100 Meter HALF YEAR REPORT 2007 NORDEX AG.

Transcription

1 100 Meter HALF YEAR REPORT 2007 NORDEX AG

2 CONTENTS 2 Contents Preface 3 Stock performance 4 Details of the first half of Market trends 6 Business performance 7 Earnings situation 7 Financial condition and net assets 7 Capital spending 8 Research and development 8 Employees 8 Outlook 9 Risks and opportunities 9 Events after the conclusion of the period under review 9 Consolidated financial statements for the first half of Balance sheet 10 Income statement 11 Cash flow statement 12 Statement of equity movements 13 Statement of changes in non-current assets 14 Notes 16 Management bodies/calendar of events 22 Contents

3 PREFACE 3 Preface Dear shareholders, in the second quarter of the year we quickened the pace of our expansion course, with sales rising by around 35% year on year from April until June At EUR 172 million, sales in the second quarter fully lived up to our current plans, but were down roughly EUR 20 million on our original forecasts due to delays in deliveries of components, which forced us to postpone the completion of individual projects. However, we will be able to clear this bottleneck in the fourth quarter in particular. Contrary to our original plans, production will be proceeding at full capacity until end of In December 2007, we will be commencing activities aimed at extending capacity in Rostock, with around EUR 280 million earmarked for the extension of our worldwide production facilities between now and This will give Nordex an annual capacity of roughly 4,500 megawatts, thus providing a solid basis for its growth scenario of EUR billion in This medium-term forecast is, of course, contingent on the continuation of the stable market conditions. However, experience in the second quarter shows that the availability of components is having a growing impact on our business, with shifts possible in the course of the year. However, we have closed the necessary agreements with our core suppliers for most of our current order backlog, which is valued at around EUR 1.7 billion (including contingent orders). Top-line growth is no target unto itself. Rather, we always additionally seek to improve our profitability. Thus, in the second quarter, we achieved an operating margin (EBIT) of 5.5%. This improvement was primarily due to the execution of more profitable projects. Our full-year target for 2007 is to achieve a return of 6% on sales. In the short to medium term, we expect to be able to harness material impetus for profitability from economies of scale. Accordingly, we consider a margin of 9 12% to be achievable in Yours sincerely Thomas Richterich Chief Executive Officer Preface

4 STOCK PERFORMANCE 4 Stock performance In the period under review, Nordex stock was the top performer in the TecDax again. Between January 1 and June 30, it advanced by around 110% (TecDax: up 24.6%), rising from EUR 13.8 to 28.9 in this period. Analysts attribute this favorable performance to the consistently improved outlook for the sector as well as for the Company itself. Thus, the stock price surged to over EUR 30 per share on the announcement of the Company s medium-term growth prospects. Nordex had stated at the end of June that it would be able to continue on its current growth trajectory and achieve a roughly 50% increase in sales provided that the markets and internal processes remained stable. This means that it should be able to report business volumes of up to EUR 4 billion and an EBIT margin of up to 12% in2011. This prompted some analysts to raise their targets for the stock to EUR 39 or 40. The heightened appeal of Nordex stock and intensive investor relations resulted in broader coverage by analysts. Thus, Nordex has also been on the watch list of US investment bank Lehman Brothers since July. In the quarter under review, Nordex announced a possible change in its shareholder structure. In May, it confirmed that its principal shareholders Goldman Sachs and CMP Capital Management-Partners were considering a possible sale of the shares which they hold in the Company and had retained the services of an investment bank for this purpose. However, it is still open as to whether and in what form they will sell all or part of the shares. On July 19, after the conclusion of the period under review, Nordex issued 2.5 million new shares PERFORMANCE OF NORDEX STOCK RELATIVE TO THE TecDAX FROM JANUARY 1, 2007 THROUGH JULY 20, 2007 (INDEX-TIED) % 250 Nordex TecDAX /02/ /16/ /30/ /13/ /27/ /13/ /27/ /10/ /24/ /08/ /22/ /05/ /19/ /30/ /17/2007 Stock performance

5 STOCK PERFORMANCE 5 Stock performance at a price of EUR for placement with qualified investors, i.e. generally fund companies pursuing long-term investment strategies. These new shares were not available to private shareholders as this would have necessitated the costly and time-consuming issue of an offering prospectus. However, these shareholders were not placed at any disadvantage due to the statutory obligation to issue the new shares at a price close to the trading price of the existing ones. proceeds of around EUR 74 million will be primarily used to finance the planned capacity extensions. As the existing principal shareholders did not take part in the equity issue, the free float widened from around 44 to 46%. The successful issue, which was fully subscribed within a short period of time, additionally highlighted the strong interest in the stock. The net SHAREHOLDER STRUCTURE Nordvest 3.9% HSH Nordbank 3.6% Free float 46.1% HypoVereinsbank 4.1% Goldman Sachs 16.7% CMP 25.6% On the basis of 66,845,000 shares Stock performance

6 MARKET TRENDS 6 Market trends In the period under review, demand for wind turbines continued to rise. All told, experts project an increase in new installed capacity of around 25% to 18,800 MW for With new capacity installations of 665 MW in the first six months of the year, Germany remained flat at a high level in line with expectations, while China, for example, is expected to report massive growth of some 70%. Currently, demand for wind turbines is exceeding supply. As a result, turbine prices have been rising in growth markets, while wind turbines producers are barely able to keep pace in their efforts to extend capacity. This is not least of all due to factors along the entire supply chain. In 2006, turbine producers were already making full use of their suppliers capacity. It is hoped that the situation will ease in 2009 once the capacity extensions now being built by producers and suppliers unleash their full effect. The higher prices of wind turbines are also due the rising costs of components and raw materials. Thus, the price of steel has risen by around 13% to USD 174 per ton, while higher-alloy steels have climbed in price by as much as 18%. Up by only a single-digit rate, component prices did not increase as swiftly. The main driving force behind heightened demand for wind turbines is the more ambitious political objectives in climate protection together with growing energy requirements, the greater competitiveness of wind power and the rising prices of fossil energies. Thus, oil was trading at over USD 75 per barrel again in July, with no sign of any easing. At the same time, the underlying conditions for feeding wind power into grids continued to stabilize or improve in the second quarter. Spain passed the long-awaited new feed-in legislation, which guarantees continued stable conditions with minimum remuneration of 7.1 euro-cents per kwh. Meanwhile, the German federal government has been debating the possibility of improvements to the remuneration structure for wind power. In the UK, remuneration is to be differentiated on the basis of the maturity of the technology for harnessing renewable energy. In accordance with proposals tabled by the Department of Trade and Industries (DTI), onshore wind is to be used as a reference and continue to receive 1 ROC/kWh. KEY FINANCIALS AS OF JUNE 30, 2007 Year to June 30, 2007 Year to June 30, 2006 Change Other receipts % Sales % EBIT % Market trends

7 BUSINESS PERFORMANCE 7 Business performance In the period under review, Nordex s new business expanded by around 71%. New business booked in the first six months of the year was valued at EUR 683 million (previous year: EUR 400 million). More than 90% of the new orders came from outside Germany, 82% from Europe excluding Germany and 9% from Asia. Once again, demand was chiefly directed at multi-megawatt systems, with over 80% of the orders received for the N80/90 family (2,500 kw). The 1.5 MW turbine now being marketed in China is attracting rising sales figures again and accounts for 14% of new business. In the period under review, Nordex sold 71 of these turbines in China. The book-to-bill ratio continued to rise to 2.1 (previous year: 1.6). Firm orders climbed by 122% to EUR 912 million (previous year: EUR 410 million). These were joined by contingent orders of a further EUR 804 million or so (previous year: EUR 470 million). Accordingly, order books rose in value by 95% to EUR 1.7 billion (previous year: EUR 880 million), sufficient to ensure capacity utilization until As planned, consolidated sales climbed by 28% in the first half of 2007 to EUR 323 million (previous year: EUR 252 million). In the second quarter alone, Nordex achieved sales of EUR 172 million (previous year: EUR 127 million), i.e. the highest figure for a single quarter in its history. As a result, it lived up to its current plans but fell short of its original forecast by around EUR 20 million. The reason for this was that delays in the delivery of components necessi- TURBINE ENGINEERING SALES BY REGION 1 6/ /2006 Germany 18 % 19 % Western Europe (excl. Germany) 74 % 77 % Asia 6% 4% The Americas 2% 0% TURBINE ENGINEERING SALES BY TURBINE TYPE 1 6/ /2006 N80/N90 81% 75% S70/S77 12 % 15 % N62 7% 10% tated postponements in the completion of individual projects. Turbine assembly output rose in the period under review by 18% to 334 MW (previous year: 284 MW), while blade production was up 60% to 160 MW. Sales were chiefly underpinned by new turbine business (94%), with after-sales service accounting for around 6%. At over 80%, the share of exports remained steady at the previous year's high level. The growing interest in the N80/N90 multimegawatt wind turbines was also reflected in sales, with its share widening from 75% to 81%. Earnings situation Earnings before interest and taxes (EBIT) doubled to EUR 15.3 million in the period under review (previous year: EUR 7.6 million), with the operating margin (EBIT) widening from 3.0% to 4.6%. In fact, it increased to 5.5% of the second quarter. This favorable performance was primarily due to the execution of more profitable projects. This is also reflected in the lower cost of materials ratio, which contracted from 81 to 79% in the first six months of The depreciation ratio dropped from 2.3 to 2.0%, while the personnel cost ratio held steady at a low 7.5%. Net income for the period surged by 268% to EUR 13.6 million (previous year: EUR 3.7 million), with the net margin widening from 1.5 to 4.1%. Net financial result also improved thanks to interest income earned on existing bank balances. At the Business performance

8 BUSINESS PERFORMANCE 8 Business performance same time, the tax rate shrank to 7.7% following the capitalization of loss carryforwards. Earnings per share rose to EUR 0.22 (previous year: EUR 0.06). Financial condition and net assets As of June 30, 2007, the consolidated equity ratio increased to around 38% (previous year: 32%). Including the net income for 2006, shareholders equity rose to EUR 162 million (previous year: EUR 149 million). At the same time, cash and cash equivalents contracted by EUR 47 million to EUR 85 million (previous year: EUR 132 million) primarily as a result of the commitment of funds in growing operating business. Thus, inventories rose by 17% to EUR 165 million due to the work commenced on numerous short-term contracts as well as stockpiling at the new facilities in China. At the same time, Nordex reduced its trade payables from EUR 66 to 61 million to make use of cash discounts. Other current liabilities dropped by 24% to EUR 142 million. At the same time, trade receivables and future receivables from construction contracts were reduced by 27% to EUR 56 million. The commitment of funds to growing business volumes is also reflected in the net cash outflow of EUR 39.2 million from operating activities. The working capital ratio rose to 9.8% as a result of the drop in the advance payment ratio to 116%. As of December 31, 2006, the advance payment ratio had been an unusually high 138%. Reservation fees for projects to be executed in the medium term stood at EUR 37 million as of June 30, Capital spending In the first six months of 2007, Nordex spent around EUR 7.2 million on assets (previous year: EUR 5.9 million). Additions to property, plant and equipment were valued at EUR 4.4 million and comprised plant, operating and business equipment of EUR 2.5 million and land, land-like rights and buildings of EUR 1.1 million. Further additions of EUR 2.8 million relate to intangible assets, particularly capitalized development costs. Research and development Development work on new products concentrated on engineering extensions to the 2.5 MW platform (N80/N90). A further model with a larger rotor diameter of 100 meters suitable for weaker wind conditions is to be launched on the market in the near future. In this way, Nordex will cover all typical location categories (IEC 1-3) with a single family of turbines. The advantage of this solution is the high percentage of identical components, allowing economies of scale to be harnessed in sourcing and product maintenance operations. The main steps entailed developing new rotor blades, redesigning the hub and machine bearer as well as adjustments to the control system. Product maintenance activities focused on adjustments to turbines to meet further international grid requirements. In this connection, a consistent model was developed for adapting the turbines to individual technical standards. At the same time, engineering was involved in the qualification of new suppliers. One aspect here entailed increasing local content in production activities in Asia. Employees As of June 30, 2007, the Nordex Group had 1,255 employees, an increase of 25% over December 31, 2006 (1,005). Recruiting activities concentrated on the operating units as well as the fast-growing foreign companies in China and France, which currently have 300 and 100 employees, respectively. Business performance

9 OUTLOOK 9 Outlook Nordex agreed on a new remuneration system with the Group employee council for staff at its German facilities, which no longer differentiates between Eastern or Western Germany or between office and technical staff. Instead, remuneration is based solely on the specific profile of requirements for the position in question. All positions are assigned to ten categories for which salary bands are defined. In this way, Nordex wants to enhance transparency and strengthen staff motivation. Outlook Growth expectations on the part of manufacturers of wind power systems remain upbeat. Market observers forecast annual average growth of around 17% in sales volumes over the next five years. Crucially, demand could fuel substantially stronger growth. In the short to medium term, however, market trends are liable to result in shortfalls in producers supply chains. The greatest demand is coming from growth markets in Western Europe (Italy, UK, France) as well as the United States and China. In terms of product segment, the greatest growth is expected in the multi-megawatt class ( MW turbines), in which sales volumes have risen by an annual 40% in the past three years. Spurred by its strong position in these regions and segments, Nordex has been outpacing its peers since In fact, its business has expanded by an average of 65% in the past two years, while the global sales of all producers combined has risen by only 37%. Looking forward into the medium term, Nordex is seeking top line growth of around 50% per year. For 2007, the Management Board projects sales of EUR million (2006: EUR 514 million). Thanks to the execution of more profitable projects combined with greater capacity utilization, the EBIT margin should widen to 6% (previous year: 3.0%). In the medium term, Nordex forecasts sales of EUR billion in The upper end of this range will be reached provided that, among other things, market conditions remain stable and sufficient internal and external production capacity is available. The operating margin (EBIT) is expected to widen to 9 12% thanks to economies of scale. All in all, Nordex plans to invest around EUR 280 million in the construction of new production facilities and extensions to existing ones by 2011 to ensure that it remains on its growth trajectory. Risks and opportunities In the first half of 2007, there were no material changes in the risks and opportunities in the Group s expected performance described in detail in the Nordex AG annual report for 2006.There are no risks to the Group s going-concern status. Nor are any such risks discernible in the future. Events after the conclusion of the year under review On July 19, 2007, Nordex AG issued 2.5 million new shares at a price of EUR each using its authorized capital. The equity issue net of transaction costs generated proceeds of around EUR 73.9 million. Thanks to the very strong demand, the issue was fully subscribed within a short period of time. The Company plans to use the proceeds to finance its continued growth, particularly the planned extensions. Outlook

10 FINANCIAL STATEMENTS OF NORDEX GROUP 10 Financial statements CONSOLIDATED BALANCE SHEET as of June 30, 2007 (IFRS) 06/30/ /31/2006 EURO 000s EURO 000s Cash and cash equivalents 84, ,909 Trade receivables and future receivables from construction contracts 56,413 77,606 Inventories 165, ,197 Current financial assets 1,283 1,298 Other current assets 21,690 15,073 Current assets 329, ,083 Property, plant and equipment 28,919 27,837 Goodwill 9,960 9,960 Capitalized development costs 11,615 11,731 Other intangible assets Non-current financial assets 7,077 7,156 Other non-current assets 1,077 1,077 Deferred tax assets 39,220 31,721 Non-current assets 98,075 90,358 Assets 427, ,441 Trade payables 60,743 66,480 Provisions for income tax 1,421 1,209 Other provisions 32,943 34,311 Other current liabilities 142, ,054 Current liabilities 237, ,054 Non-current borrowings 358 1,199 Pensions and similar obligations Other non-current liabilities 7,884 7,953 Deferred tax liabilities 19,683 11,260 Non-current liabilities 28,381 20,861 Shareholders equity 162, ,526 Shareholders equity and liabilities 427, ,441 Financial statements

11 FINANCIAL STATEMENTS OF NORDEX GROUP 11 Financial statements CONSOLIDATED INCOME STATEMENT (IFRS) for the periode January 1, 2007 June 30, /01/ /01/ /04/ /04/ /30/ /30/ /30/ /30/2006 EURO 000s EURO 000s EURO 000s EURO 000s Sales 322, , , ,007 Changes in inventories and other own work capitalized 8, ,582 2,850 Total revenues 331, , , ,857 Other operating income 3,575 2,288 1, Cost of materials - 261, , , ,750 Personnel costs -24,913-19,049-12,885-9,952 Depreciation - 6,537-5,856-3,418-3,002 Other operating expenses - 27,168-18,255-14,217-8,201 Operating profit/loss (EBIT) 15,267 7,593 9,722 3,931 Other interest and similar income 2, , Interest and similar expenses -3,052-2,246-2, Net financial result , Profit/loss from ordinary activity before tax 14,749 6,026 9,281 3,385 Income taxes -1,142-2, ,290 Net income 13,607 3,737 8,884 1,095 Minority interests Earnings attributable to the equity holders of the parent company 13,823 3,737 8,955 1,095 Earnings per share* *) on the basis of a weighted average number of shares: 1st half of 2007: million shares (previous year: million shares)/ in the 2nd quarter of 2007: million shares (previous year: 60,661 million shares) Financial statements

12 FINANCIAL STATEMENTS OF NORDEX GROUP 12 Financial statements CONSOLIDATED CASH FLOW STATEMENT (IFRS) for the periode January 1, 2007 June 30, /01/ /01/ /30/ /30/2006 EURO 000s EURO 000s Operating activities: Net profit/loss for the year 13,607 3,737 + Depreciation on non-current assets 6,537 5,856 /+ Decrease/increase in pension provisions 7 0 +/ Increase/decrease in other provisions and tax provisions - 1, Loss from disposal of non-current assets 0 2 /+ Increase/decrease in inventories - 24,208-21,634 /+ Increase/decrease in trade receivables and future receivables from construction contracts as well as other assets not assigned to investing or financing activities 14,578-38,592 +/ Decrease/increase in trade payables and other liabilities not allocated to investing or financing activities - 49,527 39,776 +/ Changes in deferred taxes 924 1,662 = Cash flow from operating activities - 39, Investing activities: + Payments received from the disposal of property, plant and equipment/intangible assets Payments received from the disposal of financial assets Payments made for investments in property, plant and equipment/intangible assets - 7,169-5,454 Payments made for investments in financial assets = Cash flow from investing activities - 7,065-5,666 Financing activities: + Payments received on account of capital increase 0 71,840 + Change in current bank loans ,037 = Cash flow from financing activities ,803 = Cash change in cash and cash equivalents - 47,144 52,307 + Cash and cash equivalents at the beginning of the period 131,909 19,493 + Exchange rate-induced change in cash and cash equivalents 7 2 = Cash and cash equivalents at the end of the period (Cash and cash equivalents carried on the face of the consolidated balance sheet) 84,772 71,802 Financial statements

13 FINANCIAL STATEMENTS OF NORDEX GROUP 13 Financial statements CONSOLIDATED STATEMENTS OF EQUITY MOVEMENTS (IFRS) Issued Share Other Foreign Minority Consoli- Consoli- Total capital premium equity currency interests dated net dated net equity components equalization profit/loss profit/loss item carried forward EURO 000s EURO 000s EURO 000s EURO 000s EURO 000s EURO 000s EURO 000s EURO 000s Balance on January 1, ,345 82,760 14, , , ,526 Consolidated net income for fiscal 2006 carried forward ,790 12,790 0 Exchange rate differences Earnings attributable to the equity holders of the parent company in 2007 (excluding minority interests) ,823 13,823 Minority interests '60/3/ ,345 82,760 14, ,075 13,576 13, ,127 Balance on January 1, ,819 16,446 13, ,003 8,217 63,453 Consolidated net income for fiscal 2005 carried forward ,217 8,217 0 Cash equity issue 5,526 66, ,840 Equity issue costs netted Exchange rate differences Consolidated net income for , ,737 3,737 '6/30/ ,345 82,760 14, , , ,526 Financial statements

14 FINANCIAL STATEMENTS OF NORDEX GROUP 14 Financial statements MOVEMENTS IN NON-CURRENT GROUP ASSETS EXCLUDING DEFERRED TAXES Acquisition and production costs Commencing Additions First-time Disposals Reclassi- Closing balance consoli- fication balance 01/01/2007 dation 06/30/2007 EURO 000s EURO 000s EURO 000s EURO 000s EURO 000s EURO 000s Property, plant and equipment Properties, property-like rights and buildings 16,554 1, ,610 Technical equipment and machinery 17, ,229 Other equipment, operating and business equipment 18,769 2, ,153 Advance payments made and assets under construction 3, ,106 Total property, plant and equipment 56,754 4, ,098 Intangible assets Goodwill 14, ,461 Capitalized development costs 24,726 2, ,426 Other intangible assets 10, ,557 Total intangible assets 50,018 2, ,444 Non-current financial assets Investments in associates 5, ,567 Loans to associates 1, ,148 Other loans 2, ,207 Total non-current financial assets 9, ,922 Other non-current assets 1, ,077 Total non-current assets excluding deferred tax 116,850 7, ,541 Financial statements

15 FINANCIAL STATEMENTS OF NORDEX GROUP 15 Financial statements MOVEMENTS IN NON-CURRENT GROUP ASSETS EXCLUDING DEFERRED TAXES Depreciation Commencing Additions First-time Disposals Reclassi- Closing Book Book balance consoli- fication balance value value 01/01/2007 dation 06/30/ /30/ /31/2006 EURO 000s EURO 000s EURO 000s EURO 000s EURO 000s EURO 000s EURO 000s EURO 000s Property, plant and equipment Properties, property-like rights and buildings 4, ,364 13,246 12,529 Technical equipment and machinery 12,138 1, ,492 4,737 5,568 Other equipment, operating and business equipment 12,754 1, ,323 6,830 6,015 Advance payments made and assets under construction ,106 3,725 Total property, plant and equipment 28,917 3, ,179 28,919 27,837 Intangible assets Goodwill 4, ,501 9,960 9,960 Capitalized development costs 12,995 2, ,811 11,615 11,731 Other intangible assets 9, , Total intangible assets 27,451 3, ,662 21,782 22,567 Non-current financial assets Investments in associates 1, ,845 3,722 3,797 Loans to associates ,148 1,148 Other loans ,207 2,211 Total non-current financial assets 1, ,845 7,077 7,156 Other non-current assets ,077 1,077 Total non-current assets excluding deferred tax 58,213 6, ,686 58,855 58,637 Financial statements

16 NOTES GENERAL 16 Notes The non-audited interim consolidated report on Nordex AG and its subsidiaries for the first six months as of June 30, 2007 was prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) in the version adopted in the EU. In this connection, all International Financial Reporting Standards and interpretations of the International Financial Reporting Interpretations Committee binding as of June 30, 2007 were applied. The consolidated annual financial statements of Nordex AG were prepared in accordance with IFRS with exempting effect under German GAAP (HGB) in accordance with Section 315a of the German Commercial Code. At the same time, the consolidated annual financial statements and the Group management report comply with the EU directive on group accounting. The accounting principles observed in preparing this interim financial report match those used for the consolidated annual financial statements as of December 31, In addition, IAS 34 Interim Financial Reporting was applied. The annual report for 2006 is available on the internet at in the Investor Relations section. The Group is currently reviewing the possible effects of new and revised standards applicable for reporting periods after December 31, These interim financial statements must be read in conjunction with the consolidated annual financial statements for In the preparation of these interim consolidated financial statements, the same recognition and measurement policies were applied as those used in the consolidated financial statements as of December 31, Further details on the recognition and measurement policies applied are to be found in the notes to the consolidated financial statements as of December 31, In the absence of any express mention of differences, the comments included in the consolidated financial statements as of December 31, 2006 also apply to the interim financial statements for The business results for the first six months as of June 30, 2007 are not necessarily an indication of expected results for the year as a whole. The presentation of the income statement continues to be based on the classification rules prescribed by German accounting law using the costof-production method. In contrast to the previous year, the cost of external staff has been reported under other operating expenses. The figures for the previous year have been restated accordingly. The interim report was prepared in the Group currency euro. Any irregular expenses occurring in the fiscal year are only included or deferred in the interim financial report to the extent that such inclusion or deferral would also be reasonable at the end of the fiscal year. Notes

17 NOTES ON BALANCE SHEET 17 Notes Current assets Trade receivables as of June 30, 2007 came to EUR 56.4 million (December 31, 2006: EUR 77.6 million). The trade receivables recognized as of June 30, 2007 include adjustments of EUR 6.6 million (December 31, 2006: EUR 7.1 million). Of the future gross receivables from construction contracts of EUR million, advance payments received of EUR million were capitalized. In addition, advance payments received of EUR 96.1 million were assigned to other current liabilities. Non-current liabilities At EUR 28.4 million, non-current liabilities were up on December 31, 2006 primarily due to higher deferred income tax liabilities. Shareholders equity Shareholders equity is broken down in the Statement of Equity Movements for Nordex AG. Inventories increased as of June 30, This was primarily due to organic growth and the resultant sourcing of large-scale projects for current contracts as well as contracts expected in the short term. Non-current assets Changes in non-current assets are set out in the statement of changes in non-current assets net of deferred taxes. As of June 30, 2007, capital spending for fiscal 2007 was valued at EUR 7.2 million, with depreciation expense coming to EUR 6.5 million. At EUR 2.7 million, the additions particularly relate to research and development costs. Deferred tax assets primarily comprise tax losses which the Company expects to be able to deduct from corporate and trade tax liability in Germany. Current liabilities Other provisions dropped by EUR 1.4 million to EUR 32.9 million and primarily relate to general and individual guarantees in connection with order provisions. Notes

18 NOTES ON INCOME STATEMENT 18 Notes Sales Sales increased over the same period one year earlier from EUR million to EUR million and break down by region as follows: 01/01/ /30/ /01/ /30/2006 EUR mn EUR mn Germany Rest of Europe Rest of the world Total Changes in inventories and other own work capitalized Changes in inventories and other own work capitalized totaled EUR 8.8 million in the first six months of In addition to an increase of EUR 5.9 million in inventories, other own output of EUR 2.9 million, which includes research and development expenditure of EUR 2.7 million, was also included. Other operating income Other operating income stems from insurance claims, among other things. Cost of materials The cost of materials breaks down as follows: 01/01/ /30/ /01/ /30/2006 EUR mn EUR mn Cost of raw materials and supplies Cost of services bought The cost of raw materials and supplies also includes the cost of components and energy. The cost of services bought includes external freight, changes in order provisions, commission and externally sourced order-handling services. Personnel costs 01/01/ /30/ /01/ /30/2006 EUR mn EUR mn Wages and salaries Social security and pension and support expenses Notes

19 NOTES ON INCOME STATEMENT 19 Notes Group employee numbers were as follows: As of June 30 Fiscal ,255 Fiscal Change 468 Personnel numbers as of June 30, 2007 were up 468 compared with the same period of fiscal Other operating expenses Other operating expenses include travel expenses, legal and consulting costs, IT costs rentals and leasing payments, among other things. Transactions with related parties Related Company Transaction 1st half of Total 1st half of Total party sales sales EUR 000s EUR 000s Carsten Pedersen Welcon A/S Tower supplier , ,306 Dr. Hans Fechner G. Siempelkamp GmbH & Co. KG Supplier of castings ,167 Martin Rey Babcock & Brown Ltd. Sale of wind turbines including project companies , ,848 Notes

20 SEGMENT REPORTING 20 Notes The Nordex Group is engaged in the development, production, servicing and marketing of wind power systems. In addition to development and production, it provides preliminary project development services to support marketing, acquires rights and creates the infrastructure required to construct wind power systems at suitable locations. The Nordex Group is essentially a single-product company, meaning that secondary segment reporting can be dispensed with. Nordex breaks down its business into three geographic segments Germany, the rest of Europe and the rest of the world. This reflects the structure of the regional sales structure and takes account of local differences in risk and growth profiles. Nordex AG operates solely as a holding company and can therefore not be allocated to any of the three segments. Segmentation is based on the current and expected market shares and market growth for Nordex. Historically, the German market has been the largest volume market for Nordex. Given moderate growth conditions, Nordex will attempt to steadily widen its market share in the future. The rest of Europe (particularly France) is currently the segment with the greatest sales. Against the backdrop of the EU s harmonization efforts, the members of the European Union are converging in both political and economic terms. In the medium to long term, there is expected to be demand for electricity produced from wind power in EU countries. Accordingly, Nordex plans to widen its market share step by step in Europe as well. Asia as well as the United States must be viewed in terms of the potential for growth. The strong growth in demand in Asia prompted Nordex to establish nacelle and rotor blade production operations for the S70/S77 wind power system in China in 2006 with the aim of supplying the Asian market from that base. Demand in the United States is also expected to be strong. Segment sales comprise sales with third parties (external sales) as well as internal Group sales between the individual regions. The prices of deliveries between the individual segments are determined on an arm s length basis. External sales are assigned in accordance with the customer s location. Segment earnings are consolidated on the basis of external sales. The following table reconciles segment earnings with earnings before interest and tax (EBIT), segment assets with consolidated assets and segment liabilities with consolidated liabilities: Notes

21 SEGMENT REPORTING 21 Notes EURO 000s Germany Europe Rest of the world Total (excluding Germany) (Regions) Q2/2007 Q2/2006 Q2/2007 Q2/2006 Q2/2007 Q2/2006 Q2/2007 Q2/2006 adjusted adjusted adjusted adjusted Sales External sales 50,610 54, , ,645 19,588 10, , ,725 Sales between segments ,914 40,022 9, ,109 40,022 Total sales 50,610 54, , ,667 28,783 10, , ,747 Operating profit/loss (EBIT) 3,501 1,316 22,433 12, ,933 14,624 Miscellaneous information Segment assets*** 170, , , ,512 70,972 34, , ,529 Interest-bearing assets*** 2,645 2,176 19,862 29,994 11,093 5,531 33,601 37,701 Income tax refund claims*** 39,220 31, ,220 31,721 Capitalized development costs*** 11,615 11, ,615 11,731 Group assets*** 224, , , ,506 82,065 39, , ,682 Segment liabilities*** 210, , , ,792 56,337 22, , ,510 Income tax liabilities*** 5,919 5,401 13,545 5, ,683 11,260 Interest-bearing liabilities*** 210 1, ,192 Liabilities from finance leases*** 8,018 8, ,018 8,078 Group liabilities 224, , , ,124 56,556 22, , ,040 Capital spending 1,670 2, , ,365 2,871 Depreciation/amortization 2,524 2, ,031 3,101 EURO 000s Consolidation Total for Group Nordex AG* Total for Group (excluding Nordex AG) after consolidation Q2/2007 Q2/2006 Q2/2007 Q2/2006 Q2/2007 Q2/2006 Q2/2007 Q2/2006 adjusted adjusted adjusted adjusted Sales External sales Sales between segments 86,109 40, Total sales 86,109 40, , , , ,725 Operating profit/loss (EBIT) ,933 14,624 10,666 7,031 15,267 7,593 Miscellaneous information Segment assets*** 466, , , ,207 76,734 54, , ,080 Interest-bearing assets*** ,601 37,701 51,171 94,208 84, ,909 Income tax refund claims*** ,220 31, ,220 31,721 Capitalized development costs*** ,615 11, ,615 11,731 Group assets*** 466, , , , , , , ,441 Segment liabilities*** 411, , , ,195 4,721 18, , ,378 Income tax liabilities*** ,683 11, ,683 11,260 Interest-bearing liabilities*** , ,134 1,199 Liabilities from finance leases*** 0 0 8,018 8, ,018 8,078 Group liabilities 411, , , ,725 4,750 18, , ,915 Capital spending 0 0 3,365 2,871 1, ,494 3,417 Depreciation/amortization 0 0 3,031 3, ,721 3,300 * At the level of Nordex AG operating assets an liabilities are reported before capital and debt consolidation. ** Capital spending and depreciation net of capitilized development costs. ***Year-ago figures as of December 31, Notes

22 RESPONSIBILITY STATEMENT 22 Erläuterungen Statement in accordance with DRS The interim financial statements and the interim management report have not been audited by independent auditors in accordance with Section 317 of the German Commercial Code. Nor have they been submitted to review by independent auditors. Declaration in accordance with sections 37y, 37w (2) of The German Commercial Code To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group, and the interim management report of the group includes a fair review of the development and performance of the business and the position of the group, together with a description of the principal opportunities and risks associated with the expected development of the group for the remaining months of the financial year. Rostock, August 2007 T. Richterich C. Pedersen H. Müller B. Schäferbarthold Chief Executive Officer Management Board Management Board Management Board Erläuterungen

23 MANAGEMENT BODIES/CALENDAR OF EVENTS 23 Management bodies Stock and stock options held by members of the Management Board and the Supervisory Board Stocks Carsten Pedersen COO Sales 99,000 and a further 2.6 million via a 50% holding in Nordvest A/S Dr. Hansjörg Müller COO Operations Yves Schmitt Chairman of the Supervisory Board 182,695 * Jan Klatten Member of the Supervisory Board 1,500,000 ** Jens-Peter Schmitt Member of the Supervisory Board 11,250 Dr. Hans Seifert Member of the Supervisory Board 50,000 * indirectly via the share held in CMP Fonds I GmbH ** via a sub-participation held by momentum Beteiligungsgesellschaft GmbH in CMP Fonds I GmbH Financial investors CMP Fonds I GmbH and Goldman Sachs have entered into agreements with individual members of the Management Board concerning dormant sub-participations (June 30, 2007: equivalent to 371,058 shares). These agreements provide for a share in the gains in the event of these financial investors selling shares in Nordex AG. CALENDAR OF EVENTS Report on the third quarter of fiscal 2007 with telephone conference November 15, 2007 Contact Nordex AG Bornbarch Norderstedt Phone Fax Design Heuer & Sachse Werbeagentur GmbH, Paul-Dessau-Straße 3c, Hamburg Lithographie LITHOKONTOR WENIG GmbH, Hamburg, Photos Nordex Management bodies/calendar of events