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

(3) Consolidation procedures
According to IAS 27 and 22, initial capital consolidation is governed by the date of acquisition, which,
pursuant to IAS 22.20, is the date at which control of the net assets and operations of consolidatable
subsidiaries is effectively transferred to Taifun AG as acquirer and transferee.
Since today’s Nordex AG (formerly Taifun AG) will not start up its operations before early 2001 and its
subsidiaries will until then remain fully integrated at the organizational level with Borsig Energy GmbH
and the BDAG Balcke-Dürr AG Group, no effective group structure, and hence no control of the
contributed subsidiaries, existed in 2000 despite the agreements consummated in November/December
2000.
In the pro forma consolidated interim statements, capital consolidation was effected pro forma
(i) to ensure that the equity as of December 31, 2000, is best comparable to that at September 30, 2000,
and (ii) lest the group’s net assets should be overstated as of December 31, 2000. For such pro forma
capital consolidation, the equity interests (financial assets) of, acquired with legal effect as of 12-14-
2000 by, Taifun AG in the subsidiaries included in the pro forma consolidation group were offset
against such subsidiaries’ IAS-based equity as of January 1, 2001, the resulting difference being shown
as pro forma goodwill, which was thus determinable on a best-estimate basis. Since, when the
individual subsidiaries were transferred and contributed to Taifun AG, this nonmonetary transaction
constituted merely a restructuring process within the Babcock Borsig Group, the investment book
values carried in Taifun AG’s balance sheet underlay not only pro forma capital consolidation but also
the determination of pro forma goodwill. No goodwill amortization was charged since the group
structure was not created until early 2001. On this basis and assuming a 15-year period of benefit, the
anticipated annual goodwill amortization will amount to kE1,336.5.
In consolidation, all receivables and payables among consolidated subsidiaries were mutually offset,
without producing any foreign exchange gains or losses.
In First Quarter for Fiscal Year 2000/2001, no intercompany profits were made, whether within
inventories or in the form of prorated profits realized according to the percentage-of-completion
method. The accounting for capital leases according to IAS 17 (from the group’s vantage point) resulted
in First Quarter for Fiscal Year 2000/2001 and First Quarter for Fiscal Year 1999/2000 each in income of
kE61.9.
Moreover, all expenses and income originating from intragroup transfers of goods/services and from
intercompany allocations and intragroup P&L transfers were all mutually netted in consolidation, cf.
Note (2).
In addition, the external group fees apportioned and charged in the quarters under review were in
consolidation eliminated from quarterly net income and replaced by imputed future personnel and
administrative expenses of today’s Nordex 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 sheet. The income statement according to IAS is 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 IASbased
quarterly net income of pro forma net earnings, cf. Note (1).
(4.2) Accounting and valuation methods
The accounting, valuation and currency translation methods underlying the (combined) pro forma
consolidated statements 1997/98, 1998/99 and 1999/2000 were consistently applied when preparing
the pro forma consolidated interim statements for the quarter ended December 31, 2000.
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