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As filed with the Securities and Exchange Commission on June 26, 2003

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

OR

  For the fiscal year ended December 31, 2002

OR

  For the transition period from              to             

Commission file number 1-15232

SUEZ

(Exact name of Registrant as specified in its charter)

16, rue de la Ville l’Evêque, 75008 Paris, France

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  ¨

Indicate by checkmark which financial statement item the registrant has elected to follow:    Item 17  ¨    Item 18  x

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INTRODUCTION

Forward-Looking Statements

This annual report contains certain statements that are forward-looking within the meaning of Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), including statements with respect to management’s business strategies, expansion and growth of operations, trends in our business, competitive advantage, and technological and regulatory changes, information on exchange rate risk and generally all statements preceded by, followed by or that include the words “believe”, “expect”, “project”, “anticipate”, “seek”, “estimate” or similar expressions. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward-looking statements as a result of various factors. The accompanying information contained in this annual report on Form 20-F, including, without limitation, the information under “Risk Factors”, “Information on the Company”, “Operating and Financial Review and Prospects” and “Financial Information”, identifies important factors that could cause such differences. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date hereof.

Financial and Certain Other Information

Suez is incorporated as a joint stock company (société anonyme) under the laws of France. As used in this annual report, “Suez”, “we” or the “Group” refers to the parent company and its consolidated subsidiaries unless the context otherwise requires. Our annual general meeting of shareholders of May 4, 2001, authorized the change of our name from Suez Lyonnaise des Eaux to Suez. Our legal life expires on December 31, 2040, unless we are dissolved prior to that date or it is extended. Our statutory documents may be consulted at our administrative office, 16, rue de la Ville l’Evêque, 75008 Paris, France, telephone (33-1) 40-06-64-00.

Our annual general meeting of shareholders of May 4, 2001 authorized a split of our shares whereby one share of common stock converted to five shares of common stock effective May 15, 2001. Unless otherwise indicated, all share amounts and related figures in this annual report have been restated to take into account the stock split.

In this annual report, references to “United States”, “US”, or “USA” are to the United States of America, references to “U.S. dollars”, “$” or “U.S. $” or “USD” are to United States dollars and references to “euro” or “EUR” or “€” are to euros. References to the “Euronext Paris” are to the integrated national dealing system through which trading of all listed French securities occurs. References to kWh are to kilowatt hours, references to MW are to megawatts, references to GWh are to gigawatt hours, references to MWe are to megawatts of electricity, and references to MWth are to megawatts of thermal energy. References to EONIA are to Euro OverNight Index Average and to EURIBOR are to Euro Inter Bank Offering Rate.

Various amounts and percentages set out in this annual report have been rounded and accordingly may not total.

Exchange Rates

Unless otherwise indicated, U.S. dollar amounts herein have been translated from euro at the rate of €1.00 = $1.0485, the noon buying rate in New York City for cable transfers in euro as announced by the Federal Reserve Bank for customs purposes on December 31, 2002 on its website www.federalreserve.gov. The exchange rate in effect on June 19, 2003 was €1.00 = $1.1678.

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PART I

Not applicable.

Not applicable.

A.    Selected Consolidated Financial Data

The selected consolidated financial data at December 31, 2002, 2001 and 2000 and for the years ended December 31, 2002, 2001 and 2000 have been derived from our consolidated financial statements included in this annual report. The selected consolidated financial data at year-end 1998 and 1999 and for the years ended December 31, 1998 and 1999 have been derived from our consolidated financial statements that are not included in this annual report. Our consolidated financial statements for the years ended December 31, 2002 and 2001 were audited by Barbier Frinault & Autres—Ernst and Young and Deloitte Touche Tohmatsu—Audit. For the year ended December 31, 2000, they were audited by Barbier Frinault & Autres—Ernst and Young, Mazars & Guérard and Deloitte Touche Tohmatsu—Audit.

Our consolidated financial statements have been prepared in accordance with French GAAP, which differs in certain significant respects from U.S. GAAP. Notes 26 to 28 to our consolidated financial statements describe the principal differences between French GAAP and U.S. GAAP as they relate to us, and reconcile our net income and shareholders’ equity to U.S. GAAP.

You should read the following data together with the section entitled “Item 5. Operating and Financial Review and Prospects” and our consolidated financial statements.

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Exchange Rates

The following table set forth, for the periods and dates indicated, certain information concerning the noon buying rates for the euro for 1998, 1999, 2000, 2001, 2002 and 2003 (through June 19), based on rates reported by the Federal Reserve Bank of New York on its website www.federalreserve.gov. No representation is made that franc or euro amounts have been, could have been or could be converted into U.S. dollars at the noon buying rates indicated for any given date.

A substantial proportion of our assets, liabilities, revenues and expenses are denominated in currencies other than the euro. Accordingly, fluctuations in the value of the euro relative to other currencies can have an effect on the translation into euro of our assets, liabilities, revenues and expenses. For information with respect to the impact of fluctuations in exchange rates on our operations, see “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.

B.    Capitalization and Indebtedness

Not applicable.

C.    Reasons for the Offer and Use of Proceeds

Not applicable.

D.    Risk Factors

This section describes some of the risks that could affect our businesses. The factors below should be considered in connection with any forward-looking statements in this document and with the cautionary statements contained in “Forward-Looking Statements” at the beginning of this document.

The risks below are not the only ones that we face—some risks may not yet be known to us and some that we do not currently believe to be material could later turn out to be material. Any of these risks could materially affect our business, financial condition and results of operations.

Revenues from Markets Outside North America and Europe Represent a Significant Portion of Our Total Revenues and Our Capital Employed

We expect that revenues from markets outside North America and Europe, which represented approximately 12% of our revenues in 2002, will continue to be a significant portion of total sales and our capital employed

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(approximately 18% in 2002. See Note 22 to the financial statements). Our activities in these countries entail a higher degree of potential risks than in developed countries. In particular, these include GDP volatility, economic and governmental instability, changing regulations, nationalization or expropriation of private assets, collection difficulties, social unrest, significant fluctuations in interest and exchange rates, income and other taxes levied by foreign governments and local authorities, exchange control measures, and other unfavorable interventions and restrictions imposed by foreign governments. Aside from Argentina (see Item 5.A and Note 2.4 to the financial statements), we also faced difficulties in the Philippines and Indonesia during 2002 (see Note 5 to the financial statements).

Changes in Laws and Government Regulations Could Significantly Impact Our Business

Many aspects of our business are subject to strict European, national and local regulations (e.g. licenses, permits, authorizations). This is particularly true in electricity transmission and distribution, gas distribution, water management, nuclear plant operation and maintenance, waste collection and processing, cable network management and conventional TV. Regulatory changes can affect our pricing, margins, operations, strategy and profitability.

Our businesses are also subject to many laws and regulations related to respect for the environment, health protection and safety standards. These relate particularly to air quality, water pollution, drinking water quality, the treatment of hazardous and non-hazardous waste, nuclear plant management, and soil contamination. A change or toughening of regulations can lead to additional costs or investments for us that we cannot guarantee will be covered by sufficient revenues. In such cases, we may have to close down an operation without any assurance of being able to offset the costs related to such a shutdown. Furthermore, to engage in these activities, we must obtain or renew various permits and authorizations from regulatory authorities—an often long, unpredictable and costly process. Despite the substantial expense of applying for such permits or authorizations, they may in the end not be granted, or be granted too late.

Lastly, regulations require investments and operational outlays not just by us, but also by our customers, particularly concession-granting municipalities, to upgrade their facilities to regulatory standards. If the customer does not meet these obligations, the operator’s reputation may be damaged and its development capacity impaired.

We May Be Negatively Affected By The Decision of Our Local and Municipal Partners to Terminate or Modify Partnership Agreements

We develop some of our local operations, in partnership with municipal governments or private local entities. These partnerships are one of the ways in which we share the economic and financial risks associated with certain large projects by limiting the capital we commit and enhancing our ability to adapt to specific local-market conditions. Such partnerships may also be required by local regulations.

Changes as a project develops, local politics and economics, and a partner’s economic situation may result in termination of a partnership, in particular by one of the partners requesting dissolution of the joint venture or a preemption right being exercised. As a result, we may have to increase our financial commitment on certain projects or, in case of conflict with a partner, seek solution in litigation or arbitration.

Failure By Significant Customers and Suppliers to Meet Their Contractual Obligations Could Significantly Impact Our Business

In our energy and environment operations, subsidiaries enter into contracts, particularly with municipal authorities. Performance of those contracts can hinge on several or even a single customer. This is the case, for example, in delegated water-management contracts, certain electricity production and sales operations involving medium and long-term power purchase agreements, and in the management of non-hazardous waste incinerators.

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A customer’s refusal or inability to uphold its contractual obligations, particularly regarding rate adjustments, can compromise the economic equilibrium of the contracts and the profitability of investments the operator may have made. Despite contract provisions in case a contracting party fails to perform its obligations, total compensation is not always recoverable, which in turn can affect our gross revenue and net income. We are facing such situations particularly in Argentina, the Philippines and Indonesia.

Likewise, in managing its water treatment plants, certain power plants, and waste treatment units, we may depend on a limited number of suppliers for water, non-hazardous waste, various types of fuel and equipment. Any supply interruption or delay, even in breach of contract, can hurt a project’s profitability.

Our energy trading (including fuel procurement and power marketing) exposes us to risks associated with the fluctuation of energy prices, the participation in evolving markets, exposures to our counterparties and other factors that may have a negative effect on our financial results

We trade natural gas, electricity, crude oil and gas products into the spot market or other competitive power markets or on a contractual basis. We also enter into contracts and a variety of other instruments to purchase and sell electricity, natural gas and coal as part of our power marketing and energy trading operations or for our own use. With respect to such transactions, our revenues and results of operations are likely to depend, in large part, upon prevailing market prices for power in our regional markets and other competitive markets. These market prices may fluctuate substantially over relatively short periods of time. As a result, our energy trading (including fuel procurement and power marketing) activities expose us to risks of commodity price movements. We attempt to manage our exposure through enforcement of established risk limits and risk management activities. These risk limits and risk management activities may not always be followed or may not work as planned and cannot always eliminate the risks associated with these activities. As a result, we cannot predict the impact that our energy trading and risk management decisions may have on our business, operating results or financial position.

Authorities that have jurisdiction over wholesale power rates in the United Sates, Europe and elsewhere, as well as independent system operators that oversee some of these markets, may impose price limitations, bidding rules and other mechanisms which may erode trading margins and lead to diminished opportunities for gain.

We are exposed to the risk that counterparties that owe us money or energy will breach their obligations. Should the counterparties to these arrangements fail to perform, we may be forced to enter into alternative hedging arrangements or honor underlying commitments at then-current market prices that may exceed our contractual prices, which would cause our financial results to be diminished and might result in losses. Although our estimates take into account the expected probability of default by a counterparty, our actual exposure to a default by a counterparty may be greater than the estimates predict if defaults by counterparties exceed our estimates.

Currency exchange rate fluctuations may negatively affect our results

We hold assets and liabilities, earn income and pay expenses of our subsidiaries in a variety of foreign currencies, primarily US dollars. Our financial statements are presented in euros. Therefore, when we prepare our financial statements, we must translate our assets, liabilities, income and expenses in currencies other than the euro into euros at applicable exchange rates. Consequently, increases and decreases in the value of the euro will affect the value of these items in our financial statements, even if their value has not changed in their original currency. For example, an increase in the value of the euro may result in a decline in the reported value, in euros, of our interests held in foreign currencies and a corresponding negative effect on our financial condition as presented in our financial statements. Similarly, many of the commodities and other goods that we purchase as part of our operations are indexed in currencies other than euro, particularly in US dollars. Decreases in the value of the euro against other currencies, particularly the US dollar, can effectively increase the price we have to pay for these commodities, even if their price in the index currency does not change. This could have a negative effect on our financial condition.

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Our Exposure to Interest Rates May Negatively Affect our Financial Results

As of December 31, 2002, approximately 48% of our gross debt was under a variable rate and 52% under a fixed rate. We thus have exposure to interest-rate variations as any rise in interest rates increases the cost of our debt. By way of illustration, and assuming no change in the structure or level of debt, a 0.50% rise in interest rates would increase financing costs by approximately €40 million a year.

Securities Risk On Non-Consolidated Companies

We hold a portfolio of non-consolidated securities, the market value of which is dependent on stock market prices. It is not our policy to resort systematically to hedging to limit the economic risk arising from fluctuations in the price of these securities. Hedging is not always an option depending on the quantities of securities held and the liquidity of the hedging instruments. Some securities have been used to back bonds exchangeable into shares so that we could benefit from the attractive terms of such financings. The portfolio of non-consolidated listed securities at December 31, 2002 is given in Note 10.1 to the consolidated financial statements.

We expect to fund the development of our core businesses in part through the disposition of these holdings as favorable opportunities arise. This strategy could be adversely affected by a market decline.

Exposure to Specific Environmental Regulations, Environmental Risks Generally and Malicious Acts May Negatively Affect our Financial Situation.

Facilities that we own or manage for local industrial and municipal third parties pose risks to the natural environment—air, water, soil—as well as risks to the health of consumers, employees and subcontractors. These health and environmental risks are subject to strict and precise national and international regulations and regular audits by government agencies.

In the course of our business, we handle and even generate dangerous products or by-products, such as certain chemical products for water treatment. Some of our waste facilities are in the business of treating potentially toxic hazardous industrial and medical waste. A waste treatment permit for any given facility would be at risk in case of reception and treatment of a waste that is non-compliant with the categories of “hazardous waste” or “municipal waste” authorized for treatment in that facility.

Evolving regulations covering environmental responsibility make it difficult to assess risks related to our past activities, particularly in the case of closed landfills. Even where past activities complied with regulations in force when they were in operation, past activities may nonetheless be a source of pollution to the natural environment.

In waste management, the gaseous emissions of concern are greenhouse gases, gases that acidify the air, noxious gases, and dust. In the water business, the primary potential air pollutants are chlorine and gaseous by-products resulting from accidental releases of water treatment products. In addition, sewage treatment and waste treatment operations can create odor problems.

Potential impacts of activities on water in the natural environment include leachates from poorly controlled landfills, the release of heavy metals into the environment, and aqueous effluent discharges from systems for treating the fumes from incineration facilities. These various emissions can pollute groundwater and waterways.

Sewage treatment plants discharge treated water into the natural environment. It is possible that this water may not meet discharge standards in terms of its organic, nitrogen and phosphorus content. Also, some of the facilities we manage are not equipped to treat rainwater. In this case, when it rains, the water collected is entirely or partially discharged into the natural environment without being treated. This can degrade the quality of water used for swimming or shellfish farming. The operator cannot be held liable for such pollution, except insofar as it demonstrably failed to properly manage the facilities under its management.

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Soil pollution issues include the storage of hazardous products and liquids, leaks during processes that use hazardous liquids, and sludge storage and surface spreading.

We also face external risks such as lightning, drought, flooding, earthquakes and mud slides that can damage or destroy our installations. In addition our production and distribution installations in the areas of energy and water could be the targets of terrorist or other malicious acts. The occurrence of any of these or similar events would negatively affect our financial condition.

Our Activities Are Likely To be Covered By Stricter National and International Standards Relating to Climate Change And Related Costs May Negatively Affect Our Financial Position

Particularly in power generation and waste management and waste recovery, we are engaged in activities that come under national, international and European Union climate change programs established pursuant to the Kyoto Protocol. Since none of the elements that would enter into quantifying the impact of the “carbon constraint” can be estimated with sufficient accuracy, the risk it represents cannot yet be quantified either. This uncertainty, however, should disappear once rules on how the “carbon market” will operate are formalized. Once formalized, we may have to incur significant costs to comply with these rules which could have a negative impact on our financial condition.

We may Incur Substantial Liability From Our Ownership and Operation of Nuclear Facilities

We own and operate nuclear power facilities in Belgium for the production of electric power. Risks of substantial liability arise from the ownership and operation of nuclear facilities, including mechanical or structural problems at a nuclear facility, the storage, handling and disposal of radioactive materials, and uncertainties with respect to the technological and financial aspects of decommissioning nuclear facilities at the end of their useful lives. In addition, if the Belgium government were to discontinue the use of nuclear power facilities for the production of energy, that decision would also affect negatively our activities and financial condition.

We Operate in Increasingly Competitive and Evolving Markets, Which Has Increased Pressure on Our Market Share and May Have a Negative Effect on Our Financial Results

Most of our services are subject to strong competition both from large international competitors and, in a number of markets, also from small niche players. Electricity or gas industry deregulation in the European Union and in the United States has opened most markets to new competitors, which could have a significant negative effect on energy prices and on our market share, particularly in Belgium. In the field of Environment, our various Water and Waste activities are also subject to strong competitive pressure both from international and local players, the effect of which may be lower prices for our services to industrial or municipal customers or both. Such decreases in prices could have a negative effect on our financial results.

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A.    History and development of Suez

Suez was formed in June 1997 by the merger of Compagnie de Suez and Lyonnaise des Eaux. At that time Compagnie de Suez, which had built and operated the Suez Canal in Egypt until its nationalization in 1956, was a highly diversified holding company with operating units in financial services and energy, largely in Belgium and France. Lyonnaise des Eaux was a diversified company, with water, waste services, construction, communications, and on-site technical management services, largely in France, but with significant international activities.

We are a société anonyme, a joint stock company, established under French law until December 31, 2040. We are governed by the French Business Code and décret no. 67-236 of March 23, 1967. We are registered in the Registre du Commerce et des Sociétés de Paris, the Commercial and Companies’ Register of Paris, under reference number SIREN 542 062 559 R.C.S. Paris. Our registered office is at 16, rue de la Ville l’Evêque, 75008 Paris, France, telephone 33-1 40 06 64 00. Our agent for U.S. federal securities law purposes is Michael Newton, Ondeo Nalco located at One Nalco Center, Naperville, Illinois 60563-1198, United States.

B.    Business overview

VISION AND STRATEGY

We provide services that meet the essential needs of a diversified clientele. In keeping with our announced intentions at the time of the merger in 1997, Suez has evolved from a conglomerate to a global industrial group promoting sustainable development and offering a comprehensive range of solutions in the energy and environment sector, water and waste services, for companies, individuals and municipalities.

We develop, design, implement, and operate systems and networks in each of these areas to meet the needs of our customers, whether they are companies, municipalities, or individual customers. Beyond the services these customers require, we aim to provide them with customized and innovative solutions.

Our development is sustained by the diversity of our services, which benefit from our expertise, our long experience and extensive client base, our financial flexibility resulting from recurrent cash flow, and by our international network.

In each of our two major business areas, Energy and Environment, we enjoy leading positions:

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We believe that our diversified clientele provides a constant source of business, with an organic growth potential between 4% and 7% per year, depending on economic conditions. We target two main customer segments:

a)  Business customers

In 2002, we generated over 50% of our revenues from this segment. Industrial and service sector companies often seek custom-tailored solutions in areas of our expertise.

We offer:

We expect that the company services market will grow in the coming years. The pace of growth will be determined by the health of national economies. Strong trends in outsourcing include a gradual move from simple, maintenance-type services to more complex ones, such as facilities management, full water cycle management, and waste management. In addition, there is a growing expectation for service providers such as Suez to make commitments on results, not just on means, as well as the sharing or transfer of all or part of the industrial risk. Our international presence permits us to offer multi-site, mono-service, or even multi-service contracts, in accordance with customer needs. Such a contract could include, for example, ultra-pure water supply (Ondeo), electricity, natural gas and heating (Tractebel), incineration and waste treatment (SITA), and facilities management and management of on-site cogeneration facilities (Elyo).

Since 1997, factors have converged to accelerate development of our industry services business. The opening of the energy market to competition has created new market opportunities not only for commodity supply but also for assisting companies seeking more complex services. In addition, we have acquired companies with strong industrial specialties (particularly in water treatment, with Nalco and Calgon) to expand our range of expertise and geographic coverage.

Suez has also restructured, creating:

b)  Municipal and individual customers

Our market is influenced in the long-term by shifts in public policy and national regulations, and increasing urbanization. In the case of energy, for example, reliance on private sector enterprises is increasing with market deregulation. In the case of water, it is increasing as public sector entities reach the limits of their resources and expertise. With waste services, private sector activity increases as environmental standards are more rigorously enforced. This reliance on private operators can take the form of privatization, concessions, or operation and maintenance contracts. For numerous municipalities and international institutions, reliance on private sector providers is synonymous with greater efficiency, in the form of prices which better reflect economic reality, higher quality service, and the ability to serve a greater number of people.

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Management believes that the long-term development potential of this market is considerable. For example, only 8% of the world’s population currently receives water services through a public-private partnership. We committed ourselves to “bridging the water divide” by addressing these major long-term needs. Today, one person out of six in the world does not have access to drinking water and close to half the world’s population is without adequate sanitation. If this disastrous situation continues, the so-called “millennium improvement targets” will not be achieved. This finding was strongly emphasized at Johannesburg in August 2002. The development model that we propose is based on a public-private partnership, with a clear delineation of responsibilities. In this model, the private sector operator is not the infrastructure owner but, for the duration of the contract, is given responsibility for its upkeep and most often for its development for the benefit of all parties. Investments, if any, by the operator are for the expansion or improvement of the network or treatment infrastructure, and not their acquisition. If ways can be found to avoid having the private operator take too great a share of the risk and if public authorities are in a position to honor their contractual commitments, particularly with respect to rates, the private sector has a role to play in “bridging the water divide”. Its importance in this regard was underscored at the Earth Summit.

Business activity growth despite a depressed international economic climate

Despite the year’s difficult economic picture, we continued to have strong commercial activity in 2002, winning over 50 major contracts, which contributed to an organic growth rate of 5.7%, the same as in 2001. Group revenues were €46.1 billion in 2002, representing an increase of 8.8% over the previous year. Energy and Environment revenues accounted for 98.6% of total revenues, of which Energy represented 64.1%, and Environment services 34.5%.

Organic growth for energy activities was 4.9%, while organic growth for environment activities was 6.6%.(1) Although our activity is worldwide, our most important market remains Europe where we generated approximately 76.2% of our 2002 revenues (excluding energy trading). France and Belgium make the largest contribution, 48.4% (excluding energy trading), and the relative weight of our activities in Europe and the United States increased from 84.9% in 2001 to 87.8% (excluding energy trading) in 2002. A large part of the decline in emerging countries’ contribution to our revenues is due to the depreciation of the Argentine and Brazilian currencies. We announced our strategy for geographic development in January 2003 (see below, “The 2003-2004 action plan”). As a result, we expect to see continued growth in coming years, while we aim to reduce our relative exposure to emerging countries, both in terms of revenues as well as invested capital, and to increase it in industrialized countries, particularly in Europe and the United States.

Our organic growth in 2002 progressed against the background of an unstable world economy. 2001 was marked by a breakdown of the growth dynamic. Activity rebounded in early 2002, but slowed with a further weakening in the financial markets and a worsening of the Middle East situation. During 2002 our activity was characterized by a persistent slowdown in the major western countries, along with continued erosion in market indexes and, in Asian and Latin American countries, by economic difficulties resulting in currency collapses, particularly in Argentina and Brazil.

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Financial market volatility in 2002 was accompanied by increased wariness about the debt levels of numerous companies and a climate of strong aversion to risk. Our net indebtedness has declined since the end of 2001, from €28 billion at December 31, 2001, to €26 billion at December 31, 2002. Management believes that we have sufficient liquidity to meet our needs. At December 31, 2002, we had €7.1 billion in cash and cash equivalents, net of overdraft, in addition to €3.8 billion in marketable securities and €6.9 billion in confirmed undrawn credit lines. An amount of €7 billion (including €0.9 billion in monetized securities due in 2003, and €1.7 billion in line of credit drawings due in 2003), plus €3.3 billion in commercial paper will be due in 2003 under our credit lines. In addition, we have the possibility of extending €1.7 billion in credit facilities for one year.

Our operating results declined due to the worsening economic situation, particularly in Argentina, Brazil, Indonesia, and the Philippines. Our position there was weakened by both the collapse of local currencies and the refusal by certain contracting parties to respect their contractual obligations, particularly in terms of rate adjustments. The protracted stock market decline significantly reduced the value of our non-consolidated investments, resulting in an increase in exceptional expenses.

As a result, we had a net loss of €862.5 million after exceptional expenses, Group share after tax, of €1,733 million. Exceptional expenses include provisions established to cover our Argentine exposure, the closing or withdrawal from certain activities, and equity write downs and the impairment in value of both listed and unlisted securities.

Still, despite the particularly difficult world economic circumstances in 2002, Suez demonstrated strong operating performance, both in its Energy and Environment activities, which produced organic(1) growth in EBITDA of 3.3%.

The table below summarizes consolidated revenue and profitability trends for the past three years.

Management believes that the current economic instability and slow growth could persist throughout 2003 and beyond.

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We reduced net indebtedness at December 2002 by €2 billion compared to 2001, and announced a 2003-2004 action plan in January 2003 that included objectives to deal with the current difficult economic situation. With this plan and corrective measures already begun we aim to improve our profitability and to strengthen our financial position, while favoring organic growth over acquisitions. However, despite the inherent stability of our activities, our performance will continue at least partially to be dependent on the health of the economies we serve.

The 2003-2004 action plan

The period between 1997 and 2001 was characterized by sustained international expansion in our Energy and Environment activities and by the establishment of a platform for the future development of our businesses. Still, this growth was accompanied by a net increase in our debt which by the end of 2001 had reached €28 billion. Anticipating a weakened and uncertain economic climate for the period 2003-2004, we established in September 2002 six strategic priorities for the coming two years. They are:

These priorities led to the development of an action plan for 2003-2004 which was announced in January 2003 and whose objectives are:

To achieve these objectives, our action plan has five components:

(1)  Continued debt reduction

We have reduced our net investments by €1.3 billion between 2001 and 2002. The asset disposal program will be pursued to reduce debt and enhance profitability, focusing not only on non-strategic assets but also on certain Energy and Environment assets in favor of activities offering a better risk/return ratio as well as improved cash flow generation. See Item 8.B. “Significant Changes”.

(2)  Enhanced profitability

We seek to reduce head office and operating expenses. Taking into account measures already in place, we intend to save approximately €500 million(2) starting in 2003 and another €100 million in 2004. An additional cost-cutting plan covering the entire Group as well as headquarters is expected to be approved in 2003. Furthermore, we may decide to discontinue certain contracts whose profitability proves to be inadequate and that

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are not likely to improve due in particular to failure by contracting parties to meet their obligations. In this regard, since January 1, 2003 our Water division has announced its withdrawal from contracts with the cities of Manila and Atlanta.

(3)  Establishment of a more operational, more integrated organizational structure

In 2002, in a first-phase reorganization, Environment activities—Water and Waste Services—were restructured into two business lines: Suez Environment Local Services and Suez Environment Industrial Services. In March 2003, a second-phase reorganization was implemented with the functional attachment to Group headquarters of our two operating energy businesses, Electricity and Gas Europe (EGE) and Electricity and Gas International (EGI).

We are currently reorganizing into four operating business lines, supervised by a single head office with locations in Paris and Brussels, which combines all staff functions. As part of this process Tractebel and Société Générale de Belgique are scheduled to merge in 2003. In addition, we plan to integrate our gas activities in Europe, and our energy and industry services as well as engineering activities within Electrabel.

The business lines are placed under the responsibility of a chief operating officer, Jean-Pierre Hansen. The heads of the business lines are members of the Executive Committee. Furthermore, to further improve risk management, the position of Chief Risk Officer has been created with responsibility for supervising the identification and reporting of major risk.

Finally, management compensation policy, already based on improving profitability, now includes a cash generation factor.

(4)  Slow the pace of investments

After strong growth in activity from 1997 to 2002, the objective now is for the business lines to be able to self-finance their development starting in 2004. As a result, in addition to the current investment criteria, more demanding cash flow requirements and risk limitation standards, particularly in the area of foreign exchange, will be imposed. For the period 2003-2005, we plan to reduce the average annual amount of investments from €8 billion between 1997 and 2002, to €4 billion.

(5)  Reduce risk exposure

Without planning to cease activity in emerging countries, we intend to reduce capital employed in these countries by one-third by 2005 and will concentrate on healthier markets with more recurrent business opportunities, such as the European Union and North America.

2003-2004 strategic priorities

We expect 2003 to be another year of consolidation.

In this context, the strategic business priorities of our four operating business lines will be focused on achieving increased profitability, strengthened financial health, and greater flexibility. Their main strategic objectives for 2003-2004 are summarized below.

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a)  Electricity and Gas Europe (EGE)

In Italy, following the cooperation agreement between Electrabel and Acea, the consortium of Acea, Electrabel and Energia Italia recently acquired Interpower from Enel in Italy. In Spain, Electrabel aims to strengthen its position on the local electricity market through power plant construction projects.

In addition, Hisusa, the joint Suez-La Caixa subsidiary, has purchased 5% of Gas Natural in Spain, which has commercial partnership arrangements with the Group.

b)  Electricity and Gas International (EGI)

c)  Suez Environment Local Services

Water

Waste Services

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d)  Suez Environment Industrial Services (Ondeo Nalco)

Organizational Structure

The following is a simplified list of our major subsidiaries and our percentage of ownership interest as of December 31, 2002.

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ENERGY

Organization and key figures

Through Tractebel, we are present throughout the world in the energy and services markets. Tractebel’s core activities are electricity and natural gas, which include production of electric power, energy trading, construction and the management of transmission and distribution networks as well as sale of electricity and natural gas. The complementary nature of its activities enables Tractebel to offer its customers other directly related services which include technical installations, energy and industrial services and engineering.

As of December 31, 2002 Tractebel is made up of five operating units:

Responsibility for Tractebel’s development in the electric power and natural gas markets and services sector is divided as follows:

a) In Europe:

Tractebel Electricity & Gas Europe (EGE) is responsible for its electric power and natural gas related activities, through four major companies:

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Tractebel Installations & Maintenance (TIM) is responsible for the installation services—electrical and mechanical—primarily for industrial customer projects and generally for a short duration. The units involved are: the Fabricom Group and its subsidiaries with the exception of the Axima companies which are operationally attached to TES.

Tractebel Energy Services (TES) is responsible for all operation and maintenance services, management of cogeneration and thermal installations and related services and heating, ventilation and air conditioning (“HVAC”) installation projects, targeted to industry and the tertiary sector, as well as local authorities and the residential sector. These services generally call for long-term contracts. These services thus consist of a continuing services and solutions, ranging from management of local energy networks (electric power distribution and urban heating), to utilities management at industrial sites, including operations and maintenance of thermal and technical plant, facilities management and HVAC installation work. The companies involved are: the Elyo group and Axima companies which are subsidiaries of Group Fabricom.

Tractebel Engineering is responsible for Tractebel’s worldwide engineering activities, a large part of which takes place in Europe.

b)  Outside Europe:

Tractebel Electricity & Gas International (EGI) is responsible for the worldwide energy and services activity except for Europe.

EGI’s principal subsidiaries are:

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Strategy

Tractebel has established a strategy that aims to benefit from its competitive advantages rather than seeking merely to benefit from size. Its principal advantages are:

As defined in the 2003-2004 action plan, this business strategy aims to exploit these advantages to a maximum within the following framework:

To achieve these goals, EGI and EGE are working within the framework of a business model which seeks to achieve the best balance between physical assets such as electric power stations or natural gas terminals and sales positions. Residual or possible temporary imbalances are managed by access to the market. The centralized portfolio management and trading functions are used for this purpose.

Significant Events

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