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

The calculation of imputed taxes, too, was based on future tax rates, cf. Note (1).
Inventories include raw materials and supplies (operating stores), as well as work in process (goods/
services). In conformity with IAS 2, raw materials and supplies were stated at purchase cost. Allowances
were charged for slow-moving items, varying according to age and product, and for inventories whose
fair market prices were below their carrying values. Work in process for which no customer contract
existed and to which IAS 11 did hence not apply were valued at production cost pursuant to IAS 2. The
production cost components to be included according to IAS 2 were recognized wherever the costs
were reliably measurable. Borrowing costs were not included in production cost. Provided and to the
extent that in specific cases production cost (including any overheads yet to be incurred) was
foreseeable to outweigh expected net revenues, the underlying asset was written down to its lower net
realizable value. Moreover, prepayments made on inventories were stated, and those received on
account of inventories were deducted, at their face values.
Future receivables under long-term construction contracts (i.e., costs and estimated earnings in excess
of billings) were accounted for according to their percentage of completion (‘‘PoC’’) according to IAS 11
where based on a specific customer contract and contract costs were reliably allocable. Prorated
earnings were realized according to the PoC where the latter as well as total contract costs and
revenues were reliably determinable in conformity with IAS 11. The PoC was determined by using the
cost-to-cost method, i.e., by relating the costs incurred to the estimated total contract costs. Applying
this PoC to revenues, the resulting portion of total contract revenues was realized accordingly. Contract
costs comprise all direct costs allocable to the contract, as well as all indirect costs separately billable to
the customer (as defined in IAS 11) and if reliably measurable. Costs of debt were expensed. If the
contract revenues were not determinable with reasonable reliability, valuation was based on contract
costs according to IAS 11.
When determining contract costs and revenues, any new insights with respect to the periods under
review at the time the (combined) pro forma consolidated financial statements were prepared were
duly taken into account. Losses incurred for specific contracts and ascertained subsequently were also
accounted for.
In the balance sheet, this item was disclosed as ‘‘future receivables under long-term construction
contracts’’ and, in the income statement, under net sales. Where specific contracts produced a loss on
balance, such loss was shown separately on the liabilities side as ‘‘future payables under long-term
construction contracts.’’ In the income statement, such losses were disclosed as cost of materials.
Prepayments received on contracts were offset against ‘‘future receivables under l/t construction
contracts’’ unless the total turned into a negative balance (i.e., a payable).
Trade receivables and sundry current assets were recognized at par, duly allowing for any and all
foreseeable risks. General allowances for doubtful accounts were eliminated when restating the
separate financial accounts to conform to IAS.
Cash & cash equivalents are valued at par.
In accordance with IAS 37, the sundry accruals provide for all uncertain obligations to third parties.
Provisions were made wherever current legal or economic commitments existed that resulted from past
events and whose settlement was probable to entail an outflow of resources embodying economic
benefits. Accruals were measured on the basis of best estimates. Discounting was waived for lack of
materiality.
Liabilities were recognized at the amounts repayable.
Expenses and income of the periods were recognized when realized, regardless of the payment date.
Revenues were recognized when the agreed product or service was provided or when realized early as
required by the PoC method under IAS 11. Period-related income and expenses were only accounted
for to the extent allocable to the period.
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