Birka Energi annual accounts for 1999

Birka Energi annual accounts for 1999 * The first year of operation of Birka Energi has been successful * Better results than in the previous year * Large and stable customer base * Increased volumes and continued new investments in heat and refrigeration * Active participation in the restructuring of the industry by acquisitions Successful first year of operation of Birka Energi Birka Energi can summarize 1999 as being a successful first full year of operation. In parallel with extensive internal integration work aimed at establishing the operative and legal structure of the new Group, coordinating the routines and systems, and external launching of the Birka Energi and HemEl (Home Electricity) brand names, the operations have yielded better results than in 1998. This is partially a consequence of the synergism achieved in the merger between Gullspång Kraft and Stockholm Energi. The stable development of the results at Birka Energi is due largely to the strong Group product mix of electricity, network operations and heat. Birka Energi has also succeeded in maintaining its position of being Sweden's leading energy utility in terms of number of customers. The stable customer base comprises around 850 000 customers who have chosen the company's services on a market that is totally deregulated for the first time ever. Acquisitions and restructuring Birka Energi continues to participate actively in the restructuring of the Nordic energy market. During 1999, Birka Energi has acquired Eksjö Elförsäljning AB, Lidingö Energi AB, Lidingö Energi Försäljnings AB, Katrineholms Energiförsäljning AB and NSE Elförsäljnings AB. In addition, Birka Energi has acquired 65% of Baerum Fjernvarme AS, 40% of Puab Projektutveckling AB and 65% of Elingenjörsbyrån i Södertälje AB, and has increased its holdings in Ekerö Energi AB and Ockelbo Kraft AB to 79% and 87% respectively at the turn of the year. In addition, 50% of Ljusdal Energi Försäljnings AB and all customer agreements at Blåsjön Kraft AB have so far been acquired during the year 2000. Birka Energi has also concluded an intention agreement with Arvika Municipality concerning the acquisition of the shares of Arvika Energi AB that pursues electricity trading and operates a number of smaller hydro power stations. During the year, Birka Energi has sold 9% of the shares in Birka Service AB to Fortum Service OY, and has made a new share issue related to 35% of the holding in Birka Teknik & Miljö AB to Fortum Engineering OY. Turnover and results Even though the year was characterized by low electricity prices and mild weather, the Group has succeeded in achieving a net turnover of SEK 12 702 million, which is roughly on a level with that in the preceding year (SEK 12 686 million). The lower turnover from electricity sales have been outweighed to some extent by revenues from financial electricity trading, and increased revenues from heat, refrigeration and network operations. Total electricity sales during the year amounted to 24 TWh (25.6). Out of the drop in sales, 0.5 TWh is due to reduced sales to the electricity exchange. During the year, Birka Energi generated 21.3 TWh of electrical energy in wholly or partially owned generation plants. The total electricity turnover, including own consumption for heat generation, etc., amounted to 26.5 TWh (27.9), and the turnover was thus 5.2 TWh higher than the energy generated by the Group. The excess volume of electricity was purchased by bilateral agreements and on the Nord Pool electricity exchange. Sales of heat amounted to 7.5 TWh (7.5). Heat sales are very temperature- dependent, which resulted in a lower sales volume during 1999 due to spells of mild weather. However, continued expansion of the heat operations enabled sales volumes to be maintained. Sales of refrigeration are continuing to expand. Refrigeration sales increased to 192 GWh (110). Sales of gas dropped to 399 GWh (429), partially due to the reduced number of gas cookers. In spite of declining electricity prices and stiffening competition on the energy market, the operating profits improved by SEK 192 million compared to the notional profits for 1998. In the power operations, the lower property tax and lower costs of nuclear power contributed to the improved results. The margins in electricity sales were largely maintained as a result of the Group price strategy and a customer base that continues to be stable. The expansion in the heat and refrigeration operations and the realization of synergism have made a further contribution to the strong development of the results. The net financial items amounted to SEK -1475 million (-1429). Compared to the notional SEK -1615 million for 1998, the net financial items dropped by SEK 140 million. The favourable interest rate situation at the beginning of the year has had a positive effect on the net financial items of the Group. When the Birka Energi Group was formed, the liabilities of the Group rose. At the same time, an extensive refinancing programme of the liability portfolio was started, since financing via the owners ceased. The profit after net financial items was SEK 1114 million. Compared with the notional result for 1998, the profit is SEK 332 million better, of which SEK 192 million relates to the operations and SEK 140 million to the lower net financing items. The result for the year was SEK 715 million (397). The total net investments by the Group in tangible and intangible fixed assets, excluding corporate acquisitions in the period amounted to SEK 2185 million (2576). The investment level in the Group continues to be expansive. Most of the investments have been made in the Birka Värme and Birka Nät subsidiaries. The investments at Birka Värme are mostly related to expansion of the heat and refrigeration operations. The investments in the network operations relate principally to reinvestment in existing networks. Investments in the acquisition of subsidiaries amounted to SEK 1049 million. The balance sheet total has increased during the year by SEK 3507 million as a result of the continued high investment rate and acquisition of operations. The equity/assets ratio dropped somewhat. The Group interest-bearing net debt increased during the year by SEK 1320 million. The refinancing work carried out during the year enabled Birka Energi to achieve increased flexibility in the choice of financing form. The average terms of the Group liabilities have been increased, while borrowing from the owners has been reduced. In February 2000, further bonds to the value of Euro 250 million were floated under the existing GMTN programme. Stockholm, March 2000 Tomas Bruce For further information, please get in touch with: Tomas Bruce, President and CEO, on +46 8 671 79 60 or +46 70 771 79 60 Lars-Håkan Ellenius, CFO on +46 8 671 79 69 or +46 70 727 03 86 Merril Boman, Vice President Communications on +46 8 671 79 51 or +46 70 590 79 75 ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/03/01/20000301BIT00060/bit0001.doc http://www.bit.se/bitonline/2000/03/01/20000301BIT00060/bit0002.pdf