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

With the exception of the development and provision of technical equipment for wind farms, the
Group’s other consolidated subsidiaries are primarily involved with providing parts, sales and
distribution services for Nordex Energy GmbH and Südwind Energy GmbH.
During the periods under review, the proportion of foreign sales to sales generated in Germany
developed as follows:
Net sales Fiscal years
1999/2000 1998/1999 1997/1998
EUR thousand % EUR thousand % EUR thousand %
Germany 152,319.0 55.9 173,792.9 77.7 79,975.4 96.9
Foreign sales 120,351.0 44.1 49,949.9 22.3 2,501.2 3.1
Total 272,670.0 100.0 223,742.8 100.0 82,476.6 100.0
While net sales in the periods under review increased, work in process also increased by approximately
193% from EUR 2.8 million in fiscal year 1997/1998 to EUR 8.4 million in fiscal year 1998/1999, and
then decreased EUR -3.2 million in fiscal year 1999/2000.
In fiscal year 1999/2000, the effect of using the percentage-of-completion method required by IAS 11
resulted in a decrease in inventories. This method leads to sales being recognized before the transfer of
risk according to German commercial law, and thus to a technical reduction in the item ‘‘work in
process’’. This effect will be reversed when these orders are actually invoiced. At present, these effects
are expected to balance each other out after a maximum of two years, depending on the period for
which the Nordex Group has advance orders.
Total operating performance, which compensate for these effects, increased during each of the periods
under review. Total operating performance increased by approximately 173% from EUR 85.2 million in
fiscal year 1997/1998 to EUR 232.6 million in fiscal year 1998/1999 and by approximately 16% to EUR
270.1 million in fiscal year 1999/2000.
Cost of materials
Cost of materials, increased by approximately 183% from EUR 66.6 million in fiscal year 1997/1998 to
EUR 189 million in fiscal year 1998/1999, and by approximately 7% to EUR 204 million in fiscal year
1999/2000. In addition to an increase in net sales, the relatively high cost of materials in fiscal year
1998/1999 compared to 1997/1998 was primarily due to the fact that for larger wind farms (e.g., the
Zafarana project in Egypt), assembly aids such as cranes, were accounted for as purchased services. In
the following fiscal year 1999/2000, these types of components were leased, leading to a decrease in
the cost of materials purchased in fiscal year 1999/2000 compared to the previous fiscal year. Lease
payments are not recorded and disclosed under cost of materials, but as other operating expenses,
insofar as they do not constitute finance leases under IAS.
Also contributing to the increase in cost of materials, the cost of raw materials and supplies increased
by approximately 196% from EUR 52.7 million in fiscal year 1997/1998 to EUR 156 million in fiscal year
1998/1999, and by approximately 7% to EUR 167 million in fiscal year 1999/2000. In addition, EUR 13.8
million was spent on services purchased in fiscal year 1997/1998, EUR 32.9 million in fiscal year 1998/
1999 and EUR 37.3 million in fiscal year 1999/2000. The services purchased primarily relate to freight,
sales commissions, outsourced services for order fulfillment, outside labor and the changes in contractrelated
accruals.
The increased use of outside labor in fiscal year 1998/99 also contributed to a temporary increase in the
cost of materials ratio and, at the same time, to proportionately lower personnel expenses.
Personnel expenses
Expenses for wages and salaries and for social security taxes increased disproportionately to the
increase in the number of employees during the period under review, by approximately 113% from EUR
6 million in fiscal year 1997/1998 to EUR 12.8 million in fiscal year 1998/1999, and by approximately
50% to EUR 19.2 million in fiscal year 1999/2000. The disproportionate increase in personnel expenses
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