OFFERING MEMORANDUM Global Offering of up to ... - Nordex

Since Taifun AG will not commence with its operations before early 2001 and its subsidiaries will until
then remain fully integrated at the organizational level with Borsig Energy GmbH or the BDAG Balcke-
Dürr AG Group, no effective group structure in terms of a control of the contributed subsidiaries
existed in 2000 despite the agreements consummated in November/December 2000.
This is why capital consolidation has been waived when preparing the (combined) pro forma
consolidated financial statements for the fiscal years ended September 30, 1998, September 30, 1999,
and September 30, 2000; instead, the equity of the subsidiaries has been merely footed up. For the
same reason, no pro forma goodwill amortization has been shown either.
Another reason for the nonrecognition of pro forma goodwill amortization or pro forma releases of
badwill from capital consolidation in the (combined) pro forma consolidated financial statements is
that the relevant amounts required to determine goodwill or badwill could not be reliably measured
when preparing the financial statements (IASC Framework paragraphs 86 et seq. in conjunction with
par. 83). This refers to the shares in Taifun AG’s subsidiaries, which the provisions of IAS 22.21 et seq.
require to be recognized at cost and which, after having been transferred as agreed at book value by
Borsig Energy GmbH and Nordvest A/S to Taifun AG, would have had to be offset against the IAS equity
of such subsidiaries. The relevant equity (early 2001) was not determinable when the financial
information was prepared.
The expected future goodwill amortization will adversely affect performance in future consolidated
financial statements. In consolidation, all receivables and payables among consolidated subsidiaries
were mutually offset, without producing any exchange gains or losses.
The aggregate total of kE27.4 (net balance) (up from kE10.2 in 1998/99) representing (i) intercompany
profits which in fiscal 1999/2000 were made from intragroup transfers within inventories, as well as (ii)
the prorated profits realized according to the percentage-of-completion method, was eliminated in
consolidation. The accounting for capital leases according to IAS 17 (from the group’s vantage point)
resulted in fiscal 1999/2000 in income of kE247.3 (up from kE56.2 in 1998/99). Consequently,
consolidation transactions in fiscal 1999/2000 raised income (including the allocable deferred taxes) by
kE130.9 (up from kE27.1 in 1998/1999).
Moreover, all expenses and income originating from intragroup transfers of goods/services and from
intercompany allocations were mutually netted in consolidation.
In addition, the group fees apportioned and charged in the periods under review were in consolidation
eliminated from net income and replaced by imputed future personnel and administrative expenses of
Taifun AG, duly accounting for the imputed tax effects, cf. Note (1).
(4) General accounting and valuation details
(4.1) Classification
The classification rules of Art. 266 HGB (after adjustment to specific IAS disclosure requirements) were
applied for preparing the IAS-based balance sheets. The income statements according to IAS are
presented in the full-cost format in analogy to the classification provisions of Art. 275(2) HGB. Major
deviations from the HGB-oriented disclosure format are, in particular, attributable to the derivation
from IAS-based net income of pro forma net earnings, cf. Note (1).
(4.2) Details of accounting and valuation methods
Within intangible assets, mainly purchased licenses and software were capitalized. Internally created
intangible assets (i.e., prototype development costs) were capitalized whenever permitted by IAS 38.
Intangible assets and property, plant & equipment were stated at cost and, where applicable, amortized
or depreciated systematically on a straight-line basis over the anticipated useful lives of the underlying
assets. For additions to personal property (plant & equipment) in the first half of the fiscal year, the full
annual depreciation rate was applied while for additions in the second 6-month period, half this annual
rate was used. Low-value assets (under German law, valued at net cost of E409 or less each) were full
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