half yearly Report

10
0
Me
te
r
HALF YEAR REPORT
2007
NORDEX AG
www.nordex-online.com
2 | Contents
CONTENTS
Preface
Stock performance
3
4
Details of the first half of 2007
Market trends
Business performance
Earnings situation
Financial condition and net assets
Capital spending
Research and development
Employees
Outlook
Risks and opportunities
Events after the conclusion of the period under review
6
6
7
7
7
8
8
8
9
9
9
Consolidated financial statements for the first half of 2007
Balance sheet
Income statement
Cash flow statement
Statement of equity movements
Statement of changes in non-current assets
Notes
10
10
11
12
13
14
16
Management bodies/calendar of events
22
Contents
3 | Preface
PREFACE
Dear shareholders,
in the second quarter of the year we quickened
the pace of our expansion course, with sales rising
by around 35 % year on year from April until June
2007. At EUR 172 million, sales in the second quarter
fully lived up to our current plans, but were down
roughly EUR 20 million on our original forecasts due
to delays in deliveries of components, which forced
us to postpone the completion of individual projects. However, we will be able to clear this “bottleneck” in the fourth quarter in particular. Contrary to
our original plans, production will be proceeding at
full capacity until end of 2007.
In December 2007, we will be commencing activities aimed at extending capacity in Rostock, with
around EUR 280 million earmarked for the extension of our worldwide production facilities between
now and 2011. This will give Nordex an annual
capacity of roughly 4,500 megawatts, thus providing a solid basis for its growth scenario of
EUR 2.5–4 billion in 2011. This medium-term forecast
is, of course, contingent on the continuation of the
stable market conditions. However, experience in
the second quarter shows that the availability of
components is having a growing impact on our
business, with shifts possible in the course of the
year. However, we have closed the necessary agree-
Preface
ments with our core suppliers for most of our
current order backlog, which is valued at around
EUR 1.7 billion (including contingent orders).
Top-line growth is no target unto itself. Rather,
we always additionally seek to improve our profitability. Thus, in the second quarter, we achieved an
operating margin (EBIT) of 5.5 %. This improvement
was primarily due to the execution of more profitable projects. Our full-year target for 2007 is to
achieve a return of 6 % on sales. In the short to
medium term, we expect to be able to harness
material impetus for profitability from economies of
scale. Accordingly, we consider a margin of 9–12 %
to be achievable in 2011.
Yours sincerely
Thomas Richterich
Chief Executive Officer
4 | Stock performance
STOCK PERFORMANCE
In the period under review, Nordex stock was the
top performer in the TecDax again. Between January
1 and June 30, it advanced by around 110 % (TecDax:
up 24.6 %), rising from EUR 13.8 to 28.9 in this
period. Analysts attribute this favorable performance to the consistently improved outlook for the
sector as well as for the Company itself. Thus, the
stock price surged to over EUR 30 per share on the
announcement of the Company’s medium-term
growth prospects. Nordex had stated at the end of
June that it would be able to continue on its current
growth trajectory and achieve a roughly 50 %
increase in sales provided that the markets and
internal processes remained stable. This means that
it should be able to report business volumes of up to
EUR 4 billion and an EBIT margin of up to 12%
in2011. This prompted some analysts to raise their
targets for the stock to EUR 39 or 40.
The heightened appeal of Nordex stock and
intensive investor relations resulted in broader coverage by analysts. Thus, Nordex has also been on
the watch list of US investment bank Lehman
Brothers since July.
In the quarter under review, Nordex announced
a possible change in its shareholder structure. In
May, it confirmed that its principal shareholders
Goldman Sachs and CMP Capital Management-Partners were considering a possible sale of the shares
which they hold in the Company and had retained
the services of an investment bank for this purpose.
However, it is still open as to whether and in what
form they will sell all or part of the shares.
On July 19, after the conclusion of the period
under review, Nordex issued 2.5 million new shares
PERFORMANCE OF NORDEX STOCK RELATIVE TO THE TecDAX FROM JANUARY 1, 2007 THROUGH JULY 20,
20 07 (INDEX-TIED)
% 250
Nordex
TecDAX
200
150
100
50
Stock performance
07/17/2007
07/30/2007
06/19/2007
06/05/2007
05/22/2007
05/08/2007
04/24/2007
04/10/2007
03/27/2007
03/13/2007
02/27/2007
02/13/2007
01/30/2007
01/16/2007
01/02/2007
0
5 | Stock performance
STOCK PERFORMANCE
at a price of EUR 30.30 for placement with qualified
investors, i.e. generally fund companies pursuing
long-term investment strategies. These new shares
were not available to private shareholders as this
would have necessitated the costly and time-consuming issue of an offering prospectus. However,
these shareholders were not placed at any disadvantage due to the statutory obligation to issue the
new shares at a price close to the trading price of the
existing ones.
proceeds of around EUR 74 million will be primarily
used to finance the planned capacity extensions.
As the existing principal shareholders did not
take part in the equity issue, the free float widened
from around 44 to 46 %.
The successful issue, which was fully subscribed
within a short period of time, additionally highlighted the strong interest in the stock. The net
SHAREHOLDER STRUCTURE
Nordvest 3.9 %
HSH Nordbank 3.6 %
HypoVereinsbank 4.1%
Goldman Sachs 16.7 %
CMP 25.6 %
On the basis of 66,845,000 shares
Stock performance
Free float 46.1%
6 | Market trends
MARKET TRENDS
In the period under review, demand for wind turbines continued to rise. All told, experts project an
increase in new installed capacity of around 25% to
18,800 MW for 2007. With new capacity installations
of 665 MW in the first six months of the year,
Germany remained flat at a high level in line with
expectations, while China, for example, is expected
to report massive growth of some 70 %.
Currently, demand for wind turbines is exceeding supply. As a result, turbine prices have been
rising in growth markets, while wind turbines producers are barely able to keep pace in their efforts to
extend capacity. This is not least of all due to factors
along the entire supply chain. In 2006, turbine producers were already making full use of their suppliers’ capacity. It is hoped that the situation will ease
in 2009 once the capacity extensions now being
built by producers and suppliers unleash their full
effect. The higher prices of wind turbines are also
due the rising costs of components and raw materials. Thus, the price of steel has risen by around 13 %
to USD 174 per ton, while higher-alloy steels have
climbed in price by as much as 18 %. Up by only a
single-digit rate, component prices did not increase
as swiftly.
The main driving force behind heightened
demand for wind turbines is the more ambitious
political objectives in climate protection together
with growing energy requirements, the greater
competitiveness of wind power and the rising prices
of fossil energies. Thus, oil was trading at over
USD 75 per barrel again in July, with no sign of any
easing. At the same time, the underlying conditions
for feeding wind power into grids continued to stabilize or improve in the second quarter. Spain
passed the long-awaited new feed-in legislation,
which guarantees continued stable conditions with
minimum remuneration of 7.1 euro-cents per kWh.
Meanwhile, the German federal government has
been debating the possibility of improvements to
the remuneration structure for wind power. In the
UK, remuneration is to be differentiated on the basis
of the maturity of the technology for harnessing
renewable energy. In accordance with proposals
tabled by the Department of Trade and Industries
(DTI), onshore wind is to be used as a reference and
continue to receive 1 ROC/kWh.
KEY FINANCIALS AS OF JUNE 30, 20 07
Year to June 30, 2007
Year to June 30, 2006
Change
683
400
+ 71%
Sales
323
252
+ 28 %
EBIT
15.3
7.6
+ 101%
Other receipts
Market trends
7 | Business performance
BUSINESS PERFORMANCE
In the period under review, Nordex’s new business expanded by around 71%. New business
booked in the first six months of the year was
valued at EUR 683 million (previous year: EUR
400 million). More than 90 % of the new orders came
from outside Germany, 82 % from Europe excluding
Germany and 9 % from Asia. Once again, demand
was chiefly directed at multi-megawatt systems,
with over 80 % of the orders received for the N80/90
family (2,500 kW). The 1.5 MW turbine now being
marketed in China is attracting rising sales figures
again and accounts for 14 % of new business. In the
period under review, Nordex sold 71 of these turbines in China.
The book-to-bill ratio continued to rise to 2.1
(previous year: 1.6). Firm orders climbed by 122 % to
EUR 912 million (previous year: EUR 410 million).
These were joined by contingent orders of a further
EUR 804 million or so (previous year: EUR
470 million). Accordingly, order books rose in value
by 95 % to EUR 1.7 billion (previous year: EUR
880 million), sufficient to ensure capacity utilization
until 2009.
As planned, consolidated sales climbed by 28 %
in the first half of 2007 to EUR 323 million (previous
year: EUR 252 million). In the second quarter alone,
Nordex achieved sales of EUR 172 million (previous
year: EUR 127 million), i.e. the highest figure for a
single quarter in its history. As a result, it lived up to
its current plans but fell short of its original forecast
by around EUR 20 million. The reason for this was
that delays in the delivery of components necessi-
TURBINE ENGINEERING SALES BY TURBINE TYPE
1– 6/2007
1– 6/2006
N80/N90
81%
75 %
S70/S77
12 %
15 %
7%
10 %
N62
tated postponements in the completion of individual projects.
Turbine assembly output rose in the period
under review by 18 % to 334 MW (previous year:
284 MW), while blade production was up 60 % to
160 MW.
Sales were chiefly underpinned by new turbine
business (94 %), with after-sales service accounting
for around 6 %. At over 80 %, the share of exports
remained steady at the previous year's high level.
The growing interest in the N80/N90 multimegawatt wind turbines was also reflected in sales,
with its share widening from 75 % to 81%.
Earnings situation
Earnings before interest and taxes (EBIT)
doubled to EUR 15.3 million in the period under
review (previous year: EUR 7.6 million), with the
operating margin (EBIT) widening from 3.0 % to
4.6 %. In fact, it increased to 5.5 % of the second
quarter. This favorable performance was primarily
due to the execution of more profitable projects.
This is also reflected in the lower cost of materials
ratio, which contracted from 81 to 79 % in the first
six months of 2007. The depreciation ratio dropped
from 2.3 to 2.0 %, while the personnel cost ratio held
steady at a low 7.5 %.
TURBINE ENGINEERING SALES BY REGION
1– 6/2007
1– 6/2006
Germany
18 %
19 %
Western Europe (excl. Germany)
74 %
77 %
Asia
6%
4%
The Americas
2%
0%
Business performance
Net income for the period surged by 268 % to
EUR 13.6 million (previous year: EUR 3.7 million),
with the net margin widening from 1.5 to 4.1%. Net
financial result also improved thanks to interest
income earned on existing bank balances. At the
8 | Business performance
BUSINESS PERFORMANCE
same time, the tax rate shrank to 7.7 % following the
capitalization of loss carryforwards.
Earnings per share rose to EUR 0.22 (previous
year: EUR 0.06).
Financial condition and net assets
As of June 30, 2007, the consolidated equity ratio
increased to around 38 % (previous year: 32 %).
Including the net income for 2006, shareholders’
equity rose to EUR 162 million (previous year: EUR
149 million).
At the same time, cash and cash equivalents
contracted by EUR 47 million to EUR 85 million (previous year: EUR 132 million) primarily as a result of
the commitment of funds in growing operating
business. Thus, inventories rose by 17 % to EUR
165 million due to the work commenced on numerous short-term contracts as well as stockpiling at the
new facilities in China. At the same time, Nordex
reduced its trade payables from EUR 66 to 61 million
to make use of cash discounts. Other current liabilities dropped by 24 % to EUR 142 million. At the
same time, trade receivables and future receivables
from construction contracts were reduced by 27 %
to EUR 56 million.
The commitment of funds to growing business
volumes is also reflected in the net cash outflow of
EUR 39.2 million from operating activities. The
working capital ratio rose to 9.8 % as a result of the
drop in the advance payment ratio to 116 %. As of
December 31, 2006, the advance payment ratio had
been an unusually high 138 %. Reservation fees for
projects to be executed in the medium term stood at
EUR 37 million as of June 30, 2007.
Capital spending
In the first six months of 2007, Nordex spent
around EUR 7.2 million on assets (previous year:
Business performance
EUR 5.9 million). Additions to property, plant and
equipment were valued at EUR 4.4 million and comprised plant, operating and business equipment of
EUR 2.5 million and land, land-like rights and buildings of EUR 1.1 million. Further additions of EUR
2.8 million relate to intangible assets, particularly
capitalized development costs.
Research and development
Development work on new products concentrated on engineering extensions to the 2.5 MW platform (N80/N90). A further model with a larger rotor
diameter of 100 meters suitable for weaker wind
conditions is to be launched on the market in the
near future. In this way, Nordex will cover all typical
location categories (IEC 1-3) with a single family of
turbines. The advantage of this solution is the high
percentage of identical components, allowing
economies of scale to be harnessed in sourcing and
product maintenance operations. The main steps
entailed developing new rotor blades, redesigning
the hub and machine bearer as well as adjustments
to the control system.
Product maintenance activities focused on
adjustments to turbines to meet further international grid requirements. In this connection, a consistent model was developed for adapting the
turbines to individual technical standards. At the
same time, engineering was involved in the qualification of new suppliers. One aspect here entailed
increasing local content in production activities
in Asia.
Employees
As of June 30, 2007, the Nordex Group had 1,255
employees, an increase of 25% over December 31,
2006 (1,005). Recruiting activities concentrated on
the operating units as well as the fast-growing
foreign companies in China and France, which currently have 300 and 100 employees, respectively.
Nordex agreed on a new remuneration system
with the Group employee council for staff at its
German facilities, which no longer differentiates
between Eastern or Western Germany or between
office and technical staff. Instead, remuneration is
based solely on the specific profile of requirements
for the position in question. All positions are
assigned to ten categories for which salary bands
are defined. In this way, Nordex wants to enhance
transparency and strengthen staff motivation.
Outlook
Growth expectations on the part of manufacturers of wind power systems remain upbeat. Market
observers forecast annual average growth of
around 17% in sales volumes over the next five
years. Crucially, demand could fuel substantially
stronger growth. In the short to medium term,
however, market trends are liable to result in shortfalls in producers’ supply chains.
The greatest demand is coming from growth
markets in Western Europe (Italy, UK, France) as well
as the United States and China. In terms of product
segment, the greatest growth is expected in the
multi-megawatt class (1.5–2.5 MW turbines), in
which sales volumes have risen by an annual 40 % in
the past three years. Spurred by its strong position
in these regions and segments, Nordex has been
outpacing its peers since 2005. In fact, its business
has expanded by an average of 65 % in the past two
years, while the global sales of all producers combined has risen by “only” 37 %.
Looking forward into the medium term, Nordex
is seeking top line growth of around 50 % per year.
For 2007, the Management Board projects sales of
EUR 760–770 million (2006: EUR 514 million). Thanks
Outlook
| Outlook
9
OUTLOOK
to the execution of more profitable projects combined with greater capacity utilization, the EBIT
margin should widen to 6 % (previous year: 3.0 %).
In the medium term, Nordex forecasts sales of EUR
2.5–4 billion in 2011. The upper end of this range will
be reached provided that, among other things,
market conditions remain stable and sufficient internal and external production capacity is available.
The operating margin (EBIT) is expected to widen to
9–12 % thanks to economies of scale. All in all,
Nordex plans to invest around EUR 280 million in the
construction of new production facilities and extensions to existing ones by 2011 to ensure that it
remains on its growth trajectory.
Risks and opportunities
In the first half of 2007, there were no material
changes in the risks and opportunities in the Group’s
expected performance described in detail in the
Nordex AG annual report for 2006. There are no risks
to the Group’s going-concern status. Nor are any
such risks discernible in the future.
Events after the conclusion of the year under
review
On July 19, 2007, Nordex AG issued 2.5 million
new shares at a price of EUR 30.30 each using its
authorized capital. The equity issue net of transaction costs generated proceeds of around EUR 73.9
million. Thanks to the very strong demand, the issue
was fully subscribed within a short period of time.
The Company plans to use the proceeds to finance
its continued growth, particularly the planned
extensions.
10 | Financial statements
FINANCIAL STATEMENTS OF NORDEX GROUP
CONSOLIDATED BALANCE SHEET
as of June 30, 2007 (IFRS)
Cash and cash equivalents
06/30/2007
12/31/2006
EURO 000s
EURO 000s
84,772
131,909
Trade receivables and future receivables
from construction contracts
Inventories
Current financial assets
Other current assets
Current assets
Property, plant and equipment
Goodwill
Capitalized development costs
Other intangible assets
Non-current financial assets
Other non-current assets
Deferred tax assets
Non-current assets
Assets
Trade payables
Provisions for income tax
Other provisions
56,413
77,606
165,405
141,197
1,283
1,298
21,690
15,073
329,563
367,083
28,919
27,837
9,960
9,960
11,615
11,731
207
876
7,077
7,156
1,077
1,077
39,220
31,721
98,075
90,358
427,638
457,441
60,743
66,480
1,421
1,209
32,943
34,311
Other current liabilities
142,023
186,054
Current liabilities
237,130
288,054
Non-current borrowings
358
1,199
Pensions and similar obligations
456
449
7,884
7,953
Other non-current liabilities
Deferred tax liabilities
19,683
11,260
Non-current liabilities
28,381
20,861
Shareholders’ equity
162,127
148,526
Shareholders’ equity and liabilities
427,638
457,441
Financial statements
11 | Financial statements
FINANCIAL STATEMENTS OF NORDEX GROUP
CONSOLIDATED INCOME STATEMENT (IFRS)
for the periode January 1, 2007 – June 30, 2007
01/01/2007
01/01/2006
01/04/2007
01/04/2006
- 06/30/2007
- 06/30/2006
- 06/30/2007
- 06/30/2006
EURO 000s
EURO 000s
EURO 000s
EURO 000s
322,678
251,725
171,866
127,007
8,838
944
5,582
2,850
331,516
252,669
177,448
129,857
Sales
Changes in inventories and other own work capitalized
Total revenues
Other operating income
Cost of materials
3,575
2,288
1,979
979
- 261,206
-204,204
-139,185
- 105,750
-24,913
-19,049
- 12,885
- 9,952
Depreciation
- 6,537
-5,856
-3,418
-3,002
Other operating expenses
- 27,168
-18,255
- 14,217
-8,201
Operating profit/loss (EBIT)
15,267
7,593
9,722
3,931
2,534
679
1,580
343
-3,052
-2,246
-2,021
-889
Personnel costs
Other interest and similar income
Interest and similar expenses
-518
-1,567
-441
-546
14,749
6,026
9,281
3,385
Income taxes
-1,142
-2,289
- 397
- 2,290
Net income
13,607
3,737
8,884
1,095
-216
0
- 71
0
13,823
3,737
8,955
1,095
0.22
0.06
0.14
0.02
Net financial result
Profit/loss from ordinary activity before tax
Minority interests
Earnings attributable to the equity holders of the parent company
Earnings per share*
*) on the basis of a weighted average number of shares: 1st half of 2007: 64.435 million shares (previous year: 59.740 million shares)/
in the 2nd quarter of 2007: 64.345 million shares (previous year: 60,661 million shares)
Financial statements
12 | Financial statements
FINANCIAL STATEMENTS OF NORDEX GROUP
CONSOLIDATED CASH FLOW STATEMENT (IFRS)
for the periode January 1, 2007 – June 30, 2007
01/01/2007
01/01/2006
- 06/30/2007
- 06/30/2006
EURO 000s
EURO 000s
Operating activities:
Net profit/loss for the year
+ Depreciation on non-current assets
–/+ Decrease/increase in pension provisions
+/– Increase/decrease in other provisions and tax provisions
+ Loss from disposal of non-current assets
–/+ Increase/decrease in inventories
13,607
3,737
6,537
5,856
7
0
- 1,156
- 637
0
2
- 24,208
- 21,634
14,578
- 38,592
- 49,527
39,776
924
1,662
- 39,238
- 9.830
–/+ Increase/decrease in trade receivables and future
receivables from construction contracts as well as other assets
not assigned to investing or financing activities
+/– Decrease/increase in trade payables and other
liabilities not allocated to investing or financing activities
+/– Changes in deferred taxes
= Cash flow from operating activities
Investing activities:
+ Payments received from the disposal of
property, plant and equipment/intangible assets
+ Payments received from the disposal of financial assets
– Payments made for investments in property, plant and equipment/intangible assets
– Payments made for investments in financial assets
= Cash flow from investing activities
0
14
104
227
- 7,169
- 5,454
0
- 453
- 7,065
- 5,666
Financing activities:
+ Payments received on account of capital increase
+ Change in current bank loans
= Cash flow from financing activities
0
71,840
- 841
- 4,037
- 841
67,803
= Cash change in cash and cash equivalents
- 47,144
52,307
+ Cash and cash equivalents at the beginning of the period
131,909
19,493
7
2
84,772
71,802
+ Exchange rate-induced change in cash and cash equivalents
= Cash and cash equivalents at the end of the period
(Cash and cash equivalents carried on the face of the consolidated balance sheet)
Financial statements
13 | Financial statements
FINANCIAL STATEMENTS OF NORDEX GROUP
CONSOLIDATED STATEMENTS OF EQUITY MOVEMENTS (IFRS)
Issued
Share
capital
premium
Other
Foreign
Minority
equity
currency
interests
components equalization
EURO 000s
Consoli-
Total
dated net dated net
equity
profit/loss profit/loss
carried forward
item
EURO 000s EURO 000s
Consoli-
EURO 000s EURO 000s
EURO 000s EURO 000s EURO 000s
64,345
82,760
–14,770
324
2,291
786
12,790
148,526
carried forward
0
0
0
0
0
12,790
–12,790
0
Exchange rate differences
0
0
0
–6
0
0
0
–6
0
0
0
13,823
13,823
Balance on January 1, 2007
Consolidated net income
for fiscal 2006
Earnings attributable to the equity holders of the parent company in 2007
(excluding minority interests)
0
0
0
0
0
0
0
– 216
0
0
– 216
'60/3/2007
64,345
82,760
–14,770
318
2,075
13,576
13,823
162,127
Balance on January 1, 2006
58,819
16,446
–13,025
429
0
9,003
– 8,217
63,453
Minority interests
Consolidated net income
for fiscal 2005
0
0
0
0
0
– 8,217
8,217
0
5,526
66,314
0
0
0
0
0
71,840
Equity issue costs netted
0
0
– 900
0
0
0
0
– 900
Exchange rate differences
0
0
0
–153
0
0
0
–153
Consolidated net income for 2006
0
0
0
0
2,291
0
3,737
3,737
64,345
82,760
–14,770
324
2,291
786
12,790
148,526
carried forward
Cash equity issue
'6/30/2006
Financial statements
14 | Financial statements
FINANCIAL STATEMENTS OF NORDEX GROUP
MOVEMENTS IN NON-CURRENT GROUP ASSETS EXCLUDING DEFERRED TAXES
Acquisition and production costs
Commencing
Additions
First-time
balance
consoli-
01/01/2007
dation
EURO 000s EURO 000s
Disposals
Reclassi-
Closing
fication
balance
06/30/2007
EURO 000s
EURO 000s
EURO 000s
EURO 000s
1,056
0
0
0
17,610
Property, plant and equipment
Properties, property-like rights and buildings
16,554
Technical equipment and machinery
17,706
523
0
0
0
18,229
Other equipment, operating and business equipment
18,769
2,448
0
64
0
21,153
Advance payments made and assets under construction
Total property, plant and equipment
3,725
381
0
0
0
4,106
56,754
4,408
0
64
0
61,098
14,461
Intangible assets
Goodwill
14,461
0
0
0
0
Capitalized development costs
24,726
2,700
0
0
0
27,426
Other intangible assets
10,831
61
0
335
0
10,557
50,018
2,761
0
335
0
52,444
Investments in associates
5,642
0
0
75
0
5,567
Loans to associates
1,148
0
0
0
0
1,148
Other loans
2,211
25
0
29
0
2,207
Total non-current financial assets
9,001
25
0
104
0
8,922
Other non-current assets
1,077
0
0
0
0
1,077
116,850
7,194
0
503
0
123,541
Total intangible assets
Non-current financial assets
Total non-current assets excluding deferred tax
Financial statements
15 | Financial statements
FINANCIAL STATEMENTS OF NORDEX GROUP
MOVEMENTS IN NON-CURRENT GROUP ASSETS EXCLUDING DEFERRED TAXES
Depreciation
Commencing
Additions
First-time
balance
consoli-
01/01/2007
dation
Disposals
Reclassi-
Closing
Book
Book
fication
balance
value
value
06/30/2007 06/30/2007 12/31/2006
EURO 000s EURO 000s EURO 000s EURO 000s EURO 000s EURO 000s EURO 000s EURO 000s
Property, plant and equipment
Properties, property-like rights
and buildings
Technical equipment and machinery
4,025
339
0
0
0
4,364
13,246
12,529
12,138
1,354
0
0
0
13,492
4,737
5,568
12,754
1,633
0
64
0
14,323
6,830
6,015
Other equipment, operating and
business equipment
Advance payments made and assets
under construction
Total property, plant and equipment
0
0
0
0
0
0
4,106
3,725
28,917
3,326
0
64
0
32,179
28,919
27,837
4,501
0
0
0
0
4,501
9,960
9,960
12,995
2,816
0
0
0
15,811
11,615
11,731
Intangible assets
Goodwill
Capitalized development costs
Other intangible assets
Total intangible assets
9,955
395
0
0
0
10,350
207
876
27,451
3,211
0
0
0
30,662
21,782
22,567
Non-current financial assets
1,845
0
0
0
0
1,845
3,722
3,797
Loans to associates
0
0
0
0
0
0
1,148
1,148
Other loans
0
0
0
0
0
0
2,207
2,211
Investments in associates
Total non-current financial assets
Other non-current assets
1,845
0
0
0
0
1,845
7,077
7,156
0
0
0
0
0
0
1,077
1,077
58,213
6,537
0
64
0
64,686
58,855
58,637
Total non-current assets
excluding deferred tax
Financial statements
16 | Notes
NOTES GENERAL
The non-audited interim consolidated report on
Nordex AG and its subsidiaries for the first six
months as of June 30, 2007 was prepared in accordance with the International Financial Reporting
Standards (IFRS) issued by the International
Accounting Standards Board (IASB) in the version
adopted in the EU. In this connection, all International Financial Reporting Standards and interpretations of the International Financial Reporting Interpretations Committee binding as of June 30, 2007
were applied.
The consolidated annual financial statements of
Nordex AG were prepared in accordance with IFRS
with exempting effect under German GAAP (HGB)
in accordance with Section 315a of the German
Commercial Code. At the same time, the consolidated annual financial statements and the Group
management report comply with the EU directive
on group accounting. The accounting principles
observed in preparing this interim financial report
match those used for the consolidated annual financial statements as of December 31, 2006. In addition, IAS 34 “Interim Financial Reporting” was
applied. The annual report for 2006 is available on
the internet at www.nordex-online.com in the
Investor Relations section.
The Group is currently reviewing the possible
effects of new and revised standards applicable for
reporting periods after December 31, 2007.
Any irregular expenses occurring in the fiscal
year are only included or deferred in the interim
financial report to the extent that such inclusion or
deferral would also be reasonable at the end of the
fiscal year.
Notes
These interim financial statements must be read
in conjunction with the consolidated annual financial statements for 2006.
In the preparation of these interim consolidated
financial statements, the same recognition and
measurement policies were applied as those used in
the consolidated financial statements as of December 31, 2006. Further details on the recognition and
measurement policies applied are to be found in the
notes to the consolidated financial statements as of
December 31, 2006.
In the absence of any express mention of differences, the comments included in the consolidated
financial statements as of December 31, 2006 also
apply to the interim financial statements for 2007.
The business results for the first six months as of
June 30, 2007 are not necessarily an indication of
expected results for the year as a whole.
The presentation of the income statement continues to be based on the classification rules prescribed by German accounting law using the costof-production method. In contrast to the previous
year, the cost of external staff has been reported
under other operating expenses. The figures for the
previous year have been restated accordingly.
The interim report was prepared in the Group
currency euro.
17 | Notes
NOTES ON BALANCE SHEET
Current assets
Non-current liabilities
Trade receivables as of June 30, 2007 came to
EUR 56.4 million (December 31, 2006: EUR 77.6
million). The trade receivables recognized as of
June 30, 2007 include adjustments of EUR 6.6
million (December 31, 2006: EUR 7.1 million).
At EUR 28.4 million, non-current liabilities were
up on December 31, 2006 primarily due to higher
deferred income tax liabilities.
Of the future gross receivables from construction contracts of EUR 434.3 million, advance payments received of EUR 407.4 million were capitalized. In addition, advance payments received of
EUR 96.1 million were assigned to other current liabilities.
Inventories increased as of June 30, 2007. This
was primarily due to organic growth and the resultant sourcing of large-scale projects for current contracts as well as contracts expected in the short term.
Non-current assets
Changes in non-current assets are set out in the
statement of changes in non-current assets net of
deferred taxes. As of June 30, 2007, capital spending
for fiscal 2007 was valued at EUR 7.2 million, with
depreciation expense coming to EUR 6.5 million. At
EUR 2.7 million, the additions particularly relate to
research and development costs.
Deferred tax assets primarily comprise tax
losses which the Company expects to be able to
deduct from corporate and trade tax liability in
Germany.
Current liabilities
Other provisions dropped by EUR 1.4 million to
EUR 32.9 million and primarily relate to general and
individual guarantees in connection with order provisions.
Notes
Shareholders’ equity
Shareholders’ equity is broken down in the
Statement of Equity Movements for Nordex AG.
18 | Notes
NOTES ON INCOME STATEMENT
Sales
Sales increased over the same period one year earlier from EUR 251.7 million to EUR 322.7 million and
break down by region as follows:
Germany
Rest of Europe
Rest of the world
Total
01/01/2007– 06/30/2007
01/01/2006 – 06/30/2006
EUR mn
EUR mn
50.6
54.2
252.5
186.7
19.6
10.8
322.7
251.7
Changes in inventories and other own work capitalized
Changes in inventories and other own work capitalized totaled EUR 8.8 million in the first six months of
2007. In addition to an increase of EUR 5.9 million in inventories, other own output of EUR 2.9 million, which
includes research and development expenditure of EUR 2.7 million, was also included.
Other operating income
Other operating income stems from insurance claims, among other things.
Cost of materials
The cost of materials breaks down as follows:
Cost of raw materials and supplies
Cost of services bought
01/01/2007– 06/30/2007
01/01/2006 – 06/30/2006
EUR mn
EUR mn
208.8
176.4
52.4
27.8
261.2
204.2
The cost of raw materials and supplies also includes the cost of components and energy. The cost of
services bought includes external freight, changes in order provisions, commission and externally sourced
order-handling services.
Personnel costs
Wages and salaries
Social security and pension and support expenses
Notes
01/01/2007– 06/30/2007
01/01/2006 – 06/30/2006
EUR mn
EUR mn
21.5
16.0
3.4
3.0
24.9
19.0
19 | Notes
NOTES ON INCOME STATEMENT
Group employee numbers were as follows:
As of June 30
Fiscal 2007
1,255
Fiscal 2006
787
Change
468
Personnel numbers as of June 30, 2007 were up 468 compared with the same period of fiscal 2006.
Other operating expenses
Other operating expenses include travel expenses, legal and consulting costs, IT costs rentals and
leasing payments, among other things.
Transactions with related parties
Related
Company
Transaction
1st half of
party
Total
1st half of
sales
Total
sales
EUR 000s
EUR 000s
Carsten Pedersen
Welcon A/S
Tower supplier
2007
14,817
2006
12,306
Dr. Hans Fechner
G. Siempelkamp GmbH & Co. KG
Supplier of castings
2007
21
2006
2,167
Martin Rey
Babcock & Brown Ltd.
Sale of wind turbines
2007
32,657
2006
37,848
including project companies
Notes
The Nordex Group is engaged in the development, production, servicing and marketing of wind power
systems. In addition to development and production, it provides preliminary project development services
to support marketing, acquires rights and creates the infrastructure required to construct wind power
systems at suitable locations. The Nordex Group is essentially a single-product company, meaning that secondary segment reporting can be dispensed with. Nordex breaks down its business into three geographic
segments – Germany, the rest of Europe and the rest of the world. This reflects the structure of the regional
sales structure and takes account of local differences in risk and growth profiles. Nordex AG operates solely
as a holding company and can therefore not be allocated to any of the three segments. Segmentation is
based on the current and expected market shares and market growth for Nordex.
Historically, the German market has been the largest volume market for Nordex. Given moderate growth
conditions, Nordex will attempt to steadily widen its market share in the future. The rest of Europe (particularly France) is currently the segment with the greatest sales. Against the backdrop of the EU’s harmonization efforts, the members of the European Union are converging in both political and economic terms. In the
medium to long term, there is expected to be demand for electricity produced from wind power in EU countries. Accordingly, Nordex plans to widen its market share step by step in Europe as well. Asia as well as the
United States must be viewed in terms of the potential for growth. The strong growth in demand in Asia
prompted Nordex to establish nacelle and rotor blade production operations for the S70/S77 wind power
system in China in 2006 with the aim of supplying the Asian market from that base. Demand in the United
States is also expected to be strong.
Segment sales comprise sales with third parties (external sales) as well as internal Group sales between
the individual regions. The prices of deliveries between the individual segments are determined on an arm’s
length basis. External sales are assigned in accordance with the customer’s location. Segment earnings are
consolidated on the basis of external sales. The following table reconciles segment earnings with earnings
before interest and tax (EBIT), segment assets with consolidated assets and segment liabilities with consolidated liabilities:
Notes
20 | Notes
SEGMENT REPORTING
21 | Notes
SEGMENT REPORTING
EURO 000s
Germany
Europe
Rest of the world
(excluding Germany)
Q2/2007
Q2/2006
Q2/2007
adjusted
Q2/2006
Total
(Regions)
Q2/2007
adjusted
Q2/2006
Q2/2007
adjusted
Q2/2006
adjusted
Sales
External sales
Sales between segments
Total sales
Operating profit/loss (EBIT)
50,610
54,245
252,480
186,645
19,588
10,835
322,678
0
0
76,914
40,022
9,195
0
86,109
251,725
40,022
50,610
54,245
329,394
226,667
28,783
10,835
408,787
291,747
3,501
1,316
22,433
12,776
–1
532
25,933
14,624
170,908
160,580
439,846
343,512
70,972
34,437
681,767
538,529
2,645
2,176
19,862
29,994
11,093
5,531
33,601
37,701
39,220
31,721
0
0
0
0
39,220
31,721
Miscellaneous information
Segment assets***
Interest-bearing assets***
Income tax refund claims***
11,615
11,731
0
0
0
0
11,615
11,731
Group assets***
224,388
206,208
459,708
373,506
82,065
39,968
766,162
619,682
Segment liabilities***
210,240
105,402
378,102
405,792
56,337
22,316
644,679
533,510
5,919
5,401
13,545
5,305
219
554
19,683
11,260
210
1,165
118
27
0
0
328
1,192
8,018
8,078
0
0
0
0
8,018
8,078
Capitalized development costs***
Income tax liabilities***
Interest-bearing liabilities***
Liabilities from finance leases***
Group liabilities
224,387
120,046
391,765
411,124
56,556
22,870
672,708
554,040
Capital spending
1,670
2,372
202
194
1,493
305
3,365
2,871
Depreciation/amortization
2,524
2,764
231
168
276
169
3,031
3,101
EURO 000s
Consolidation
Q2/2007
Q2/2006
Total for Group
Nordex AG*
(excluding Nordex AG)
after consolidation
Q2/2007
adjusted
Q2/2006
Q2/2007
adjusted
Total for Group
Q2/2006
Q2/2007
adjusted
Q2/2006
adjusted
Sales
0
0
322.678
251.725
0
0
322.678
Sales between segments
– 86,109
– 40,022
0
0
0
0
0
0
Total sales
– 86,109
– 40,022
322,678
251,725
0
0
322,768
251,725
0
0
25,933
14,624
– 10,666
–7,031
15,267
7,593
External sales
Operating profit/loss (EBIT)
251.725
Miscellaneous information
– 466,429
– 311,322
215,297
227,207
76,734
54,873
292,031
282,080
Interest-bearing assets***
0
0
33,601
37,701
51,171
94,208
84,776
131,909
Income tax refund claims***
0
0
39,220
31,721
0
0
39,220
31,721
Capitalized development costs***
0
0
11,615
11,731
0
0
11,615
11,731
Group assets***
– 466,429
– 311,322
299,732
308,360
127,905
149,081
427,638
457,441
Segment liabilities***
Segment assets***
– 411,947
– 263,315
232,732
270,195
4,721
18,183
237,452
288,378
Income tax liabilities***
0
0
19,683
11,260
0
0
19,683
11,260
Interest-bearing liabilities***
0
0
328
1,192
805
7
1,134
1,199
Liabilities from finance leases***
0
0
8,018
8,078
0
0
8,018
8,078
308,915
Group liabilities
– 411,947
– 263,315
260,761
290,725
4,750
18,190
265,511
Capital spending
0
0
3,365
2,871
1,129
546
4,494
3,417
Depreciation/amortization
0
0
3,031
3,101
690
199
3,721
3,300
* At the level of Nordex AG operating assets an liabilities are reported before capital and debt consolidation.
** Capital spending and depreciation net of capitilized development costs.
***Year-ago figures as of December 31, 2006.
Notes
22 | Erläuterungen
RESPONSIBILITY STATEMENT
Statement in accordance with DRS 16.13
The interim financial statements and the interim management report have not been audited by independent auditors in accordance with Section 317 of the German Commercial Code. Nor have they been submitted to review by independent auditors.
Declaration in accordance with sections 3 7 y, 37 w (2) of The German Commercial Code
To the best of our knowledge, and in accordance with the applicable reporting principles for interim
financial reporting, the interim consolidated financial statements give a true and fair view of the assets,
liabilities, financial position and profit or loss of the group, and the interim management report of the group
includes a fair review of the development and performance of the business and the position of the group,
together with a description of the principal opportunities and risks associated with the expected development of the group for the remaining months of the financial year.
Rostock, August 2007
T. Richterich
C. Pedersen
H. Müller
B. Schäferbarthold
Chief Executive Officer
Management Board
Management Board
Management Board
Erläuterungen
23 | Management bodies
MANAGEMENT BODIES/CALENDAR OF EVENTS
Stock and stock options held by members of the Management Board and the Supervisory Board
Stocks
Carsten Pedersen
COO Sales
Dr. Hansjörg Müller
COO Operations
99,000 and a further 2.6 million via a 50% holding in Nordvest A/S
Yves Schmitt
Chairman of the Supervisory Board
182,695 *
Jan Klatten
Member of the Supervisory Board
1,500,000 **
Jens-Peter Schmitt
Member of the Supervisory Board
11,250
Dr. Hans Seifert
Member of the Supervisory Board
50,000
4.500
* indirectly via the share held in CMP Fonds I GmbH
** via a sub-participation held by momentum Beteiligungsgesellschaft GmbH in CMP Fonds I GmbH
Financial investors CMP Fonds I GmbH and Goldman Sachs have entered into agreements with individual
members of the Management Board concerning dormant sub-participations (June 30, 2007: equivalent to
371,058 shares). These agreements provide for a share in the gains in the event of these financial investors
selling shares in Nordex AG.
CALENDAR OF EVENTS
Report on the third quarter of fiscal 2007
with telephone conference
November 15, 2007
Contact
Nordex AG
Bornbarch 2
22848 Norderstedt
Phone +49 40 500 98 - 100
Fax +49 40 500 98 - 101
Design Heuer & Sachse Werbeagentur GmbH, Paul-Dessau-Straße 3c, 22761 Hamburg
Lithographie LITHOKONTOR WENIG GmbH, Hamburg, www.lithokontor.de
Photos Nordex
Management bodies /calendar of events