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Veolia Environnement (VE)
April 18, 2013 2:00 am ET
Pierre-François Riolacci - Chief Finance Officer
Nathalie F. Casali - JP Morgan Chase & Co, Research Division
Olivier Van Doosselaere - Exane BNP Paribas, Research Division
Julie Arav - Barclays Capital, Research Division
Arnaud Joan - BofA Merrill Lynch, Research Division
Louis Boujard - Banco Português de Investimento, S.A., Research Division
Philippe Ourpatian - Natixis S.A., Research Division
Emmanuel Turpin - Morgan Stanley, Research Division
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Thank you very much. Good morning, all of you. Thank you very much for attending this education call about our pro forma 2012 now that the proportional integration is gone probably forever. The purpose of the call is to help you to get a better understanding of Veolia under these new accounting rules. I'm afraid that you may have many technical questions and actually you will have a few days to dig in with the team. And if necessary, obviously, we will help you with the people who have been more associated to the collection of the accounts. I'm here in this call with the IR team, Ronald and Ariane, that you know very well; but also from the team, from the controlling side, Denis Gasquet, [ph] he's the head of control; Sophie Bucon Meier [ph], financial reporting; and the other team as well as the people from the [indiscernible].
You are aware already of the main impact of this accounting change. But I will go back to the basics, and I suggest that we start with Page 5 just to remind you that in the balance sheet, you will follow up the companies which are accounted for under the equity method for 2 lines: Investments in associates, which is the usual equity; and Investments in joint ventures, which is actually the new category flowing in.
On the income statement, we had clarification from regulation authorities. So the different lines that will be used are described in the slide. We will keep the operating income line. That is Résultat opérationnel in French. That will include the operating income of fully controlled entities, as well as the contribution of joint operation. You know that joint operations are not joint venture. They are basically unincorporated joint ventures.
There will be a specific line, operating income after share of net income of equity-accounted entities. This is a name which has been designed by the French accounting body, and this will include -- you will see the share of the contribution of the joint ventures. This will include the contribution of the joint ventures before minority interest that could be held. I know we come back on that one, and this has an impact on Dalkia International.
The third item would be the share of net income of other equity-accounted entities, and this has to do with stakes that we will have in businesses which are not directly related to group operation. Actually, there is none because you know that we are not a holding company and we have no residual stakes which are left in the balance sheet.
And then at the end of the day, you will get the adjusted operating income. That would be the operating profit of fully controlled subsidiary as well as the share of adjusted net income of joint venture associates, which are -- you will see engaged in the group business.
So that's for -- is the description of the different lines. On Page 6, you have little things that you don't know already. You are familiar with the adjusted net financial debt, which is deducting from the net financial debt, the loans which have been given to these joint ventures.
On the cash flow statement, we expect to see dividends received from the joint ventures and associates as well as the financial income that we get from the loans given to this company. And that would be obviously a cash in, together with -- that will be booked with the operating cash flow. That's for basically the cash flow statement. You know that there will be, in the notes to the financial statement, many information that will be disclosed according to IFRS 12.
So when it comes to Veolia, Page 7, here again, no big change compared to what we discussed a few weeks ago. Basically, the bulk of our proportional integration of companies will be accounted for joint venture that is under the equity method, and you know this already. We will have one significant associate, which will be Berlin Water. And you will see that between 2011 and 2012, Berlin changed from proportional integration to equity method, so you will see the impact in the pro forma as well because it's not flowing in the same -- at the same line.
Page 8. We will have a few joint operations, mainly in the construction business, where it's usual practice that, that would be very limited and that would be accounted as fully integrated entities. And then there is the specific case of Veolia Transdev, which is now Transdev, and which will be accounted for under the equity method, but also under IFRS as discontinued operation. So you get all the standard in that one, which is not very easy to follow up by fully subscribe. So that's for the general description of the move.