Interim Report. First nine months of fiscal year 2009/10 (2009/04/ /12/31)

Transcription

1 Interim Report First nine months of fiscal year 2009/10 (2009/04/ /12/31)

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3 Contents Key figures of REpower Systems Group 4 Group Management Report on the first nine months of fiscal year 2009/10 5 News in the reporting period 5 Overall economic trends 6 Sector development 7 The shares 8 Annual General Meeting 9 Installed capacity 9 Order development 10 Sales and earnings situation 11 Net assets and financial situation 11 Research and development 12 Personnel situation 13 Risks and opportunities 13 Outlook 14 Supplementary report 14 Responsibility statement 15 Consolidated Interim Financial Statement as of 31 December 2009 according to IFRS 16 Consolidated balance sheet 16 Consolidated income statement 18 Group cash flow statement 19 Statement of changes in consolidated shareholders equity 20 Group Notes as of 31 December 2009 according to IFRS 22 Accounting policies 22 Scope of consolidation 22 Investments accounted for using the equity method 22 Notes to the consolidated balance sheet 24 Notes to the consolidated income statement 24 Notes to the consolidated cash flow statement 25 Segment reporting 26

4 4 Group Management Report Key figures of REpower Systems Group Key figures (IFRS) 2009/04/ /12/ /04/ /12/ /04/ /03/31 Sales in EUR k 920, , ,209,090.7 Total performance in EUR k 932, , ,220,548.7 Operating result in EUR k 56, , ,898.8 Earnings before tax in EUR k 47, , ,552.6 Net profit in EUR k 32, , ,936.5 Investments in EUR k as per record date 31, , ,169.6 Staff as per record date (REpower Systems Group) 1,949 1,640 1, /12/31 Total assets in EUR k 924,812.7 Shareholders equity in EUR k 435,368.0 Shareholders equity ratio in % 47.1 Number of no-par shares (1 EUR) 9,177,939 Result per share (undiluted) in EUR 3.54 Closing price Xetra as per record date in EUR

5 Group Management Report 5 Group Management Report on the first nine months of fiscal year 2009/10 News in the reporting period The first nine months of fiscal year 2009/10 were satisfying for REpower Systems AG, despite the turbulent worldwide economic situation. Right at the beginning of the reporting period, the company presented its technological innovations the 3.37 MW onshore turbine REpower 3.XM and the 6.15 MW offshore turbine REpower 6M to interested members of the public at a large number of international trade fairs. The REpower 6M is a further development in the successful 5-megawatt technology. Like the REpower 5M, it is specifically designed for use on the open sea in deep waters. Three REpower 6M test and reference turbines were installed onshore at the German/Danish border in spring The prototype for the efficient and service-friendly REpower 3.XM was erected in December 2008 on the Südermarsch wind farm near Husum (Schleswig-Holstein). Two more 3.XM wind turbines were installed and commissioned in spring During the reporting period, REpower Systems AG announced several major incoming orders. In addition to a contract with the French project developer Valorem relating to the supply and construction of a total of 21 REpower MM92 wind turbines for projects in France, the company concluded supply contracts with two project companies for a total of 31 REpower MM92 turbines for wind farms in Italy. REpower also obtained approval from E.ON Climate and Renewables for the supply of two wind farm projects in north-east England. A total of 15 type MM82 turbines are to be installed there. REpower also received several orders in North America: the company signed a contract with US project developer Heritage Sustainable Energy LLC for the supply of nine wind turbines in the 2-megawatt class for the Stoney Corners II project in Michigan (USA). In addition, REpower signed a supply contract with the US company enxco a subsidiary of EDF Energies Nouvelles for megawatts. The contract, which is still subject to suspensive conditions, relates to 70 REpower MM92 turbines. The turbines are intended for a project on the western coast. REpower also sealed the biggest onshore contract in the company s history in North America in November: REpower signed a framework agreement with EDF Energies Nouvelles and RES Canada for the supply of MM series wind turbines with a total capacity of up to 954 MW for a total of five wind farm projects in the Canadian province of Quebec. A minimum purchase volume of 748 megawatts is guaranteed in the contract. The offshore division of REpower Systems AG achieved further success in the first nine months of fiscal year 2009/10: the company concluded a contract with the energy provider Vattenfall regarding the supply of 30 REpower 5M turbines for the British offshore project Ormonde. The 5M nacelles and hubs are to be assembled at the Bremerhaven offshore production and logistics center and delivered from the end of 2010 onwards. REpower Systems AG also constructed a total of six REpower 5M wind turbines at the first German offshore wind farm, alpha ventus, in under two months during the fourth quarter of the 2009 calendar year. The company benefited from its experience on projects such as Beatrice (Scotland) and Thornton Bank (Belgium). The turbines have a rated output of five megawatts (MW) each and the tips of the blades reach 155 meters above sea level. The alpha ventus wind farm is to be installed by a consortium consisting of EWE, E.ON and Vattenfall, and will be located around 45

6 6 Group Management Report kilometers north of the island of Borkum. Each of the six turbines constructed at alpha ventus is to supply around 18 million kilowatt hours (kwh) of electricity to the grid per year; according to the operating consortium, the wind farm can supply around 50,000 households in total. As early as May, REpower Systems AG signed an agreement with an international consortium of banks for a syndicated loan of EUR 600 million. The loan, with a term of three years, consists of one tranche of EUR million for the provision of warranties and guarantees and a second tranche of EUR million as working capital. The main shareholder in REpower Systems AG, Suzlon Energy Ltd, announced in June that it had increased its stake in the share capital of REpower Systems AG to %. The Indian company had bought the remaining 14.4 % stake of the Martifer Group in the share capital of REpower Systems AG. There were also staff changes: the Supervisory Board of REpower Systems AG announced in December that Derrick Noe had been appointed as the company s new CFO. He succeeds Pieter Wasmuth, who left the company on August 31, Noe, who took up his post on February 1, 2010, brings with him a wealth of international experience from fields such as the automobile, retail, industrial and pharmaceutical sectors. Furthermore the Supervisory Board of REpower Systems AG extended the appointments of the three Board Members Per Hornung Pedersen (CEO), Matthias Schubert (CTO) and Lars Rytter Kristensen (CSCO). Since January 2008, Per Hornung Pedersen has been CEO of REpower Systems AG. His appointment as Chairman of the Executive Board runs until 31 March Also until 31 March 2012 Lars Rytter Kristensen s appointment as CSCO was extended. Since April 2001, Matthias Schubert has been a member of the REpower Systems AG Executive Board as Chief Technical Officer (CTO). His contract has now a term of three years and runs until 31 March Other milestones achieved during the reporting period were the entry to the Polish market, the laying of the foundation stone and topping-out ceremony for the new Technical Center in Osterrönfeld and the awarding of the prize for investment in jobs to REpower Systems AG. Overall economic trends The German economy experienced a decline for the first time in six years in 2009 and saw a massive slump in production, triggered by the financial and economic crisis. Although there was a slight stabilization at a low level during the course of the year, production capacity was still not being fully utilized again towards the end of the year, according to the Halle Institute for Economic Research (IWH). The Federal Office of Statistics reported that the gross domestic product (GDP) for 2009 as a whole was 5.0 % below that of the previous year. German exports, which are traditionally strong, also continued to be heavily influenced by the financial crisis, according to BGA, the German wholesale and export federation. The association does not anticipate a return to precrisis levels in the near future. With adjustments for prices, exports fell by 14.7 %, which means that foreign trade significantly held back economic development. Although short-time working prevented unemployment in many cases during the course of the year, the Federal Employment Agency reported that over 3.4 million people nationwide were unemployed on average in the year, 155,000 more than in the year before. The unemployment rate was therefore 8.2 % on average in 2009, an increase of 0.4 % on the previous year.

7 Group Management Report 7 Investment by German companies also fell sharply during At the end of the year, the Munich-based Ifo Institute published the results of a survey of 1,800 companies, which showed a general decline in investment by 22 % to EUR 36.5 billion. The engineering sector was particularly restrained. However, there were signs of cautious optimism in the Ifo business climate index, the most important indicator of sentiment in the German economy. The index, which is calculated monthly based on 7,000 companies, reported its ninth consecutive increase in December, the highest level since July However, experts have mainly attributed this easing following the severe phase of the recession to government economic stimulus packages and low interest rates. The global economy also experienced its worst recession for 60 years in 2009, shrinking by around 1 % compared with 2008, after an upward trend that had lasted for five years. The International Monetary Fund (IMF) is predicting 3 % growth for the global economy in According to the IMF s calculations, however, commodity prices have also risen sharply again since worldwide industrial production reached a low point in February 2009: in 2009, prices are reported to have seen their sharpest increase since records began. This could thwart any economic recovery this year. At European level, the statistics office Eurostat in January presented a second estimate for the EU s gross domestic product in the third quarter of According to this, the GDP rose during the year, boosted by exports, among other things. In the euro zone (EZ16), GDP grew by 0.4 % compared with the previous quarter, while in the European Union as a whole it rose by 0.3 %. Real growth in GDP of 0.3 % has been forecast for the fourth quarter of For 2009 as a whole, however, the European Commission is anticipating a drop of 4 % year-on-year. Sector development According to current statistics of the Global Wind Energy Council (GWEC), the global market for wind energy enjoyed an above-average, positive performance in 2009, contrary to all fears. With new installations of 37,466 MW, the year-on-year growth rate was tight 39 %. At the end of 2009, wind turbines with a total rated output of 157,899 MW had been installed across the world. This represents year-on-year growth of almost 31 %. With new installations of 13,000 MW, the Chinese market, which has almost doubled its capacities compared to 2008, was the strongest growth force. One reason for this could be the plans of the Chinese government to introduce a fixed feed-in tariff for onshore wind energy. The National Development and Reform Commission (NDRC) issued an announcement in July regarding feed-in tariffs for onshore wind energy projects: four tariff levels are to be introduced in future, ranging from CNY 0.51 to CNY 0.61 (corresponds to Eurocent) per kilowatt hour (kwh) fed in, depending on the location and the project conditions. The government hopes that this measure will standardize the pricing system and that this will encourage investment in wind energy projects, as the planning ability will be improved. The US wind energy market also performed much more positively than initially expected, with 9,922 MW installed there in This represents year-on-year growth of almost 19 %. According to experts, the climate package containing important investment incentives for wind energy projects which was passed under the Obama administration in early 2009 was responsible for this.

8 8 Group Management Report New installations in Germany also increased year-on-year: according to current German Wind Energy Institute (DEWI) statistics, a total of 952 new wind turbines with a total power of 1,917 MW were installed in Germany in This represents year-on-year growth of around 15 %. This means that 21,164 wind turbines with a total rated output of 25,777 MW were feeding clean electricity into the German electricity grids at the end of December According to DEWI, the improved basic conditions which have applied since the amendment of the Renewable Energy Act (EEG) for wind energy projects on land and at sea are one of the factors behind this positive development. This amendment came into force on January 1, The feed-in tariff for turbines constructed on land (onshore turbines) rose to 9.2 cents/kwh; for turbines installed on the open sea (offshore turbines), grid operators have even been paying 13 cents/kwh since that time. In addition, the amendment will grant a bonus of an additional 2 cents/kwh for offshore wind turbines for which construction begins before December 31, The System Service Ordinance (SDLWindV) also came into effect in July 2009, which sets down in law extensive technical and operational requirements of wind farms in Germany. The aim of the ordinance is to increase the security and stability of Germany s electricity grids, even with a high proportion of wind energy in the grid. There is also to be targeted promotion of technical developments in this field, setting the course for the further expansion of wind energy. A system service bonus was also introduced with this ordinance. This is intended to offset the cost of more complex turbine technology, additional expenses involved in planning activities and engineering services and expenses for refitting and assessing/certifying wind farms. These new legal regulations are to support the German government s ambitious target of increasing the proportion of renewable energies to at least 30 % by Meanwhile, the Copenhagen climate summit in December dealt with the setting of international goals for the protection of the environment. The participating government representatives faced the challenge of arranging a follow-up agreement to the Kyoto Protocol. However, the tough negotiations resulted in a minimum consensus rather than clear targets. After the German chancellor Angela Merkel negotiated the Copenhagen Accord together with 25 heads of state and government, this received harsh criticism in the plenary assembly. Owing to official objections, the paper could not be passed as an official UN decision in the end, and was merely noted by the 120 government leaders. The Copenhagen Accord states the target of limiting global warming to less than 2 degrees. The agreement also contains pledges by industrial nations to provide financial aid for climate protection to developing countries. The share Since the highs of summer 2007, the development of the world s stock exchanges has been sobering, with new ten-year lows up to March However, this was then followed by a trend reversal for many indices: in the world s leading share indices, such as the US S&P 500, Japan s Nikkei 225 and the European Euro Stoxx 50, significant upward movements emerged. Germany s DAX 30 share index also defied the economic crisis in 2009, recording the best year for the stock markets since 2005, with an increase of 24 %. Towards the end of 2009, the leading index even surpassed the 6,000-point mark. There was little sign of this euphoria at the beginning

9 Group Management Report 9 of 2009: the index slumped dramatically in the first few months, although it rose sharply again after overcoming the low of 3,588 points in March. The selection indices MDAX and SDAX also recorded substantial gains of 34 % and 27 % respectively in the stock market year. However, the best performance was achieved by the German technology stocks index (TecDAX). At 824 points, the index was higher in December than at any time in 2009: the 30 technology stocks gained around 61 % over the whole year. At the beginning of the 2009 calendar year, the development of REpower s share price was similar to that of its benchmark, the TecDAX. REpower shares also reached their annual low on Xetra in early March (EUR 72.80) and then achieved a turnaround. The share price recorded an increase of about 12 % in the 2009 calendar year; in the reporting period, it even rose by 42 %. Following a sharp rise at the end of May, the price of REpower shares remained largely within a range of EUR 100 to EUR 120 between June and August. After dropping briefly below the EUR 100- mark in September, the share price increased again, closing at EUR on December 30, 2009, near its annual high of EUR (December 28, 2009). An average of 3,444 REpower shares were traded on a total of 191 trading days on the electronic platform Xetra in the first nine months of fiscal year 2009/10. The calculated average share price also on Xetra was EUR Annual General Meeting The Annual General Meeting of REpower Systems AG took place on October 21, 2009 at the company s head office in Hamburg. With over 100 visitors, % of capital carrying voting rights was represented. A total of eight items were on the agenda. These also included the resolution on the appropriation of the net retained profit for the 2008/2009 fiscal year. The proposal of the Executive Board and the Supervisory Board to carry forward the net retained profit was backed by the shareholders. The other items on the agenda were also approved with a large majority. The appointment of Dr. Christof Maria Fritzen as a member of the Supervisory Board was confirmed by his re-election. With a ruling of the Hamburg District Court dated August 15, 2008, Fritzen replaced Jan Andreas Leonardus Horbach, who had stepped down from his seat on the Supervisory Board on June 6, Installed capacity In the period from April to December 2009, REpower Systems AG produced a total of 311 wind turbines with total output of MW, which generated sales. In the prior-year period, 416 turbines with an output of MW were installed or delivered. In the period from April to December 2009, REpower Systems AG produced a total of 311 wind turbines with total output of MW, which generated sales. In the prior-year period, 416 turbines with an output of MW were installed or delivered. One of the reasons for this decline is that the implementation of some projects had begun in the reporting period but was not completed by the reporting date. The percentage of completion method (PoC) was applied so that these projects can be reported in the income statement according to their degree of completion.

10 10 Group Management Report Sales-related wind turbine types 9M 2009/10 9M 2008/ /04/ /12/ /04/ /12/31 Turbine type Number MW Number MW 6M M XM MM MM MM Total Order development At the end of December 2009, the order backlog was somewhat smaller compared to the previous year: as of December 31, 2009, it was 607 wind turbines (previous year s reporting date: 708 wind turbines) with total rated output of 1, megawatts (December 31, 2008: 1,502.6 MW). By contrast, the contractually-secured order volume rose from EUR 1.6 billion at the end of December 2008 to its present level of almost EUR 1.7 billion. This is a result of the modified product mix and a higher scope of supply for particular orders. Of the number of wind turbines in the order backlog, 26 % are for Germany and 74 % are for other countries. Order backlog development 2009/12/ /12/31 Turbine type Number MW Number MW 6M M XM MM MM Summe 607 1, ,502.6

11 Group Management Report 11 Sales and earnings situation The figures for the first nine months of fiscal year 2009/10 (April 1, 2009-December 31, 2009) were compared with the figures for the corresponding period of the previous year (April 1, 2008-December 31, 2008). Including the financial data for the consolidated participations, the sales figure for the first nine months of fiscal year 2009/10 is EUR million, compared with EUR million in the prior-year period. This represents an increase of more than 8 %. After taking changes in inventory and other company-produced additions to plant and equipment into consideration, total operating performance comes to EUR million (previous year: EUR million). The EBIT figure achieved in the reporting period comes to EUR 56.3 million, compared to EUR 38.1 million in the prior-year period. After the deduction of interest, the pre-tax result comes to EUR 47.2 million (previous year: EUR 40.1 million). Net income increased year-on-year by around 23 % from EUR 26.1 million to its current level of EUR 32.1 million. The resulting figure for earnings per share is EUR 3.54 (previous year: EUR 2.98). Net assets and financial situation The balance sheet items as at the reporting date of December 31, 2009 were compared with the items as at the reporting date for the annual financial statements of March 31, In the reporting period, total assets fell by EUR 3.6 million to EUR million. This is mainly due to the decline in current assets from EUR million to EUR million. Within current assets, other assets fell by EUR 53.4 million to EUR 68.8 million; trade receivables also declined by EUR 50.4 million to EUR 73.2 million. At the same time, inventories increased by EUR 54.8 million to EUR million as per the reporting date. Cash and cash equivalents increased from EUR million to EUR million in the reporting period. Within liabilities, the decline in total assets was caused by the EUR 42.7 million decline in current liabilities to EUR million. Within this item, it was mainly trade receivables that declined; they came to EUR million on the reporting date (previous year: EUR million). Within non-current liabilities, which came to a total of EUR 53.2 million on the reporting date, long-term loans grew from EUR 12.3 million to their current level of EUR 26.3 million. In addition, equity capital rose from EUR million to EUR million as of December 31, In the reporting period, EUR 31.7 million was used for investments.

12 12 Group Management Report Research and development As a result of the amendment of the Renewable Energy Act (EEG 2009) and the announcement of a System Service Decree (SDLWindV), far-reaching technical and operational requirements for wind turbines were laid down in law in REpower has developed a package of network and REguard SCADA products (known as the EEG product package ) to form the basis for an SDLWindVcompliant wind farm; this will ensure that existing and new systems meet requirements. Having submitted measurement results and simulation models to certifiers, REpower is now expecting initial unit certificates to be issued during spring The three prototypes of the REpower 6M which were installed not far from the German-Danish border in early 2009 are operating reliably in automatic mode. Comprehensive measurements of noise and power curves as well as of the electrical properties are currently being performed. In preparation for major offshore projects, REpower is also looking for further onshore test sites in order to gain further experience operating what is currently the most profitable wind turbine for the offshore market. Development of REpower s own rotor blade for the 6M wind turbine (RE61.5) is currently on schedule, so that the first rotor blades will probably enter production in mid The first rotor blade of this type will then undergo suitable blade tests, and the first rotor blade set will be assembled on a turbine on land in order to measure the performance curve with this new rotor blade. In order to use the benefits of REpower s own control unit, REguard Control B, in the series 5M turbines as well, REpower Systems AG has been working on further developing this product since last year. The aim behind this is to meet the stricter requirements from grid connection conditions and to optimize remote turbine monitoring; this is important, particularly for offshore projects. To this end, two existing wind turbines were converted to the new control unit at a wind farm on land following an indoor test. The first turbine has already re-entered automatic operation with very promising results, while the second one is currently being commissioned. A total of five REpower 3.XM wind turbines had been installed by December 31, In addition, the first prototype of a 98-meter tower was installed in December. On the basis of know-how gained from the first systems from the new series to be installed, the power guarantee was set at 3,370 kilowatt (kw). The type tests for wind zone 4 (coastal standard section) for the two system variants have been performed. The type certificate will follow in Two prototypes of an MM92 cold climate version (CCV) were installed in Canada in December. This variant of the MM series has been specially developed for use on cold sites and allows operation with an outside temperature as low as -30 C. Following the successful noise measurements of the MM92, the guaranteed acoustic output level for this system variant was lowered from decibel (db) to db. Both values correspond to a best possible rating (A-rating) on the decibel scale.

13 Group Management Report 13 Personnel situation The number of employees in the REpower Systems Group increased over the previous year s reporting date from 1,640 employees on December 31, 2008 to 1,949 employees on December 31, Employees 2009/12/ /12/31 Employees of REpower Systems Group 1,949 1,640 Employees of REpower Systems AG 1,380 1,206 Risks and opportunities In the framework of the implementation of the new risk management system the company performed a comprehensive, pan-division risk inventory in the reporting period. Compared to the existing procedure, the new concept allows a more sophisticated examination of the individual risks. This means that it is easier to systematically track individual risk control and reduction measures which have been initiated. As part of the conversion of the risk management concept, and the ensuing re-acceptance of all existing risks, the current risk evaluation system was subjected to a critical test. In the reporting period, increased activity in markets outside the euro zone again led to the risk of currency exchange rate fluctuations, which can have detrimental effects on the assets, liabilities, financial position and profit or loss of REpower Systems Group. A comprehensive currency management system was implemented in order to counter this risk. If the economy recovers, the currently low interest level could rise which could lead to higher financing costs. On the other hand, a possible economic recovery could also have positive effects on the order backlog. In order to manage the risk of becoming dependent on individual suppliers, a system for continuous monitoring of the suppliers economic situation was established as part of supplier supervision and monitoring. In order to counter the possibility of further effects of the global financial market crisis on the assets, liabilities, financial position and profit or loss of REpower Systems Group, risk control and countermeasures are being used at various places in order to detect these effects at an early stage.

14 14 Group Management Report Outlook The 2009 wind year exceeded the expectations of all experts: the strong industry growth, driven by China and the USA, has shown that the wind industry defied the global financial and economic crisis to a very large extent. International market researchers such as Make Consulting will probably adjust their forecasts following publication of the GWEC statistics. According to a Make study from September 2009, they are expecting global new installations of 33,423 MW for 2010; but according to GWEC, this figure was already exceeded in Despite everything, the experts agree that growth of the young industry will be driven mainly by Asia, North America and Europe in the current year. In addition to China and the USA, the main countries at the top in 2010 will be Germany, Spain, France and the UK. Offshore wind energy in particular will be a major topic of interest in Europe in the coming years. Germany reached a milestone with the completion of the first German wind farm in the German North Sea called alpha ventus. By 2015, offshore wind turbines with a total rated power of over 10,000 MW are to be installed in the German North Sea and Baltic Sea. The UK also has ambitious offshore expansion goals: in early 2009, Prime Minister Gordon Brown reported the installation of nine offshore designated zones with a planned total capacity of around 32,000 MW off the coast of the north of England. In the third allocation round (Round 3), the UK decided which consortia of operators the project for the zones is to be awarded to. REpower believes the global market for onshore wind energy will continue to grow stongly in the medium term due to the foreign markets of North America and Asia. With its successful MM type series and the new REpower 3.XM turbine, the company is also excellently prepared for the growing onshore market. For the 2009/10 fiscal year, REpower most recently forecasted sales of EUR 1.4 billion and an operating profit margin (EBIT margin) of 7.5 %. The Executive Board has confirmed these targets, but would like to emphasize that uncertainty regarding the achievement of its goals has increased significantly due to a growing number of projects postponed by customers and to the long and persistent winter weather in the past weeks. This could possibly lead to sales deferrals from the current to the following fiscal year. A concluding statement concerning the occurrence probability of this risk cannot be made at this point in time. Supplementary report In February, REpower Systems AG and the RWE project company for Nordsee Ost have concluded a contract on the delivery of 48 REpower 6M offshore wind turbines. This is the first contract for supplies under the framework agreement that REpower closed with RWE Innogy one year ago. The 48 turbines of the type REpower 6M are based on the proven technology of the 5M range, have a total capacity of approx. 295 megawatts and are intended for the Nordsee Ost offshore wind farm, due to be built in the German Bight between 2011 and The wind farm will be situated about 22 miles (35 km) north of the island of Helgoland, at a depth of 22 to 25 meters. The first wind turbines should already start running mid year 2012.

15 Responsibility statement 15 Responsibility statement 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. Hamburg, 12 February 2010 The Executive Board of REpower Systems AG Per Hornung Pedersen CEO Derrick Noe CFO Matthias Schubert CTO Lars Rytter Kristensen CSCO

16 16 Consolidated Financial Statement Consolidated balance sheet of REpower Systems AG in compliance with IFRS Assets (EUR) 2009/12/ /03/31 Current assets Liquid funds 140,064, ,238,648 Shares in project corporations 25,999 25,999 Future accounts receivables from contract orders 123,310, ,866,158 Trade accounts receivable 73,249, ,609,985 Intragroup receivables 5,495, ,404 Receivables from associates and joint ventures 22,119,256 50,193,352 Inventories 295,709, ,870,415 Total other assets 68,775, ,151,613 Total current assets 728,750, ,413,574 Non-current assets Other Intangible assets 33,291,341 26,975,803 Goodwill 1,387,367 1,387,367 Property, plant and equipment 141,166, ,717,523 Investments in associates and other companies 8,878,222 6,719,309 Other financial investment 559, ,766 Borrowings 8,201,307 6,177,606 Deferred taxes 1,672,033 1,181,006 Other assets 906,211 1,206,356 Total non-current assets 196,062, ,958,736 Total assets 924,812, ,372,310

17 Consolidated Financial Statement 17 Liabilities (EUR) 2009/12/ /03/31 Short-term liabilities Short-term loans and current portion of longterm loans 5,705,034 6,448,171 Trade accounts payable 120,210, ,140,738 Liabilities from associates and joint ventures 1,039, ,315 Advance payments received 245,267, ,172,301 Provisions 35,366,671 23,411,774 Deferred sales 9,441,582 6,987,077 Income tax liabilities 4,586,896 4,586,896 Other financial liabilities 6,961,205 11,950,516 Other miscellaneous liabilities 7,686,527 14,982,427 Total short-term liabilities 436,265, ,936,215 Long-term liabilities Long-term loans 26,271,427 13,974,735 Capital from profit participation rights 10,000,000 10,000,000 Deferred taxes 16,908,080 17,121,345 Total long-term liabilities 53,179,507 41,096,080 Equity capital Subscribed capital 9,177,939 9,177,039 Additional paid-in capital 300,147, ,185,061 Currency translation -396, ,349 Change in current value of Cash Flow Hedges 2,532,974 12,762,658 Retained Earnings 121,882,465 89,377,041 Equity entitled to shareholders 433,344, ,336,450 Minority interests 2,023,363 3,565 Total equity capital 435,368, ,340,015 Total liabilities 924,812, ,372,310

18 18 Consolidated Financial Statement Consolidated income statement of REpower Systems AG in compliance with IFRS Income statement (EUR) 2009/04/ /12/ /04/ /12/31 Sales 920,462, ,510,570 Changes in work in progress 9,739,534-7,801,008 Company-produced additions to plant and equipment 1,947, ,543 Total performance 932,149, ,880,105 Other operating income 13,655,062 9,735,450 Cost of materials/cost of purchased services -720,180, ,794,189 Personnel expenses -71,142,526-56,461,308 Depreciation on property, plant and equipment and amortization on intangible assets -12,951,850-7,951,985 Other operating expenses -85,201,802-59,284,649 Operating result 56,328,168 38,123,424 Interest and similar financing income 1,722,498 3,370,493 Interest and similar financing expenses -12,523,431-3,070,034 Share of result from associates and joint-ventures 1,658,913 1,673,953 Income before taxes 47,186,148 40,097,836 Taxes on income -15,110,926-13,987,825 Net income for the year 32,075,222 26,110,011 Share of net income for the year attributable to minority interests -430,202-1,034,166 Share of net income for the year attributable to shareholders of the parent company 32,505,424 27,144,177 Earnings per share (undiluted) Consolidated statement of (EUR) 2009/04/ /04/01- comprehensive income 2009/12/ /12/31 Net income for the year 32,075,222 26,110,011 Hedging instruments of derivatives -10,229,684-1,468,183 Other comprehensive income -10,229,684-1,468,183 Total comprehensive income 21,845,539 24,641,828

19 Consolidated Financial Statement 19 Consolidated cash flow statement of REpower Sytems AG in compliance with IFRS Cash flow statement (EUR) 2009/04/ /12/31 Cash flow from operating activities 2008/04/ /12/31 Profit for the period before taxes 47,186,148 40,097,836 Adjustments for: Depreciation on property, plant and equipment, amortization of intangible assets and write-down of financial assets 12,951,850 7,951,985 Interest income -1,722,499-3,370,493 Interest expenses 12,523,431 3,070,034 Increase/decrease in provisions 11,954,897 6,424,774 Profit/loss on disposal of fixed assets -3,244 0 Change in working capital -12,324, ,723,567 Interest received 1,722,499 3,370,493 Interest paid/financial expenses -12,523,431-3,070,034 Income tax paid -103, ,663 Cash flows from/used in operating activities 59,660, ,353,634 Cash flow from investing activities Proceeds from the sale of fixed assets 105,226 36,998 Payments for the purchase of Intangible and tangible Assets -31,789,215-42,427,430 Cash flows used in the acquisition of investments -31,683,989-42,390,432 Cash flow from financing activities Proceeds from equity appropriation 38,286 7,763,040 Borrowings of Loans 11,553,555 16,358,834 Cash flows used in/from financing activities 11,591,841 24,121,874 Increase/decrease in cash and cash equivalents 39,568, ,622,193 Cash and cash equivalents at the beginning of the period 94,790, ,909,665 Cash and cash equivalents at the end of the period 134,359,070 39,287,472 Bank balances 140,064,104 58,956,310 Short-term bank liabilities -5,705,034-19,668,838 Cash and cash equivalents at the end of the period 134,359,070 39,287,472

20 20 Consolidated Financial Statement Statement of changes in equity of Repower Systems AG in compliance with IFRS Subscribed capital Additional paid-in capital Currency translation in EUR in EUR in EUR Balance at 2008/04/01 8,993, ,441,254-6,185 Capital increase of executed but not yet registered employee stock option programme 183,463 7,621,053 Stock option plans 7,122,753 Change in the consolidated group Change in the direct recorded revenues and expenses in equity -159,163 Net result for the year Balance at 2009/03/31 9,177, ,185, ,348 Balance at 2009/04/01 9,177, ,185, ,348 Capital increase of executed but not yet registered employee stock option programme ,386 Stock option plans 2,925,218 Capital increase minority interest Foreign currency translation -231,053 Change in the direct recorded revenues and expenses in equity Net result for the year Group result 0 Balance at 2009/12/31 9,177, ,147, ,400

21 Consolidated Financial Statement 21 Change in current value of Cash Flow Hedges Retained earnings Equity entitled to shareholders Minority interests Total shareholders equity in EUR in EUR in EUR in EUR in EUR 0 37,076, ,505, , ,117,719 7,804,516 7,804,516 7,122,753 7,122, , ,758-55, ,000 12,762,658 12,603,495 12,603,495 52,490,268 52,490, ,737 51,936,532 12,762,658 89,377, ,336,449 3, ,340,014 12,762,658 89,377, ,336,449 3, ,340,014 38,286 38,286 2,925,218 2,925,218 2,450,000 2,450, , ,053-10,229,684-10,229,684-10,229,684 32,505,424 32,505, ,202 32,075,222-10,229,684 32,505,424 22,275, ,202 21,845,539 2,532, ,882, ,344,641 2,023, ,368,004

22 22 Group Notes Group Notes as of 31 December 2009 according to IFRS Accounting policies These consolidated interim financial statements for the period from April 1, 2009 to December 31, 2009 were created from the single-entity financial statements of all the companies included in the consolidation. In accordance with commercial law, these statements had been converted to IFRS. The necessary consolidating entries were taken into consideration. The valuation provisions which are applicable in accordance with IFRS were also observed. The IFRS principles were observed in accordance with those applied to the most recent REpower Systems Group annual financial statements dated March 31, The accounting policies in the consolidated financial statements for 2009 were also used for the consolidated interim financial statements dated December 31, The single-entity financial statements which form its basis are in Euros or have been converted using the official rate. Due to the new version of IAS 1 Presentation of Financial Statements, the consolidated financial statements contain a separate statement of comprehensive income, in addition to the income statement. The statement of comprehensive income reports the profit for the period as well as all changes reported directly in shareholders equity for the period. The segment reporting of REpower Systems Group is carried out according to the directives of IFRS 8 Operating Segments. The standard has an impact on the layout of the segment reporting that has been adapted in structure and content to the reporting system for internal decision-makers according to the Management Approach. The standard does not have any impact on net assets, financial position or results of operations. Scope of consolidation There are investments in twelve foreign sales companies for the purpose of marketing the parent company s wind turbines. Furthermore there are investments in production and service companies as well as in project companies. Investments accounted for using the equity method The first two companies listed serve as production and sales companies to develop the sales markets in their respective countries. RETC Renewable Energy Technology Centre GmbH is a joint venture between REpower Systems AG, Hamburg and Suzlon Energy Ltd, India. Its aim is to combine the future strengths of the two companies in the area of research and technical training as well as to achieve strategic cooperation. The proportional profits for the period are taken into consideration in the interim financial statements. In the first nine months of fiscal year 2009/10, the Group generated sales of EUR 23.2 million from transactions with associated companies. Companies measured according to the equity method generated total earnings of EUR 1.7 million in the reporting period.

23 Group Notes 23 Scope of consolidation During the reporting period shown, the scope of consolidation includes the following German and international companies which are fully consolidated: Group share of nominal capital 2009/12/31 [in %] 2009/03/31 [in %] Sales companies Repower España S.L., Madrid, Spain REpower S.A.S., Courbevoie, France Repower Italia SRL., Milan, Italy Repower Australia Pty Ltd., Melbourne, Australia REpower Wind Systems, Beijing, People s Republic of China REpower USA Corp., Denver/Colorado, USA REpower Canada Inc., Montreal, Canada REpower Benelux b.v.b.a., Brussels, Belgium REpower UK Ltd., Edinburgh, Great Britain REpower Diekat, Athens, Greece (in liquidation) Powerblades S.A., Oliveira des Frades, Portugal REp Ventures Portugal S.A., Porto, Portugal Production and service companies PowerBlades GmbH, Bremerhaven, Germany WEL Windenergie Logistik GmbH, Schloß Holte- Stukenbrock, Germany Project companies (all located in Germany) REpower Betriebs- und Beteiligungs GmbH, Rendsburg REpower Investitions- und Projektierungs GmbH & Co. KG, Rendsburg Windpark Meckel/Gilzem GmbH & Co. KG, Hamburg Investments accounted for using the equity method In the interim financial statements as of December 31, 2009, the following companies are included according to the equity method: Group share of nominal capital 2009/12/31 [in %] 2009/03/31 [in %] REpower Portugal Sistemos Eolicos S.A., Oliveira de Frades, Portugal REpower North China Ltd., Baotou, People s Republic of China 50,01 50,01 RETC Renewable Energy Technology Centre GmbH, Hamburg, Germany 50 50

24 24 Group Notes Notes to the consolidated balance sheet Total assets have dropped by EUR 3.6 million since the end of fiscal year 2008/09. This decrease results from a decline in current assets by EUR 44.7 million and a rise in non-current assets of EUR 41.1 million. On the liabilities side, a EUR 27.0 million rise in equity capital is opposed to a EUR 30.6 million decrease in liabilities. The material changes between the balance sheet date of December 31, 2009 and that of March 31, 2009 are explained below: Assets The decrease of EUR 44.7 million in current assets relates to a decline in receivables from customers and in construction contracts carried as assets totaling EUR 61.9 million, a drop in receivables from associates and joint ventures of EUR 23.0 million, a decrease in other assets of EUR 53.4 million. This decrease is countered by an increase in inventories of EUR 54.8 million and a rise in short-term liquid funds by EUR 38.8 million. Non-current assets increased by EUR 41.1 million from the previous balance sheet date. This development primarily relates to an increase of EUR 30.4 million in property, plant and equipment (particularly due to the new construction of the TechCenter in Osterrönfeld), a rise of EUR 6.3 million in intangible assets due to the capitalization of development costs and increased shares in associated companies and joint ventures totaling EUR 2.2 million as well as a rise in granted loans of EUR 2.0 million. Liabilities Changes in liabilities totaling EUR 3.6 million comprise a decline of EUR 42.7 million in current liabilities, an increase of EUR 12.1 million in non-current liabilities and a rise of EUR 27.0 million in total equity capital. The decline in current liabilities mainly results from a decrease by EUR 28.9 million in trade payables as of the balance sheet date. At the same time, advance payments received from customers on orders declined by EUR 15.9 million. These advance payments only cover those orders that were not to be included in the valuation in accordance with the percentage of completion method. The increase in provisions by EUR 12.0 million compared with March 31, 2009 is primarily due to deferrals for warranty expenses. Other liabilities decreased by EUR 12.3 million compared to the previous year. All further liabilities increased slightly, and rose by EUR 2.5 million overall. The changes in non-current liabilities mainly relate to the borrowings of long-term loans for financing the production facility in Bremerhaven, to deferred tax liabilities from temporary differences between tax profits and the carrying amounts in accordance with IFRS. Total equity capital has increased by EUR 27.0 million since the previous balance sheet date. This performance can mainly be attributed to earned group equity of EUR 32.5 million, transfers of EUR 3.0 million into the capital reserves from employee option programs, directly recognized income and expenses of EUR 10.2 million and an increase in minority interests of EUR 2.0 million. Notes to the consolidated income statement The consolidated income statement is structured the same way as that of March 31, 2009 in accordance with the specifications as defined by IFRS 1. In this case, the reporting period relates to the period April 1, 2009 to December 31, 2009, thus to the first nine months of fiscal year 2009/10.

25 Group Notes 25 In the first nine months of fiscal year 2009/10, total operating performance of EUR million was generated from the sale of wind turbines, services and license proceeds. Total operating performance increased slightly over the prior period (EUR million). During the reporting period, 311 wind turbines with an output of megawatts were installed (comparative period: 416 wind turbines with an output of megawatts). The cost of materials rose by EUR 29.4 million in line with sales performance. Relative to total output, the cost of materials totaled 77.3 %, having fallen 4.7 percentage points year-on-year. Staff costs rose by EUR 14.7 million to EUR 71.1 million due to a further increase in the number of employees. Depreciation of property, plant and equipment and amortization of intangible assets increased by EUR 5.0 million year-on-year to EUR 13.0 million as a result of higher investments and amortization of development costs. Including an increase of EUR 25.9 million in other operating costs to EUR 85.2 million, the operating result as of the balance sheet date is EUR 56.3 million. The operating result is EUR 18.2 million higher than on December 31, Net finance income decreased by EUR 11.1 million year-on-year. This development relates to banking charges being paid to involved banks in conjunction with the company s latest growth finance credit. Investment income totaling EUR 1.7 million was generated from associated companies and joint ventures. Overall, earnings before tax equal EUR 47.2 million as of the reporting date. Tax expense totals EUR 15.1 million, 32 % of earnings before tax. With a consolidated tax rate of 30 % in terms of earnings before tax, tax expense is expected to be EUR 14.2 million. The difference of EUR 0.9 million is primarily the result of permanent deviations between balance sheet items according to IFRS and the tax balance sheet values (mainly from expenses for the employee option program). Overall, the Group has positive earnings after taxes of EUR 32.1 million as of the balance sheet date of December 31, 2009 (comparative period: EUR 26.1 million). Notes to the consolidated cash flow statement The cash flow statement for the period from April 01, 2009 to December 31, 2009 is compared to the cash flow statement for the corresponding period of the previous year. The cash flow statement as of the balance sheet date reflects the liquidity flow between the consolidated financial statements as of March 31, 2009 and the consolidated interim financial statements as of December 31, The cash flow statement shows inflow of funds totaling EUR 39.6 million as of the balance sheet date (comparative period: outflow of EUR million). In the first nine months of fiscal year 2009/10, the inflow of funds resulting from operating activities totaled EUR 59.7 million. In terms of investments, there were accruals of EUR 31.7 million for investments in intangible assets and in property, plant and equipment. Due to financing growth from current cash flow, the change in financing activities is mainly limited to borrowings of long-term loans totaling EUR 11.6 million.