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2002, Annual Results 2002, Annual Results –– March 2003March 2003 11
Paris, 10th March 2003Paris, 10th March 2003
2002, Annual Results 2002, Annual Results –– March 2003March 2003 22
Important Important Legal DisclaimerLegal Disclaimer
Vivendi Environnement is a corporation listed on the NYSE and Euronext Paris. This document 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 Vivendi Environnement’s profits, the risk that governmental authorities could terminate or modify some of Vivendi Environnement’s contracts, the risk that Vivendi Environnement’s compliance with environmental laws may become more costly in the future, the risk that currency exchange rate fluctuations may negatively affect Vivendi Environnement’s financial results and the price of its shares, the risk that Vivendi Environnement may incur environmental liability in connection with its past, present and future operations, and the risks related to Vivendi Environnement’s relationship with Vivendi Universal, as well as the risks described in the documents Vivendi Environnement has filed with the U.S. Securities and Exchange Commission. Vivendi Environnement does not undertake, nor does it have, any obligation to provideupdates or to revise any forward-looking statements. Investors and security holders may obtain a free copy of documents filed by Vivendi Environnement with the U.S. Securities and Exchange Commission from Vivendi Environnement.
2002, Annual Results 2002, Annual Results –– March 2003March 2003 33
Contents :Contents :
2002 : 3 stress scenarios overcome
1. Which risk event ?2. Industrial Profile 3. Financial Profile
Target 2003 : to maintain or even improve our long and short term ratings
2002, Annual Results 2002, Annual Results –– March 2003March 2003 44
nn “Shareholder” Stress scenario “Shareholder” Stress scenario : : the contagion risk has been the contagion risk has been removed by the completion of the “removed by the completion of the “spin off” spin off” from VUfrom VU
nn “Sector”“Sector” Stress scenario Stress scenario : : The Latin America risk and the crisis in The Latin America risk and the crisis in the Energy sector are 2 nonthe Energy sector are 2 non--issues for the Group. As world leader in issues for the Group. As world leader in Environmental ServicesEnvironmental Services VEVE is able to generateis able to generate FFOFFO, even in a , even in a difficult economic climatedifficult economic climate
nn “Liquidity”“Liquidity” Stress scenario :Stress scenario :èè CashCash--flow generation up significantlyflow generation up significantlyèè Decrease in net indebtedness : from € 14.2 to 13.1 Decrease in net indebtedness : from € 14.2 to 13.1 bnbnèè Strong improvement in [net debt /Strong improvement in [net debt / EBITDAEBITDA] ratio from 4 to 3.4] ratio from 4 to 3.4èè Strengthening of financial flexibility by better covenant levelsStrengthening of financial flexibility by better covenant levels, ,
elimination of all ratings triggers and improvement in liquidityelimination of all ratings triggers and improvement in liquiditypositionposition
2002 : 2002 : thethe Group has Group has overcomeovercome 3 3 stress stress scenariosscenarios
2002, Annual Results 2002, Annual Results –– March 2003March 2003 55
1. 1. WhichWhich event riskevent risk??
Past:The spin off with VU is over
Future:Our strategy is not “multi utilities”.
This significantly reduces the event risk
2002, Annual Results 2002, Annual Results –– March 2003March 2003 66
History of Vivendi Universal’s stake in Vivendi Environnement’s equity capital
nn December 1999December 1999 Formation of Formation of Vivendi EnvironnementVivendi Environnement ((VEVE), ), 100% owned by owned by VivendiVivendi Universal (VU)Universal (VU)
nn July 20, 2000July 20, 2000 IPOIPOVU owns VU owns 72.3%
nn December 17, 2001December 17, 2001 VU sells 9.3%VU sells 9.3%VU owns VU owns 63%
nn June 28, 2002June 28, 2002 VU sells 15.5%VU sells 15.5%VU owns VU owns 47.5%
nn August 2, 2002August 2, 2002 1.5 billion euro capital increase for1.5 billion euro capital increase for VEVEVU owns VU owns 40.8%
nn December 24, 2002December 24, 2002 VU sells 20.4%, +20.4% call option VU sells 20.4%, +20.4% call option exercisable at 26.5 euros per share at any exercisable at 26.5 euros per share at any time until December 2004. VU owns time until December 2004. VU owns 20.4%
2002, Annual Results 2002, Annual Results –– March 2003March 2003 77
Shareholder structure after capital stock restructuringShareholderShareholder structure structure afterafter capital stock capital stock restructuringrestructuring
(1)(1) New New investorsinvestors: :
CompaniesCompanies in in thethe followingfollowing groups: CDC, groups: CDC, GroupamaGroupama, Electricité de France,, Electricité de France,BNP Paribas, Société Générale, BNP Paribas, Société Générale, DexiaDexia, Groupe Axa, Assurances Générales de, Groupe Axa, Assurances Générales deFrance, France, EurazeoEurazeo, Caisse Nationale des Caisses d'Epargne, Crédit Lyonnais,, Caisse Nationale des Caisses d'Epargne, Crédit Lyonnais,Crédit Agricole Crédit Agricole Indosuez Indosuez ((SwitzerlandSwitzerland) on ) on behalfbehalf of of customercustomer, Crédit Mutuel , Crédit Mutuel CIC, CIC, GeneraliGenerali, Groupe CNP, Crédit Agricole , Groupe CNP, Crédit Agricole Indosuez Indosuez ((SwitzerlandSwitzerland) for ) for its own its own accountaccount, , MédéricMédéric Prévoyance, Prévoyance, Wasserstein Family Wasserstein Family TrustTrust
NB : EDF NB : EDF owns owns 34% of 34% of DalkiaDalkia
Vivendi Vivendi Universal Universal 20.4%20.4%
FloatingFloating 59.2%59.2%
New New investors investors 20.4% 20.4% (1) (1)
2002, Annual Results 2002, Annual Results –– March 2003March 2003 88
2. 2. IndustrialIndustrial ProfileProfile
2002 : The increase in year end results confirms the
soundness of our business model
2003 : A new indicator (ROCE) is put in place in order to
optimise growth versus FCF
2002, Annual Results 2002, Annual Results –– March 2003March 2003 99
nn RevenueRevenue
nn Revenue from core businessesRevenue from core businesses
nn EBITDAEBITDA
nn EBITDAEBITDA from core businessesfrom core businesses
nn EBITEBIT
nn EBITEBIT from core businessesfrom core businesses
nn Net incomeNet income
nn Recurring net incomeRecurring net income
nn Recurring net income per share (in €)Recurring net income per share (in €)
nn Dividend (in €) Dividend (in €) (1)(1)
nn Dividend pay out ratioDividend pay out ratio
nn Net debt Net debt
In In €€mm
2002 2002 keykey figuresfigures
(1)(1) excluding tax credit and subjectexcluding tax credit and subject to to thethe approvalapproval of of thethe ShareholdersShareholders Meeting on Meeting on AprilApril 3030
29,12729,127
26,51326,513
3,7603,760
3,4803,480
2,0132,013
1,8131,813
(2,251)(2,251)
420420
1.201.20
0.550.55
46%46%
14,28314,283
30,07930,079
28,07328,073
3,8873,887
3,7273,727
1,9711,971
1,8471,847
339339
429429
1.161.16
0.550.55
47%47%
13,06613,066
Number of shares: 405,070,459Number of shares: 405,070,459Average number of shares in 2002: 370,213,187Average number of shares in 2002: 370,213,187
+5.9%+5.9%
+7.1%+7.1%
+1.9%+1.9%
+7.2%+7.2%
+8.0%+8.0%
+3.2%+3.2%
2002/2001Exchange rate
Current ConstantDec. 31, 01Dec.31, 02
2002, Annual Results 2002, Annual Results –– March 2003March 2003 1010
Unchanged strategy built aroundUnchanged strategy built around one one business: business: Environmental Environmental ServicesServices
nn The only pure player in Environmental ServicesThe only pure player in Environmental Services
nn 4 well4 well--matched divisionsmatched divisionsèè WaterWaterèè WasteWasteèè Energy servicesEnergy servicesèè TransportationTransportation
nn Positions in highPositions in high--potential markets such as Waterpotential markets such as Water
nn Growth ensured by a balanced customer mix (municipalities Growth ensured by a balanced customer mix (municipalities ~65% of revenue; manufacturing and service customers ~35%)~65% of revenue; manufacturing and service customers ~35%)
nn Secure geographical coverageSecure geographical coverageOver 95% of revenue generated in industrialized countries with Over 95% of revenue generated in industrialized countries with stable political and monetary systemsstable political and monetary systems
nn Future cash flows that are recurring and undergoing growth: Future cash flows that are recurring and undergoing growth: €30 billion additional backlog in 2002€30 billion additional backlog in 2002
2002, Annual Results 2002, Annual Results –– March 2003March 2003 1111
nn PudongPudong 50 yrs50 yrs ChinaChina 10,00010,000nn RedalRedal (Rabat)(Rabat) 27 yrs27 yrs MoroccoMorocco 4,5004,500nn PraguePrague 15 yrs15 yrs Czech RepublicCzech Republic 2,7002,700nn IndianapolisIndianapolis 20 yrs20 yrs USAUSA 1,5001,500nn The HagueThe Hague 30 yrs30 yrs NetherlandsNetherlands 1,5001,500nn ZhuhaiZhuhai 30 yrs30 yrs ChinaChina 390390nn BaojiBaoji 23 yrs23 yrs ChinaChina 265265nn Atlanta Atlanta 20 yrs20 yrs USAUSA 200200nn GeraGera 10 yrs10 yrs GermanyGermany 100100nn AlonAlon 20 yrs20 yrs USAUSA 7575nn French industryFrench industry -- FranceFrance 6868nn RichmondRichmond 20 yrs20 yrs USAUSA 5959nn Oklahoma CityOklahoma City 5 yrs5 yrs USAUSA 3636nn FreymingFreyming –– MerlebackMerleback 12 yrs12 yrs FranceFrance 3535nn California California MicrofiltrationMicrofiltration 1 yr1 yr USAUSA 2525nn Lens Lens –– LiévinLiévin 13 yrs13 yrs FranceFrance 1717nn ToulouseToulouse 17.5 yrs17.5 yrs FranceFrance 1616nn NarbonneNarbonne 18 yrs18 yrs FranceFrance 1515
Main municipal and industrial contractsOrder backlog won in 2002: €30 billionMain municipal Main municipal and industrial contractsand industrial contractsOrder backlog won in 2002: €30 billion
In €mIn €m
nn WaterWater nn Waste Waste nn EnergyEnergy servicesservices nn TransportationTransportation
Backlog
nn East SussexEast Sussex 25 yrs25 yrs UKUK 1,0001,000nn WestminsterWestminster 7 yrs7 yrs UKUK 350350nn NouméaNouméa 30 yrs30 yrs NewNew--CaledoniaCaledonia 350350nn MarneMarne 20 yrs20 yrs FranceFrance 306306nn Borough of CamdenBorough of Camden 7 yrs7 yrs UKUK 190190nn Charleston (South Carolina)Charleston (South Carolina) 7 yrs7 yrs USAUSA 119119nn SingaporeSingapore 5 yrs5 yrs SingaporeSingapore 4545nn SNCFSNCF 6 yrs6 yrs FranceFrance 4343nn Savannah (Georgia)Savannah (Georgia) 6 yrs6 yrs USAUSA 4141nn PortsmouthPortsmouth 7 yrs7 yrs UKUK 3838nn FordFord 3 yrs3 yrs USAUSA 1010
2002, Annual Results 2002, Annual Results –– March 2003March 2003 1212nn WaterWater nn WasteWaste nn EnergyEnergy servicesservices nn TransportationTransportation
nn PoznanPoznan 25 25 yrsyrs PolandPoland 1,7001,700nn BP Lavera BP Lavera 12 12 yrsyrs FranceFrance 498498nn " "" " 11 11 yrsyrs FranceFrance 387387nn ResonorResonor 24 24 yrsyrs FranceFrance 437437nn AhlstromAhlstrom 10 10 yrsyrs UKUK 7272nn Manuli Manuli FilmsFilms 10 10 yrsyrs ItalyItaly 7070nn ArcelorArcelor 15 15 yrsyrs FranceFrance 6565nn ViryViry--ChâtillonChâtillon 24 24 yrsyrs FranceFrance 4848nn AulnayAulnay 12 12 yrsyrs FranceFrance 4242nn MajidMajid 10 10 yrsyrs United Arab EmiratesUnited Arab Emirates 4141nn ParmeParme 9 9 yrsyrs ItalyItaly 3434nn FortalezzaFortalezza 5 5 yrsyrs BrazilBrazil 3131nn SetuzaSetuza 15 15 yrsyrs MoraviaMoravia 2929nn FuturoscopeFuturoscope 3 3 yrsyrs FranceFrance 2626nn ATM MilanoATM Milano 5 5 yrsyrs ItalyItaly 2323nn RhodiaRhodia 15 15 yrsyrs FranceFrance 2121nn Prince Charles Prince Charles HospitalHospital, Wales, Wales 20 20 yrsyrs UKUK 1818
In €mIn €m Backlog
Main municipal and industrial contractsOrder backlog won in 2002: €30 billionMain municipal Main municipal and industrial contractsand industrial contractsOrder backlog won in 2002: €30 billion
nn BostonBoston 5 5 yrsyrs USAUSA 1,0001,000nn JerusalemJerusalem TramwayTramway 27 27 yrsyrs IsraelIsrael 459459nn RikstrafikenRikstrafiken 5 5 yrsyrs SwedenSweden 190190nn EmEm--SenneSenne--Weser Weser 10 10 yrsyrs GermanyGermany 180180nn CertusCertus 10 10 yrsyrs SloveniaSlovenia 170170nn DublinDublin 5 5 yrsyrs IrelandIreland 157157nn Bus Bus SleskaSleska 20 20 yrsyrs Czech RepublicCzech Republic 124124nn Washington D.C. Washington D.C. areaarea 5 5 yrsyrs USAUSA 8080nn EskilstunaEskilstuna 6 6 yrsyrs SwedenSweden 5656nn Los AngelesLos Angeles 5 5 yrsyrs USAUSA 5050
2002, Annual Results 2002, Annual Results –– March 2003March 2003 1313
55% of revenue 55% of revenue earned outsideearned outside France but France but low low exposure exposure to to the emerging marketsthe emerging markets
Other Other 2%
FranceFrance45%
Rest of Europe Rest of Europe 35%
North America North America 12%
8% of revenue earned in countries rated ≤ A-
Latin America Latin America 2%
Asia Asia 4%
2002, Annual Results 2002, Annual Results –– March 2003March 2003 1414
nnWaterWater
nnWasteWaste
nn EnergyEnergy servicesservices
nn TransportationTransportation
nn FCCFCC
In In €€mmDec. 31,
2001Dec. 31,
2001 2002/2001
Revenue by Division : Revenue by Division : growing despite growing despite a a weak weak economic climateeconomic climate
Dec. 31, 2002
Dec. 31, 2002
Organic growth Organic growth at constant at constant
exchange ratesexchange rates
11,28811,288
6,1396,139
4,5714,571
3,4223,422
2,6532,653
11,02711,027
5,9145,914
4,0174,017
3,0993,099
2,4552,455
+2.4%
+3.8%
+13.8%
+10.4%
+8.1%
+4.0%+4.0%
+5.0%+5.0%
+6.3%+6.3%
+4.5%+4.5%
+8.5%+8.5%
TOTALTOTAL 28,07328,073 26,51326,513 +5.9% +5.0%+5.0%
2002, Annual Results 2002, Annual Results –– March 2003March 2003 1515
nnWaterWater
nnWasteWaste
nn EnergyEnergy servicesservices
nn TransportationTransportation
nn FCCFCC
nn Holding Holding companycompany
nn Total Total core businessescore businesses
In In €€mm 2002 margin2002 margin
RecurrenceRecurrence of cash of cash flows flows : : Water and Waste Water and Waste generate generate 70% of70% of EBITDAEBITDA
Dec. 31, 2002Dec. 31, 2002 r 2002/2001rr 2002/2001
nn NonNon--core businessescore businesses 160160
nn TotalTotal 3,8873,887
1,6041,604
949949
576576
291291
354354
(47)(47)
3,7273,727
14.2%14.2%
15.5%15.5%
12.6%12.6%
8.5%8.5%
13.3%13.3%
13.3%13.3%
+6.8%+6.8%
+1.8%+1.8%
+20.8%+20.8%
+13.1%+13.1%
+8.7%+8.7%
+7.1%+7.1%
2002, Annual Results 2002, Annual Results –– March 2003March 2003 1616
TheThe world leader position in world leader position in Water Water strengthens thestrengthens the VE VE industrial industrial profileprofile
250116
244385
900
875
391221
112229
1,813
0
200
400
600
800
1000
1200
1400
1600
1800
2000
WaterWater Waste Waste (1)(1) Energy Energy servicesservices
TransportationTransportation FCCFCC TotalTotal
+2.9%+2.9% --1.4%1.4% +10.7%+10.7% +3.1%+3.1% +9.1%+9.1% +1.9%+1.9%DecDec..31, 02/31, 02/DecDec. 31, 01. 31, 01
1,8471,847
nn DecDec. 31, 2002. 31, 2002nn DecDec. 31, 2001. 31, 2001
AtAt constant constant exchangeexchange raterate +3.2%+3.2%+ 2.4%+ 2.4% + 9.0%+ 9.0% +2.9%+2.9% + 9.4%+ 9.4%
(In €m)(In €m)
+ 4.2%+ 4.2%(1)(1) +5% +5% excludingexcluding Proactiva at Proactiva at constant constant exchange exchange rate (Onyx scope)rate (Onyx scope)
2002, Annual Results 2002, Annual Results –– March 2003March 2003 1717
nnWaterWater
nnWasteWaste
nn EnergyEnergyservicesservices
nn TransportationTransportation
nn FCCFCCand Proactivaand Proactiva
In In €€mm CommentsCommentsMaintenanceMaintenance
The “J curve”: in the short term, growth impacts onThe “J curve”: in the short term, growth impacts onROIROI
GrowthGrowth
PudongPudong,,Czech RepublicCzech Republic, , MoroccoMorocco,,USAUSA
1,3231,323 2,4152,415
584584
383383
9696
108108
152152
1,2421,242
461461
340340
159159
213213
Major Major projectsprojects in France, Sheffield, in France, Sheffield, HampshireHampshire
ContractContract in in EstoniaEstonia, , PoznanPoznan in in PolandPolandAcquisition of Acquisition of VerneyVerney, Stockholm , Stockholm metrometro
Capital expenditure and investment acquisitions : €3.7bn, against€4bn in 2001
2002, Annual Results 2002, Annual Results –– March 2003March 2003 1818
One business : One business : Environmental Environmental ServicesServicesStrengtheningStrengthening of of the core the core business in 2002business in 2002
Bristol Bristol WaterworksWaterworks
Filtration & Filtration & SeparationSeparation
Plymouth Plymouth ProductsProducts
Philadelphia Suburban CorpPhiladelphia Suburban Corp. .
SouthSouth StaffordshireStaffordshire
DistributionDistribution
BonnaBonna SablaSabla
MiscellaneousMiscellaneous tangible tangible assetsassets
Other financial disposalsOther financial disposals
TOTALTOTAL
FebruaryFebruary 0202
AprilApril 0202
SeptemberSeptember 0202
SeptemberSeptember 0202
OctoberOctober 0202
NovemberNovember 0202
DecemberDecember 0202
3737
378378
126126
207207
131131
472472
9898
203203
119119
€1,771m€1,771m
In €mIn €m
Over €1.7 billion in completed disposals: beyond target
2002, Annual Results 2002, Annual Results –– March 2003March 2003 1919
In In €€mm
2002 : VE has self2002 : VE has self--financed its growthfinanced its growthCash Cash flow generationflow generation up up significantlysignificantly : +36%: +36%
2001200120022002
2,4552,455(1,382)(1,382)
1,0731,073
(2,670)(2,670)598598
(460)(460)437437
(1,022)(1,022)
411411(484)(484)
(1,095)(1,095)
(13,187)(13,187)
(14,283)(14,283)
èè Cash flow from operationsCash flow from operations +13%+13%èè Maintenance capital expenditureMaintenance capital expenditure
Cash flow available before growth Cash flow available before growth +36%+36%
èè Capital expenditure for growthCapital expenditure for growthèè Disposal of assetsDisposal of assetsèè Change in scope of consolidationChange in scope of consolidationèè Change in working capital requirementChange in working capital requirement
Cash flow before financial transactionsCash flow before financial transactions
èè Change in capitalChange in capitalèè Impact of exchange rate, dividends and otherImpact of exchange rate, dividends and other
Cash flow for the year after capital increaseCash flow for the year after capital increase
Net debt at start of year 2002Net debt at start of year 2002
Net debt at end of year 2002Net debt at end of year 2002
2,7802,780(1,323)(1,323)
1,457 1,457
(2,415)(2,415)1,7711,771(525)(525)(464)(464)
(176)(176)
1,5541,554(161)(161)
1,2171,217
(14,283)(14,283)
(13,066)(13,066)
(2)(2)
(1)(1) IncludesIncludes €223m €223m increase relatedincrease related to to thethe reductionreduction in in thethe French French securitization programsecuritization program(2)(2) IncludesIncludes €815m €815m reduction relatedreduction related to to thethe introduction of introduction of thethe French French andand US US securitization programsecuritization program
(1)(1)
2002, Annual Results 2002, Annual Results –– March 2003March 2003 2020
In €mIn €m
0
500
1000
1500
2000
2500
3000
nn 20002000 nn 20012001 nn 20022002 nn 20002000 nn 20012001 nn 20022002
Net debt / EBITDA (x)
+32%+92%
Profitable growth : FFO +32% in 2 years at € 2.7G; potential FCF (before growth) : € 1.4 GProfitable Profitable growth growth :: FFOFFO +32% in 2 +32% in 2 years at years at € 2.7G; € 2.7G; potentialpotential FCFFCF ((before growthbefore growth) : € 1.4 G) : € 1.4 G
Cash Cash flow from operationsflow from operations Cash Cash flow available flow available before growthbefore growth
4
3.9
3.8
3.7
3.6
3.5
3.4
3.3
3.2
3.1
3.0
2002: 3.4 (x)2001: 3.8 (x)2000: 4.0 (x)2,1002,100
2,4552,455
2,7802,780
758758
1,0731,073
1,4571,457
2002, Annual Results 2002, Annual Results –– March 2003March 2003 2121
Industrial flexibility Industrial flexibility : VE : VE can affordcan afford to balance to balance growth growth // FCFFCF
nn Average revenue growth in core business of Average revenue growth in core business of 44––8% per year from 2002 to 20058% per year from 2002 to 2005
nn PProfitabilityrofitability improvement: increase inimprovement: increase in ROCE ROCE for for each each division, division, based on:based on:
èèMaturing of contracts signed since 1999Maturing of contracts signed since 1999
èèProductivity improvement effortsProductivity improvement efforts
èè Implementation of synergiesImplementation of synergies
èèSelective investment policySelective investment policy
èèActive management of asset portfolioActive management of asset portfolio
2002, Annual Results 2002, Annual Results –– March 2003March 2003 2222
Key Key indicatorindicator:: ROCEROCE
nn A suitable tool for growth/capital decisionsA suitable tool for growth/capital decisions
èè Strong potential growth and synergiesStrong potential growth and synergies
èè Context of scarce capitalContext of scarce capital
nn A consistent and A consistent and measurable measurable operating indicatoroperating indicator
nn 2002 group2002 group ROCEROCE: 6.: 6.44%% (including 2% impact from major (including 2% impact from major acquisitionsacquisitions
Capital employed = Capital employed = Gross goodwill Gross goodwill -- amortization+ fixed assetsamortization+ fixed assets+ working capital requirements+ working capital requirements+ equity method securities+ equity method securities–– provisions for risks and liabilities provisions for risks and liabilities –– other LT other LT liabilitiesliabilities
(EBIT (EBIT –– group tax + cogroup tax + companies accounted mpanies accounted for by for by equity methodequity method))ROCE ROCE (1)(1) = =
Average capital employed for the yearAverage capital employed for the year
(1)(1) These These figures are figures are calculated based calculated based on data for on data for the core businessesthe core businesses..
2002, Annual Results 2002, Annual Results –– March 2003March 2003 2323
5,0%
5,5%
6,0%
6,5%
7,0%
7,5%
8,0%
8,5%
23 000 25 000 27 000 29 000 31 000 33 000 35 000 37 000
2002
CA 2005 : +4% CAGR
CA 2005 : +8% CAGR
Permanent balance between growth and FCFPermanent balance Permanent balance between growth andbetween growth and FCFFCF
Key indicator: ROCEKey indicator: ROCE
2005 2005 targetstargets for for growth andgrowth and ROCEROCE
Core Core business revenuebusiness revenue
RO
CE
RO
CE
In In €€mm
2002, Annual Results 2002, Annual Results –– March 2003March 2003 2424
3. 3. Financial Financial ProfileProfile
Success in 2002:Strengthening of financial flexibility
2003 Target:To extend debt maturityusing the bond markets
2002, Annual Results 2002, Annual Results –– March 2003March 2003 2525
Financial flexibility improved :Financial flexibility improved :1- Renegotiation of covenants
nn Extension of Extension of average debt maturityaverage debt maturity overover 4 years
nn Significantly stronger financialSignificantly stronger financial ratios: 40% ratios: 40% improvementimprovement in in
coverage coverage ratio in ratio in two yearstwo years
5.15.1
3.43.4
4.84.8
3.83.8
20012002
Financial ratiosFinancialFinancial ratiosratios
3.73.7
4.04.0
2000
nn EBITDAEBITDA//financial expensefinancial expense (x)(x)nn Net Net debtdebt//EBITDAEBITDA (x)(x)
CovenantsCovenantsCovenants
nn Interest coverageInterest coverage ratio (x)ratio (x)nn Debt payoutDebt payout ratio (x)ratio (x)
5,7 (>4)5,7 (>4)
3,5 (<4,25)3,5 (<4,25)
2002, Annual Results 2002, Annual Results –– March 2003March 2003 2626
In In €€mm
FinancialFinancial resultresult : € 150 M : € 150 M improvement improvement in 2002in 2002
nn Cost of financingCost of financingnn Other financial income and expensesOther financial income and expenses
RecurringRecurring
èè AmortAmort. of premium (mainly . of premium (mainly OcéaneOcéane) ) èè OtherOther
NonNon--recurringrecurring
èè Capital gain from PSC disposalCapital gain from PSC disposalèè Depreciation of treasury stockDepreciation of treasury stockèè OtherOther
nn Net Net financial resultfinancial result
AverageAverage 2002 2002 interest interest rate rate 4.25% (2001 : 4.85%)
20012001
(764)(764)(34)(34)
(798)(798)
(33)(33)88
20022002
(681)(681)(25)(25)
(648)(648) 150150
rr8383
5858
110110(32)(32)(20)(20)
2002, Annual Results 2002, Annual Results –– March 2003March 2003 2727
EUREUR 68%68%USD 22%USD 22%
OthersOthers 10%10%
Fixed Fixed rates 51%rates 51%
FloatingFloating rates 49%rates 49%
Structure of Structure of gross debtgross debt
Currency Type of rate(after hedging)
2002, Annual Results 2002, Annual Results –– March 2003March 2003 2828
Syndicated loans19%
Océanes9%
Commercial paper7%
Bilateral facilities 39%
Bonds26%
Diversification of Diversification of fundingfunding sourcessources
2002, Annual Results 2002, Annual Results –– March 2003March 2003 2929
62%Vivendi Environnement
Subsidiaries12%
Project Financingstructures
12%
Proportionalconsolidation14%
BorrowersBorrowers withinwithin VEVE
84%Vivendi Environnement
Subsidiaries16%
2002, Annual Results 2002, Annual Results –– March 2003March 2003 3030
2003 Target : continue extension of 2003 Target : continue extension of average debt average debt maturitymaturity : ~ 4 : ~ 4 yearsyears atat thethe end of 2002end of 2002
0
500
1000
1500
2000
2500
3000
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
> 201
4
In M€In M€
nn BondsBonds nn BanksBanks
Bonds 5.7 billion €Bonds 5.7 billion €
LTLT Banking Debt Banking Debt 7.4 billion €7.4 billion €
The bond market is a natural source of funds for the Group.
2002, Annual Results 2002, Annual Results –– March 2003March 2003 3131
LTLT Ratings : S&P Ratings : S&P ààBBBBBB+ / O s+ / O sMoody’sMoody’s ààBaa1 / O Baa1 / O --
è ST Ratings confirmed A2 (S&P), P2 (M)
n One success : withdrawal from S&P “credit cliff list ” in December 2002
èè Removal of all ratings triggersRemoval of all ratings triggers
èè Easing of covenant levelsEasing of covenant levels
èè Extension of the average debt maturityExtension of the average debt maturity
èè BBB+ rating stableBBB+ rating stable
2002, Annual Results 2002, Annual Results –– March 2003March 2003 3232
LTLT Ratings : S&P Ratings : S&P ààBBBBBB+ / O s+ / O sMoody’sMoody’s ààBaa1 / O Baa1 / O --
n One disappointment : Moody’s retains a negative outlook despite the elimination of the Shareholder risk
èèThe negative outlook was the result of the The negative outlook was the result of the XdefaultXdefault of of VivendiVivendiUniversal, cleared up in August 2002Universal, cleared up in August 2002
èèThe last press release on March 3rd states : “The last press release on March 3rd states : “ VEVE has made has made significant progress in 2002 in improving the financial arrangemsignificant progress in 2002 in improving the financial arrangements of ents of facilities by removing all rating triggers that could lead to acfacilities by removing all rating triggers that could lead to acceleration celeration and by increasing headroom under its financial covenants.and by increasing headroom under its financial covenants.The negative outlook reflects The negative outlook reflects Moody’sMoody’s views regarding the needs for views regarding the needs for further strengthening in areas including liquidity, increasing tfurther strengthening in areas including liquidity, increasing the he availability and maturity profile of its financing arrangements,availability and maturity profile of its financing arrangements, and and reducing the growth trends in its underlying capital expenditurereducing the growth trends in its underlying capital expenditure levels.”levels.”
2002, Annual Results 2002, Annual Results –– March 2003March 2003 3333
The 2002 financial results strengthen thesoundness of our business model
n Strong stability in cash flows secured by a total backlog of more than 10 years revenue
n Low sensitivity to economic position, especially in Water business
nLow customer risk
n Low country risk
The group became mature in 2002. This “emancipation” will be totally achieved with the change of corporate structure and the change of name (on the agenda of the next shareholder’s meeting).
2002, Annual Results 2002, Annual Results –– March 2003March 2003 3434
Our 2003 targets
nn Ratios : improvement Ratios : improvement èè2003 : positive free cash2003 : positive free cash--flows after disposals and flows after disposals and
growth growth capexcapexèè≥≥ 2004 : 2004 : positive free cashpositive free cash--flowsflows
nn Debt : Debt : èèStabilization or even reductionStabilization or even reductionèèExtension of duration by using bond marketsExtension of duration by using bond markets
nn Rating : Rating : èèMaintain or even improve our LT and ST ratingsMaintain or even improve our LT and ST ratings
2002, Annual Results 2002, Annual Results –– March 2003March 2003 3535
n Jérôme ContamineSenior Senior ExecutiveExecutive Vice Vice President and Chief Financial OfficerPresident and Chief Financial Officer
n Philippe MessagerSenior Vice Senior Vice President President –– Group Group TreasurerTreasurer
38 Avenue Kléber 38 Avenue Kléber –– 75116 Paris / France75116 Paris / FrancePhone Phone numbernumber:: +33 1 71 75 01 70+33 1 71 75 01 70Fax:Fax: +33 1 71 75 10 13+33 1 71 75 10 13
EE--mail: philippe.messager@mail: [email protected] Nathalie Pinon
Director Director of of Investor Investor RelationsRelations38 Avenue Kléber 38 Avenue Kléber –– 75116 Paris / France75116 Paris / FrancePhone Phone numbernumber:: +33 1 71 75 01 67+33 1 71 75 01 67Fax:Fax: +33 1 71 75 10 12+33 1 71 75 10 12
EE--mail: nathalie.mail: nathalie.pinonpinon@@groupvegroupve..comcom
Web Site: http//Web Site: http//wwwwww..vivendienvironnementvivendienvironnement--finance.finance.comcom
Vivendi Environnement representatives