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

In total, the average pro forma income tax burden during the period under review for the Nordex Group
was approximately 37%.
Net income
Net income after consolidation increased by approximately 408% from EUR 1.6 million in fiscal year
1997/1998 to EUR 6.53 million in fiscal year 1998/1999, and decreased by approximately 1% to EUR
6.43 million in fiscal year 1999/2000 due primarily to the negative net financial result.
Liquidity
The following table sets forth the development of the Group’s liquidity during the periods indicated:
Fiscal years
1999/2000 1998/1999 1997/1998
EUR thousand
Cash flow from operating activities -44,886 18,868 -379
Cash flow from investing activities -12,090 -10,497 -1,947
Cash flow from financing activities -7,913 -4,104 -1,290
Change in cash and cash equivalents -64,889 4,266 -3,615
Cash and cash equivalents at beginning of period 2,407 -1,859 1,756
Cash and cash equivalents at end of period -62,482 2,407 -1,860
thereof:
Cash in hand and at bank 2,634 371 588
Intercompany clearing account credit/(debit) balances -64,936 2,095 -2,447
Current liabilities due to banks -180 -59 0
-62,482 2,407 -1,859
The fluctuations in cash flow from operating activities resulted from strong increases in sales during
the period under review. In particular, the investment backlog in fiscal year 1999/2000 that was caused
by the uncertainty surrounding the Gesetz über den Vorrang erneuerbarer Energien (Renewable Energy
Directive) coupled with associated planning difficulties, led to incoming orders being delayed until the
middle of fiscal year 1999/2000. This contributed to a high level of receivables on the balance sheet
date at September 30, 2000, the unusually high level of receivables at the end of fiscal year 1999/2000
was primarily due to the date of the balance sheet, and returned to pre-September 30, 2000 levels in
the first quarter of fiscal year 2000/2001.
The negative cash flow from investing activities in fiscal year 1999/2000 was due primarily to capital
expenditures for property, plant and equipment and intangibles. The major contributing factors were
the capitalization of development costs, prototypes and software required in connection with the
Group’s conversion to the SAP R3 cost accounting program. In addition, in fiscal years 1998/1999 and
1999/2000, the Nordex Group increasingly invested in its production facilities in Rostock.
The main contributing factors to the negative cash flow from financing activities in fiscal year 1999/
2000 were profit transfers to shareholders resulting from profit and loss transfer agreements which
were still in force at that time, and which placed a burden on the Company’s financial position. Prior to
fiscal year 1999/2000, almost all of the overall requirement for cash and cash equivalents were
financed by the Babcock Borsig Group by way of the inter-company clearing account.
In the first year following the Company’s Offering, a portion of earnings will initially be used to set up
statutory reserves, and the Company’s positive future cash flow will be used to meet operating
financing requirements. Nordex does not plan to pay any dividends in the fiscal years following the
Offering. Part of the net proceeds of the Offering will be used, among other things, to repay the
Group’s liabilities to the Babcock Borsig Group, which will improve the Group’s negative net financial
result (see ‘‘The Offering — Use of Proceeds’’).
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