1. Best in France on ITT FLYGT France May 2005 By: Gilles RIVIÈRE, Christine LEMKE, Walid MALOUF, Bryan O’DRISCOLL, Antonio CELESTE

2. ITT FLYGT International ITT FLYGT is the World Leader of submersible pumps, mixers, and accessories Founded in Sweden in 1901 ; bought by American conglomerate ITT in 1968 French office created in 1960

3. ITT FLYGT International ITT FLYGT has a large panel of activities Products for collecting and treating waste water Water accessibility and flood management Large construction site management … Also used in mining, industrial processes, agriculture and aquaculture

4. ITT FLYGT Operations Headquarters: Stockholm, Sweden Partially or wholly owned subsidiaries in 130 countries worldwide 4,000 employees (300 in France) Headquarter  Principal Factories Distributors  Susbsidiaries                                 

5. ITT FLYGT Operations Presence in France –Distribution Center –French headquarters in Nanterre –12 sales offices in France No more than 200km from each customer –Some product development done in France

6. ITT FLYGT France Performance France is ITT FLYGT (Flygt)’s best performing country in Europe Twice the revenue of Germany, 30% larger than UK Revenue and Profit –2004 Worldwide revenue: €873million –2004 French revenue: €85.7million 2004 French profits: €7.3million Strong and consistent financial performance –No losses in history of company

7. Customer Profile 4 Main Customers Segments –Municipalities & Water companies Veolia, Lyonnaise des Eaux, … –Construction and Mining Bouygues, Vinci, … –Industry Nestlé, Shiseido, Rhodia, Renault, … –Resellers & Distribution Network

8. Customer Expectations French presence is necessary! Critical for sales to municipalities in the French market Important for selling to large French industrial clients that operate worldwide Expectations –Provide a global service –Provide maintenance, spare parts –Increasingly, provide solutions, not just products

9. Why France? France was an attractive sales market for Flygt products Flygt believed in close and direct relationships with clients France had a large and growing municipal market in the 1960’s –Many municipal authorities and state-owned public utilities that required water pumps France chosen above several other European targets, including Spain and Italy

10. Company Core Values

11. Core Values Integration Customers Direct Relationships, Partnerships, Solutions Products Innovation, Quality, Technological Leadership Operational Excellence Triple Crown Certification: ISO 9000, 9001, 14000 Strong Fit No perceived cultural differences French office perceived as “very Creative” Perceived Differences Perceived cultural differences with Swedish office

12. Other Values Based on Swedish and American values Cultural Differences Not based on French values Very Compatible with French culture Winner of Stockholm Water Prize Sponsor of Sweden Jr. Water Prize Protector of water for “future generations” Environmental Sustainability Code of Ethics

13. Overcoming Cultural Differences Swedish/American Perceptions of French Culture Hierarchical Resistant to Change Different ethics that seemed incompatible Language barriers French Perceptions of Swedish/American Culture “Inflexible” structure Constant Change Different ethics that seemed incompatible Language barriers “Tangible” Tools Intranet Site (although in English) Free English Language Lessons “Soft” Tools Constant Communication Understanding, Tolerance Ability to adapt French is working language in French office

14. Perceived Constraints Flygt did not perceive any major constraints when setting up business in France However, there were some initial challenges –Understanding the market and the customers in France (Municipalities & other agents in decision process) –Securing autonomy and flexibility from parent company These challenges are similar in other markets

15. Adaptation to France Management Development and Motivation –Managers trained in Sweden or USA –Well developed internal training school –Employees have access to generous external training programs –Job switching and promotion from within –Annual performance appraisals –Regular meetings with Human Resources

16. Adaptation to France Most employees are French –Current France CEO is Swedish with extensive international work experience –However, previous CEO was French –No non-European employees Workforce Planning –Elimination of under-performing employees –Layoffs rare and “difficult” in France

17. Major Costs in France Direct relationships with customers –Need to support many regional sales offices More expensive to hire and fire in France –Strong labor protections Language training for all employees –Some resistance from French employees to speak English –Training facilitates more effective communication with Sweden and USA headquarters

18. Key Benefits Close proximity to critical market for Flygt –Solidifies relationships with clients –Helps Flygt better understand changing customer needs High Quality of Life –Location in Nanterre is seen as particularly nice for employees (no commute)

19. Key Benefits France Metrics: –€285,000 revenue per French employee –€24,000 in profit per French employee Growing market –Expected growth of 5% per year, which is high for the industry & waste water segment –Market is somewhat insulated from economic fluctuations

20. Essential Advice Before coming to France –Find a good French consultant for integration! –Know your market very well and the decision process for business with French administration, if applicable –Decentralize sales force There are many differences between the regions of France Adaptation while in France –Be very flexible –Hire French people, but good to have outside leadership, too French people know the market, but an outsider can guide change when needed

21. Future Investments in Europe Growth potential in emerging Eastern European economies Caution needed to protect against financially troubled countries

22. We Thank … Paul DIETRICHSON, Président Directeur Général Paul.Dietrichson@flygt.com.Dietrichson@flygt.com Laurent CHAIGNE-BERTHOLET, Directeur Marketing & Communication Laurent.Chaigne-Bertholet@flygt.com Frédéric LOFFREDO, Directeur Financier Frederic.Loffredo@flygt.comrederic.Loffredo@flygt.com Frédéric MAIRET, Directeur des Ressources Humaines Frederic.Mairet@flygt.com all located at: ITT Flygt SAS 29, Rue du Port - Parc de l'Ile 92729 Nanterre cedex +33 146953333rederic.Mairet@flygt.com

23. Bibliography ITT FLYGT Annual Report 2004 ITT FLYGT France Marketing presentation www.flygt.com www.flygt.fr

24. Our Team Gilles RIVIÈRE 4, Rue Michelet 92100 Boulogne-Billancourt Christine LEMKE 1, Rue Humblot 75015 Paris Walid MALOUF Campus HEC (Résidence Expansiel) 78350 Jouy-en-Josas Bryan O’DRISCOLL Campus HEC (Résidence Expansiel) 78350 Jouy-en-Josas Antonio CELESTE 105, Rue Haxo 75020 Paris