During the 2004/05 financial year, the Supervisory Board performed its duties in accordance with the requirements of the law and of the company's articles of incorporation. We were provided by the Executive Board with regular, prompt and comprehensive information and involved at an early stage in all decisions of significance to the development of the company. We monitored the work of the Executive Board on an ongoing basis throughout the year under report and assisted it in an advisory capacity.

The Executive Board informed us on a regular basis of the business situation and performance of MVV Energie AG and its principal shareholdings, the course of business in the individual segments and the development of the company's financial position. We were also provided with information about the company's risk situation and its risk management, as well as its financial, investment, personnel and strategic planning. At our meetings, the Executive Board outlined all major business transactions to us, which were then jointly discussed in detail. In addition to the presentations and documentation pertaining to the meetings, we were also provided with quarterly reports and further oral and written reports concerning events of significance and the decisions thereby required.

In the case of decisions and actions requiring our consent, the Supervisory Board inspected the draft resolutions, which in some cases were prepared by its committees, at its meetings and reached the necessary decisions. The Supervisory Board met on six occasions during the period under report. The Audit and Personnel Committees each met on three occasions during the year under report.

Main topics of discussion

At the beginning of the year under report, we adopted resolutions on the amendments to the organisational structure begun within the framework of the restructuring process in the previous year, particularly in respect of the restructuring of the environmental energy and value-added services segments at MVV Energie AG. We are very satisfied with the development and results of the focusing process and with the consistent value focus of the portfolio management. The “FOKUS” efficiency enhancement programme launched during the year under report has resulted in cutbacks for the staff. The Supervisory Board attached great importance in this respect to the reduction in personnel being undertaken in a socially responsible manner and without any redundancies.

In addition to the approval of the 2004/05 business plan and the discussion of the company's medium-term planning, one particular focus of our attention in the year under report was on the development of the underlying political framework in the electricity and gas industry and on market developments in our high-growth areas. We also discussed in great detail the decisions concerning the increase in electricity, gas and district heating prices in the context of the rise in procurement expenses. A further major topic related to the restructuring of the cash pool. In order to meet needs within the Group and to do justice to the new requirements of corporate and tax legislation, the establishment of a separate cash pooling system for MVV Energie AG independent of the MVV GmbH holding company was approved.

Further important topics related to the sale of the shares held in the Czech district heating company in Brno executed in the initial months of the 2004/05 financial year, as well as to various resolutions involving our high-growth areas of environmental energy and value-added services, including the decision to build a second incineration line in Leuna.

At the end of the year under report, we discussed the 2005/06 business plan and the company's medium-term planning in great detail. Furthermore, the full Supervisory Board once again addressed the implementation of the German Corporate Governance Code and reviewed the effectiveness of our supervisory activities. Further information about corporate governance at the MVV Energie Group can be found on Pages 12 and 13 of this Annual Report, together with our Statement of Compliance, which has also been made available to our shareholders on the company's homepage at www.mvv-investor.de.

Composition of Supervisory and Executive Boards

Dr. Karl Heidenreich, a member of the executive board of Landesbank Baden-Württemberg until his retirement on 30 April 2005, succeeded Dr. Michael Pfingsten on the Supervisory Board of MVV Energie AG as of 12 April 2005. Dr. Pfingsten, a member of the executive board of E.ON Ruhrgas AG, retired from his position on the Supervisory Board on 4 March 2005. Dr. Norbert Egger, First Deputy Mayor of the City of Mannheim, left the Board on 28 February 2005 and was succeeded by Christian Specht, Financial Mayor of the City of Mannheim, on 1 March 2005. A further new member of the Supervisory Board since 1 July 2005 is Bernd Sendzik, a commercial assistant, who has succeeded the longstanding Chairman of the Works Council of Energieversorgung Offenbach AG, Manfred Mathia, who retired from his position on the Supervisory Board on 30 June 2005. We should like to thank Dr. Egger, who accompanied the fortunes of our company as a member of the Supervisory Board for 20 years, as well as Mr. Mathia and Dr. Pfingsten, for their constructive contribution to the work of our body.

There were no changes in the composition of the Executive Board.

Approval of the annual financial statements

The auditing company Deloitte & Touche GmbH, Wirtschaftsprüfungsgesellschaft, Mannheim, audited the consolidated financial statements and group management report of the MVV Energie Group for the 2004/05 financial year pursuant to the resolution passed by the Annual General Meeting and the subsequent mandate by the Supervisory Board. The consolidated financial statements, which were compiled in accordance with International Financial Reporting Standards (IFRS), and the group management report were granted an unqualified audit opinion.

The annual financial statements of MVV Energie AG compiled in line with the German Commercial Code (HGB) and the accompanying management report for the 2004/05 financial year were also audited by Deloitte & Touche GmbH, Wirtschaftsprüfungsgesellschaft, Mannheim. These were also granted an unqualified audit opinion.

The consolidated financial statements and group management report of the MVV Energie Group, the annual financial statements and management report of MVV Energie AG, the proposal made by the Executive Board in respect of the appropriation of earnings and the audit reports of the auditor were all submitted in time for the respective meetings of the Audit Committee and the Supervisory Board.

The Audit Committee and the Supervisory Board carefully inspected and discussed these documents in the presence of the auditor. The auditor presented the principal audit findings and was available to provide further information.

We have raised no objections and concur with the findings of the audit. At its meeting on 15 December 2005, the Supervisory Board approved the consolidated financial statements and group management report of the MVV Energie Group and the annual financial statements and management report of MVV Energie AG. The annual financial statements are thus adopted. The Supervisory Board endorses the proposal made by the Executive Board in respect of the appropriation of earnings.

Dependent company report and risk managment

The Executive Board further compiled a report for the 2004/05 financial year on the company's relationships with closely related companies (dependent company report). This report demonstrates that in the legal transactions with affiliated companies outlined therein MVV Energie AG received commensurate compensation and was not disadvantaged on the basis of the circumstances pertaining upon the execution of the respective transactions. The dependent company report was audited by Deloitte & Touche GmbH, Wirtschaftsprüfungsgesellschaft, Mannheim, and granted an unqualified audit opinion. The Supervisory Board was provided with copies of the dependent company report and of the audit report compiled by the auditor. Following our own thorough review, we concur with the assessment made by the auditor and thus approve this report.

Moreover, the auditor also reviewed the risk management system in place at MVV Energie AG and was of the opinion that this system was suited to fulfil its legal obligations.

The Supervisory Board would like to thank the Executive Board, the management teams at the shareholdings, all employees and employee representatives for their successful work during the financial year and for their constructive and responsible cooperation, also in respect of the difficult issues tackled within the framework of the “FOKUS” efficiency enhancement programme.

Mannheim, December 2005

Supervisory Board

Gerhard Widder

Chairman