Report on operations for the year ended december 31, 1999

REPORT ON OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 * Slightly lower earnings * Intense price competition * Lower hydroelectric and nuclear power production * Agreement reached on Barsebäck * Significant acquisitions COMMENTS BY GROUP CEO Sydkraft departed the 20th century in strong style. Earnings in 1999 were very satisfactory, bearing in mind the particularly turbulent conditions in the energy market. The shift into the new millennium was achieved without any problems thanks to our meticulous Y2K preparations, which had been in progress for the past three years. We are now looking forward to an exciting new century. In 2006, for example, Sydkraft will celebrate the 100th anniversary of its founding. On November 1, 1999, the total deregulation of the Swedish electricity market was implemented. As of that date, all electricity consumers can, in practice, change their electricity suppliers with one month's advance notice. During November and December, several thousand customers left Sydkraft. In return, we gained customers from other companies. There was substantial price pressure in the Nordic electricity market, which resulted in Sydkraft's electricity sales and energy trading operations experiencing lower revenues. The mild start to the winter also left its mark on electricity prices. The restructuring process continued during the year and in September we acquired a 49% holding in Norrköping Miljö & Energi, a transaction totaling approximately SEK 1.3 billion. During the early months of 2000, we have acquired 49% of the shares in two Norwegian companies, Østfold Energi Kraftsalg and Østfold Energi Nett. With Østfold Energi as our partner and Southern Norway as our base, we improve our potential to expand further into the Norwegian market. During 1999, we also acquired Tellus Teknik AB, with a hundred of highly qualified environmental consultants, and El & Trafikteknik (ETA) in Gothenburg, with experts in the maintenance of traffic lights. Among other projects, ETA secured an order at the end of 1999 to maintain the city of Oslo's traffic lights. Work to strengthen the Sydkraft brand is continuing. During the year, a number of campaigns, particularly those on television, generated positive results. The degree of brand recognition has increased significantly. Sydkraft will continue to be seen in connection with aggressive promotional projects. We shall therefore be taking a very active part in the international and EU-supported housing exhibition Bo01 in Malmö in summer 2001. The format is based on a futuristic community consisting of more than 1 000 exciting apartments and houses. It is estimated that the exhibition will attract about one million visitors, who will be given the opportunity to see how Sydkraft delivers 100% local, renewable energy based on ecocycle principles with fully maintained standards of comfort. Through our corporate slogan "TomorrowToday," we shall reflect our desire to look to the future without losing our grip on the present. The Barsebäck nuclear power plant was decommissioned on November 30, 1999 due to a political decision. We pursued the legal process to the extent possible, while simultaneously negotiating a voluntary settlement with the Swedish Government. The agreement reached with the Government and Vattenfall was approved by a special general meeting of shareholders just prior to Christmas. An independent party, Handelsbanken Markets, was able to demonstrate that the settlement would not be negative for shareholders. The Standard & Poor's credit rating institute considers the settlement to be neutral from a credit-rating viewpoint. The Swedish Government/Parliament will reach a decision on the settlement during spring 2000. Lars Frithiof Chief Executive Officer ------------------------------------------------------------ Please visit for further information The following files are available for download:

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Sydkraft is a supplier of electricity, gas, heating and energy services.