As an energy supplier, we operate in a challenging environment. On the one hand, we have to enhance our efficiency and reduce our costs due to increased competition, stagnating demand for energy and the substantial reduction in grid utilisation fees called for by politicians. On the other hand, we must do justice to the ever more stringent requirements of the Federal Networks Agency, climate protection, and our customers' expectations. However, there is no alternative to further profitable growth.

All this gives rise to a need for investment over the coming decade, and one which should not be underestimated. Given these various factors, we see energy supply companies as only having any chance if they accept these challenges, while at the same time retaining their strengths and maintaining their regional identities. We are taking on this challenge with operational excellence and strategic farsightedness.

We will enhance our efficiency by boosting group-wide cooperation

The MVV Energie Group's new alignment enables its companies and employees to draw on their strengths at their various locations and to exploit their regional identities. By ensuring cooperation between all of the shareholdings within our group of companies, we are able to achieve significantly greater efficiency and make more targeted use of our joint expertise than would be possible working as standalone municipal utility companies or in loose cooperations. At the same time, unlike large centrally managed energy suppliers, we thus nevertheless provide our shareholdings with a very wide range of regional entrepreneurial opportunities.

We focus on four key aspects:

• Sustainability
• Efficiency
• Regionalism
• Connectivity

We understand sustainability as representing a balance between short-term and long-term perspectives for the supply of energy. One example of the objectives to be pursued in the short term is the expansion of district heating. In the longer term, however, we will also establish new technologies and processes at the Group in terms of both generation and of the structure of our processes.

We know that operational excellence is a critical success factor in the increasingly competitive market and tough economic climate. Operational excellence requires all operating processes to be improved continuously. This way, we are able to enhance our efficiency.

We see regionalism as involving the penetration of markets in our companies' core regions. Our municipal utility shareholdings, with their roots in their local districts, are the starting point for our entrepreneurial activity. We focus consistently on our local customer contacts and brands. By efficiently exploiting benefits of scale at the same time, we are able to generate regional growth.

We demonstrate our connectivity by enabling all of the municipal utility companies within the MVV Energie Group to tap their joint potential. One example of what this involves is the exploitation of synergies by working with a common operational model. By developing and maintaining best practices, as well as by achieving a critical size in the market, we are able to increase our efficiency even further. Working together, we develop sustainable operational business models, implement them and successfully access our regional markets even more closely.

New strategic alignment set up to 2020

MVV Energie - Energising the Future - aims to be one of Germany's leading regional energy companies in ten years' time as well, with successful operations along the entire energy industry value chain.
Our growth strategy is based and dependent on efficient structures, continually optimised processes and uniform planning and controlling. In our municipal utility group, we aim to consistently exploit the enhancement and cost-saving potential available in our existing business. This way, we will secure our competitiveness and lay a foundation for further value-driven growth and sustainable dividends for our shareholders.

The MVV Energie Group sees numerous options and growth opportunities for its diversified business portfolio. Over the next ten years, we will be making around three billion euros available for investments in the future. Our aim is to acquire further market share in existing markets and to access new markets. Investments will focus on renewable energies, energy-related services, district heating, building Block 9 at the large power plant in Mannheim (GKM) and sales to industrial customers. These measures will enable us to combine our contribution towards protecting the climate and resources with a sustainable improvement in the earnings power of our group of companies.

The future lies in renewable energies and innovative technologies, as well as in solutions to improve energy efficiency. In our electricity and heating energy businesses, we intend to gradually expand our decentralised generation park of regenerative energies based on cogeneration. In our generation of energy from renewable energy sources, we rely in particular on wind energy, biomass and geothermal energy.

As well as investing in renewable energies, we will also strengthen our energy-related services business. We have refocused our business portfolio and compiled a far-reaching restructuring plan for the MVV Energiedienstleistungen subgroup. This will be implemented in the 2009/10 financial year. By optimising cost structures in our existing business, we are laying a foundation enabling us to achieve further profitability-driven expansion in our energy-related services business. In this, we are focusing on promising services in the contracting, energy efficiency consulting, industrial park management and fuel management segments. The Federal Government's Integrated Energy and Climate Programme (IECP) and state promotion to expand renewable energies and cogeneration will boost our energy-related services business in these focal areas. These are the areas where MVV Energiedienstleistungen has already built up a leading position in the German market and in which it has the necessary competence and longstanding experience. Energy efficiency is one of the key topics of the future.

A further focus of investment is the expansion and concentration of district heating at all locations in line with the German government's plans to double the volume of electricity generated using cogeneration. The MVV Energie Group is already one of Germany's leading district heating companies.

The construction of the new Block 9 at the large power plant in Mannheim (GKM), a hard coal-fired cogeneration block with a fuel efficiency rate of 70% which has now been approved by the regional authorities in Karlsruhe, will enable us to secure a resource-efficient electricity supply and to expand and concentrate the district heating supply in Mannheim and the Rhine/Neckar metropolitan region. However, other than Block 9 at GKM, we will not be focusing on building any further coal-fired power plants in future. Stadtwerke Kiel is currently investigating the possibility of building a gas and steam-fired power plant.

One further strategic focus is the expansion of industrial customer sales. By offering its innovative Electricity Fund and Gas Fund products, our group of companies has built up a strong market position in the nationwide electricity and gas business with industrial, commercial, multiple location and secondary distribution customers. Building on the market success achieved to date, we aim to profitably expand our industrial customer sales in the coming years.

By realigning our strategy in this way, we are convinced that we have laid a foundation for the further profitable growth of the MVV Energie Group.