Paris, May 16, 2012 

Dear Shareholders,

The transformation of your Company is underway and the strategy that we have defined is being implemented. The new Veolia will be a company with improved performance and greater efficiency, and will be more attractive to its investors, customers and employees.

In all sectors, the market for services is subject to significant change. Exacerbated by the debt crisis which has impacted the public sector, pricing pressure is becoming a meaningful reality for the majority of services companies. In parallel, the economic crisis has negatively impacted the purchasing power of constituents, which has accentuated pricing pressure. The Water division felt these effects throughout 2011. This situation is also present in our other activities and financial constraints will not be relieved anytime soon. Therefore we are approaching the future with two main directives:

• first by reinventing our offerings and our methods of remuneration. We have always been attentive to our customers’ needs, but we must be more attentive because these needs are changing faster than in the past.  Customer expectations are now more varied and our offerings must follow.  To do this, technological innovation and commercial innovation must go hand in hand;
• our second directive consists of reducing the costs of our activities.  This requirement is not new, but we must do more.  Supplemental savings will come from our Efficiency Plan and from efforts derived from “Convergence”.  While the Convergence Plan primarily aims to reshape our organization, it will also have the added benefit of reducing our functional and structural costs.

This isn’t the first time that your Company has had to transform itself.  The fact that we are still here after 160 years of operating shows our capacity to reinvent ourselves when necessary.  Of course such a process does not bear fruit overnight.  It requires determination and consistency.  But we have already observed the initial results: we are in the process of refocusing our businesses and this task is well advanced; we are committed to review and reinvent our offerings, and recent commercial awards prove that we are being successful; we are committed to reduce our debt and we have already started to see its reduction…

Thus, the new Veolia which will be created from this transformation plan will be refocused on three divisions with strong synergies between them. The Company will have lower debt with restored financial flexibility, which will provide the means to fully implement the strategy for selective, disciplined and profitable growth.

My commitment, along with each member of the Executive Committee, is to create the conditions for sustainable growth that will benefit our customers, our shareholders and our employees, and on behalf of the Company, I would like to thank you for your support and continued loyalty.

Antoine Frérot, Chairman and Chief Executive Officer