Ladies and gentlemen, welcome to the Veolia conference call on Q1 2021 results publication with Antoine Frérot, CEO, Estelle Brachlianoff, COO, Claude Laruelle, CFO, and Olivier Brousse, head of strategy and innovation. I now hand over to Mr. Antoine Frérot. Sir, please go ahead. Thank you. Good morning, ladies and gentlemen, and thank you for attending this conference call on Veolia first quarter 2021 results. This morning, I am with Estelle Brachlianoff, our COO, Claude Laruelle, our CFO, and Olivier Brousse, head of strategy. Before presenting you our Q1 highlights with Estelle, I will say a few words about the agreement signed on April 11th with the board of SUEZ to acquire the majority of SUEZ assets outside France, and thus to become the undisputed leader in the ecological transformation. Claude will give you details on Q1 key figures, and we will then answer your questions. I will begin on page five. On the 11th of April, we signed a landmark agreement with the board of SUEZ to buy SUEZ shares at EUR 20.5 per share, dividend included. This project has been considered several times in the past, but has never been accomplished. It is now finally happening. It opens up great opportunities for the combined entity. With this agreement, Veolia is adding nearly EUR 10 billion of international revenues to its existing perimeter. The SUEZ group will remain, including, on the one hand, all its French activities, which we would have been obliged to sell for antitrust purposes, and on the other hand, some international assets totaling revenue of about EUR 7 billion. This offer, which will be recommended by the board of SUEZ, includes strong social commitments for a period of four years after the closing of the offer. Both sides have agreed to drop all legal actions. I now move to slide six. The purchase of SUEZ by Veolia will create a group with a EUR 37 billion of revenue, with a reinforced geographical presence, a unique service and technologies offering, and an enlarged client base, thus making it the undisputed leader of the ecological transformations. From a geographical standpoint, we will strengthen our footprint in the U.S., in Latin America, in Australia, in the Middle East, in Spain, and in the U.K. In terms of offering, the combination of our expertise will give us a unique positioning in technologies and know-how in water, waste, and energy. The combination of our two groups will also be significantly value creating. The EUR 500 million expected synergies are confirmed. We expect a double-digit EPS accretion as of 2022, and of nearly 40% in 2024. The financing of the transaction is designed to maintain our financial robustness with a net debt to EBITDA ratio below three times from the first year of the consolidation of the combined entity. The purchase of the 70% stake in SUEZ we do not already own will be largely financed by the asset divestitures, which will constitute the new SUEZ, and will be complemented by a capital increase of between EUR 2 billion-EUR 2.5 billion. After the announcement of the agreement, the rating agencies, Standard & Poor's and Moody's, have both confirmed our ratings with a stable outlook. On slide seven, you can see the expected profile of the new group based on 2019 pro forma figures. The new Veolia will thus generate revenue of about EUR 37 billion and an EBITDA of EUR 6 billion before synergies. In term of businesses, water will represent 47% of the group versus 41% for Veolia today. Waste will account for 37%, and energy for the remaining 16%. On slide eight, you have the detailed geographical footprint of Veolia and SUEZ on a standalone basis and after the combination. I have already mentioned the geographies where the combination will have the most impact. North America, where SUEZ will increase Veolia revenue by 50%, Latin America, where revenue will double, Australia, where it will increase by 60%, and global businesses by 60% as well. Revenue growth is more moderate in Europe taken as a whole, but it is very significant in the U.K. and in Spain. On slide nine, you have an indicative timetable of the next steps of the transaction. When we signed the agreement on April 11th, we gave ourselves until May 14th to finalize the agreement in detail. We will then have the valuation of the main assets, which will be contributed to the new SUEZ, as well as the details of its new shareholding structure. We will then be in a position to file a revised tender offer document to the French stock market regulatory body, AMF. In parallel, the antitrust process will be processing. We have already obtained clearance in five countries. We expect the EU clearance in the third quarter. The tender offer on SUEZ will be opened during the third quarter and be closed before year-end. 2022 will, of course, be the first year of the full combination of the new group. Our new world champion of ecological transformation will then be ready to take advantage of the various stimulus plans underway in Europe, in the U.S., in the U.K., and in all the other countries that see ecological transformation as both an imperative and as one of the ways out of the crisis. This is what I wanted to share with you regarding the purchase of SUEZ. Let us now move to our first quarter results, and for that, I am on slide 11. 2021 is off to a very good start for Veolia. Despite the third wave of COVID in Europe, we have enjoyed a strong rebound in revenue and results, thanks to the resilience of our business model and continued strong efficiency actions. We have continued to apply strict pricing discipline while maintaining a vigorous commercial dynamic. We are ahead of our annual objective in terms of efficiency gain, with EUR 92 million achieved in Q1, compared to a EUR 350 million annual target, and then largely above Q1 2020 achievement. We have also benefited from the sharp rebound of recycled material prices, and in total, Q1 revenue reached EUR 6,807 million, a 4% increase at constant Forex versus Q1 2020, and EBITDA total, EUR 1,078 million, strongly up by 13.6%, thanks to the operating leverage and record efficiency gains. If we now compare Q1 2021- Q1 2019, before the sanitary crisis, you see that here again, we have enjoyed a sustained growth, + 2.8% at constant Forex for revenue, and + 7.5% at constant Forex for EBITDA. Our activity level and profit delivery is well above Q1 2019, which clearly shows that we have managed to wipe out all the impact of the crisis and to recover our normal growth trajectory in a short period of time. This very strong first quarter is very encouraging for the rest of the year. I now hand over to Estelle, who will give you details on the operational trends of the first quarter. Estelle, the floor is yours. Thank you, Antoine. I am very satisfied with Q1 results in many respects. A strong revenue growth and an even stronger growth in our results, both a testament to our focus on continuous delivery. Digging now into the various components of this really strong quarter revenue growth, you will see on slide 12 how it splits between our various business segments. Municipal water, first, has been super resilient, and so has our energy business, helped by a cold winter. Our solid waste business has adapted very well to quite volatile C&I volumes, still down in the first quarter with lockdown measures in place in most geographies. We have driven massive efficiency measures, as well as continued our price increases in most geographies as well. It has also benefited from higher levels of recycled prices. Hazardous waste continues to be a success story of sustainable performance and growth, with volumes up, sustained prices, and no less than seven new facilities under construction in Asia, Europe, Middle East, and America. Onsite services for industry are not completely back yet, with our services to the automotive industry a little behind in Europe, and our services to oil and gas not yet back to full capacity, although they have rebounded very strongly. I'm pleased to mention on slide 13 a few very important wins of new contracts, which have materialized in the first quarter of 2021, as it could have been difficult to win new customers when you cannot even travel or meet them in person, given COVID restrictions. I would highlight in particular, a very good series in our municipal water activities, starting in France with the gain of Cholet, SUEZ being the incumbent, and Colmar, which was previously run mainly by the city. For the rest, it was a great achievement to win the first PPP type contract with the municipality of Miyagi in Japan, which represents EUR 800 million backlog. It follows exactly the same model as our successful Hamamatsu concession in the same country. Many interesting wins as well with our industrial customers. For example, with Petroperú, where we have managed to leverage the experience in sulfuric acid recovery of our U.S. team. Our EUR 200 million contract with BASF's new factory dedicated to electric car batteries in Finland is another source of satisfaction. On slide 14. Our strong results in Q1 have obviously been driven not only by our revenue growth, but also by our continued efficiency measures, as you can see from the operational lever. After the second half of 2020, where we managed to get EBITDA back to pre-COVID levels, we are really accelerating the rate of recovery. With a 14% EBITDA progression against 2020, also a 7.5% increase compared to 2019. We are on target with EUR 92 million cost cutting in the first quarter. As you know, our annual target is EUR 350 million, as we've kept an additional EUR 100 million recovery in the Recover & Adapt Plan on top of our annual EUR 250 million efficiency plan, as COVID consequences are still visible. We have sustained our effort in G&A squeezing, key asset efficiency, and digital. Just to mention a few examples, our Hubgrade live monitoring of water meters has helped us to chase after non-billed customers in France and Ecuador. When our American team has managed to reduce the cost of reactive in our hazardous waste units by recycling some byproducts. That's a typical example of what's underlying those efficiency measures. In summary, it gives me a lot of confidence in our team to keep the focus on delivering very good results quarter after quarter. It shows we are ready for the merger with SUEZ later in the year. I hand over. Now it's back to you. Thank you, Estelle. I am on page 15, where you can see our detailed 2021 objectives before the combination with SUEZ. As I said earlier, this excellent start to the year makes us particularly confident that we will reach our annual targets. Our objective for 2021 is clear. We want our level of activity and profit to be above 2019 performance. More specifically, revenue is expected above 2019. EBITDA is expected above EUR 4 billion, a growth of more than 10% versus 2020. We are targeting EUR 350 million of savings. Regarding our balance sheets, we are targeting a net financial debt below EUR 12 billion, with a leverage ratio below three times before the combination with SUEZ. In terms of dividends, we clearly intend to recover our pre-crisis dividend policy in 2021. I now hand over to Claude, who will give you details on these first quarter results. Claude, the floor is yours. Thank you, Antoine, and good morning, ladies and gentlemen. I'm very pleased to detail the sharp Q1 rebound with a solid growth momentum and a record profitability. As you can see on slide 17, revenue grew by 4% in Q1 at constant ForEx. Thanks to a very strong operating leverage, EBITDA jumped by 13.6% with a recovery in almost all our activities, as Estelle described earlier. Current EBIT is also well-oriented at EUR 469 million, +22.7% compared to last year. Current net income is up 59.8%. Thanks to a strong and continuous focus on cash management and lower CapEx spending, our free cash flow generation is excellent in Q1 and has improved by EUR 468 million compared to last year, leading to a net financial debt almost flat compared to December 31st. Moving to slide 18. Let's have a look at the Q1 performance by geography. You can first notice the group revenue acceleration over the last quarters, -0.6% in Q3, +0.9% in Q4, and +4% in Q1. Where did it come from? First, from France, +5.7% in Q1 with a resilient Water France with good volume and tariff increases, and a sharp recovery of Waste France, +11.2%, despite wave three of COVID due to solid volumes, price increases, and sharp rebound of recycled prices. Second, with the outstanding growth in the rest of Europe. + 9%, with very strong growth in energy and in Central Europe, and a good resilience of our waste activity in Germany. Third, from the rest of the world, which is still more contracted with a very dynamic China, +12%, and North America and Morocco still behind last year activity level. Fourth, from global businesses that continue to perform in line with previous quarters, with continued recovery in hazardous waste and construction, in line with the industrial recovery in many countries. On slide 19, you have our usual revenue bridge, where you can see the details of the 4% growth. The like-for-like growth is + 3%, and the scope effect is 1%, mostly due to our recent acquisitions in energy in Central Europe. What is noticeable is the volume box, - 0.5%, showing that our C&I waste business has not yet fully recovered in Europe, with the lockdown that happened in the U.K., Germany and France, which will lead to a further rebound as lockdown measures are lifted. As you can see, the colder weather that we all experienced in February and March helped our revenue by 1%. Energy and recycled prices are benefiting from the strong commodity prices and the high demand for cardboard. Finally, our prices are well-oriented, thanks to a strong price discipline that is one of the strong marks of this crisis in both water and waste, which is boosting further the revenue by 0.9%. Let's have a look at our waste activity on slide 20. The sharp increase of recycled prices has a strong impact on our waste revenue, + 3.2%. Prices continue to be very well-oriented at + 1.7%, thanks to continuous pricing discipline and price increases in some segments where treatment demand is high, like hazardous waste, for example. On the volume side, as I told you, Q1 2021 is below Q1 2020 by 0.9%, which was itself 1.8% below Q1 2019. We are clearly still impacted by the lower C&I volumes in Europe and recycling activities in the U.S. By geography, volumes are back in France, + 1.6%, Asia + 15%, and LATAM + 0.8%, but still down in the U.K., - 7.6%, Northern Europe - 1.4%, North America - 1.8%, and Australia - 4%. Regarding the geographies, one country to mention is the U.K., which came late last year in the lockdown and early this year. Waste revenue is down by 6.5%, but thanks to its resilient PFI model, the financial performance is almost flat, which is remarkable. Let's move to slide 21 with our Q1 EBITDA bridge and focus on the three main points. First, the contribution of the recent acquisitions in Central Europe, which are performing well in Q1 and boosting EBITDA by almost 5%. Second, the impact of the colder weather, + EUR 23 million, and the recycled prices, + EUR 24 million, in line with the revenue trend. Third, the cost-cutting of EUR 92 million, that includes EUR 68 million of usual cost-cutting and EUR 24 million of Recover & Adapt Plan that is strongly contributing to EBITDA growth. I can confirm that we are fully on track to achieve our EUR 350 million target for 2021. Moving to slide 22, let's review now our activities by geography. We start, as usual, by France. Water France in Q1, as you can see, is slightly up 0.8% with tariff increase 0.7%, works recovery, more than offsetting the end of the Toulouse wastewater contract in 2020. Waste France experienced a very sharp rebound in Q1, +11.2% compared to last year, and even +7.2% compared to Q1 2019, with three main causes. First, volumes still impacted by lockdown measures, but overall up 1.6% compared to last year. Continuous price increase in C&I collection and treatment, and sharp increase of recycled prices, especially in non-ferrous metal and cardboard. EBITDA France is sharply up, in line with the resilience in the water activities and the jump in the waste business. Moving to slide 23. Let's have a look at our activities in the rest of Europe. Starting by Central Europe, revenue increase is 23.5% compared to last year, mainly driven by a very strong contribution of our energy district heating business linked with energy price increase, heat tariffs up between 5%-10%, and the integration of the assets we bought last year in Prague and Budapest. U.K. revenue decreased by 6% compared to a strong Q1 2020, as lockdown started later in 2020 due to lower C&I waste volumes with a strict lockdown in Q1 2021. Thanks to the very solid PFI business model and good cost control, U.K. financial performance is very steady. Germany also experienced excellent results despite lockdown measures, thanks to the restructuring and recycled prices. EBITDA performance of rest of Europe is very strong, with good operating leverage. Moving to slide 24. We have seen a recovery in all regions in our rest of the world segment and a good operating leverage. Let's start by Asia and especially China. Chinese activities are up 12% and EBITDA 30%, with all activities strongly recovering after a low Q1 2020, and a special mention to our hazardous waste business, boosted by the new sites under operation, like Jining, are ramping up and overall significantly increased volume in all our facilities. We expect two other hazardous waste sites to start up this year, Dongfeng and Dalian. Latin America continues to grow at a strong pace, with little COVID impact in Q1 due to the warm weather. As we told you, North America refineries are still running at 85%, impacting our sulfuric acid recycling activities. U.S. municipal water, on the other side, had a strong Q1 with good financial performance. Australia, despite good weather conditions, experienced some remaining COVID impact and has not yet fully recovered its nominal C&I waste volumes. EBITDA of the segment is sharply up, with the strong contribution of the high-margin businesses. On slide 25, you have the details of our global business activities. VWT continues to perform well, with revenue up 2.1%, benefiting from the transformation initiated a couple of years ago, focusing on technology and higher margin business. We have, as we speak, a large pipeline of desalination projects, as the demand in the Middle East remains very high for many people and industrial end users. Networks activities of SADE are stable at constant scope after the disposal of our telecom activities in November last year. We have seen a recovery in the tender activity in Q1. Hazardous waste is recovering well, with price increases offsetting a little bit of volumes that are still missing. EBITDA of the segment is also strongly up, in line with better revenue and efficiency measures. On slide 26, you have the detailed EBITDA to current EBIT bridge, with a very strong current EBIT increase, up 22.7% at constant ForEx. Renewal expenses are slightly up in France and back to a normalized level in Q1. Depreciation is almost flat and is helped by less OFA repayment in 2021. The main variance is coming from the provision line, coming from various items, including litigation, employee share plans, insurance. Finally, you can notice the impact of the Shenzhen disposal in the contribution of our Chinese JVs, down to EUR 11 million in Q1. As a result, the level of current EBIT for Q1 2020 is EUR 469 million. Let's move to slide 27, to the current net income calculation for Q1, which is up 60% at constant ForEx. What is remarkable is the cost of the net financial debt, down by EUR 26 million to EUR 86 million, with two main reasons. First, the lower cost of our euro-denominated debt, with the continuous refinancing of corporate midterm notes, which is now, at an average, below 2%. Second, the benefit from low short-term interest rates in most countries where we operate, helping the cost of the swaps of euro debt into foreign currencies to go sharply down. Regarding tax, current tax rate is at 27%, and we are still projecting a tax rate of around 25% for the full year 2021. Moving to slide 28. Let's have a look at our free cash flow generation in Q1, with a EUR 468 million improvement compared to last year. Where does it come from? First, from a very good level of working capital, improved by EUR 314 million, thanks to continuous focus on cash collection and cash management in all our BUs, where we monitor cash on a daily basis and have really set a cash awareness since the beginning of the COVID crisis. Second, from a good CapEx management in Q1, at EUR 426 million, down by EUR 32 million. As a result, the net financial debt is only slightly up compared to December 2020, by less than EUR 300 million, and almost half of it is coming from ForEx impact, so EUR 131 million. On slide 29, you can see the details of the debt variation since the beginning of the year, with a net CapEx box at EUR 426 million and the working capital variation sharply reduced at EUR 480 million, thanks to strong collection in most of our geographies, including LATAM and Africa, Middle East. On slide 13, after this very good Q1 and its outstanding financial performance, I can fully confirm our strong confidence in 2021, and I can fully confirm our guidance for the year. Thank you for your attention. Thank you, Claude. We are now ready for your questions. Thank you, ladies and gentlemen. If you wish to ask a question, you may press zero one on your telephone keypad. It's zero one on your telephone keypad. We have one first question from Mr. Emmanuel Turpin from Société Générale. Sir, please go ahead. Good morning, everybody. I'd love to ask one financial question and then a couple of questions on business development. On the financial side, starting with CapEx, you basically spent a little bit less than last year, about EUR 30 million. Could you give us an update on your plans for the full year? It's going to be a very special year with the merger with SUEZ, if we focus on Veolia on its own, how do you see the rest of the year as the economy is restarting and your businesses seem to be going well? The second financial question is actually a cross between business and financial. You mentioned that, thanks to the nature of your PFI contracts in the U.K., you ensured, I understood it as a flattish EBITDA, despite lower volumes and lower revenues. Would you mind explaining to us how this type of PFI contracts work on essentially protecting your EBITDA even if volumes are down? What would be the implications when volumes are up? Would your EBITDA kind of lag this volume rebound as they were protected as volumes were down? A couple of questions on business development. You announced your second concession in water in Japan. Japan is a large economy, one which had been historically difficult to penetrate for foreign operators. If you look out five years or more, how big could Japan become in terms of potential market for Veolia, especially new Veolia, as the two companies will combine their forces there? The second business development question is about your service offer around air quality. I remember a couple of years ago, you launched this business and explained to us you had a couple of pilot projects. You strongly believed there was a great future for this type of business. Now, the COVID crisis is putting air quality at the center of discussions. I was wondering to what extent you felt public authorities were becoming more aware of the need for a service there. Thank you. Thank you very much, Emmanuel. You have questions for all of us. For the CapEx on the full year, Claude. For the EBITDA U.K. and the good resilience of our business, it will be Estelle. I will take your Japanese question, and Olivier about air quality. We start with the CapEx? Yes, please. Regarding the CapEx, if you look at what we spent over the last couple of years, 2019 was EUR 2.2 billion. Last year, a little bit more than EUR 2.1 billion. You know that we managed the CapEx quite well last year. This year, because we have a lot of discretionary CapEx to spend both on hazardous waste and also on the conversion of energy transition in Germany and in Central Europe, we expect CapEx of around EUR 2.3 billion for the full year. About the U.K. business, Estelle. About the U.K. business, various components into it, I guess C&I and PFI, just to say two large components. C&I-wise, volumes are down, as Claude explained, because there was a big lockdown in the first quarter of 2021. There had been no lockdown last year. It happened later on. We have a very large decrease in volume compared to last year in C&I. Cost-cutting managed to keep our results where they should be, basically stable, something like that. With regard to PFI, which is another type of business, it's relatively resilient to volume level short term. Basically, we share the volume and price effect with the customer, with a type of collar and floor type of arrangement. Each contract is different. On majority that's the case. At one point we benefit from a little bit more volume, but not 100%. On the other hand, when volumes are down, we are not down to 100% of the volumes on our side. We really are sharing with the customer. All in all, in the PFI business, volume is not a big thing as long as we manage to keep the energy from waste full, which we have throughout the crisis. We've prioritized them against the landfills or other type of activities. What's really important is more the prices, price of recyclate, as much as our performance industry-wise as in energy from waste level of availability. Basically resilience to volume to a large extent. Thank you, Estelle. About Japan now. You remember that we were the first foreign company to enter the water market in Japan about 20 years ago. It is, of course, a difficult market and we need time to be Japanese in Japan and to progress into this market. We enjoyed a turnover of about more than EUR 600 million in this country, mainly in water business. We take profit year after year by the fact that we were the first one into this market, and we are still the first one amongst the foreign companies. We introduced the PPP model in this country, where the major parts of water services are performed by public bodies, and regularly we make progress. Our water presence allowed us also to enter progressively in the waste business, especially recycling, but also in energy business. With EUR 600 million of turnover, we are far of what we can expect in the next 10, next years. Japan is for sure an expansion zone, expansion territory for Veolia. Now I can say that in Japan we are seen as also a Japanese company. Air quality, Olivier Brousse? Yes. As you know, Emmanuel, we've been talking and working on air quality for several years now, mostly indoor air quality. What we can say in the last month is that the trends from especially public authorities to deal or to improve or maintain the air quality in buildings, especially public spaces, is accelerating. We're seeing more and more tenders, for instance, in schools from regions, from departments, in order to ensure a good air quality in classrooms. What is interesting, though, in the last week, and I'm sure you've heard that, is that air quality, it's an important risk to healthcare and public authorities are aware of that. Now with COVID, it could be an element of being open for business or not. Public authorities are talking, for instance, about how to ensure school class availability thanks to air cleaning between sessions. The leisure industry, like cinemas, are talking about how to negotiate with government and public authorities about how to stay open or reopen for business by cleaning the air between cinema sessions. All the experience that was accumulated by Veolia in the last two years on this matter could become essential for some services, public services or business services, to remain open in the case of a long COVID economy. We're seeing a steady growth in that, and we're well positioned to take advantage of that. Thank you, Olivier. Another question. Thank you, sir. We have another question from Philippe Ourpatian from ODDO BHF. Sir please go ahead. Yes. Good morning to everyone. I have several questions, let's say three or four. The first one is concerning the COVID impact. You mentioned that your economies were EUR 92 million, you break down between the normal plan and the Recover & Adapt Plan. Out of these EUR 24 million, what are the level of economies which might be seen as recurrent one? I do think that the travel are still limited and you will use more, for example, some digital meetings versus traveling. Is there some millions which could be, let's say, permanent or resilient in this figure? That's the first question. The second one is concerning the deviation in terms of price effect between revenues and EBITDA. You have +EUR 61 million and -EUR 52 million. Could you just elaborate a little bit more about this deviation, I would say? The third question is concerning tax carry-forward. Is there some additional use in the French fiscal perimeter and U.S. perimeter of the tax carry forward inventories you have had due to the better results you extract in Q1? The two last question are first concerning the French pipe request of improvement. There were some article in French press that there is clear need of investment. What could be your thought and the impact on the Veolia's activities in the coming years? The last one is concerning the capital increase for the SUEZ merger. You were mentioning previously max EUR 2 billion. Now you are putting the range between EUR 2 billion and EUR 2.5 billion. Why this has changed and why on higher figures? Many thanks. Okay. I'm not sure I completely understood well your question about the Water France business. Could you repeat it please, Philippe? Yes. I was saying that French press was mentioning during the last day that there is clear need of investments for water pipes in the French municipal business. I do think that with SADE, you are working in this area. Is there some sign or, let's say, expectation of better businesses, level of businesses in this way, as most of these investments are going to be done by the municipalities? Okay, thank you. We will begin with Estelle about the prospecting. Thanks for the question. If I refer to page 14 of the presentation on our efficiency plan. The part which is the efficiency plan, as in the traditional one, is fully a recurring one, so the EUR 68 million out of the EUR 92 million. As far as the EUR 24 million, which is the Recover & Adapt Plan, it's not meant to be necessarily recurring. Given what I know what's underlying in Q1, I would say the vast majority of it is. We still have a little bit of, say, travel freeze and stuff like that in it. The vast majority is more recurring measures, even in the Recover & Adapt Plan. About the price effect. The price effect that you see on the revenue side is coming from the price increases that we have in all our businesses. On the other side, what we put in the EBITDA bridge with -EUR 52 million is the usual price to squeeze. Is the cost inflation that we are not passing to our customers, plus the renewal impact of our contract. This is the reason why that we have, as usual, a price net of cost inflation, which is negative, and that we have to offset, but by more savings than this price of cost inflation. That is the explanation of the difference between the two boxes. And there is usual- There is not- Excuse me, Philippe. It is very usual in our presentation. If we enjoyed an increasing of our prices, we will limit this cost squeeze. We will not take it completely, but we will limit it largely. So first of all- Okay. For example, you have a cost of oil and gasoline. It's part of the price of the negative EBITDA above. It's also slightly, because we're increasing slightly the prices, but not fully regarding the level of oil price, which is the level of Q1 today. In fact, just my question was also, there is no other, let's say, non-recurring or exceptional item? I know this mechanism, but it was just to know also if there is some specificities, mainly in Q1. No. You have this effect on all our publication regularly. You will see a price increase for now some second semester, pre-semester, and a negative impact of the price cost squeeze on the EBITDA level. It is very classic for us. About the tax carry forward, Claude, again. In terms of tax, if you look at the tax level of Q1, it is a bit higher than the full year, because we have less contribution from France and the U.S. You have seen what happened in the U.S., and in U.S., we were further impacted by the very cold weather in Texas. With the very cold weather in Texas, we had to shut down a hazardous waste facility there for a couple of weeks. What we are seeing with less contribution from those two tax groups, the tax rate is slightly higher in Q1. The expectation is still the same, 25% for the full year. Meaning less than the 27% we had on Q1. On Q1. Okay. About the French water business, we take the question. It's very good news that at least we hear some municipalities and some public people saying that we need more investment in the water activity in France. Meaning that the prices which decreased a lot for 10 years now, will stop to decrease and probably, perhaps, increase a bit. It's too early to see the consequences on that fact today for SADE, for example, for the works. It will be more interesting also for our water services, meaning that we can invest on the water infrastructure, not only for pipes, but also from treatment equipment, new pollutants, and so on. It is benefiting for all our services, with some subcontracting to SADE or to VWT for us, but also profiting for all the services. We hope to see that in the coming months or semester, the money will come probably from the water agency. You know, Philippe, that in France, between some political announcement and the facts on the field, we need a bit time sometimes. About the capital increase. Capital increase, yes. What we have always said is that the capital increase will be capped at around 20% of the operation. Yes. Today with the share price increase that we have targeted and that we have announced, EUR 20.5, this is the reason why that we have put this window, and we will fine-tune the amount when we have a clearer view of the proceeds from the disposal. We will give you later in the year the precise number of the capital increase. What we said in the past was maximum 20%. I thought remember it was maximum two. It is around two. It will be between two and 2.5. Very clear. Many thanks. Another question? Yes, we have another question from Mr. Olivier Van Belleghem from Exane. Sir, go ahead. Thank you very much. Good morning, everyone. Thank you for taking our questions also for me. I had a few as well. First, maybe on the EBITDA guidance. You mentioned above EUR 4 billion for this year. The EUR 4 billion is actually what you did in 2019, and with the Q1 EBITDA already up 4.5% versus Q1 2019, when, as you mentioned, in fact, activity levels are still a bit subdued because of COVID, and that might get better later in the year. I wonder what your thinking is about the possibility to actually do substantially better than EUR 4 billion in terms of EBITDA this year. The second question, which is actually maybe related to the first one, your net debt is targeted, as you mentioned previously, to be below EUR 12 billion by year-end. That will probably include disposals. I wonder if you could give us an indication of the amount of disposals that you expect to make this year. Again, on a standalone basis, so not including the SUEZ transaction. A third question would be on working capital. You did well in Q1, how much of that do you expect to be retained structurally? Do you expect working capital to be a positive driver for your cash flow also at year-end? If so, if you could give us an indication of the amount, that would be very useful. Then a final question from me, also coming back to the capital increase. I don't know if at this stage you can already give an indication in terms of how much of the capital increase you expect to be financed by giving part of the SUEZ buyout in Veolia shares, and how much of the capital increase would then be financed by a straight capital increase on your end. Thank you. Okay. I take the first question, Olivier. For sure, we are in advance on our guidance at the end of Q1. We did not recover all the consequences of the crisis. For example, our waste volumes, meaning that for the rest of the year, we hope to accelerate again our performance. So likely there is room to do better than, clearly better than the 2019 EBITDA performance. We've announced the guidance just months ago. It is today a bit too early to change it. About the debts of EUR 12 billion before the combination of SUEZ and Veolia close. Yes, to give you a little bit of color regarding the net debt level, it's including some disposal yet, to reduce the debt that was at EUR 13.2 billion. What we expect in terms of disposals is slightly higher than EUR 1 billion, so between EUR 1 billion and EUR 1.3 billion for the full year. This is for the net debt computation. Working capital at year-end. As you have seen, we have made a lot of progress on the working capital side, even last year, so it's really a continuous improvement. What I can say, if you look at the previous year, in 2019, we made a positive contribution from working capital by EUR 200 million. Pretty much the same in 2020. What we expect from 2021 with what we have done since the beginning of the year, is a positive impact at year-end, which will be, I would say, maybe in the range of the previous years. We will see later in the year what we will contribute. With the effort done by all the countries, we will have a slight positive impact on the debt reduction coming from the working capital. About working capital, the fees are not going to the sky also. Today, the working capital is for Veolia, clearly a resource. It can increase a bit. Every year, we forecast to be stable. Every year, we do better. A small increase, perhaps at the end of the year. Capital increase. For the capital increase, we said we have two options, but we want to do it in one or the other option, but not half and half. It will be clearly a rights issue as a normal rights issue that can be done, or it could be a share tranche, a capped share tranche in the tender offer. Yes, we accept through the deal with the SUEZ board to increase our price for the SUEZ share. We pay a good price. Not in excess, but a very good price for this share. I think it will be fair also to leave to the Veolia shareholders a part, the normal part, of the valuation of our deals. Probably today, we will go probably to the classical share increase, especially for our actual shareholders. Thank you very much. Thank you. Thank you, sir. Next question is from Mr. Juan Rodriguez from Kepler Cheuvreux. Sir, go ahead. Thank you. Good morning, everyone. Thank you for taking our questions. On the operational level, most of my questions have been answered, I still have two on the financing of the SUEZ deal, if I may. The first is on the capital increase on the new terms that you provided. In terms of timing, can you please confirm that it will be done at the same time as the SUEZ closing? The second is on the financing or through disposal of the assets. It has been said that the multiples will be similar to those of the transaction, should we expect something around 9x the EBITDA? Any color on what has been the leverage or what will be the leverage of the new SUEZ will be useful as well. Thank you. I'll begin with the second question. We deal with SUEZ board to have a price for the new SUEZ in concurrence with the global price for the whole SUEZ. We will get that because it is already discussed and forecast with the SUEZ board. Not very far from what you have in mind. What we will do, we will look at the appropriate timing to see when to do the share capital increase. It could be slightly moved from the formal takeover of SUEZ. Likely before the closing. Yes of the offer. Thank you. As a follow-up, any color on what could be the leverage of the new SUEZ on the asset disposals? It is a question for the new shareholder of the new SUEZ. They will agree. These shareholders are discussing today between themselves, first to propose to Veolia first, because the true seller is Veolia, SUEZ also, the best price they can propose in concurrence with the global price we offer for the global share SUEZ. They discuss also about their governance, the governance of the new SUEZ, on that, they will propose certainly the leverage. We decided in the agreements of April 11th that the new SUEZ should be, how we say that? Should be leverage balanced in terms of debt and equity. Exactly. Also they have to be rated as investment grade. Exactly. Investment grade. This is the goal, is to have an investment grade rating. Okay. Quite useful. Thank you. Thank you, sir. We have another question. Ladies and gentlemen, I would like to remind you that if you wish to ask one, you may press zero one on your telephone keypad. We have another question from Mr. Philippe Ourpatian from ODDO BHF. Sir, go ahead. Yes. Just one additional question regarding a detail in the slide 19 about the revenues. You were mentioning a commercial volumes and work negative impact of EUR 38 million. In terms of EBITDA, you were mentioning only - EUR 4, and you were saying as comments, "Thanks to operational efficiencies." Could you just a little bit illustrate which kind of, or what kind of operational efficiency you are discussing about? Which are not in the EUR 92 million of cost cutting, I do suppose it's really operational efficiencies. Just a minute, Philippe. We have a look at your question more precisely. Yes. What we are saying about operational efficiency is also commercial efficiency. What we are talking about here is about the contribution of hazardous waste contribution in China. This is one of the drivers. One big item which is contributing to this box, Philippe. It's a combination, as you know, of a lot of things, but including that effect. Also for the waste activity, we got a little bit a boost in our incineration activity because we were also able to increase the efficiencies in that activity by a better. All the cost efficiency is in the cost cutting plan. When we are talking about efficiency, it is not in the cost cutting plan, it is other efficiency, for example, commercial efficiency. Very clear. Many thanks. Thank you, sir. We have one last question from Mr. Andrew Fisher from Berenberg. Please go ahead. Thank you. Morning, everyone. Just two quick questions from me. Thanks for taking the questions. One on hazardous waste. Please, could you just remind us of the timing of new capacities or any new capacities that you already have in planning under construction, and what that means in terms of the total size of the treatment capacity you have going forward? How much growth will the new capacities bring? Maybe just expand on any further opportunities that you see to continue to grow in hazardous waste. Just on industrial water services and technologies, I was just wondering if you could maybe give us a bit more color on any differences that you're seeing across industries, power, oil and gas, mining, pharma, food and bev. Whether or not you're seeing any particular differences between the new inquiries that you're getting from the industrial water segment, please. Thank you. Okay. About hazardous waste new capacities. About hazardous waste new capacities, basically, we're opening new capacity, say, a few times in the year on every year. I would have to go through the whole list of the seven which are under construction. Some of them will be this year, some of them will be next year, and it will be up to 2023 for those under construction now to be open. It's really spread over the time. For instance, we have started the construction of one in Germany, which is going to be more opening in 2023. We have some which are a large one. We have a large one as well in the U.S., which will be in 2023. In China, typically we have three which are meant to open this year or beginning of the next, which are shorter term, if you wish, and I could go on like that. So- Yeah We have as well one in the Middle East, Sadara, which is under construction, and it's going to open in 2022. It's really a few every year for the next few years. And then- If you have a look at the overall increase in the capacity, if I put it in turnover terms, we've announced in our Impact 2023 plan that we'll have a revenue higher than EUR 3 billion altogether in the hazardous waste business at the end of the plan. We are really on our way to Sorry, EUR 4 billion. Another EUR 1 billion because we are more around three. An extra EUR 1 billion turnover compared to what we have now. It gives you an idea of the pace of those opening of new capacities. The new facility of Singapore is already open? The new facility of Singapore is starting, as in we have basically half of the volume in, which is a normal ramp-up. That's why I was not mentioning it, but you're right, Antoine, that's one of the seven as well. Just to have some figures in mind. The turnover of hazardous waste was EUR 1.2 billion in 2016, EUR 2.5 billion in 2019, and we target EUR 4 billion in 2023. About industrial water, to well understand your question, could you precise it, please? Yeah, sure. I just was looking to see if you're seeing any differences between the segments of industrial clients in terms of, as economies open up, whether you're seeing any particular pockets of demand from, say, the food and beverages sector relative to oil and gas. Just to see if there's any differences in trends between the industries, please? Yes. That's a very good question. We're seeing a very different trend of reopening from the various industries, either from our industrial water, but it's the same for our industrial energy, typically, or even hazardous waste. To keep a long story short, we are seeing, and that won't be a surprise to you, super big boom in everything to do with pharmaceutical industry, where we do a lot, typically in the hazardous waste business. We have seen quite a down in 2020, but it's picking back up in the oil and gas, typically in the U.S., where the refineries are back up to, say, 85% capacity. They were down to around 70% last year. It's getting back up, but not yet recovered fully. Food and beverage has always been super resilient, we haven't seen a big drop, and neither is there a big rebound. It's been relatively stable. On the other end of the spectrum, the automotive sector, in particular in Europe, is still a bit weak and hasn't come back to pre-COVID levels. Altogether, since we're covering all the industries I've just mentioned, we have a great portfolio because it's super diversified. Of course, it depends on the various geographies. We obviously have more oil and gas in the U.S. than we have in Europe, but nonetheless, very different vision from the various industries and a big boost in pharma. Okay. On account of industrial water needs, perhaps some few words on the year about the rise of needs of water reuse for agriculture, which will grow quickly in my mind in the coming years. Yes. As you know, water stress is a growing concern for not only the industry, society at large, but also agriculture. You will remember that last year, some of the crops in France reduced by 20%-25% just because of water stress during the summer. That's again, fortunately, the case again this year. As a consequence, the agriculture sector is talking to us With a certain sense of urgency in order to find water delivery guarantee, which would come from the reuse, from our water treatment plants. You don't see it in our revenue line for now, but it already represents 60% of the water provided to the agriculture sector in Spain, 80% in Israel, 0% in France. Reuse of water for the agriculture should be a new business line in the coming years. We wouldn't be surprised if in the coming years, this was a new source of revenue for us, in Europe, but also in other regions that are affected by water stress for agriculture. That will also bring some new needs of pipes, infrastructure treatment, but also pipes. It will increase the water business, not only for cities, not only for industry, but also for agriculture. Absolutely. The wastewater treatment plants will become a new source of water. They will have to be upgraded and [audio distortion] Do we have another question? Thank you. Another question? The last one, perhaps. Yes, we have one last question from Mr. Emmanuel Turpin from Société Générale. Sir, go ahead. Thanks. Question on your slide 27 on the quite impressive performance in cost of net financial debt improving from EUR 112 million- EUR 86 million. Is there any, either cost or further savings we should take into account? Same question for the next line on that table, the other financial income and expenses. Back on business development, would you mind updating us on your ambitious business plan for plastics recycling? That was one big area of growth pre-COVID. How is this shaping up in coming years? Are you sticking to your ambitions on targets? Should we expect a bit of delays for the delivery of those targets or not? Thank you. Yes. About the first question, Emmanuel, perhaps it is more your business than ours to forecast the short term interest rate. Claude will try to answer your question. What I can tell you, Emmanuel, is when you look at the low number in Q1 2021, a large part of it is coming from the low interest rates in foreign currency, so which is really good news. It's about one quarter or one-fourth coming from the interest rates in the euro debt, and three quarters coming from the low level of interest rates in foreign currencies. Short term. Short term rates. What we're expecting from the full year is something which could be slightly below EUR 400 million as a cost of net financial debt, well below last year number. In terms of other financial income and expense, this is a line where you will see the dividend that we will receive from SUEZ in Q2 because the dividends, which are expected to be around EUR 120 million. What you will have to do is to have the usual level of other financial income and expense, and put the SUEZ dividend on top of it. Very clear. Thanks. About our plastic recycling business. On the back of our plastic recycling business, the short answer is we are really sticking to our plan. Meaning, as you know, we've targeted to reach EUR 800 million by 2023. We are really building the new facilities exactly as we had planned. Just a specific comment on last year's COVID prices with regard to plastics. It has really confirmed that our position in this industry was really the right one because even in the midst of last year's worst part of the crisis, the decorrelation of our plastic recycled prices against the virgin prices and the oil has been kept by our customers because they really were keen on buying recycled plastics because the trend is there and the demand from the consumer is there. That was really a confirmation that we're on the right niche of high-end quality of plastics, and we are really on plan. That was the last question. Thank you very much to all of you. Ladies and gentlemen, you can see that Veolia and its strong team is able to do together two big things. Of course, to prepare and create the big champion of ecological transformation with the project with SUEZ, and to manage our actual businesses strictly in the line of our Impact 2023 strategy plan. We will perform this plan as we forecasted from the beginning. You see that after one year of the crisis, we are doing better than just to recover or to have lost one year. EBITDA + 7.5% between 2021 and 2019 is meaning that we already get the two years progression, meaning that we are doing better than just to recover. We will come progressively on the curve, on the initial curve before the crisis, that is very good news. We are able to do both things together during morning, evening, weekend, and so on. We are in a good position to welcome all our new colleagues in some months from now. Have a good day. Thank you very much. Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.