Three-month Interim Report 2001 January - March

Three-month Interim Report 2001 January - March Comments by the Chief Executive - Acquisitions and higher prices boost net sales - 17 per cent improvement in profit before tax and minority interests - Acquisitions in Germany under completion Market Development During the first quarter of 2001, net sales increased by 27 per cent to SEK11.6 billion compared with the corresponding period of 2000. The improvement is due to a growth in volume as a result of acquisitions and, in particular, due to higher electricity spot prices. Operating profit rose by 21 per cent to just over SEK 3.3 billion. Higher electricity spot prices and a greater volume of sales to the NordPool Power Exchange were the main contributing factors to the increase in profit. Profit before tax and minority interests increased by 17 per cent to SEK 2.8 billion. Nordic electricity spot prices have declined since the deregulation of the electricity market in 1996 due to a number of years of unusually high precipitation. The price level rose during the first quarter of 2001 as a result of low precipitation and greater demand due to the cold winter. Acquisitions in Germany under Completion In April, Vattenfall and the other contractual parties signed an agreement concerning Bewag AG, where HEW and Mirant specify their intention to hold equal stakes in Bewag, about 43 per cent each. In May, the earlier agreement with Sydkraft and E.ON Energie concerning Vattenfall's acquisition of 37.2 per cent of the shares in Hamburgische Electricitäts-Werke (HEW) will be completed. In this way, Vattenfall will achieve a majority ownership of 71.3 per cent in HEW. Together with Mirant, Bewag, HEW and Veag/Laubag, we shall now continue our work to build, in three steps, a new major player, where the Vattenfall Group intends to have the leading role. Our aim is to achieve a rapid consolidation so that we can exploit the dynamics created by the agreement and continue to be an attractive energy provider for customers. Network Investments After the disruptions to the electricity network that occurred in the south of Sweden at around new year, the Board of Directors decided on a comprehensive action plan to reinforce the network and improve customer service. Other Agreements In February, Vattenfall acquired a 32 per cent stake in the Polish distribution company, GZE and is thereby entering the end-customer market in Poland. In March, Vattenfall made a public offer to the other shareholders in Arrowhead AB to acquire the remaining shares. Arrowhead will need considerable restructuring. A close co-operation between Connection and Arrowhead is being considered in order to provide a clear strategic future direction for the two companies. In early April, a letter of intent was signed with Birka Energi to exchange certain fixed assets and to swap Vattenfall's 63 per cent shareholding in AB Ryssa Elverk with Birka Energi's wholly-owned AB Kallströmmen and its subsidiary, AB Avesta Elnät. Market development for intelligent services has been considerably weaker than expected. Sensel AB is therefore adjusting its direction by drastically reducing its operating expenses and seeking new ownership and partnership solutions. Birka Energi and Vattenfall have reached an agreement concerning co-operation on UMTS network services for third-generation mobile telephony and on infrastructure services for broadband. Together with ten other European power companies, Vattenfall signed a shareholders' agreement to launch an independent B2B e-procurement exchange called Eutilia. Annual Meeting of Shareholders At the General Meeting of Shareholders on April 26, Dag Klackenberg took over as Chairman of the Board and Annette Brodin Rampe, Peter Fallenius and Vattenfall's President were also elected to the Board. Lars G Josefsson President and Chief Executive Officer From Vattenfall's Press Office, telephone +46 8 739 50 10. For more information, please contact: Karl-Erik Olsson, Director Media Communication, telephone +46 8 739 75 83. Vattenfall's vision is to be a leading European energy company. The Nordic region, Poland and Germany are its domestic markets. Today, Vattenfall generates power and supplies energy solutions to 2.2 million customers in the Nordic region and northern Europe. The largest electricity customers are industrial plants and energy companies. Vattenfall's main products are electricity, heat and natural gas, as well as network, consulting and maintenance services. Vattenfall's net sales in 2000 amounted to almost SEK 32 billion. Sales included 83 TWh electricity and 17 TWh heat. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/05/15/20040817BIT20860/wkr0001.pdf