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

SUMMARY OF CERTAIN DIFFERENCES
AMONG GERMAN (HGB), UNITED STATES (US GAAP)
AND INTERNATIONAL (IAS) ACCOUNTING PRINCIPLES
Certain selected financial data of the Nordex Group contained in this Offering Memorandum were
prepared in accordance with German Commercial Code provisions reflecting German principles of
adequate and orderly accounting. German Commercial Code provisions differ in some respects from
the Generally Accepted Accounting Principles in the United States (‘‘US GAAP’’) and from those in the
proposals made by the International Accounting Standards Committee (the ‘‘IASC’’) to harmonise
international presentation of accounts in the form of International Accounting Standards (‘‘IAS’’).
Below is a summary of some essential differences among the German provisions, US GAAP and IAS.
This summary does not explain all of the differences that are of importance for preparing annual
financial statements. The following explanation also does not describe all of the differences that can
affect the presentation of the assets, financial position and earnings situation of the Nordex Group.
Fundamental Differences
HGB accounting, US GAAP accounting and IAS accounting pursue fundamentally different accounting
goals.
While accounting according to the German Commercial Code gives special emphasis to the principle of
prudence and protection of creditors, US GAAP and IAS accounting give priority to providing
shareholders with information relevant to decisions. Therefore, the comparability of annual financial
statements — both over different years as well as of different companies — and income determination
by period are given more emphasis under US GAAP and IAS than under HGB.
In addition, under German law, financial statements prepared in accordance with the Commercial Code
also form the basis for the tax balance sheet and, therefore, tax considerations influence considerably
the preparation of the annual financial statement. Companies therefore use somewhat conservative
valuation methods, to some extent, in their financial statements.
Giving priority to the principles of conveying information relevant for decisions and comparability of
annual financial statements instead of to the principle of prudence under US GAAP and IAS results, in
certain situations, to cases in which unrealised results are shown. This applies to transactions in foreign
currencies, to long-term custom orders and to showing marketable securities in the balance sheet.
Long-term custom orders are shown in the balance sheet under certain conditions according to the
percentage-of-completion method. This method recognizes sales and also profits from a long-term
order corresponding to the progress of the order, whereas HGB allows a realisation of results for orders
carried out over several years only after the full completion of the order.
With marketable securities being held only for the short to medium-term — in contrast to the
accounting treatment under HGB — a market valuation is prescribed by both IAS and US GAAP in which
the unrealised profit from securities held for a short period is considered as fully affecting net income
in the profit and loss statement. For securities held medium-term, market changes under US GAAP
have a neutral effect on shareholders’ equity, whereas IAS allows the choice of either treating these
changes in value as having an effect on results or to treat them neutrally.
Goodwill
According to the provisions of the German Commercial Code, for an affiliated group’s financial
statement, the differential amount between the purchase price of a company and the current market
value of the acquired net assets (goodwill) can be set off with reserves (with a neutral effect on results)
or carried as an asset on the balance sheet and depreciated during its expected useful life, as a rule 5 to
15 years, with an effect on the financial statements According to German Accounting Standard No. 4
(DRS 4), ‘‘Acquisition of Companies in Consolidated Statements’’, issued by the German Accounting
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