Report on operations for the year ended december 31, 2000

Report on operations for the year ended december 31, 2000 · Earnings increased by 10% · Access to abundant water supplies led to low electricity prices · Lower energy sales as a result of mild weather · Efficiency and rationalization measures gave reduced costs · Continued active participation in restructuring of energy sector Comments by group ceo After a year of turbulent market conditions and depressed prices, it is highly satisfying to be able to report a favorable financial result for year 2000. Sydkraft's profit after net financial items rose by 10%. The Group's cost mass was able to be reduced as a result of continued efficiency and rationalization measures, among other programs. Naturally, the repayment of surplus funds from Alecta (formerly SPP), also contributed to the year's earnings. At the same time, I can note that the consumption of electricity and other forms of energy is continuing to rise and that there is a positive underlying trend for our products and services. The growth in the economy is continuing and the environmental efforts being made by society require that environmentally compatible energy be available in the right amounts and at the right times. As the Chief Executive of a Group that offers total solutions that are designed to increase the competitiveness of our customers in virtually all areas of the energy sector, I can look to the future with confidence. The rise in electricity prices is continuing, but to a limited extent. As yet, no word has been received of producers intending to build new capacity during the next few years. Instead, it is likely that Northern European capacity will decline even further as more environmentally harmful coal-fired plants are closed down, particularly in Denmark and Germany. In a market characterized by transparent and volatile prices, Sydkraft must stand for something more than simply the supply of energy. We must be associated with values that are perceived as positive by demanding consumers - particularly those of the next generation. Ethics, moral standards and the environment currently play a major role and will play an even greater role in the future. That is why it is gratifying to note that the Sydkraft brand is strong and well known. During the past year, we acquired companies for a total of approximately SEK 3 billion and we have the capacity to make other large acquisitions. I am convinced that Sydkraft's excellent reputation played a major part in several of the acquisitions made during 2000. The corporate name is also becoming well known in Denmark, Norway and Poland, which is important for our continued expansion. Areas of special interest include the Oslo region in Norway, the Danish island of Sjaeland and the areas surrounding Poznan and Katowice in Poland. In Sweden, our focus remains on the southern part of the country and on our hubs in Örebro, Sundsvall and now Norrköping, and their surrounding areas. Current interest is on Norrköping Miljö & Energi, which will be integrated with the Group during spring 2001 following the acquisition of the remaining 51% of the shares a few months ago. On March 1, we shall inaugurate our new Call Center in Norrköping. Sweden's fourth largest metropolitan region, with an approximately 500 000 population and strongly growing educational opportunities, should be viewed together with another very rapidly growing area, namely the Mälardalen region. Even at this early stage, we can see a number of important common denominators between the operations we have established in Örebro and Norrköping. One such common denominator is recovery operations. We plan to focus intensively on becoming the right partner for industrial companies and municipalities in the fields of energy and materials recovery. In combination with our refuse handling operations in Norrköping, our acquisition of Sellbergs/SAKAB, which we implemented jointly with the French company SITA, will provide us with a strong position in this segment. Environmentally compatible recovery operations will increase sharply, bearing in mind the EU regulations that will come into force at the beginning of 2002. As of then, it will be prohibited to dispose of unsorted burnable waste as landfill and in 2005 it will also be illegal to dispose of organic materials. Currently, two million tons of burnable waste are disposed of as landfill each year in Sweden alone. Rapid advances are also occurring within the field of IT and broadband. It is estimated that 40% of all households will be connected within just a few years. We have formed Sydkraft Bredband with the aim of becoming one of Sweden's leading suppliers of broadband. We also intend to invest in backbone and access networks - the networks positioned closest to customers. The new investments are another expression of our desire to look to the future without losing our grip on the present, as coined in the Group's corporate maxim: "TomorrowToday." On February 21, 2001, Sydkraft's largest shareholder, E. ON Scandinavia AB, made a bid to acquire all of the shares in Sydkraft AB, as announced in a press release issued on the same date. As a consequence of the bid, E. ON is obligated to produce an offer prospectus, copies of which will be distributed to all Sydkraft AB shareholders. The prospectus will be prepared in consultation with the Board of Directors of Sydkraft AB. After having obtained an independent and objective valuation report, the Board will also make a statement declaring its position in regard to the offer. This statement is planned to be released on March 22, 2001. Lars Frithiof Chief Executive Officer ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/02/22/20010222BIT00730/bit0002.doc Full year-end report http://www.bit.se/bitonline/2001/02/22/20010222BIT00730/bit0002.pdf Full year-end report