before disposal of non- core activities
non- -540
Disposal of non- core activities
non- -66
Dividend payments +315
Impact of foreign exchange and other +248

Net debt at end of the 1st half 2004 12,726

(1) Inc luding changes in receivables discounting program and reclassification impact of the LSF ( French
Financial Security Act)


Disposal of North American Water activities
in 2003 and 2004
Target met

Sale price
Everpure USD 215m
Farmlands in California USD 77m
USF equipment &
short term services (1) USD 993m
Culligan (2) USD 610m
Sub-
Sub-total USD 1,895m i.e.: €1,550m (4)

Surface Preparation (3) USD 130m
Total USD 2,025m i.e.: €1,656m (4)

(1) (3)
Received on August 2, 2004 Sold dur ing the 3rd quarter of 2003
(2) (4)
To be received dur ing the 2nd half Based on verage exchange rate in H1 2004 used


Disposals completed in 2003 and in progress
during 2004

Sale price

Total disposals in the US €1,656m
FCC (1) €916m

Other disposals in 2003 (2) €408m
€155m
Disposal of operating assets during H1 2004
€3,135m
Total

(1) Received in the 2nd half of 2004
(2) Total 2003 asset disposals: €720m (retreated for the sale of Everpure of €191m in December
2003 and of Surface Preparation for €121m in September 2003)

First-half contribution of activities sold since
the beginning of 2004

in €m
North American FCC (1) Total
Water activities

Revenue 736 1,489 2,225
EBITDA 68 194 262
EBIT 29 132 161
Capital expend. / investments 30 129 159
Cash flow from operations 60 165 225

(1) Not including the 50% interest in Pr oactiva ow ned by FCC: Proact iva is to be consolidated proportionately once
Proactiva
the sale of FCC becomes effective during the second half of 2004.
2004.


Outlook
Scope of consolidation at June 30, 2004 after disposals
in US (1) and sale of FCC (2)
Breakdown of revenue at June 30, 2004 Breakdown of revenue at June 30, 2004
by division after disposals in US and by region after disposals in US and sale
sale of FCC of FCC
RoW 4%
Transportation Water39% Asia/Pacific 4%
15%
France 55%
Rest of Europe 29%
Energy Serv. 21%

North America8%
Waste 25%

June 30, 2004 June 30, 2003
Consolidated revenue (€bn) 12.0 11.7

(1) Excluding the North A merican businesses sold during 2003 (Surface Preparation and Ev erpure) or in the
process of being sold ( Culligan, equipment and short-ter m services).
(2) FCC w as consolidated proportionately until June 30, 2004

Veolia Environnement today : a group

Refocused on its strategic businesses in targeted
geographic zones

Offering long and sustained visibility

With a strengthened financial situation (control of
indebtedness and generation of free cash flow)

A steady rise in profitability founded upon rigorous
management (Veolia 2005)


2000-2004
Review of four years of
transformation


Changes in the business portfolio

Major commercial success

Contracts renewed on the same, if not
better business terms

Strategic contracts awarded

Positions consolidated in Central Europe

Major presence being established in
Asia


Strategic contracts won around the world
Principal municipal outsourcing contracts won and renewed since 2001

Western Europe
Brussels, Camden, Dublin, Central and Eastern Europe
East Sussex, Gera, Marne,
Lyon, Metz, Rennes, The Czech Rep. (Prague, Moravia). Lithuania, Poland
Hague, Weisswasser (Saxony) (Poznan), Slovenia, Estonia
Westminster…

Asia
US
China (Baoji, Beijing, Guangzhou, Lao
Indianapolis, Atlanta, Boston, Gang, Pudong/Shanghai, Shenzhen,
Pontiac (Michigan), Tampa, Tianjin, Zuhai …), Singapore, Taichung
Oklahoma City, Washington DC, (Taiwan) …
US Virgin Islands …
Africa & Middle East
Al exandria, Jerusalem,
Rabat …

Australia/New Zealand

Auckland, Melbourne,
Woodlawn…


And highly successful in the development of
industrial outsourcing contracts…

Western Europe
Arcelor, ATM Milan, BP Lavera,
L’Oréal, Manuli Films, Novartis,
PS A Citroën, Pigna, Renault,
Central and Eastern Europe
Visteon…
Setuza (Czech Rep.), Richter
Gideon Rt (Hungary) …

US
BP, ConocoPhilips, Ford,
General Motors, Kerr McGee,
3M…
Asia
Hynix, Michelin,
Petronas…



Strategic contracts awarded:
Prague, Budapest, Bucharest, Baltic countries,
Sheffield, Indianapolis, Boston, Shanghai,
Shenzhen, Melbourne, etc.
Industrial investments
Major expansion plans launched
Water BOTs: The Hague, Brussels, Chengdu,
Ashkelon
Incinerators in France and the UK
Acquisitions
Significant success through targeted
acquisitions in line with the Group’s strategy:
Pacific Waste, Siram, Verney

Heightened control over investments
(in €m)
Total investment
Of which maintenance capex
4500 4 052
4000 3 739
3 538
3500 2 973
3000

2500
2000
1 212

1500

1000
1331 1 382 1 323 1 325
500
591
0
2000 2001 2002 2003 H1 2004


Free cash flow after investments and changes in the
WCR, before dividends and non-core asset disposals
(in €m)

Very favorable trend reversal since the beginning of
2003
1000
540

500 171
2000 H1 2001 H2 2001 H1 2002 H2 2002 -3
0
H1 2003 H2 2003 H1 2004

-500

-1000 -672
-854
-1 008
-1500 -1 221
-1 384
-2000


Strategic management of the business mix
€5 billion in strategic asset disposals
US Filter disposals
2000-2004: $3.5 billion
Exit from the equipment and short-term services activities,
retail and commercial activities

Sale of FCC stake
2004: €1.1 billion
Partnership terminated owing to strategic differences
Stake in Dalkia sold to EdF for €1.1 billion
Partnership with a primary energy producer
And over €1 billion in “recurring” disposals
Sale of minority shareholdings: PSC 2002, UK
Asset disposals: Barraqueiro 2000, Wyuna 2003
Optimization of industrial assets



Balanced revenue contribution from divisions
Water
Waste
Energy serv ices
9% €2.1 billion Tra nspor tation
FCC 15%
11%
€2.5 billion
39%

12% 51%
21%
€2.8 billion
€11.8 billion (1)

17%
€4 billion 25%

Pro forma 1999 revenue Estimated 2004 revenue
€23.2 billion After announced US disposals and sale of FCC

(including 1999 US acquisitions ~€24 billion
on a full year basis)
(1) incl. 42% in the US

USA: strategic refocusing
Europe: consolidation of a domestic market
Asia: start-up of activities
start-
4% incl. 1% in Asia-Pacific
8% incl. 4% in Asia-Pacific
23% 8%

42%

55%
29%

31%
Pro forma 1999
Estimated 2004
After announced US disposals
France
Rest of Eur ope and sale of FCC
USA
RoW


Financial structure strengthened
(in € bn)

17 16.6 Significant reduction in consolidated net debt
16

15.0
15 14.8

14
13.1
13 12.7
0,7 (*)
12
Target
€10.5 - 11.0 bn
11

10
Pre-IPO June 30, 2001 June 30, 2002 June 30, 2003 June 30, 2004 Dec. 31, 2004e
(July 2000)
(*) Inc luding consolidation of €325m for w ater securitizations and €378m of special pur pose entities
(application of French Financial Security Act)

Solid cash flow from operations in spite of
asset disposals and currency effects
(in €m)

3 000 2701 26%
2780
2 800
24%
2 600 2455 22.9%
2 400 22%

2 200 21.3%
1 953 20%
2 000
1 800 18%
17.2%
1 600 16%
1 400
14.8% 14%
1 200
1 000 12%
31/12/2000 31/12/2001 31/12/2002 31/12/2003

Cash flow from operations (€m) Cash flow/Net debt (% )


Financial structure strengthened

(in €bn) Profitability improvement
24 10%
23
22
22
21 9%
20
18 /18.5
8%
18

16
7%
7.0%
14
6.4% 6%
12

10 5%
2001 2002 2003 2004 target .
Average capital employed (€m) ROCE Group (in %)


Appendices


IFRS progress report: :
Migration program in progress since 2003

IFRS-compliant financial statements are to be published from
2005 with comparative figures for 2004
The IFRS project was launched with the identification of the
principal differences between the French and international
standards based on the experience gained when US GAAP were
adopted in 2001
Implementation of a Steering Committee led by the Sr. Exec VP
and a 16-person IFRS working group devoting 100% of its time to
the transition to IAS/IFRS;
Training was held during the first half of 2004 for over
1,200 employees at the Veolia Campus for an average of two days
varying according to the audience: Finance department,
accountants, lawyers, sales teams. Accounting principles
handbook made available on VE's intranet portal;
IT-based consolidation system adapted to IFRS: reporting system
adjusted to produce the 2004 and 2005 financial statements.
Uncertainty of the interpretation of IFRS standards as they relate
to the treatment of concessions. Publication of an IFRIC
interpretation expected in the first quarter of 2005.

IFRS project schedule
2003 2004 2005
First quarter 2nd quarter 3rd quarter 4th quarter 1st quarter

IRFS training for over 1,200
Identification of employees
differences
between French
G AAP/IFRS FTA v2 FTA v3 Quantified
FTA (1) v1
Review with
10/09/04 …/../04 impact of
auditors
Reported on reviewed by reviewed by FTA
14/06/04 auditors auditors

Presentation of
2004 financial
statements

(1) FTA : First Time Adoption. Reconstitution of the consolidated balance sheet at January 1, 2004


IFRS project report update:
principal restatements

Standards Restatements carried out

Revenue from ordinary activities IAS18 Exclusion of amounts collected
on behalf of third parties from
revenue and cost of revenue

Financial debt IAS39 Consolidation of Veolia Water's
securitization programs and of
receivables discounting
Valuation of financial IAS 32-39 Valuation already completed
instruments (FAS133). Option chosen
Jan. 1, 2004
Employee benefits IAS 19 Accounting treatment of
retirement commitments
already in line with IAS 19,
especially retaining the corridor
approach. Actuarial differences
set to zero.
Intangible assets and IAS 38 Reclassification of some
deferred charges busine ss assets

Adjustment of provisions IAS 37

Debt structure

Ratings Standard & Poor's BBB+ / Stable / A2
Moody's Baa1 / Stable / P2

Average maturity for reclassified debt (1) : ~ 6.5 years

64% of gross debt denominated in euros, 23% of gross debt in
US dollars

Fixed/variable interest rate (after hedging) : 48% / 52%

73% of net debt excluding Project financing debt concentrated
at VE level

Liquidity: €8.5bn (Cash : €3.1bn / Credit lines not drawn down:
€5.4 bn)

(1) Gross debt – ( mar ketable securities + cash and equivalence)


Financial Communication

Nathalie PINON, Head of Investor Relations
38 Avenue Kléber – 75116 Paris - France
Telephone +33 1 71 75 01 67
Fax +33 1 71 75 10 12
e-mail nathalie.pinon@groupve.com

Brian SULLIVAN, Vice President, US Investor Relations
1605 Main Street, Suite 710, Sarasota, FL 34236- USA
Telephone (941) 362-2435
Fax (941) 362-2499
e-mail brsullivan@onyxna.com

Web site
http://www.veoliaenvironnement-finance.com

2004, First Half Results

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