Veolia Environnement: Key Figures for the Nine Months Ended September 30, 2017

Regulatory News:

Antoine Frérot, Veolia Environnement’s (Paris:VIE) Chairman and CEO commented: "Veolia’s 9-month results are satisfying, and support our strategy of growth and efficiency. The solid development of our revenue is confirmed, as announced at the beginning of the year. Good commercial momentum and revitalized attractiveness of our offerings resulted in new contract awards across all our businesses and geographies. For example, we have signed a new 10-year hazardous waste treatment contract with Antero Resources, an oil and gas producer in the United States, and renewed the contract to operate the Le Mans wastewater treatment plant for a period of 12 years. In addition, the successful framework and execution of our efficiency programs allowed us to achieve cost savings in line with our objectives. All in all, the combination of profitable growth and cost savings translates into an overall acceleration of EBITDA and earnings, in line with our plan. These results allow me to fully confirm our objectives.”

Group consolidated revenue increased 3.7% (+4.4% at constant exchange rates) from represented €17,569 million for the nine months ended September 30, 2016 to €18,221 million for the nine months ended September 30, 2017.

The unfavorable movement in exchange rates negatively impacted revenue growth by 0.7% for the first nine months of 2017 (-€123 million). At constant consolidation scope and exchange rates (i.e. like-for-like), revenue growth for the nine months amounted to 3.1%, as in the first half of 2017.

At constant exchange rates and excluding the impact of construction and energy prices, nine-month revenue increased 4.9%.

• In France, revenue was almost stable for the nine months (-0.7%), but grew 1.2% at constant consolidation scope. Water was stable (+0.1%) but showed gradual improvement due to volume growth (+1%) and price indexation which improved to +0.4% in the third quarter after -0.3% in the first and second quarters. The Waste business recorded a decline of 1.6%, but at constant consolidation scope increased 2.9% due to good commercial momentum, volumes up by 2.1% (+3.5% in Q3) and the positive effect of higher recycled material prices.
• Europe excluding France revenue was up sharply, +6.5% at constant exchange rates for the nine-month period and up 8.1% during the third quarter. All regions recorded sustained growth, with the exception of Italy (-2.8%). Germany increased 4.9% due to good commercial performance in Waste and higher paper prices. UK revenue improved 5.1% given continued strong PFI performance, good commercial momentum and higher recycled material prices. Central and Eastern Europe revenue increased 10.3% due to good volumes in Energy given favorable weather in the first half of 2017 and the contribution of the Prague Left Bank district heating network, as well as good water volumes. In addition, Nordic countries also posted good performance with revenue up 12.2%, while the Iberian Peninsula grew revenue 11.5%.
• At constant exchange rates, the Rest of the World segment continued to record strong revenue growth for the nine-month period (+10.6%), with Q3 revenue up 9.4%. North America revenue increased 11.6% due to the integration of Chemours’ sulfuric acid regeneration business and the benefit from higher energy prices in the municipal business. Industrial services revenue remains down. Revenue in Asia progressed 22%, with in particular, 30.3% growth in China, which continues to benefit from commercial successes. Japan and South Korea also recorded revenue growth. Latin American revenue increased 22.4%, due to good development in Argentina, Brazil and Columbia. Australia revenue recovered, with third quarter revenue up 8.2%.
• Global Businesses revenue declined by 1.3% at constant exchange rates. Hazardous waste activities continue to grow at a good pace (+4.5%). Veolia Water Technologies construction revenue fell 8.7% during the nine-month period, however YTD bookings increased 10%. The SADE business recorded a good performance in France, but delays in the start-up of international projects resulted in an overall revenue decline (-2.9%).

Commercial reinforcement efforts launched a year ago continue to bear fruit.

After the good commercial performance recorded during the first half of 2017, including for example the award of several energy services contracts in China to generate more than €860 million in cumulative revenue, and the design, build and operation of the largest waste-to-energy plant in Latin America, in Mexico (cumulative revenue expected of €886 million), the Group has once again signed several significant contracts during the third quarter.

• In Water in France, Veolia notably was awarded the operations contract for the Valenton wastewater treatment plant for a 12-year period and expected cumulative revenue of €400 million, as well as operations contracts for two wastewater treatment plants in Lille for 5 years and Le Mans for 9 years.
• In the United States, in the oil and gas sector, Antero Resources awarded Veolia a contract to treat sludge generated from its West Virginia site for a period of up to 10 years and $70 million in cumulative revenue.
• In recycling, Veolia has established a global industrial plastic recycling platform with a European presence in France, the United Kingdom, Germany, Benelux and Scandinavian countries, as well as an Asian presence in South Korea and Japan.
• In addition, renewal rates for expiring contracts remained very satisfactory across all the Group’s businesses.

EBITDA increased 1.3% (+1.7% at constant exchange rates) to €2,359 million for the nine months ended September 30, 2017.

• The variation in exchange rates negatively impacted EBITDA by 0.4% (-€10 million).
• At constant exchange rates, EBITDA growth accelerated during the third quarter with 4.8% growth, after +0.4% growth in the first half of 2017.
• This improvement was driven by continued solid revenue growth and cost savings which reached €190 million for the first nine months of 2017, in line with the €250 million annual objective. The weight from unfavorable transitory and one-off items amounted to -€103 million during the nine months, including only -€9 million for the third quarter, which made it possible to benefit from operating leverage generated from top line growth. The impact of movements in energy prices and recycled material prices was not significant, (only +€1 million for the nine-month period).

Current EBIT rose 1.3% (+2.2% at constant exchange rates) to €1,049 million for the nine months ended September 30, 2017.

• The foreign exchange impact on current EBIT amounted to -€9 million.
• At constant exchange rates, current EBIT growth was driven mainly by the increase in EBITDA. Depreciation and amortization, combined with principal payments on operating financial assets, increased 2.4% at constant exchange rates to €1,255 million (scope effect). The contribution from the current net income of joint ventures and associates was €76 million, compared to €82 million for the prior year period due to the impact of divestitures that more than offset strong growth in China (€50 million for the first nine months of 2017 vs. represented €38 million for the first nine months of 2016).

Current net income – Group share declined 1.6% (-0.7% at constant exchange rates) to €406 million for the nine months ended September 30, 2017. Excluding capital gains, current net income – Group share increased 3.3% (+4.3% at constant exchange rates) for the same period.

• The foreign exchange impact on current net income – Group share amounted to -€4 million.
• The cost of net financial debt was stable at €314 million.
• Current net income – Group share included €14 million in financial capital gains, compared with represented €33 million for the first nine months of 2016.
• The current tax rate was 25%.

Net financial debt declined to €8,419 million at September 30, 2017, compared with €8,883 million at September 30, 2016.

**********

Medium-term outlook*.

In view of the performance recorded during the first nine months of 2017, the Group’s medium-term outlook is fully confirmed:

• 2017: a transition year
  • Resumption of revenue growth
  • Stable EBITDA, or moderate EBITDA growth
  • Increased efforts to reduce costs: more than €250 million in cost savings

• 2018:
  • Continuation of revenue growth
  • Resumption of more sustained EBITDA growth
  • More than €300 million in cost savings
• 2019:
  • Continuation of revenue growth and full impact of cost savings
  • EBITDA between €3.3bn and €3.5bn (excluding IFRIC 12)

*at constant exchange rates

Veolia group is the global leader in optimized resource management. With over 163,000 employees worldwide, the Group designs and provides water, waste and energy management solutions that contribute to the sustainable development of communities and industries. Through its three complementary business activities, Veolia helps to develop access to resources, preserve available resources, and to replenish them. In 2016, the Veolia group supplied 100 million people with drinking water and 61 million people with wastewater service, produced 54 million megawatt hours of energy and converted 30 million metric tons of waste into new materials and energy. Veolia Environnement (listed on Paris Euronext: VIE) recorded consolidated revenue of €24.39 billion in 2016. www.veolia.com

Important disclaimer

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 Autorités 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.

QUARTERLY FINANCIAL INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

A] PREFACE

Changes in concession standards

Under concession contracts with local authorities, infrastructure is accounted, as appropriate, as an intangible asset, a financial receivable, or a combination of the two. Veolia may have a payment obligation vis-a-vis the grantor for the use of the associated assets.

In July 2016, IFRIC published a verdict regarding these payments and concluded that in the case of fixed payments required by the operator, an asset and a liability should be recorded (intangible model). Veolia identified the contracts concerned and has applied the new IFRIC 12 measures retroactive to January 1, 2015. The most significant contracts concerned are our water concessions in the Czech Republic and Slovakia. September 30, 2016 figures have been represented for the application of IFRIC 12. The impacts are presented in the appendix to this press release.

Figures as of September 30, 2017 discussed in this press release include the impact of adjustments resulting from the application of IFRIC 12. Reflecting these adjustments, EBITDA was increased in the amount of €160.9 million, Current EBIT in the amount of €70.9 million and Current net income, Group share in the amount of €3.6 million.

Lithuania

As of September 30, 2017, the ongoing withdrawal from Lithuania, motivated by the end of a major contract and the sales process for other activities, led the Group to transfer its Lithuanian activities to discontinued operations in accordance with IFRS 5.

B] KEY FIGURES

(1) Including the share of current net income of joint ventures viewed as core Company activities and associates.

(2) 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 interest expense, net industrial investments, taxes paid, renewal expenses, restructuring costs and other non-current expenses.

(3) Adjustments as of September 30, 2016 concern the application of IFRIC 12 and the transfer of activities in Lithuania to discontinued operations pursuant to IFRS 5 (see Appendix).

(4) The indicators are defined in Section 3.8.3 of the 2016 Registration Document.

The main foreign exchange impacts were as follows:

C] INCOME STATEMENT

1. GROUP CONSOLIDATED REVENUE

Group consolidated revenue for the nine months ended September 30, 2017 was €18,221 million, compared with represented €17,568.8 million for the same period in 2016, up +4.4% at constant exchange rates. Excluding Construction revenue² and energy price effects, revenue increased +4.9% at constant exchange rates.

As in the first two quarters, revenue growth was marked by favorable momentum across mainly Europe excluding France and Rest of the world in the third quarter of 2017:

By segment, the change in revenue compared with represented figures for the nine months ended September 30, 2016 breaks down as follows:

Revenue increased +1.2% at constant scope in France: Water revenue increased +0.1%, while Waste revenue grew 2.9% at constant scope.

• Water revenue was €2,198.7 million, impacted by higher volumes (+1%) and stable commercial activity, slightly offset by a reduction in tariff indexation (-0.2%);
• Waste revenue declined -1.6% compared to the represented figures for the nine months ended September 30, 2016, but grew 2.9% at constant scope (adjusted for the impact of the sale of Bartin Recycling on November 30, 2016) to €1,838.1 million. Continued good commercial momentum with significant contract wins was accompanied by increased volumes and higher recyclate prices.

Europe excluding France (excluding Lithuania which is classified in discontinued operations) grew +6.5% at constant exchange rates compared to the represented prior-year period, with solid momentum in all key countries:

• In the United Kingdom, revenue increased +5.1% at constant exchange rates to €1,497.7 million, thanks to good waste performance driven by the contribution of integrated contracts, the favorable impact of recyclate prices (paper and ferrous and non-ferrous scrap metals) and contract wins (St Albans, Southend on Sea, Army 2020);
• In Central and Eastern Europe, revenue increased +10.3% at constant exchange rates compared to the represented nine months ended September 30, 2016 to €2,050.2 million, boosted by:
  • In Energy, a favorable weather impact (+€35 million), an increase in heating and electricity volumes sold in Poland and the contribution of the Prague heating network;
  • In Water, increased volumes and new extended Armenia contract;

• In Northern Europe, revenue increased +4.6% at constant exchange rates compared to the represented prior year period to €1,764.4 million. Germany, the main contributor (€1,298.6 million) benefited from higher paper prices, a positive price impact on industrial waste collection activities and new contract wins in the Waste sector. In addition, acquisitions, mainly in Sweden in the Waste sector, further contributed to the improvement in revenue.

Strong revenue growth (+10.6% at constant exchange rates compared to the represented nine months ended September 30, 2016) in the Rest of the world segment, with strong growth reported across most regions:

• Revenue rose +11.6% at constant exchange rates to €1,520.8 million in North America, benefiting from the integration of Chemours' Sulfur Products division assets (+€106.9 million) and the acquisition of a building energy services company (Enovity: +€26.4 million) in January 2017. Additionally, robust Municipal and Commercial activities were boosted by higher electricity and gas prices and volumes, offset by a contraction in industrial services;
• Revenue growth was robust in Latin America (+22.4% at constant exchange rates) thanks to tariff increases in Argentina, the positive impact of the acquisition of the Pedreira landfill site in Brazil in May 2016 and the start-up of the Santa Marta contract (drinking water distribution) in Colombia in April 2017;
• Asia reported significant revenue growth of +22% at constant exchange rates. In China, strong revenue growth (+30.3%) was due to new contracts (Sinopec, Hongda, Heijian Biomass and Hangzhou WEE) in the Industrial Water and industrial services sectors, and growth in volumes sold in the Municipal Energy and Waste sectors. Revenue growth in Japan was also driven by the development of Municipal Water activities and the contribution of plastic recycling activities purchased in August 2016. In Korea, the acquisition of Uniken in Industrial Waste had a favorable impact on revenue;
• Revenue increased in the Pacific zone (+2.9% at constant exchange rates for the nine months ended September 30, 2017). In the Waste business, increased volumes following the opening of new processing sites (Banksmeadow and MBT Woodlawn) were partially offset by a decrease in industrial services (loss of Rio Tinto contract);
• In Africa and the Middle East, revenue declined by -1.9% at constant exchange rates.

Global Businesses: -1.3% decline in revenue at constant exchange rates compared to the represented nine months ended September 30, 2016:

• Solid growth in Hazardous Waste activities (+4.5% at constant exchange rates), mainly due to an improvement in the oil recycling business;
• Design & Build activities remain down by -8.7% at constant exchange rates, in line with the Veolia Water Technologies business restructuring, although bookings improved (+10%). Growth in SADE activities in France, however, partially offset international delays.

The increase in revenue between the nine months ended 2016 and 2017 breaks down by main impact as follows:

The foreign exchange impact on revenue was -€122.7 million (-0.7% of revenue) and mainly reflects fluctuations in the UK pound sterling (-€139.9 million), the Argentine peso (-€15.2 million), the Chinese renminbi (-€12.8 million), the Australian dollar (+€26.1 million), the Czech crown (+€13.5 million) and the Brazilian real (+€13.1 million).

The consolidation scope impact (+€225.2 million) mainly concerns developments in 2016 and 2017: in 2016, the integration of Chemours’ Sulfur Products division assets in the United States (+€106.9 million), Prague Left Bank, renamed Veolia Energie Praha, in the Czech Republic (+€20.5 million) and the Pedreira landfill site in Brazil (+€16.5 million), as well as the sale of Bartin Recycling in the Waste business in France (-€104.9 million); in 2017, the acquisition of Enovity in the United States (+€26.4 million), Uniken in South Korea (+€18.0 million), the takeover of Ta-ho in Taiwan (+€28.7 million) and Corvara and Hans Andersson in Sweden (+€19.2 million), which offset the sale of the FM AB business in Sweden (-€8.1 million). At constant scope and exchange rates, revenue grew +3.1%.

Construction revenue contracted by -€67 million (-€8 million in Q3 2017, compared with +€15 million in Q2 2017 and -€74 million in Q1 2017) following a decrease in Construction activity under concession agreements, slightly offset by the recovery of SADE activities in France.

Energy and recyclate prices had an impact of €72 million (versus -€119 million for the nine months ended September 30, 2016).

Commercial momentum improved significantly (Commerce/Volumes impact) contributing +€423 million (compared with +€110 million for the nine months ended September 30, 2016):

• A volume effect of +€207 million in line with higher volumes sold in Central Europe (particularly electricity and heating sales), good waste volumes in France, the United Kingdom and Germany, and further growth in energy volumes in China;
• A commercial effect of +€186 million, encompassing the development of new industrial assets in Europe and Asia (Sinopec contract: €63 million);
• A weather impact of +€30 million: highly favorable impact in Central Europe (+€35 million) partially offset by North America (-€6 million).

Favorable price effects (+€119 million) are tied to positive tariff indexation in Germany in Waste, in Central Europe in Water and the significant impact of higher prices in Argentina.

By business, the increase in revenue for the nine months ended September 30, 2017 compared to the represented period for the prior year breaks down as follows:

WATER

Water revenue increased slightly by +0.6% at constant exchange rates and 1.8% at constant exchange rates excluding Construction revenue and energy price effects, compared with represented figures for the nine months ended September 30, 2016. This improvement can be explained as follows:

• Higher volumes in France, Central Europe (notably the new extended Armenia contract) , Asia (Sinopec contract), and a positive commercial impact lead to an overall increase of +1.9%;
• Tariff increases in Central Europe and Latin America;
• A slight decrease in Construction revenue (-0.9%) following a slowdown in activity.

WASTE

Waste revenue rose +6.7% at constant exchange rates compared with represented figures for the nine months ended September 30, 2016 (+4.2% at constant scope and exchange rates), due to:

• A scope impact of +2.6%, mostly related to the acquisition of the Chemours’ Sulfur Products division assets in the United States (+€106.9 million), the acquisition of Pedreira in Brazil (+€16.5 million) and external growth transactions in Asia, partially offset by the sale of Bartin (-€105 million);
• Commercial and volume effects of +1.5%: slowdown in Waste volumes in the United States (Industrial services still weak) offset by numerous contract wins, particularly in France, the UK and Germany;
• A positive price effect of +1.0%;
• The favorable impact of higher recyclate prices (+1.5%) and particularly paper.

ENERGY

Energy revenue rose +9.4% at constant exchange rates compared with represented figures for the nine months ended September 30, 2016 (+6.9% at constant consolidation scope and exchange rates). This improvement can be explained as follows:

• The positive volume and commerce effect of +5%, due to higher volumes of energy sold in Central Europe, China and the United States and new energy efficiency contracts in Asia and Europe;
• A favorable weather impact of €30 million (+0.9%) mostly in Poland and the Czech Republic;
• A slightly positive price effect of +0.4%: lower heat and electricity prices in Europe were mostly offset by higher prices in the United States;
• A scope impact of +2.5%, related to the acquisition of Prague Left Bank and Gesten in 2016 and an energy efficiency business in the United States (Enovity) in 2017.

2. EBITDA

Group consolidated EBITDA for the nine months ended September 30, 2017 was €2,358.7 million, up 1.7% at constant exchange rates compared to the represented prior year period. The EBITDA margin decreased from represented 13.3% for the nine months ended September 30, 2016 to 12.9% for the nine months ended September 30, 2017.

Changes in EBITDA by segment were as follows:

In France, EBITDA improved:

• In the Water business, EBITDA improved significantly in the nine months ended September 30, 2017, thanks to significant cost savings and higher volumes (+1%), partially offset by squeezed margins due to negative tariff indexation and contractual renegotiations;
• In the Waste business, EBITDA also increased, benefiting from cost savings and the impact of commercial developments.

EBITDA stabilized in Europe excluding France (excluding Lithuania) as a result of several impacts:

• In Central and Eastern Europe, EBITDA improved mainly thanks to a favorable weather impact in Energy and good volumes in Water;
• In the United Kingdom, good operating performance was partially offset by plant outages and one-off dismantling costs;
• Lower EBITDA in Northern Europe, mainly due to favorable non-recurring items in the first-half of 2016 (litigation payment and insurance claim reimbursement).

EBITDA grew in the Rest of the World:

• Increased EBITDA in the United States was mainly due to changes in consolidation scope, with the successful integration of Chemours’ Sulfur Products division assets and progression in Energy, with the acquisition of Enovity, partially offset by the sale of West Coast energy assets. The decline in industrial services was partial offset by the restructuring measures previously implemented;
• EBITDA growth in Latin America was mainly due to price increases in Argentina and the impact of acquisitions in Brazil and a new contract in Colombia;
• Sustained EBITDA growth in China across all businesses: Municipal and Industrial Energy, Industrial Water (Sinopec) and Waste (landfill volumes and growth in hazardous waste).

In the Global Businesses segment, the benefits of restructuring at Veolia Water Technologies and the good performance of Hazardous waste activities were offset by the non-recurrence of 2016 favorable impacts (favorable outcome of a contract termination). Veolia Water Technologies is pursuing its transformation plan with the standardization of its offerings, purchasing savings and a decrease in selling and administrative costs.

The increase in EBITDA between the nine months ended 2016 and 2017 breaks down by impact as follows:

• The foreign exchange impact on EBITDA was -€9.5 million and mainly reflects the depreciation of the UK pound sterling (-€18.1 million) and the Chinese renminbi (-€3.3 million), partially offset by the appreciation of the Czech crown (+€4.6 million), the Polish zloty (+€3.2 million), the Brazilian real (+€2.7 million), and the Australian dollar (+€2.2 million).
• The consolidation scope impact (+€52.6 million) mainly concerns developments in 2016: the integration of Chemours’ Sulfur Products division assets in the United States, Prague Left Bank in the Czech Republic, and the Pedreira landfill site in Brazil.
• Commerce and volume impacts totaled +€33 million thanks to strong commercial momentum (notably in Asia), good water volumes in Europe, higher waste volumes and favorable weather conditions over the first nine months. These favorable items were partially offset by the impact (albeit weaker) of contract negotiations in France Water, contract losses in Italy and a downturn in industrial service activities in North America and the Pacific.
• Energy and recyclate prices positively impacted EBITDA (+€1 million): heating and electricity prices changed in line with the purchase price of fuel used to produce heat and electricity (decrease in Central Europe and increase in the U.S.). The positive impact of higher recyclate prices in the United Kingdom was offset by increased fuel costs in Waste in France.
• The -€104 million price squeeze includes in particular the negative impact of the start-up of new activities.
• Cost savings plans contributed €190 million, consistent with the annual objective of €250 million. They mainly cover operational efficiency (46%) and purchasing (31%), and were achieved across all geographic zones: France (32%), Europe excluding France (26%), Rest of the World (25%), Global Businesses (15%) and Corporate (2%).
• Transitory costs and one-off items mainly concern the absence of the favorable impact of one-off items recorded in the first nine months of 2016 (litigation payment in Belgium, insurance claim reimbursement received in Germany, favorable contract termination at Veolia Water Technologies) and additional insurance and maintenance costs (particularly in the United Kingdom) incurred in the first half of 2017.

3. CURRENT EBIT

Group consolidated Current EBIT for the nine months ended September 30, 2017 was €1,049.2 million, up +2.2% at constant exchange rates compared to the represented figures for the prior-year period.

The reconciling items between EBITDA and Current EBIT for the nine months ended September 30, 2017 and 2016 are as follows:

(*) Including principal payments on operating financial assets (OFA) of -€120.1 million for the nine months ended September 30, 2017 (compared with -€140.4 million for the nine months ended September 30, 2016.)

The increase in Current EBIT at constant exchange rates reflects:

• EBITDA growth at constant exchange rates;
• the increase in depreciation and amortization charges at constant exchange rates, in line with consolidation scope impacts, primarily in the Unites States following the acquisition of Chemours’ assets in July 2016, as well as in Brazil;
• the favorable change in net operating provision reversals, in particular captive insurance provisions (+€12 million);
• a decline in capital gains or losses on industrial divestitures in the nine months ended September 30, 2017;
• Share of current net income of joint ventures and associates was +€75.8 million versus +€81.6 million in 2016; improved performance of Chinese concessions were offset by sales of assets in United Kingdom.

The foreign exchange impact on Current EBIT was -€8.9 million and mainly reflects fluctuations in the pound sterling (-€10.5 million), Brazilian real (+€1.6 million), Czech crown (+€2.3 million), Chinese renminbi (-€3.1 million), and Australian dollar (+€1.2 million).

4. CURRENT NET INCOME

Current net income attributable to owners of the Company was €406 million for the nine months ended September 30, 2017, compared with represented €412 million for the nine months ended September 30, 2016. Excluding capital gains and losses on financial divestitures net of tax and minority interests, current net income attributable to owners of the Company rose 4.3% at constant exchange rates to €392 million from represented €379 million for the nine months ended September 30, 2016.

D] FINANCING

Net free cash flow was -€63 million for the nine months ended September 30, 2017, versus represented -€25 million for the nine months ended September 30, 2016.The change in net free cash flow compared with the represented nine months ended September 30, 2016 mainly reflects the increase in restructuring and other costs (-€40 million).

Net FCF excluding WCR seasonality for the nine months ended September 30, 2017 amounted to €619 million.

Overall, net financial debt amounted to €8,419 million at September 30, 2017, compared with represented €7,812 million at December 31, 2016.

In addition to the change in net free cash flow (including the change in operating WCR), net financial debt was impacted by net financial investments of -€248 million, as well as favorable exchange rate fluctuations totaling €221 million in the first nine months of the year and dividends paid.

APPENDIX

Reconciliation of 2016 published data for the nine months ended September 30, 2016 with represented data¹

(1) Unaudited figures

(2) See below

(3) Including the represented share of current net income of joint ventures and associates for the nine months ended September 30, 2016.

(4) The IFRIC 12 adjustment has no impact on net Free Cash Flow (a)+(b)+(c)=0)

(5) In order to ensure the comparability of periods, the accounts for the nine months ended September 30, 2016 have been adjusted for the reclassification of the Group's activities in Lithuania to "Net income (loss) from discontinued operations" pursuant to IFRS 5

IFRIC 12

In the income statement, the adjustments resulting from this clarification drive an increase in EBITDA and Current EBIT. In effect, the concession fee formerly accounted for as a charge is eliminated and then reallocated between interest expense and repayment of the recognized debt. At the same time, a depreciation charge for the asset is recognized and then deferred taxes are adjusted accordingly.

On the balance sheet, the liability related to the fixed payments is classified within concession liabilities and broken down between current and non-current liabilities according to maturity. The liability balance relating to the adjustments is greater than the corresponding net asset value: in effect, the asset depreciation rate is linear, while the reimbursement rate is progressive ("constant annuity formula,” with reduction in the interest portion in favor of the principal repayment).

The increase in EBITDA resulting from the application of the clarification is offset by the liability repayment (classified in CAPEX) and interest payments. As a result, these adjustments have no impact on net free cash flow or net financial debt.

¹ At constant exchange rates.
At current consolidation scope and exchange rates: revenue up 3.7%, EBITDA up 1.3%, current EBIT up 1.3%, and current net income-group share was down 1.6%, though up 3.3% excluding capital gains.

² Construction activities encompass the activities of Veolia Water Technologies, SADE and Sede.

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