Interim report January 1 - March 31, 2000

INTERIM REPORT JANUARY 1 - MARCH 31, 2000 * Virtually unchanged earnings, despite tough price competition and mild weather conditions * Lower water levels and reduced nuclear power production * Focus on broadband * Repayment of SPP funds to be recognized in earnings during year * Acquisition of 49% of shares in Østfold Energi COMMENTS BY GROUP CEO A continued successful hunt to reduce costs has contributed to Sydkraft being able to present a quarterly report that shows a largely unchanged level of earnings compared with the corresponding quarter of 1999. This was possible despite the mild start to the year, which had an adverse effect on energy sales, abundant water supplies and continued tough price competition, which contributed to electricity prices in particular being maintained at a low level. The weather and water situation during the initial months of the year resulted in the downward adjustment of nuclear power being started somewhat earlier this year. Production at the plants in Oskarshamn and Barsebäck was reduced, primarily due to well-filled reservoirs, considerable amounts of snow in the mountains and commencement of the spring thaw. Our acquisition strategy continues to focus on targets in northern Europe. Our latest acquisitions, in Örebro and Norrköping (Sweden) and Østfold (Norway) developed favorably. In Norrköping, we have already started a joint service company with Norrköping Miljö & Energi comprising 450 employees and SEK 330 M in sales. We are also discussing the establishment of a joint electrical installation and consulting company with Østfold Energi. In Poland, we recently started a heating company that will sell-in the packaged heating concept of "Färdig Värme" to primarily the Katowice area. In addition, we plan to invest jointly with the city of Poznan's district heating company in central and subsidiary boiler plants in the district-heating network for 600 000 consumers. Partnership is one of the most successful ways of achieving a greater number of satisfied customers. Our vision is to have a total of three million satisfied customers by year 2005. Today, we have almost one million customers, if we include the 49% holdings in Norrköping and Østfold and their 160 000 customers. Sydkraft's strength lies in its service and individual solutions, which provide its customers with greater competitiveness, comfort and security. This is to be achieved through a future-oriented approach. We have coined the slogan "TomorrowToday," which reflects our desire to look to the future without losing our grip on the present. This means that we will be seen in a number of aggressive and highly challenging projects. We are currently coordinating our IT resources within the communications area and initiating a major focus on broadband by utilizing our network infrastructure and developing business via these electronic highways. The focus on our infrastructure is being undertaken through our subsidiary Evicom, with investments in the main grid, city networks and customer- access networks. In a pilot project in the municipality of Staffanstorp, outside Malmö, southern Sweden, we are building a local portal - "Godagrannar" (Good neighbors) - jointly with the business community for the local inhabitants. Sydkraft is also a partner in another offensively oriented project, namely the international housing exhibition "Bo01," which will take place in Malmö in summer 2001. Approximately one million exhibition visitors will be able to see Sydkraft deliver 100% locally generated, renewable energy based on ecocycle principles, with sustained home comfort. Forceful efforts are being devoted to developing and safeguarding the Sydkraft brand. Our vision is to have the strongest brand in the energy industry. Successful brands are developed out of operations that share strong and clearly defined values. Sydkraft's corporate values are based on customer orientation, constant improvement and the participation and cooperation of all employees. At the same time, we are active in an industry that is characterized by sweeping changes and increasingly tough competition. We face a number of major challenges in the years ahead. To meet them, we are working determinedly to strengthen our market position and further improve the efficiency of our operations. Against this background, I would say that we have every reason to view developments during year 2000 with confidence. Lars Frithiof ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/05/08/20000508BIT01030/bit0001.doc http://www.bit.se/bitonline/2000/05/08/20000508BIT01030/bit0002.pdf