A successful end to the financial year 2000 - Two strong structural pillars

The leading Swiss electricity trading Group, Aare-Tessin Ltd. for Electricity, also known as Atel, has concluded the financial year 2000 on a successful note having expanded its energy services business into a second strong supporting pillar.

"Our company has consistently pursued a clear strategy over the last few years", was CEO Alessandro Salas comment on the successful results achieved by the Atel Group in the financial year 2000. Consolidated turnover rose by 73% to CHF 3.3 billion - strong growth which is primarily due to the acquisition of the GAH Group and other companies. After allowing for the effect of these acquisitions, turnover was up CHF 130 million or 7%. This internal growth stemmed mainly from the energy trading segment. Atel Group profits rose by 26% to CHF 135 million. The cash flow was down by 15% to CHF 465 million due to changes in the business portfolio. Investment in fixed assets and holdings remained high at CHF 408 million (+ 85%). A motion will be submitted to the Annual General Meeting to increase the share dividend payment by 11% to CHF 20.

45% of consolidated turnover generated by the energy services sector With the acquisition of the German GAH Group, the energy services segment has now become the Groups second structural pillar. Energy services account for 45% of consolidated turnover, with the remaining 55% stemming from energy trading. Net turnover and overall results in the energy services sector improved markedly as a result of the acquisitions. In the energy services sector, Atel provides a wide range of electrotechnical services for buildings, industrial plant, traffic systems, communications technology and energy supply operations. These services make Atel an ideal and reliable partner for all energy requirements.

Further strong growth in energy sales Electricity sales were up by 15% on the prior year to 33 billion kWh. The main market is still Italy, which accounts for over 40% of sales. Sales in the Northern/Western Europe region - Germany in particular - doubled, and now already contribute as much as 20% to total energy sales. Around 16% of electricity sales went to the Central/Eastern European energy markets. Switzerland generated 21% of total energy sales. In Italy, the dispute with Enel was settled last year on an amicable basis that was acceptable to both parties.

Further increase in corporate value The proportionately higher growth in reported income in the energy segment led to an increase in Return on Sales (ROS) from 6.3% to 8.2%. There was a marked year-on-year improvement in reported Return on Equity (ROE) at 9.4% as against 8.3%. An Economic Value Added (EVA) of around CHF 49 million resulted in a further increase in corporate value. Profits per share were up from CHF 33.95 to CHF 41.43. At the close of the year 2000, Atel was valued on the stock exchange at CHF 2.7 billion, or around CHF 300 million more than last year. To ensure room for manoeuvre for the growth strategy to which Atel is committed, a proposal will be submitted to the Annual General Meeting to approve an increase of CHF 30.6 million in the nominal capital.

Atel in favour of market liberalisation Atel is committed to fast and consistent liberalisation of the energy market. Liberalisation is essential to safeguard the competitiveness of the Swiss economy. Without the Electricity Market Act (EMA) Switzerland will have to open and negotiate a whole new bilateral file on the electricity market with the EC, commented Alessandro Sala on the importance of the EMA. The associated legislation must, however, be clearly structured to prevent the misuse of energy for fiscal, social and regional-political purposes if the EMA is to have any chance of being accepted in a national referendum.

Prospects for the financial year 2001 With the expansion of the two structural pillars, energy trading and energy services, Atel is aiming for growth in the financial year 2001. In the energy sector, Atel intends to remain present in all of Europes major markets. Bearing in mind that trading on the electricity exchanges is likely to become more important, Atel plans to concentrate in particular on creating and marketing new products for both the physical and financial markets. In the energy services segment, the top priority will be to increase earning power. The Group will also work to integrate its individual companies even further. In 2001 Atel expects to see turnover remain stable at last years level coupled with a slight improvement in Group profits. The first three months of the financial year have gone very well and confirm these expectations.

Aare-Tessin Ltd. for Electricity Corporate Communications