Energising the Future Annual Report 2008/09
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MVV ENERGIE – ENERGIsING thE FutuRE ANNuAl REpoRt2008/09 MVV energie – energising the future annuaL rePort2008/09 MVV EnErgiE Key Figures external sales 1 in Eurobillion adjusted ebit in Euromillion 3.5 350 3.2 3.0 300 2.6 2.5 250 249 239 2.2 2.3 2.0 1.9 200 201 199 158 1.5 150 1.0 100 0.5 50 0.0 0 2004/052005/06 2006/07 2007/08 2008/09 2004/052005/06 2006/07 2007/08 2008/09 1excluding electricity and natural gas taxes investments1 in Euromillion cash flow in Euromillion 450 450 414 400 400 386 364 350 350 300 300 255 255 250 241 250 246 214 219 200 200 188 150 150 100 100 50 50 0 0 2004/052005/06 2006/07 2007/08 2008/09 2004/05 1 2005/06 1 2006/07 2 2007/08 2 2008/09 2 1investments in intangible assets, property,plant and equipment and 1asper DVFA/SG investment property,aswell as payments for the acquisition of fully and 2beforeworking capital and taxes proportionately consolidated companies and for other financial assets KeyFigures MVV energie group Euromillion 2008/09 2007/08 %Change External sales excluding electricity and natural gas taxes 3161 2636 +20 Adjusted EBITDA 1 385 398 −3 Adjusted EBITA 1 239 249 −4 Adjusted EBIT 2 239249 −4 Adjusted EBT 2 165181 −9 Adjusted annual net surplus 2 112123 −9 Adjusted annual net surplus after minority interests 2 98 110 −11 Adjusted earnings per shareinEuro 2,3 1.48 1.69 −12 Cash flow beforeworking capital and taxes 386414 −7 Cash flow beforeworking capital and taxes per share 3 in Euro5.86 6.33 −7 Free cash flow 20 54 −63 Adjusted total assets (as of 30.9.) 4 3566 3361 +6 Adjusted equity (as of 30.9.) 5 1208 1192 +1 Adjusted equity ratio (as of 30.9.) 33.9 % 35.5%−5 Capital employed 6 2649 2444 +8 ROCE 9.0% 10.2%−12 WACC 8.5% 8.5%— Value spread 0.5% 1.7%−71 Investments 255241 +6 Number of employees (as of 30.9.) 6053 5901 +3 1excluding non-operative IAS 39 valuation items in connection with financial derivatives 2excluding non-operative IAS 39 valuation items in connection with financial derivatives and excluding one-offcharges for write-downs at energy-related services subgroup (see reconciliation of EBIT on page 56) 3increase in number of shares (weighted annual average) from 65.3 million to 65.9 million due to capital increase 4excluding positive and negative fair values under IAS 39 5excluding net balance of positive and negative fair values under IAS 39 6adjusted equity plus financial debt plus provisions for pensions and similar obligations plus accumulated goodwill amortisation (calculated as an annual average) MVV EnErgiE Company Portrait CompanyPortrait MVV Energie has played aremarkable role among German energy companies since its IPO in 1999. Its business fields of electricity,district heating, gas, water, energy-related services and environmental energy provide it with aunique business portfolio. One further outstanding featureofour Group is its horizontal networking and integration of shareholdings with local and regional operations in the same business fields. With around 6000 employees, our Group generated consolidated sales of Euro3.2 billion in the 2008/09 financial year. We areGermany‘s sixth-largest electricity supplier and one of the top five district heating companies, while also playing apioneering role with innovative products in the gas market. In our environmental energy business, we areGermany‘s third- largest operator of waste and old timber incineration plants. In our energy-related services business too, we have built up aleading position in the German market by offering decentralised energy generation and energy saving contracting services. With our strategic alignment, we have set course to achieve further profitable and value-adding growth at our Group. To this end, we will be investing around Euro3billion over the next ten years. Renewable energies and the futuremarkets of climate protection and energy efficiency aremajor focuses in our medium and long-term strategy.Our aim is to create lasting value for our investors and to offer sustainable jobs to our employees. Our profile is clear: MVV Energie –Energising the Future. MVV Energie–Energisingthe Future The futurestarts now.Itistoday that we make decisions and lay foundations for our business tomorrow.These decisions affect the security and stability of the energy supply, the affordability of energy prices, the favourability of the impact on the environment and ultimately the further growth of our company. To energise the future, we think and plan on along-term basis, while acting quickly and in atargeted manner.Weimplement our projects effectively.Inthe 2008/09 financi- al year we focused closely on developing futurescenarios, reviewing strategies and set- ting course for sustainable, i.e. profitable, environmentally awareand socially responsible growth at our group of companies. We will continue to provide our customers with a reliable supply of energy in futureaswell, while offering them intelligent and innovative products and solutions. This way,weare working to securetomorrow's energy today. MVV EnErgiE Contents Contents I. _MVV Energie – III. _Group Management Report Securing Tomorrow’sEnergy Today 42 _ Business Framework 42 _Energy Policy and Regulation II. _ToOur Shareholders 44 _Market Climate and Competition 20 _Letter from the CEO 46 _Impact of Weather Conditions 22 _The Executive BoardofMVV Energie AG 47 _Overview of Shareholdings and Business Activities 24 _Report of the Supervisory Board 48 _Our Corporate Strategy: 28 _The ShareofMVV Energie AG MVV Energie –Energising the Future 32 _The 2008/09 Financial Year at aGlance 50 _Energy Trading Business and Innovative 34 _Corporate Governance Sales Products 34 _Report of the Executive Board 51 _Research and Development and the Supervisory Board 52 Business Performance 35 _Compensation Report 52 _Earnings Position of the MVV Energie Group (Component of Group Management Report) 62 _Net Asset Position 38 _Declaration of Conformity 64 _Financial Position 39 _Report on the Compliance System 66 _Overall Summary of Business Performance 66 _ Basic Features of the Compensation System of the Executive and Supervisory Boards 66 _Disclosures under §289 (4) and §315 (4) HGB 68 _ Sustainability 68 _Our Basis: Economic Responsibility 68 _Our Claim: Ecological Responsibility 73 _Employees 76 _Social Responsibility 77 _Value Added Statement 78 _ Events After the Balance Sheet Date 78 _ Opportunity and Risk Report 81 _ Outlook 2 MVV Energie 2008/09 IV._Consolidated Financial Statements V. _Other Disclosures 86 _Balance Sheet 158 _Multi-Year Overview 87 _Income Statement 162 _Financial Glossary 88 _Statement of Changes in Equity 164 _Technical Glossary 89 _Segment Report Financial Calendar 90 _Cash Flow Statement Imprint 92 _Notes to the Consolidated Financial Statements 144 _Responsibility Statement 145 _Directors &Officers 151 _Scope of Consolidation of the MVV Energie Group 155 _Auditor’sReport MVV Energie 2008/09 3 MVV EnErgiE Energising The Future 4 MVV Energie 2008/09 To shape the future, we need convincing visions to guide our actions. The “Tomorrow...”pages show how we visualise adesirable future. The futureisbuilt on present foundations. Without past experience, therecan be no progress. The “Today...”pages thereforeshow what MVV Energie has already achieved in its most important business fields. MVV Energie 2008/09 5 MVV EnErgiE Energising The Future even more energy will be producedfromregenerative sources. 6 MVV Energie 2008/09 Securing Tomorrow’sEnergy Today we aremakingincreasinguse of timber,aCO2-neutral fuel. Embedded in the foothills of Vogelsberg, Central Europe’slargest extinct volcanic region, the little town of Laubach lies idyllically situated in anatural park. Within this densely forested landscape, avery special energy pack –anenergy forest –istaking shape. On aone hectaretrial field, EnergieversorgungOffenbach (EVO) has planted 10 000 balsam poplars and willow trees. What makes these timbers special is that they areabsolutely energy-charged. They regenerate quickly,and that again and again. Generally speaking, they can be “harvested” every three years at aheight of around fifteen feet. The energy forest comes at the beginning of our value chain, which stretches from producing regenerative raw materials to processing them into wood pellets to generating energy at biomass plants.One trailblazing project planned by EVO is the construction of anew high-performance pellet plant. The existing manufacturing capacity of 20 000 tonnes is due to be supplemented from 2011 with afurther 65 000 tonnes to amaximum of 130 000 tonnes of wood pellets ayear. Like EVO, the MVV Energie Group as awhole is increasingly relying on timber as aclimate- friendly and environmentally-friendly resource. When it comes to biomass, we have long been the market leader in Germany,can offer in-depth expertise in operating biomass plants and have forged long-term agreements with timber suppliers. Twoexamples hereare our cooperation with the Bavarian State Forestry Commission and our takeover of A+S Naturenergie. With 18 %ofthe electricity we produce coming from renewable energies, we arealready ahead of the national average. We are continually expanding our use of renewable energies to generate electricity and heating energy from biomass and morerecently also from biogas. And we intend to make sureour growth in these business fields is just like that at the energy forest –fast and sustainable. 4.5 to 7.5 50000 139000 tonnes of CO2 ayearcan tonnes of industrial tonnes of CO2 aresaved be savedatafamilyhome pellets areenoughtoreplace ayearatthe 25 biomass by heatingwithwood 30 000 tonnes of hard coal. andthree biogasplantsat pellets instead of oil. MVV Energiedienstleistungen GmbH alone. MVV Energie 2008/09 7 MVV EnErgiE Energising The Future ourchildren shouldhaveasecuresupply firmly in their grasp. 8MVV Energie 2008/09 Securing Tomorrow’sEnergy Today we aremakingour supply of gasmoresecurebybuildingstorage facilities. November 1973: hardly acar in sight on Germany’smotorways. Due to the conflict in the Middle East, the OPEC countries impose an oil boycott.