Forecast New Organizational Structure By further optimizing our organizational structure, we aim to take advantage of the opportunities created by the ongoing integration of European and global energy markets. To seize the earnings and growth opportunities of energy- market integration, we are taking action to organize and manage our businesses--in particular our energy trading and power generation businesses--on a pan-European scale. At the start of 2008, we centralized all our European trading activities in power, gas, coal, oil, and CO2 emission allowances. We also combined our renewables operations (with the excep- tion of hydroelectricity) and our climate-protection operations and plan to expand this business globally. In October 2007, we acquired a majority stake in OGK-4, a major Russian power producer, marking our successful entry into one of the world's most interesting and fastest-growing electricity markets. Pursuant to the agreement we concluded with Enel and Acciona in April 2007, we will acquire a substantial portfolio of assets in 2008, primarily in Spain, Italy, and France. In view of these changes, the following new market unit lead companies have, or will, become operational in 2008: · E.ON Energy Trading, Düsseldorf, began operations at the start of 2008. It combines all our European trading activities in electricity, gas, coal, oil, and CO2 allowances. · E.ON Climate & Renewables, Düsseldorf, is responsible for managing and expanding our global renewables business and for coordinating climate-protection projects. Its generation portfolio consists of about 760 MW of generating capacity in Europe and 250 MW in North America. Roughly 3,000 MW of new capacity are at vari- ous stages of construction and planning. · E.ON Russia Power oversees our power business in Russia. Through OGK-4, we have around 8,600 MW of generating capacity in the fast-growing, heavily industrialized regions of Central Russia, Ural, and Western Siberia. · E.ON Italia, Milan, manages our power and gas business in Italy. E.ON is already active in Italy's wholesale power and gas markets and in natural gas sales. The planned acquisition of Endesa Italia will give us about 5,000 MW of generating capacity in Italy, making us the country's fourth-largest power producer. Initially, only Energy Trading will be disclosed as a separate reporting segment in the 2008 financial year. The other share- holdings will be combined in the Corporate Center/New Markets segment. During the course of the year, we will decide on the future form of our segment reporting based on the new market units' respective business development, volume, and significance. Macroeconomic Situation The German Council of Economic Experts ("GCEE") predicts that the global economy will expand at a slower pace in 2008 than in 2007. In view of the U.S. economy's expected weak- ness, brought on by the mortgage lending crisis and slower growth in domestic demand, the EU and Japan are also expected to expand at a slower pace. Energy prices will lead to lower inflation in the United States, whereas inflation in the EU is expected to stay at the same level as in 2007. The GCEE expects the EU economy to grow by 2.3 percent in real terms. Economic growth in some EU countries relevant for our operations (Spain, Sweden, the Netherlands) is fore- cast to be above average, in others (Germany, the United Kingdom, France) below average. Central and Eastern Euro- pean countries are expected to continue on their robust, largely domestically driven growth path, although at a slightly slower pace. The GCEE expects Germany's economy to expand by 1.9 per- cent in 2008 in real terms and consumer prices to rise by 2.2 percent, maintaining their high rate of increase. 68