Mannheim energy company aims to raise annual operating earnings by more than 50% to Euro 150 million - sales growth of 25 percent in first nine months of current financial year

Sales at the Mannheim-based energy distribution and energy-related service company MVV Energie rose to Euro 1.53 billion in the first nine months of the current 2004/05 financial year (1.10.2004 - 30.6.2005), an increase of 25 percent on the equivalent period in the previous year. At Euro 174 million, operating earnings (EBIT) were more than 37 percent higher than the adjusted figure for the previous year. The figures were released by the energy company, which is listed in the SDAX, in Mannheim on Monday. "We have thus succeeded in maintaining our position in the market and in acquiring new market share in spite of ongoing competitive pressure," commented Dr. Rudolf Schulten, CEO of MVV Energie. The company reaffirmed its forecast for the overall year and expects to generate sales of around Euro two billion and to increase its operating earnings (EBIT) by more than 50% from the adjusted figure of Euro 97 million for the previous year to Euro 150 million. "MVV Energie is on the right track," remarked Dr. Schulten. The MVV Energie boss therefore announced that the company would once again be proposing an attractive dividend, "which in view of the significant improvement in our earnings we will this time be able to pay in full from our annual net surplus after minority interests."

The energy company also intends to maintain its success with double-digit percentage earnings growth in the coming 2005/2006 financial year. The cost-saving measures agreed with the Works Council at the end of July within the framework of the FOKUS efficiency enhancement programme will make a major contribution in this respect. An increasing total of administration cost savings is to be achieved over the coming years, reaching around Euro 29 million per annum at the Mannheim Group headquarters alone from 2008 onwards. According to Schulten, almost two thirds of these measures are already to be implemented in the coming year.

In addition to achieving further improvements in its earnings strength, the main strategic focus of MVV Energie AG is on expanding its network of municipal utility companies, which currently consists of Energieversorgung Offenbach, municipal utility companies in Kiel, Solingen, Ingolstadt and Buchen, as well as Köthen Energie. "The pressure on costs resulting from the start of regulation by the new Federal Grid Agency in the coming months can be expected to result in further municipal companies being put up for sale," commented Dr. Schulten. "As a successful group of municipal utility companies with access to the capital markets, and in view of the current antitrust restrictions on vertically structured players, we believe that we have good chances of further expanding our position."

The CEO referred in this respect to the talks currently underway with regard to a closer level of future cooperation with the Frankfurt-based company Mainova AG, which have continued in recent weeks. All parties involved at the companies and in their environment are convinced of the benefits of such cooperation. "The discussions are focusing both on a joint grid company for Mainova and our Energieversorgung Offenbach subsidiary, and on a merger of the companies," commented Dr. Schulten. "The basic requirement for MVV Energie in this case is that of holding a qualified shareholding in the merged company."

At the same time, the company is working on further expanding its two growth divisions - environmental energy and energy-related services. Sales at the environment energy segment, for example, are planned to almost double over the coming five years to reach around Euro 160 million. Significant profitability enhancements had already been achieved, particularly in the field of waste incineration, given that facilities had been working at capacity since 1 June 2005 as a result of the newly acquired waste volumes from the Karlsruhe region. The commercial waste sorting and separating facility planned in Mannheim within the framework of the Group's materials management activities, involving an investment volume of around Euro 11 million, would provide further growth potential. Moreover, in view of the pleasing level of capacity utilisation already contractually secured for the new waste incineration facility at Leuna in the State of Sachsen-Anhalt, a second, identical facility is expected to commence operations at this location in 2007.

MVV Energie also intends to step up its activities in the growth market of energy-related services, whose market volume has been rising by around 15 percent per annum across Germany. "By organic growth and acquisitions in this segment, we intend to become one of the three leading energy-related services companies over the next five years," stated Dr. Schulten. The MVV Energie boss viewed the fact that this segment would achieve virtual break-even before one-off items for the first time in the current financial year as confirming the success of the company's focus on value-enhancing projects.

Mannheim, 15 August 2005

Key Figures for the First Nine Months of 2004/2005
1 October 2004 - 30 June 2005

MVV Energie Group 1			adjusted 2		adjusted2
Euro million	2004/2005	2003/2004	2003/2004	% change	% change
Sales3	1 530	1 224	1 224	+ 25	+ 25
EBITDA3	276	192	214	+ 44	+ 29
EBITA	174	99	137	+ 76	+ 27
EBIT	174	86	127	+ 102	+ 37
EBT	125	46	88	+ 172	+ 42
Net surplus for the period	77	8	49	+ 863	+ 57
Net surplus for the period after minority interests	59	0	41	-	+ 44
Earnings4 per share (Euro)	1.16	0.00	0.80	-	+ 45
Cash flow based on DVFA/SG	176	134	140	+ 31	+ 26
Total assets5 (as of 30.6.)	2 916	2 453		+ 19
Equity capital (as of 30.6)	879	772		+ 14
Investments	155	239		- 35
Employees6 (as of 30.6.)	6 429	5 513		+ 17
1 based on International Financial Reporting Standards (IFRS)
2 in previous year excluding expenses relating to streamlining of portfolio and restructuring measures
3 in previous year release of income subsidies reclassified as depreciation
4 pursuant to IAS 33
5 previous year's figure adjusted
6 including external personnel at Mannheim energy from waste plant (MHKW) of MVV Energie AG