Filed by: SUEZ
pursuant to Rule 425 under the Securities Act of 1933
Subject Company: SUEZ
Exchange Act File Number: 001-15232
Date: September 7, 2006
On September 7, 2006, Suez issued the following press release.
Important Information
This communication does not constitute an offer to purchase or exchange or the solicitation of an offer to sell or exchange any securities of Suez or an offer to sell or exchange or the solicitation of an offer to buy or exchange any securities of Gaz de France, nor shall there be any sale or exchange of securities in any jurisdiction (including the United States, Germany, Italy and Japan) in which such offer, solicitation or sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction. The distribution of this communication may, in some countries, be restricted by law or regulation. Accordingly, persons who come into possession of this document should inform themselves of and observe these restrictions. To the fullest extent permitted by applicable law, Gaz de France and Suez disclaim any responsibility or liability for the violation of such restrictions by any person.
The Gaz de France ordinary shares to be issued in connection with the proposed business combination to holders of Suez ordinary shares (including Suez ordinary shares represented by Suez American Depositary Shares) may not be offered or sold in the United States except pursuant to an effective registration statement under the United States Securities Act of 1933, as amended, or pursuant to a valid exemption from registration.
In connection with the proposed business combination, the required information document will be filed with theAutorité des marchés financiers(“AMF”) and, to the extent Gaz de France is required or otherwise decides to register the Gaz de France ordinary shares to be issued in connection with the business combination in the United States, Gaz de France may file with the United States Securities and Exchange Commission (“SEC”), a registration statement on Form F-4, which will include a prospectus.Investors are strongly advised to read the information document filed with the AMF, the registration statement and the prospectus, if and when available, and any other relevant documents filed with the SEC and/or the AMF, as well as any amendments and supplements to those documents, because they will contain important information.If and when filed, investors may obtain free copies of the registration statement, the prospectus as well as other relevant documents filed with the SEC, at the SEC’s web site atwww.sec.gov and will receive information at an appropriate time on how to obtain these transaction-related documents for free from Gaz de France or its duly designated agent. Investors and holders of Suez securities may obtain free copies of documents filed with the AMF at the AMF’s website atwww.amf-france.org or directly from Gaz de France on its web site at:www.gazdefrance.com or directly from Suez on its website at:www.suez.com, as the case may be.
Forward-Looking Statements
This communication contains forward-looking information and statements about Gaz de France, Suez and their combined businesses after completion of the proposed business combination. Forward-looking statements are statements that are not historical facts. These statements include financial projections, synergies, cost-savings and estimates and their underlying assumptions, statements regarding plans, objectives, savings, expectations and benefits from the transaction and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words “expect,” “anticipates,” “believes,” “intends,” “estimates” and similar expressions. Although the managements of Gaz de France and Suez believe that the expectations reflected in such forward-looking statements are reasonable, investors and holders of Gaz de France and Suez ordinary shares are cautioned that forward-looking information and statements are not guarantees of future performances and are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Gaz de France and Suez, that could cause actual results, developments, synergies, savings and benefits from the transaction to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the public filings with theAutorité des marchés financiers(“AMF”) made by Gaz de France and Suez, including those listed under “Facteurs de Risques” in theDocument de Basefiled by Gaz de France on April 1, 2005 (under no: I.05-037) and in theDocument de Référenceand its update filed by Suez on April 11, 2006 (under no: D.06-0248), as well as documents filed by Suez with the SEC, including those listed under “Risk Factors” in the Annual Report on Form 20-F for 2005 that Suez filed with the SEC on June 26, 2006. Except as required by applicable law, neither Gaz de France nor Suez undertakes any obligation to update any forward-looking information or statements.
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PRESSE RELEASE September 7, 2006 |
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Press Service 16 rue de la Ville l’Evêque 75008 Paris FRANCE | ||
STRONG ADVANCE IN FIRST-HALF RESULTS
UPGRADED OBJECTIVES FOR 2006
Revenues | € 22.4 billion | +10.2 | % | ||||||
EBITDA | € 3.7 billion | +10.0 | % | ||||||
Current operating income | € 2.4 billion | +13.9 | % | ||||||
Net income | € 2.2 billion | +39.5 | % | ||||||
Earnings per share | € 1.72 | +11.7 | % | ||||||
Excluding disposals | € 1.17 | +37.6 | % |
Strong advance in results
The SUEZ Board of Directors meeting of September 6, 2006, chaired by Gérard Mestrallet, approved the results for the six months ended June 30, 2006.
• | All indicators of Group operating performance registered improvement |
Ø | exceeding announced targets |
Ø | surpassing growth recorded in 2005 |
• | Net income rose +39.5% to€ 2.2 billion |
• | Increase in earnings per share,partly due to the immediate accretive impact of the year-end 2005 combined public offer for Electrabel |
• | Sound financial structure,sustained cash generation, with further improvement in the gearing (64%, versus 72% at December 31, 2005) |
Outlook for 2006
Upgrade of objectives for 2006
• | Group revenues growth above 7% |
• | EBITDA growth close to 10% |
• | Current operating income growth above 15% |
• | Net debt below€ 12 billion at the end of 2006, before special dividend |
• | Return on capital employed (ROCE) above 12% |
SUEZ Gaz de France merger project
• | Clear industrial vision |
• | A European project to meet energy and environment challenges |
• | A unique, value-creating opportunity for shareholders that strengthens growth and development potential |
• | Extraordinary General Shareholders’ Meeting planned for December 2006 |
For Gérard Mestrallet, SUEZ Chairman and CEO, “The first half of 2006 saw many commercial successes, continuing improvement in the Group’s operating performance and sound, profitable growth. These strongly improved results have led us to upgrade our 2006 performance targets. With the quality of these results confirming the effectiveness of our business strategy, we intend to accelerate its implementation through our merger with Gaz de France. In our rapidly evolving sector, we are convinced that this merger will create the most value for all stakeholders – shareholders, customers, and employees alike.”
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STRONG GROWTH IN FIRST-HALF 2006 RESULTS |
First-half 2006 saw a further improvement in Group results, with net income at€ 2.2 billion.
The rate of organic growth in revenues (+9.5%) and in EBITDA (+9.6%) are above the Group’s medium-term objectives. Net debt decreased to€ 13.2 billion at June 30, 2006, compared with€ 13.8 billion at December 31, 2005.
First-half organic growth in revenues, at +9.5%, surpassed Group objectives
During first-half 2006, SUEZ achieved sustained total revenue growth (+10.2%) to€ 22.4 billion. Organic growth (excluding changes in Group structure, exchange rate fluctuations, and natural gas price variations) was +9.5%. Revenue growth was especially strong in electricity and natural gas.
Operating profitability indicators increased faster than revenues
EBITDA,€ 3.7 billion, grew by +10.0%. Excluding changes in Group structure and exchange rate fluctuations, EBITDA grew +9.6%. Changes in Group structure arose mainly from SUEZ Environment reorganization and disposals in Latin America. Exchange rate fluctuations largely resulted from Brazilian real appreciation. EBITDA improvement was due mainly to favorable market conditions, the startup of energy sector power plants, continued recovery of SUEZ Energy Services, and good results in environment activities.
Current Operating Income amounted to€ 2.4 billion, +13.9% in total growth and +11.4% in organic growth at June 30, 2006.
Profitability improvement programs on track with established objectives
Since January 1, 2005,€ 429 million in cost savings have been realized. The two-year 2005/2006 objective of€ 550 million is confirmed.
The synergies linked to the combined public offer for Electrabel have already been identified:€ 85 million for operational synergy (3-year objective:€ 250 million) and€ 40 million in financial synergy (2-year objective:€ 100 million) on a full year basis for 2006.
Net income Group share:€ 2.2 billion
Net income from ordinary activities increased +18.5% to€ 3.1 billion, benefiting from€ 726 million in first-half 2006 capital gains (versus€ 1,024 million in 2005), arising principally from the sale of a portion of the Group’s holdings in Flemish inter-municipal companies (€ 194 million), sale of the remaining M6 shares (€ 120 million), Reva (€ 130 million) and of Colbùn (€ 84 million).
Net income Group share amounted to€ 2.2 billion, i.e. a + 39.5% increase, versus€ 1.6 billion in H1 2005.
Solid performance across divisions |
SUEZ Energy Europe (SEE): sustained progress in operating result
Revenues were up +19.1% to€ 8,391 million at June 30, 2006. On a comparable basis, excluding in particular the impact of higher natural gas prices (€ 542 million), revenues rose on an organic basis by€ 973 million, for an organic growth rate of +13.5%.
EBITDA, amounting to€ 1,790 million, saw organic growth of +13.1%, or€ 207 million, mainly accounted for by operating elements and favorable market conditions.
Also contributing were the greater availability of power plants in the Netherlands, which in 2005 had been hit by prolonged shutdowns, and the full impact of new plants start up during the last 12 months, mainly in Italy. Meanwhile, growth drivers outside the Benelux continued to advance. Natural gas activity, whose growth is mainly accounted for by Distrigas, benefited from rougher weather than in 2005, as well as from commercial successes. Distrigas’ supply portfolio enabled it to ride out pressures on market prices (between November 2005 and March 2006).
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Current Operating Income amounted to€ 1,240 million, +18.9% in terms of organic growth (or€ 197 million), considerably more than the EBITDA growth rate (+13.1%).
SUEZ Energy International (SEI): Commercial dynamism in a fast-growing environment
SEI recorded a +9.2% increase inrevenues (+€ 258 million), on a comparable Group structure, exchange rate, and natural gas price basis. Revenues were€ 3,058 million at June 30, 2006. This new increase is the fruit of SEI’s commercial dynamism in a fast-growing international economy, price increases related to reduced reserve electricity production capacity in several markets, and fuel price increases.
SEI EBITDA came to€ 753 million (+11.9%).
Current Operating Income for first-half 2006 rose +15.7% in total growth to€ 516 million. Organic growth was +5.6% with a strong contribution from South America (+9.9%), particularly Brazil which benefited from the replacement in 2005 of the last portion of initial contracts by new bilateral contracts at more favorable margins. Improvement of merchant plant performance in North America partially offset the momentary decline in natural gas activities during the first quarter of 2006. Commercial successes in Middle East/Asia also contributed to this growth.
SUEZ Energy Services (SES): Sustained activity and strong improvement in operating results
Revenues came to€ 5,362 million. Organic growth of SES revenues was +6.7% or€ 334 million.
In France, progression of the activity was especially well-sustained in the installation and maintenance segments (Ineo) (+€165 million, +12.2%) as a result of an increase in business with service sector and infrastructure customers (mainly transport, telecom, and public lighting).
Services activities in France (Elyo) recorded organic growth of +9.2%, mainly the result of commercial activity and related work.
On the international side, SES benefited from expanded business activity, mainly in Switzerland and Italy.
EBITDA saw substantial organic growth (+8.5%), to€ 315 million.
Current operating incomegrew 6.5% in organic terms during first-half 2006 to€ 221 million. On a constant structural basis the June 30, 2005 figure was€ 207 million.
This progression, in line with the revenue growth, stems mainly from the sustained level of services and installation activities in France and an improvement in operating results for project engineering.
SUEZ Environment: solid foundation for accelerated, profitable growth
SUEZ Environment generated€ 5,543 million inrevenues at June 30, 2006.Suez Environment organic growth amounted to€ 341 million, for an organic growth rate of 6.7% (+4.4% in total growth).
EBITDA came to€ 948 million, for organic growth of +11.3%, compared with +4.0% for the first half of 2005. Increased EBITDA growth is explained by:
- | excellent operational performances by Waste Services Europe (€ 47 million, or +13.5%) related to a very satisfactory level of activity, particularly in waste processing in France (increased volumes and favorable price trend) and in the United Kingdom (prices), to the impact of new plants start up during second-half 2005 (including the Zorbau incinerator in Germany and the Spolana treatment platform in the Czech Republic), and to strict costs controls. |
- | sustained growth in Water Europe (+€ 25 million, or +7%) thanks to expanding business activity, to a favorable price trend, and to good cost control. |
- | the fine six months turned in by Degrémont thanks to ongoing business mainly in Australia and Spain. |
Current operating income of SUEZ Environment grew by +4.3% in total growth and +6% in organic growth. Before reversal of provisions for the Puerto Rico contract during the first half of 2005, organic growth of current operating income was similar to that of EBITDA.
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Sound financial structure |
The Group’s financial structure strengthened during first-half 2006.
Gross cash flow before tax and financial expenses totaled€ 3.3 billion at June 30, 2006, up +7.4% in total growth versus the first half of 2005.
On the whole, cash flow from operating activity generated a treasury surplus of€ 2.1 billion despite seasonal factors and favorable non-recurring elements that occurred at the end of 2005 on working capital.
Total investments during the first half of 2006 reached close to€ 1.4 billion.
Disposals came to€ 0.9 billion at June 30, 2006 and relate mainly to the sale of the remaining shares in M6 (€ 163 million), Colbùn (€ 349 million) and Hanjin City Gas (€ 110 million).
Dividends paid during the first half of 2006 were higher than those paid in 2005 and amounted to€ 1.6 billion.
Net debt declined to€ 13.2 billion at June 30, 2006, compared with€ 13.8 billion at December 31, 2005. It is worth noting that the cash flow related to Flemish inter-municipal company securities transactions on September 5, 2006 again reduced net debt, by€ 1.2 billion.
The sharp reduction in gross debt (€ 5 billion) is due to improved circulation of cash flow within the Group.
Total equity was€ 20.7 billion at June 30, 2006, an increase of€ 1.6 billion from December 31, 2005 (€ 19.1 billion)
The Group’s gearing at the end of June 2006 was 64%, compared with 72% at the end of December 2005.
SUEZ, an international industrial Group, designs sustainable and innovative solutions for the management of public utility services as a partner of public authorities, businesses and individuals. The Group aims to meet essential needs in electricity, natural gas, energy services, water and waste management. SUEZ is listed on the Brussels, Luxembourg, Paris, New York and Zurich stock exchanges and is represented in the major international indices: CAC 40, BEL 20, DJ STOXX 50, DJ EURO STOXX 50, Euronext 100, FTSE Eurotop 100, MSCI Europe and ASPI Eurozone. The Group employs 157,650 people worldwide and achieved revenues of€41.5 billion in 2005, 89% of which were generated in Europe and in North America.
Disclaimer
This press release does not constitute an offer to purchase or exchange or the solicitation of an offer to sell or exchange any securities of Suez or an offer to sell or exchange or the solicitation of an offer to buy or exchange any securities of Gaz de France, nor shall there be any sale or exchange of securities in any jurisdiction (including the United States, Germany, Italy and Japan) in which such offer, solicitation or sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction. The distribution of this communication may, in some countries, be restricted by law or regulation. Accordingly, persons who come into possession of this document should inform themselves of and observe these restrictions. To the fullest extent permitted by applicable law, Gaz de France and Suez disclaim any responsibility or liability for the violation of such restrictions by any person.
In connection with the proposed business combination, the required information document will be filed with theAutorité des marchés financiers (“AMF”) and to any other relevant financial market authorities.
Forward-Looking Statements
This press release contains certain forward-looking statements, particularly with respect to future events, trends, plans or objectives. These statements are based on management’s current views and assumptions and involve a number of risks and uncertainties that may lead to a significant difference between actual results and those suggested either explicitly or implicitly in these statements (or suggested by past results). Additional information about these risks and uncertainties appears in documents filed by SUEZ with the U.S. Securities and Exchange Commission and the Autorité des Marchés Financiers (French securities regulator). The present forward-looking statements are made as of the date of the present release, with no undertaking by SUEZ to update or revise them, whether in connection with new information, future events, or any other factor.
Press | Analyst Contacts: | |||||||
France: | Catherine Guillon: | +33(0)1 4006 6715 | Arnaud Erbin: | +33(0)1 4006 6489 | ||||
Caroline Lambrinidis: | +33(0)1 4006 6654 | Bertrand Haas: | +33(0)1 4006 6609 | |||||
Antoine Lenoir: | +33(0)1 4006 6650 | Eléonore de Larboust: | +33(0)1 4006 1753 | |||||
Belgium: | Guy Dellicour: | +32 2 370 34 05 |
This release is also available on the Internet:http://www.suez.com
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