Activity and Results Significantly Above 2020 and 2019
Acceleration of Growth Driven by New Offerings and International Development, Confirming the Soundness of Our Strategic Program
Successful Tender Offer on Suez
Veolia Begins 2022 in Very Good Conditions Thanks to Its Portfolio of Contracts Largely Protected Against Inflation and Thanks to the Synergies Expected From the Acquisition of Suez
1 Variation at constant forex 2 Including €122M Suez dividend 3 At constant forex - Without extension of the conflict beyond the Ukrainian territory and without significant change in the energy supply conditions in Europe
PARIS--(BUSINESS WIRE )--Regulatory News:
Antoine Frérot, Veolia’s Chairman & CEO commented: « 2021 year ended on the same strong note as in the first nine month, achieving record results. Revenue growth remained strong throughout the year, both in terms of volumes (up 3%) and in value, thanks to the tariff indexation mechanisms in the majority of our contracts enabling to offset cost inflation. Moreover, the continued improvement of our efficiency has substantially amplified this increase of revenue. Our record results demonstrate the strength and the sound execution of our strategic program Impact 2023, particularly the new growth opportunities for international development and innovative offerings. It is these foundations that enable our Group to be resilient today in the face of the conflict in Eastern Europe, as in previous crises. Veolia therefore starts 2022 in good conditions, just as we begin to integrate the activities we bought from Suez through the tender offer. Close to 10 billion euros of revenue will complement our 2021 revenue of 28 billion €, an increase of more than 30% which will notably strengthen our international footprint, and accelerate innovation. This growth, in addition to the expected synergies, will enable our current net income to grow by more than 20% in 2022 and will enhance our earning per share by around 40% in 2024. The creation of the undisputed world champion of ecological transformation is underway and on track.»
Veolia’s revenue strongly progressed in 2021 thanks to higher volumes, increased service prices combined with higher energy and recycled materials prices. Compared to 2019, the reference year before the sanitary crisis, revenue is equally strongly up by +6.5% at constant forex.
At constant forex, after a growth of +4.0% in Q1 2021, of +19.7% in Q2 (compared to the most COVID- impacted quarter of 2020) and of +5.9% in Q3, Q4 2021 registered a progression of +10.1%.
Exchange rates variations were almost neutral on revenue, at -€4M.
Scope effect was €234M, or +0.9% on revenue. Developments in Central Europe (District heating network in Prague, cogeneration in Budapest mainly) and in Global Businesses (acquisition of OSIS from SUEZ) more than offset the divestment of Sade Telecom and of a cleaning business in Singapore.
Energy price increase (heat and electricity) has gathered momentum in the second part of the year, yielding a positive impact of €405M, or +1.5% on revenue, while recycled material prices have contributed by €499M (+1.9%) on revenue growth, of which €319M for paper and cardboard, €63M for plastics and €60M for metals. Recycled paper revenue thus doubled to €605M, while plastic recycling revenue grew by 29% to €383M.
Weather effect was a positive of €73M (+0.3 %). After a cold winter, favorable for heating activities, rainy summer weighed on water volumes in France.
The Volume/Commerce effect was a positive of €886M, or +3.4% on the Group’s revenue growth, thanks to continued strong commercial momentum in all our businesses, volume recovery in Waste and the rebound of works (+€211M).
Service prices continued to be well oriented, with a positive impact of €405M on the Group’s revenue, or +1.5%, in line with the 1st nine-month trend.
At constant exchange rates and by geography, the evolution over the year 2021 is as follows :
By business, at constant scope and exchange rates, the evolution is as follows.
In Water, Water distribution and Wastewater treatment grew by +1.9%, and water Technology and Networks progressed by +2.8%. Waste revenue grew sharply, by +14.2%, thanks to strong volumes, up by +5.3%, well-oriented prices, up +2.7% and the favorable impact of recycled material prices (+5.2%). Energy revenue also recorded a strong growth of +12.3% including a favorable weather impact of +1.6% (€85M) and a positive heat and electricity price effect of +6.8% on revenue.
* At constant forex ** Current net income per share after hybrid costs and before PPA
Acquisition of Suez finalized on 27 January 2022 with the closing of the tender offer
Veolia group aims to be the benchmark company for ecological transformation. With nearly 179,000 employees worldwide, the Group designs and provides game-changing solutions that are both useful and practical for water, waste and energy management. Through its three complementary business activities, Veolia helps to develop access to resources, preserve available resources, and replenish them.
In 2020, the Veolia group supplied 95 million people with drinking water and 62 million people with wastewater service, produced nearly 43 million megawatt hours of energy and treated 47 million metric tons of waste. Veolia Environnement (listed on Paris Euronext: VIE) recorded consolidated revenue of €26.010 billion in 2020. www.veolia.com
As the changes in the health crisis are difficult to estimate, we draw your attention to the “forward-looking statements” that may appear in this press release and relating to the consequences of this crisis which may affect the future performance of the Company.
Veolia Environnement is a corporation listed on the Euronext Paris. This press release 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 risk that changes in energy prices and taxes may reduce Veolia Environnement’s profits, the risk that governmental authorities could terminate or modify some of Veolia Environnement’s contracts, the risk that acquisitions may not provide the benefits that Veolia Environnement hopes to achieve, the risks related to customary provisions of divesture transactions, 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 other risks described in the documents Veolia Environnement has filed with the Autorité des Marchés Financiers (French securities regulator). 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 from Veolia Environnement a free copy of documents it filed (www.veolia.com) with the Autorités des Marchés Financiers.
This document contains "non‐GAAP financial measures". These "non‐GAAP financial measures" might be defined differently from similar financial measures made public by other groups and should not replace GAAP financial measures prepared pursuant to IFRS standards.
FINANCIAL INFORMATION FOR THE PERIOD ENDED DECEMBER, 30 2021
Group key figures for the year ended December 31, 2021 are presented below. Comparative figures for the year ended December 31, 2020 re-presented1 include IFRS 2 share-based payment impacts in current net income. A reconciliation of published and re-presented indicators is presented in the Appendices.
∆ at constant scope and exchange rates
Current net income - Group Share2
Net income - Group share
Current net income - Group share, per share2 (Basic)
Current net income - Group share, per share (Diluted)
Dividend per share paid during the fiscal year 3
(1) The indicators are defined in the appendix
(2) Including the share of current net income of joint ventures and associates viewed as core Company activities.
(3) Subject to approval at the General Shareholders’ Meeting of June 15, 2022
The main foreign exchange impacts on revenue were as follows:
FX impacts for the year ended December 31, 2021 (vs December 31, 2020 re-presented
With the post-health crisis upturn in revenue, felt from the second half of 2020, all segments reported growth in 2021.
∆ at constant scope and exchange rates
Revenue increased 8.9% in France compared with the year ended December 31, 2020:
Europe excluding France revenue grew 15.6% at constant exchange rates compared with the year ended December 31, 2020, benefiting from higher recyclate and energy prices and a positive weather effect in energy in the first quarter. These items combined with the ramp-up of new activities integrated in Central and Eastern Europe and a strong recovery in activity in the United Kingdom and Germany.
Revenue increased +5.4% in the Rest of the world at constant exchange rates year-on-year, with growth in all geographies:
Global businesses revenue increased +4.4% at constant exchange rates compared with the year ended December 31, 2020, despite the sale of the Sade Telecom business at the end of 2020. At constant scope and exchange rates, segment revenue increased +6.5%:
The Group’s activity by business in 2021 is marked by:
∆ at constant scope and exchange rates
of which Technology and Construction
Water Operations revenue increased +1.9% at constant scope and exchange rates year-on-year confirming the activity’s resilience driven by an upturn in construction activity and achieved despite lower water volumes in France due to reduced consumption linked to a wet summer in 2021.
Technology and Construction revenue is up +2.8% at constant scope and exchange rates compared with December 31, 2020. This increase is mainly driven by VWT, with growth reported by Westgarth (a subsidiary specializing in the Oil & Gas sector) and increased construction activity for municipalities in France and the United States.
Revenue increased +14.2% in the Waste business at constant scope and exchange rates compared with the year ended December 31, 2020, benefiting from ongoing high recyclate prices (+5.2%), volume growth (+5.3%) and positive tariff increases (+2.7%).
The increase in recyclate prices and particularly paper prices continued throughout 2021 and was particularly strong in the first half of the year.
Overall, volumes have returned to pre-health crisis levels, except for commercial and industrial waste which remain down on 2019 in certain geographies.
Energy revenue grew +19.9% at constant exchange rates compared with the year ended December 31, 2020 and +12.3% organically, restated for the scope effects of integrating Prague Right Bank heating network activities and cogeneration installations in Budapest (+€398 million in revenue).
The strong activity growth is supported by a favorable weather impact at the beginning of the year and in the fourth quarter (+1.6%), notably in Central and Eastern Europe, an increased price effect (+6.8%) driven by tariff rises in Poland and Hungary and strong commercial development (+1.9%) in Europe and particularly Italy.
1.3 ANALYSIS OF THE CHANGE IN GROUP REVENUE
The increase in revenue breaks down by main impact as follows:
The foreign exchange impact of -€4 million mainly reflects fluctuations in American (-€94 million) and Asian (-€22 million) currencies, partially offset by an improvement in the Australian (+€51 million) and UK (+€75 million) currencies 2.
The consolidation scope impact of €234 million mainly concerns in Central Europe the impact of integrating the Budapest cogeneration installations (€235 million) and the Prague Right Bank urban heating network (€163 million) in 2020. In the Global businesses segment, the sale of SADE’s Telecom network activities in 2020 (-€302 million) was partially offset by the integration of OSIS in May 2021 (€198 million).
The Commerce / Volumes / Works impact is +€886 million, driven for more than half by higher waste volumes and excellent commercial momentum.
The Weather impact is +€73 million and mainly concerns Central Europe where the Energy business benefited from a severe winter in the first and fourth quarters, offset in the third quarter by the impact of a wet summer on the Water activity in France.
Energy and recyclate prices had an impact of +€904 million, driven by a strong increase in recyclate prices (+€499 million, including €319 million for paper, €63 million for plastic and €60 million for metal) and the positive impact of energy prices in Europe and notably in Central Europe, which benefited from higher heating tariffs in Poland, and in Germany with favorable impacts on electricity sales.
Favorable price effects (+€405 million) are mainly tied to tariff reviews estimated at +2.7% in waste and +1% in water.
Group consolidated EBITDA for the year ended December 31, 2021 was €4,234 million, up +16% at constant exchange rates year-on-year. The margin rate is 14.9% at December 31, 2021, compared with 14% at December 31, 2020. The increase in current EBITDA by operating segment is as follows:
∆ at constant scope and exchange rates
In France, EBITDA increased by +26.8% year-on-year. In the Water business, the increase in EBITDA was mainly due to the restart of construction work as we exit the health crisis and efficiency gains which offset the negative impact of the wet summer on volume. In Waste, the higher EBITDA was driven by increased recyclate prices, particularly for paper, the post-health crisis activity recovery and the contribution of efficiency plans. EBITDA also benefited from an OFA disposal relating to a waste incinerator in France in the third quarter of 2021 for €86 million.
In Europe excluding France, EBITDA increased +22.3% at constant exchange rates year-on-year, benefiting from higher recyclate prices (paper, plastic and metal), particularly in Germany and the United Kingdom, a positive weather effect, higher electricity and heat prices in Central Europe and hedges set-up with respect to the increased cost of CO2 certificates and favorable prices for water distribution contracts.
In the Rest of world, EBITDA rose +6.9% at constant exchange rates, with the increase particularly marked in Latin America, North America and the Middle East.
In the Global businesses segment, EBITDA surged +29.3% at constant scope and exchange rates, underpinned particularly by the performance of hazardous waste activities, the upturn in construction activities and the improved operating performance of industrial maintenance businesses.
The increase in EBITDA between 2020 and 2021 breaks down by impact as follows:
The foreign exchange impact on EBITDA was +€9 million and mainly reflects the improvement in the Australian and UK currencies, partially offset by unfavorable movements in American currencies (-€14 million)3.
The consolidation scope impact of +€78 million mainly reflects the impact of the acquisition of the Prague Right Bank urban heating network and the Budapest cogeneration installations in 2020.
Commerce and volume impacts are +€277 million. This increase was driven by higher waste volumes, mainly in France and Europe, and strong construction activities in Water in France and in Global businesses (VWT).
The favorable weather impact in Energy (+€11 million), mainly in Central Europe, offset by the impact of severe weather in the United States and a wet summer in France (-€23 million).
Energy and recyclate prices had a favorable impact on EBITDA of +€35 million (vs. +€28 million at December 31, 2020), including +€113 million in recyclates and -€78 million in energy costs including CO2 certificates.
The impact of prices net of cost inflation is -€199 million.
Cost-savings plans contributed +€382 million at the end of December, above the €350 million annual objective and include:
Group consolidated current EBIT for the year ended December 31, 2021 was €1,766 million, up significantly by 41.7% at constant exchange rates compared with the year ended December 31, 2020 represented4.
EBITDA reconciles with Current EBIT compared with the year ended December 31, 2020 re-presented as follows:
Provisions, fair value adjustments & other
Share of current net income of joint ventures and associates
The significant +€518 million increase in Current EBIT at constant exchange rates compared with December 31, 2020 re-presented1 is mainly due to:
The foreign exchange impact on Current EBIT of +€5 million mainly reflects fluctuations in the UK (+€7 million) and Asian (+€4 million) currencies, partially offset by a downturn in Latin American (-€4 million) and North American (-€3 million) currencies.
The change in current EBIT by operating segment is as follows:
Cost of net financial debt (1)
Net gains / losses on loans and receivables
Assets and liabilities at fair value through profit or loss
Foreign exchange gains and losses
Unwinding of the discount on provisions
Interest on IFRS 16 lease debt
Other current financial income and expenses (2)
Gains (losses) on financial divestitures (3)
Other non-current financial income and expenses
The net financial expense for the year ended December 31, 2021 is -€382 million, compared with -€554 million for the year ended December 31, 2020. This improvement is mainly due to dividends received on the Group’s investment in Suez in respect of 2020 of +€122 million and a marked decrease in the net finance cost.
The non-current net financial expense for the year ended December 31, 2021 of -€35 million includes costs relating to the Suez acquisition financing.
Cost of net financial debt
The cost of net financial debt totaled -€343 million for the year ended December 31, 2021, compared with -€414 million for the year ended December 31, 2020. This €71 million decrease in the Group’s cost of net financial debt is due to favorable bond issue refinancing costs, lower foreign currency interest rates and the positive impact of the cancellation of the interest rate hedging portfolio (pre-hedge swaps) set-up in 2020 for €20 million.
The Group’s financing rate (excluding IFRS 16 impacts) was therefore 2.98% at December 31, 2021, compared with 4.02% at December 31, 2020 (2.85% vs. 3.74% including IFRS 16 impacts).
Other financial income and expenses
Other current financial income and expenses totaled -€23.4 million for the year ended December 31, 2021, compared with -€165.8 million for the year ended December 31, 2020.
They include dividends received on the Group’s investment in Suez (€122 million) for the shares purchased in October 2020 (29.9%) as well as interest on concession liabilities (IFRIC 12) of -€76.5 million and the unwinding of discounts on provisions for -€20.9 million.
In 2021, capital losses on disposals of financial assets total -€15.8 million and mainly comprise the capital loss on the divestiture of activities in Namibia (VWT) of -€7.1 million and the capital loss on the liquidation of a non-consolidated company, VIGIE 2, of -€7.5 million, offset by a provision reversal of €7.5 million.
Gains on financial divestitures totaled +€26.1 million in 2020.
The current income tax expense for the year ended December 31, 2021 amounted to -€329.7 million, compared with -€159.6 million for the year ended December 31, 2020 re-presented7.
The current income tax rate for the year ended December 31, 2021 is 25.8%, versus 27.6% for the year ended December 31, 2020 re-presented8.
Current income before tax (a)
of which share of net income of joint ventures & associates (b)
Re-presented current income before tax: (c)= (a)-(b)
Re-presented tax rate on current income (d)/(c)
Current net income attributable to owners of the Company was €896 million for the year ended December 31, 2021, compared with €382 million for the year ended December 31, 2020 re-presented. Excluding capital gains and losses on financial divestitures net of tax and minority interests, current net income attributable to owners of the Company increased 150.5% at constant exchange rates to €915 million from €363 million for the year ended December 31, 2020 re-presented
Selling, general and administrative expenses
Selling, general and administrative expenses impacting Current EBIT increased from €2,739 million for the year ended December 31, 2020 re-presented1 to €2,944 million for the year ended December 31, 2021, representing an increase of 7.5% at current scope and exchange rates (+7.7% at constant exchange rates and +6.8% at constant scope and exchange rates). The ratio of selling, general and administrative expenses to revenue is 10.3% for 2021, down on the previous year re-presented (10.5%).
Current net income (loss)/ Net income (loss) attributable to owners of the company
The share of net income attributable to non-controlling interests totaled €150.6 million for the year ended December 31, 2021, compared with €119.7 million for the year ended December 31, 2020.
Net income attributable to owners of the Company was €404.3 million for the year ended December 31, 2021, compared with €88.8 million for the year ended December 31, 2020.
Current net income attributable to owners of the Company was €895.8 million for the year ended December 31, 2021, compared with €381.8 million for the year ended December 31, 2020 re-presented.
Based on a weighted average number of outstanding shares of 592.9 million (basic), and 617.9 million (diluted) for the year ended December 31, 2021, compared with 554.9 million (basic) and 579.9 million (diluted) for the year ended December 31, 2020, the net income attributable to owners of the Company per share for the year ended December 31, 2021 was €0.68 (basic) and €0.65 (diluted), compared with €0.16 (basic) and €0.15 (diluted) for the year ended December 31, 2020. Current net income attributable to owners of the Company per share was €1.51 (basic) and €1.45 (diluted) for the year ended December 31, 2021, compared with €0.75 (basic) and €0.72 (diluted) for the year ended December 31, 2020.
The dilutive effect taken into account in the above earnings per share calculations concerns the OCEANE bonds convertible into and/or exchangeable for new and/or existing shares issued in September 2019 and maturing on January 1, 2025 and the Performance Share Grant Plans set-up on April 30, 2019 and maturing in April 2022, on May 5, 2020 and maturing in May 2023 and on May 4, 2021 and maturing in May 2024.
Net income (loss) attributable to owners of the Company for the year ended December 31, 2021 breaks down as follows:
Cost of net financial debt
Other financial income and expenses
Net income (loss) of other equity-accounted entities
Net income (loss) from discontinued operations
Net (income) loss attributable to non-controlling interests
Net income (loss) attributable to owners of the Company
Net income (loss) attributable to owners of the Company for the year ended December 31, 2020 re-presented10 breaks down as follows:
Cost of net financial debt
Other financial income and expenses
Net income (loss) of other equity-accounted entities
Net income (loss) from discontinued operations
Net (income) loss attributable to non-controlling interests
Net income (loss) attributable to owners of the Company
Net income (loss) from discontinued operations to the end of December 2020 corresponds to the impact of costs incurred on the discontinuation of Veolia Water Technologies’ EPC international activities of -€19.9 million.
Current EBIT reconciles with operating income, detailing the non-current items of net income, as follows:
Impairment losses on goodwill and negative goodwill
Net charges to non-current provisions
Non-current provisions and impairment of property, plant and equipment, intangible assets, operating financial assets and other
Share acquisition costs, with or without acquisition of control
Operating income after share of net income (loss) of equity-accounted entities
Restructuring costs for the year ended December 31, 2021 mainly concern the waste activity in France for -€22 million.
Non-current provisions and impairment of property, plant and equipment, intangible assets, operating financial assets and other non-current expenses for the year ended December 31, 2021 primarily concern:
The following table summarizes the change in net financial debt and net free cash flow:
Other non-current expenses and restructuring charges
Interest on concession liabilities (IFRIC 12)
Interest on IFRS 16 lease liabilities
Financial items (current interest paid and operating cash flow from financing activities)
Net free cash flow before dividend payment, financial investments and financial divestitures
Change in receivables and other financial assets
Issue / repayment of deeply subordinated securities
Proceeds on issue of shares
Effect of foreign exchange rate movements and other
Net free cash flow reflects excellent performance during the year and is €1,340.5 million for the year ended December 31, 2021, compared with €507.5 million for the year ended December 31, 2020.
The change in net free cash flow compared with the year ended December 31, 2020 reflects:
Overall, net financial debt amounted to €9,532 million, compared with €13,217 million as of December 31, 2020.
Compared with December 31, 2020, the decrease in net financial debt is mainly due to:
Net financial debt was also impacted by negative exchange rate fluctuations of -€298 million as of December 31, 202112 compared with a positive fluctuations of +€273 million as of December 31, 2020.
Total Group gross industrial investments, including new operating financial assets, amounted to €2,528 million for the year ended December 31, 2021, compared with €2,387 million for the year ended December 31, 2020.
Industrial investments, excluding discontinued operations, break down by segment as follows:
At constant exchange rates, net industrial investments are up slightly (+2.8%) year-on-year. Impacted by the health crisis, an increased budget was allocated to maintenance investments. In line with the strategic choices of the Impact 2023 program, investments mainly include:
Net financial investments totaled +€64 million in 2021, compared with -€4,898 million in 2020.
Financial investments totaled -€476 million in the year ended December 31, 2021 (including acquisition costs and net financial debt of new entities) and mainly included the impacts of the acquisition of Osis in France (€348 million including IFRS 16 debt) and an organic fertilizer facility in France (€20 million).
In 2020, excluding the acquisition of Suez Environnement shares (€3,422 million including acquisition costs), financial investments totaled -€1,649 million (including acquisition costs and net financial debt of new entities) and mainly comprised the acquisition of the Prague Right Bank urban heating network in the Czech Republic (€710 million), heat production assets in Budapest, Hungary (€294 million), the Alcoa hazardous waste processing site in the United States (€231 million) and the MAG waste processing group in Russia (€125 million) and the buyout of the minority partner in the Nagpur water contract in India (€113 million).
Financial divestitures totaled €540 million in 2021 (including disposal costs) and mainly included the divestiture of the stake in the Shenzhen water concession in China (€249 million)17, as well as the divestiture of industrial services and recycling services activities in Sweden and Norway (€111 million)18.
In 2020, financial divestitures totaled €174 million (including disposal costs) and mainly comprised the sale of SADE’s Telecom branch (€52 million), the sale of assets in Germany (€31 million), the sale of the investment in the Liuzhou water concession in China (€47 million) and the sale of Campus X in Italy (€20 million), as well as the share capital increase by Southa in Hong Kong subscribed by minority shareholders for €14 million.
The change in operating working capital requirements (excluding discontinued operations) was €382 million for the year ended December 31, 2021, compared with €233 million for the year ended December 31, 2020.
This change reflects the regular monitoring and improvement of the collection and billing processes in a context of increased vigilance and denotes the resilience of the Group’s municipal and industrial customers.
The net WCR position on the balance sheet as of December 31, 2021 is a resource of €1,854 million compared to €1,511 million as of December 31, 2020, a change of €342 million including -€41 million relating to changes in consolidation scope and €0.4 million relating to foreign exchange impacts.
3.1 STRUCTURE OF NET FINANCIAL DEBT
Bank overdrafts and other cash position items
Allocation of the fair value of hedging instruments
Liquid assets and financing financial assets
As of December 31, 2021, net financial debt after hedging is entirely at fixed rates.
The average maturity of net financial debt was 7.8 years as of December 31, 2021 (6 years excluding the impact of the share capital increase and the hybrid bond issue) compared with 6.2 years as of December 31, 2020.
Following the appearance of the health crisis in 2020, Veolia made liquidity monitoring a priority. This led to the monitoring of weekly cash flow forecasts over a five-week horizon, through the regular review of the functioning of the Finance back office (invoicing, collections, payments, suppliers) and a daily update on the situation of the financial markets at Group level.
The Group has therefore pursued a prudent and resilient financing policy, with pooled cash invested in liquid monetary assets (monetary UCITS or liquid bank deposits).
The Group’s gross liquidity position at December 31, 2021 stood at €15.5 billion and mainly consists of:
The Group’s net liquidity as of December 31, 2021 was €6.2 billion, including current debt and bank overdrafts and other cash position items reducing gross liquidity by €9.3 billion. Current debt and bank overdrafts and other cash position items notably include €5.9 billion of commercial paper with an average maturity of 2.5 months, currently being refinanced.
Liquid assets of the Group as of December 31, 2021 break down as follows:
Undrawn MT bilateral credit lines
Undrawn ST bilateral credit lines
Current debt and bank overdrafts and other cash position items
Bank overdrafts and other cash position items
Total current debt and bank overdrafts and other cash position items
Total liquid assets net of current debt and bank overdrafts and other cash position items20
The increase in net liquid assets compared to December 31, 2020 mainly reflects the proceeds from the €2.5 billion share capital increase on October 8, 2021 and the €0.5 billion hybrid debt issue on November 8, 2021, as well as the subscription of two short-term loans totaling €0.7 billion.
The multi-currency syndicated loan facility is undrawn as of December 31, 2021. Initially secured on November 2, 2015 for an amount of €3 billion and with a maturity of 2022, it was extended to 2024. In addition, Veolia Environnement has bilateral credit lines for a total undrawn amount of €1 billion as of December 31, 2021. Veolia Environnement may draw on the multi-currency syndicated loan facility and all credit lines at any time.
As of December 31, 2021, the US dollar bilateral letters of credit facility drawable in cash totaled US$25.9 million (€22.9 million euro-equivalent) and is not used to date. It is included in the above liquidity table.
D] RETURN ON CAPITAL EMPLOYED (ROCE)
Current EBIT after tax is calculated as follows:
- Current income tax expense
The table below presents the calculation of Capital Employed:
Intangible assets and Property, plant and equipment, net
Investments in joint ventures and associates
Operating and non-operating working capital requirements, net
Net derivative and other instruments
Impact of discontinued operations and other restatements23
The Group’s post-tax return on capital employed (ROCE) is as follows:
1. RECONCILIATION OF DATA PUBLISHED IN 2020 AND 2019 WITH DATA RE-PRESENTED IN 2021
From fiscal year 2021 and with a view to improving comparability with other issuers, the impacts of applying IFRS 2, “Share-based payments”, are now included in Current EBIT.
In accordance with ESMA guidance on changes in the definition of non-GAAP indicators, the 2019 and 2020 indicators were restated.
Impact of personnel costs share-based payments (IFRS2) reclassification as a current item
Net current income - Group share
Net current income - Group share excluding capital gain (loss) on financial disposals
This adjustment does not impact Net income attributable to owners of the Company in so far as it involves a reclassification between current and non-current items in Net income attributable to owners of the Company.
2. RECONCILIATION OF GAAP INDICATORS AND THE INDICATORS USED BY THE GROUP
The reconciliation of Operating cash flow before change in working capital with EBITDA is as follows:
Operating cash flow before changes in working capital
o/w Operating cash flow from financing activities
o/w Adjusted operating cash flow
Share acquisition and disposal costs
Principal payments on operating financial assets
The reconciliation of Net cash from operating activities of continuing operations (included in the Consolidated Cash Flow Statement) with net free cash flow is as follows:
Net cash from operating activities of continuing operations
Industrial investments, net of grants
Proceeds on disposal of industrial assets
Principal payments on operating financial assets
Share acquisition and disposal costs
The reconciliation of Industrial investments, net of grants (included in the Consolidated Cash Flow Statement) with industrial investments is as follows:
Industrial investments, net of grants
Change in concession working capital requirements
3.1 Strictly accounting indicators (GAAP: IFRS)
Cost of net financial debt is equal to the cost of gross debt excluding IFRS 16 financial interest presented as other financial expenses and including related gains and losses on interest rate and currency hedges, less income on cash and cash equivalents.
Operating cash flow before changes in working capital, as presented in the Consolidated Cash Flow Statement, is comprised of three components: operating cash flow from operating activities (referred to as “adjusted operating cash flow” and known in French as “capacité d autofinancement opérationnelle”) consisting of operating income and expenses received and paid (“cash”), operating cash flow from financing activities including cash financial items relating to other financial income and expenses and operating cash flow from discontinued operations composed of cash operating and financial income and expense items classified in net income from discontinued operations pursuant to IFRS 5. Adjusted operating cash flow does not include the share of net income attributable to equity-accounted entities.
Net income (loss) from discontinued operations is the total of income and expenses, net of tax, related to businesses divested or in the course of divestiture, in accordance with IFRS 5.
3.2 Non-strictly accounting indicators (non GAAP)
The term “change at constant exchange rates” represents the change resulting from the application of exchange rates of the prior period to the current period, all other things being equal.
The municipal sector encompasses services in the Water, Waste and Energy business lines aimed at users, performed under contracts with municipal governments, groups of municipal governments, or regional or national governments.
The industrial sector covers Water, Waste and Energy management services, offered to industrial or service sector customers.
EBITDA comprises the sum of all operating income and expenses received and paid (excluding restructuring charges, non-current WCR impairments, renewal expenses and share acquisition and disposal costs) and principal payments on operating financial assets.
The EBITDA margin is defined as the ratio of EBITDA to revenue.
To calculate Current EBIT (which includes the share of current net income of joint ventures and associates) , the following items are deducted from operating income:
Current net income attributable to owners of the Company is defined as the sum of the following items:
Current net income attributable to owners of the Company per share is defined as the ratio of current net income (not restated for the cost of the coupon attributable to hybrid debt holders) by the weighted average number of outstanding shares during the year.
Net industrial investments, as presented in the statement of changes in net financial debt, include industrial investments (purchases of intangible assets and property, plant and equipment, and operating financial assets), net of industrial asset divestitures.
The Group identifies three categories of investment:
The last two categories are defined as growth investments.
Net financial investments as presented in the statement of changes in net financial debt include financial investments, net of financial divestitures.
Financial investments include purchases of financial assets, including the net financial debt of companies entering the scope of consolidation, and partial purchases resulting from transactions with shareholders where there is no change in control.
Financial divestitures include disposals of financial assets including the net financial debt of companies leaving the scope of consolidation, and partial divestitures resulting from transactions with shareholders where there is no change in control, as well as share capital issues subscribed by non-controlling interests.
Net free cash flow corresponds to free cash flow from continuing operations, and is equal to the sum of EBITDA, dividends received, changes in operating working capital and operating cash flow from financing activities, less net interest expenses, net industrial investments, taxes paid, renewal expenses, restructuring charges and other non-current expenses.
Net financial debt (NFD) represents gross financial debt (non-current borrowings, current borrowings, bank overdrafts and other cash position items) which includes IFRS 16 lease debt, net of cash and cash equivalents, liquid assets and financing-related assets, including fair value adjustments to derivatives hedging debt. Liquid assets are financial assets composed of funds or securities with an initial maturity of more than three months, easily convertible into cash, and managed with respect to a liquidity objective while maintaining a low capital risk.
The leverage ratio is the ratio of closing net financial debt including IFRS 16 to EBITDA including IFRS 16.
The financing rate is defined as the ratio of the cost of net financial debt (excluding IFRS 16 lease debt and fair value adjustments to instruments not qualifying for hedge accounting) to average monthly net financial debt excluding IFRS 16 lease debt for the period, including the cost of net financial debt of discontinued operations.
The post-tax return on capital employed (ROCE) is defined as the ratio of:
Other operating revenue and expenses
Operating income before share of net income (loss) of equity-accounted entities
Share of net income (loss) of equity-accounted entities
o/w share of net income (loss) of joint ventures
o/w share of net income (loss) of associates
Operating income after share of net income (loss) of equity-accounted entities
Cost of net financial debt
Other financial income and expenses
Net income (loss) from continuing operations
Net income (loss) from discontinued operations
Net income (loss) for the year
Attributable to owners of the Company
NET INCOME (LOSS) ATTRIBUTABLE TO OWNERS OF THE COMPANY PER SHARE
NET INCOME (LOSS) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO OWNERS OF THE COMPANY PER SHARE
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO OWNERS OF THE COMPANY PER SHARE
CONSOLIDATED STATEMENT OF FINANCIAL POSITION – ASSETS
Non-current derivative instruments - Assets
Current derivative instruments - Assets
Assets classified as held for sale
(*) Restatements concern the application of the IFRS Interpretations Committee’s decision regarding IAS 19, retroactively from January 1, 2020
(**) Non-consolidated investments consist of Suez shares for €3,721.0 million as of December 31, 2021, compared with €3,046.0 million as of December 31, 2020 and other securities for €49.3 million as of December 31, 2021 compared with €56.2 million as of December 31, 2020.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION - EQUITY AND LIABILITIES
Reserves and retained earnings attributable to owners of the Company
Total equity attributable to owners of the Company
Total equity attributable to non-controlling interests
Non-current derivative instruments - Liabilities
Current derivative instruments - Liabilities
Bank overdrafts and other cash position items
Liabilities directly associated with assets classified as held for sale
(*) Restatements concern the application of the IFRS Interpretation Committee’s decision regarding IAS 19, retroactively from January 1, 2020
Net income (loss) for the year
Net income (loss) from continuing operations
Net income (loss) from discontinued operations
Operating depreciation, amortization, provisions and impairment losses
Financial amortization and impairment losses
Gains (losses) on disposal of operating assets
Gains (losses) on disposal of financial assets
Share of net income (loss) of joint ventures
Share of net income (loss) of associates
Cost of net financial debt
Operating cash flow before changes in working capital
Change in operating working capital requirements
Change in concession working capital requirements
Net cash from operating activities of continuing operations
Net cash from operating activities of discontinued operations
Net cash from operating activities
Industrial investments, net of grants
Proceeds on disposal of industrial assets
Proceeds on disposal of financial assets
Principal payments on operating financial assets
Dividends received (including dividends received from joint ventures and associates)
Principal payments on non-current loans
Net decrease/increase in current loans
Net cash used in investing activities of continuing operations
Net cash used in investing activities of discontinued operations
Net cash used in investing activities
CONSOLIDATED CASH FLOW STATEMENT CONTINUED
Net increase (decrease) in current financial liabilities
Repayment of current IFRS 16 lease debt
Other changes in non-current IFRS 16 lease debt
New non-current borrowings and other debt
Principal payments on non-current borrowings and other debt
Change in liquid assets and financing financial assets
Proceeds on issue of shares
Transactions with non-controlling interests: partial purchases
Transactions with non-controlling interests: partial sales
Proceeds on issue of deeply subordinated securities
Coupons on deeply subordinated securities
Purchases of/proceeds from treasury shares
Interest on IFRIC 12 operating assets
Interest on IFRS 16 lease debt
Net cash from (used in) financing activities of continuing operations
Net cash from (used in) financing activities of discontinued operations
Net cash from (used in) financing activities
Effect of foreign exchange rate changes and other
Increase (decrease) in external net cash of discontinued operations
NET CASH AT THE BEGINNING OF THE YEAR
NET CASH AT THE END OF THE YEAR
Bank overdrafts and other cash position items
NET CASH AT THE END OF THE YEAR
____________________ 1 See appendix for more information on this restatement 2 Main foreign exchange impacts by currency: US dollar (-€75 million), Argentine peso (-€20 million), Japanese yen (-€36 million), Polish zloty (-€37 million), Brazilian real (-€9 million), Hong Kong dollar (-€9 million), pound sterling (+€82 million), Australian dollar (+€52 million), Czech koruna (+€34 million). 3 Foreign exchange impacts by currency: US dollar (-€8 million), Argentine peso (-€3 million), Colombian peso (-€2 million), Polish zloty (-€6 million), United Arab Emirates dirham (-€1 million), Hungarian forint (-€2 million), Brazilian real (-€1 million), Australian dollar (+€7 million), Czech koruna (+€9 million), pound sterling (+€14 million). 4 See appendix for more information on this restatement 5 Including principal payments on operating financial assets. 6 See appendix for more information on this restatement 7 See appendix for more information on this restatement 8 26.1% for the year ended December 31, 2020 published 9 See appendix for more information on this restatement 10 See appendix for more information on this restatement 11 See appendix for more information on this restatement 12 Mainly driven by negative impacts on the US dollar (-€86 million), Chinese renminbi yuan (-€65 million), pound sterling (-€60 million), Czech koruna (-€39 million), Hong King dollar (-€14 million) and Russian ruble (-€14 million). 13 Including maintenance investments of €1,273 million, and contractual requirements of €876 million in 2021. 14 Including new operational financial assets of €169 million in 2021. 15 Including maintenance investments of €1,261 million, and contractual requirements of €691 million in 2020. 16 Including new operational financial assets of €160 million in 2020. 17 Total transaction amount of €394 million including the repayment of the shareholder loan (€105 million) and the payment of dividends (€40 million) 18 Total transaction amount of €235 million, including the divestiture of industrial assets 19 Including liquid assets and financing financial assets included in Net financial debt. 20 Including cash equivalents from GIE Placements 21 See appendix for more information on this restatement 22 Including the share of net income (loss) of joint ventures and associates 23 2021 restatements mainly concern the add-back of the capital employed of activities sold in Norway and Sweden and the prorating of the capital employed of OSIS acquired in 2021. 2020 restatements concern the prorating of the value of securities acquired in the last quarter of 2020 (Prague Right Bank and Bert Hungary), and the add-back of the capital employed of the Shenzhen water concession which gave rise to a restatement in assets and liabilities held for sale as of December 31, 2020.
Group Media Relations Laurent Obadia Evgeniya Mazalova – Emilie Dupas +33 (0)1 85 57 86 25/ 33 33
Investor & Analyst Relations Ronald Wasylec - Ariane de Lamaze +33 (0)1 85 57 84 76 / 84 80
Group Media Relations Laurent Obadia Evgeniya Mazalova – Emilie Dupas +33 (0)1 85 57 86 25/ 33 33
Investor & Analyst Relations Ronald Wasylec - Ariane de Lamaze +33 (0)1 85 57 84 76 / 84 80