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4 Allgemeiner Bestätigungsvermerk für Konzernabschlüsse nach HGB. Englische Fassung (mit dem IDW abgestimmt). Auditor s Report We have audited the consolidated financial statements prepared by the BIOGAS NORD AG, Bielefeld, comprising the balance sheet, the income statement, statement of changes in equity, cash flow statement and the notes to the consolidated financial statements, together with the group management report for the business year from January 1 to December 31, The preparation of the consolidated financial statements and the group management report in accordance with German commercial law is the responsibility of the parent Company's Board of Managing Directors. Our responsibility is to express an opinion on the consolidated financial statements and the group management report based on our audit. We conducted our audit of the consolidated financial statements in accordance with (Article) 317 HGB ("Handelsgesetzbuch": "German Commercial Code") and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany) (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with (German) principles of proper accounting and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of the companies included in consolidation, the determination of the companies to be included in consolidation, the accounting and consolidation principles used and significant estimates made by the Company's Board of Managing Directors, as well as evaluating the overall presentation of the consolidated financial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion. Our audit has not led to any reservations. In our opinion based on the findings of our audit, the consolidated financial statements comply with the legal requirements and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with (German) principles of proper accounting. The group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group's position and suitably presents the opportunities and risks of future development. Bielefeld, June 30, 2011 PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft ABCD ABEC EEFFFD ABEC

5 Returning to profitable growth After three years of losses, resulting from the biogas crisis in conjunction with the global financial crisis, Biogas Nord AG showed a dramatic upturn in This is demonstrated by a record turnover of million EUR (+50.66%) and a return to profitability with an annual profit of ,90 EUR. In 2008 the group found itself on the edge of insolvency. Towards the end of 2008 the management of Biogas Nord began negotiations with potential investors in order to secure the shortterm financing of the group. This included the possibility of the acquisition of shares from Mr. Gerrit Holz, the founder of the company. On the 27th April 2009, during the course of the restructuring and stabilization and following several months of negotiation, European Business Partners sp. z.o.o. (EBP) from Warsaw, Poland, acquired 1,136,875 shares (44.3 % of the company) from Gerrit Holz, who previously owned 49.3 % of the shares. Changes to the Supervisory Board Mr. Robert Szyszko was elected as the third member of the Supervisory Boardon the 14th December 2009, replacing Mr. Alexander Rechter, who resigned from the Supervisory Boardto take the position of the Chairman of the Management Board of the Company. The nomination was confirmed by the district court in Bielefeld on the 18th December On the 21st December 2009 the Supervisory Board elected Mr. Andrzej Jazwinski as its Chairman, and Mr. Boleslaw Piechucki as the Deputy Chairman of the Supervisory Board. The Supervisory Board consisted of these three members from the beginning and during the majority of the business year. Two members, Mr. Robert Szyszko and Mr. Andrzej Jazwinski, resigned from the Supervisory Board with effect from the 27th December The Management Board subsequently applied to the District Court in Bielefeld to appoint Prof. Dr. Hermann Locarek-Junge, of Dresden, and Mr. Marek Bierut-Bernatowicz, of Jazgarzeweszczyna, Poland, as members of the Supervisory Board. The appointment was confirmed by the District Court in Bielefeld on the 6th June Changes to the management of the company On the 27th August 2009 Ms. Asnat Drouianov was appointed as the new CFO and as a Managing Director (Vorstand) of Biogas Nord AG. On the 1st October 2009 Mr. Alexander Rechter, the owner of EBP, was appointed as a Managing Director (Vorstand) of Biogas Nord AG and, at the same time, as the Chairman of Biogas Nord AG s Management Board (Vorstandvorsitzender). On the 4th January 2010 Mr. Alexander Rechter was also appointed the Chief Executive Officer (CEO) of Biogas Nord AG, taking over the position from Mr. Gerrit Holz who was appointed as the Chief Technological Officer (CTO) of Biogas Nord AG. Mr. Holz also continued as a Managing Director (Vorstand) of the Biogas Nord AG. Increase of capital Following a resolution at the Annual General Meeting on the 31st August 2009, the Company issued 1,281,250 convertible bonds, each with a nominal value of 1.10 EUR. These had the right to be converted into 1,281,250 shares. By the end of February 2010 approx. 99% of the convertible bonds had been converted into shares. Following the conversion, as of the subscribed capital totalled 3,825, EUR. Of that, EBP held 46.16%, Gerrit Holz 5.02%, and the employees 2.08% with a Free Float of 46.73%. Supervisory Board meetings During 2010 the Supervisory Board met three times, including the meetings confirming the resignation of the Supervisory Board members.

6 The meetings of the Supervisory Board were held through written, verbal and electronic means in accordance with 12 paragraph. 3 of the statute. The Supervisory Board has continually monitored the management of the company using the Management Board reports and by meetings with the Management Board. The following topics were presented to and discussed by the Supervisory Board: 1. The necessary measures to stabilise the financial situation of the Company. 2. The global development of the Company and the establishment of subsidiaries in foreign countries. 3. The development of the new 100%-owned subsidiary, Biogas Nord Power AG, which invests in the equity of biogas plants. 4. The annual programme for 2011, including a business plan until An agenda for the Annual General Meeting on the 12th August Annual audit The review of the Supervisory Board comprised, in accordance with 171 paragraph 1 AktG, the annual Financial Reports, the Management Report and the Auditors Findings Report. Furthermore, the Supervisory Board examined the report concerning relationships with affiliated companies in accordance with 314 paragraph 2 AktG. These reports were presented and explained to the Supervisory Board. Each individual document, as well as the Business Plan for the years , was checked for accuracy, consistency and validity. At the annual General Assembly on the 12th August 2010 the auditing firm Price Waterhouse Coopers AG, Bielefeld (PWC) was nominated to audit the Consolidated Financial Reports of the Company. PWC examined the Financial Reports and the Management Report as of the 31st December 2010 in accordance with the guidelines set out by the German commercial legislation. The reports were approved without any qualification. Furthermore, PWC examined the report concerning relationships with affiliated companies in accordance with 314 paragraph 2 AktG, and approved it without any qualification The Supervisory Board, after thorough examination and discussion, had no objections to these documents. It approved the findings of the Auditors Reports and the Financial Statements as of the 31st December It approved the Business Plan together with the Financial Reports presented by the Management Report for the year ending on the 31st December 2010, as well as the Auditors findings. Acknowledgement The Supervisory Board thanks the Management Board and all the employees of the Company for their hard work and excellent performance in recent years. The Company experienced difficult times during 2008 and However, the results for the year ending on the 31st December 2010 clearly demonstrate that the changes introduced in 2009 have paved the way for a return to a productive growth. Particular thanks are due to the members of the Supervisory Board who led the Company through difficult times and who have helped to provide a basis for a successful future. We are very satisfied with the performance of the Company and trust that 2011 will be a year of steady growth in which the Management Board will continue to increase the value of the Company for its shareholders. The Supervisory Board also wishes to thank the shareholders for their faith and their support in these difficult times. Bielefeld, June 2011 Prof. Dr. Hermann Locarek-Junge, Chairman of the Supervisory Board, Biogas Nord AG

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12 Land Number of References Projects under construction (June 2011) Germany Netherlands 9 Romania 1 Italy 3 1 Belorussia 2 England 4 Ireland 1 Latvia

13 100% 99,98% 90% 100% 100% 55,25% 65% 5,88% BIOGAS BIOGAS BIOGAS NORD BIOGAS Bio.S Biogas NORD NORD UK Ltd. NORD Power Verwaltungs Espana S.L. Italia S.R.L. AG GmbH BIOGAS NORD Anlagenbau GmbH Bio.S Biogas Grimma GmbH & Co. KG NaWaRo Wendlinghausen GmbH & Co. KG Share capital: Share capital: Share capital: Share capital l: Share capital: Share capital: Share capital: Share capital: ,- EUR ,- EUR ,- EUR , ,- EUR ,- EUR ,- EUR ,- EUR Shareholder: Shareholder: Shareholder: Shareholder: Shareholder: Shareholder: Shareholder: Shareholder: Biogas Nord AG Biogas Nord AG Biogas Nord AG Biogas Nord AG Biogas Nord AG Biogas Nord AG Biogas Nord AG Biogas Nord AG 12

14 58,5% 49% 51% 100% Bioenergie Ahlen GmbH & Co.KG Bioenergie Ahlen Verwaltungs GmbH Biogas Nord Korea Co., Ltd. Biogas Nord Polska Sp. z o.o. Limited partnership: Share capital: Share capital: Share capital: ,- EUR ,- EUR ,- KRW ,- zl Shareholder: Shareholder: Shareholder:: Shareholder: Biogas Nord AG Biogas Nord AG Biogas Nord AG Biogas Nord AG

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23 Free Float (46.74%) European Business Partners Sp. z o.o. (EBP) 1.765,762 (46.16%) Gerrit Holz (5.02%) BIOGAS NORD Mitarbeiter & Gerrit Holz KG 79,675 (2.08%) 22

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28 5.2. The composition of the Group s assets as of 31st December 2010 Assets A. Fixed assets 5,257,358 5,147,476 I. Intangible assets 1,171,831 1,179,118 EUR EUR 1, Concessions, and similar rights ,506 2, Goodwill ,073,612 II. Tangible assets 3,530,915 3,460,163 1, Land, land rights and buildings, including buildings on third-party land ,615 2, Technical equipment and machinery ,869,051 3, Other equipment, operating and office equipment ,009,497 4, Prepayments and assets under construction III. Long-term financial assets 554, ,195 investments ,000 Other loans ,195 C. Current assets 19,740,062 15,197,620 I. Inventories 4,901,885 5,126,348 1, Raw materials, consumables and supplies ,032 2, Construction contracts in progress ,547,312 3, Prepayments ,005 II. Receivables and other assets 11,846,412 6,996,719 1, Trade receivables ,415,942 2, Other assets ,778 III. Cash-in-hand, bank balances 2,991,765 3,074,553 D. Accruals 207,971 94,087 E. Deferred tax assets 1,683,975 2,182,788 Total assets 26,889,366 22,621,971 27

29 5.3. The Composition of the Group s Liabilities and Equity as of 31st December 2010 Equity and Liabilities A. Equity 4,373,678 1,479,748 I. Subscribed capital 3,825,377 2,562,500 II. Capital reserves 10,981,393 10,855,105 III. Adjustments for foreign currency conversion 19,721 1,620 IV. Carry forward losses (11,920,646) (11,278,771) V. Net Profit (loss) for year 957,310 (641,875) VI. Minority interests 510,523 (18,831) B. Special items - investment grants 175, ,557 EUR EUR C. Provisions 6,608,025 3,738,053 1, Provisions for taxes 74, , Other provisions 6,533, D. Liabilities 15,732,585 17,286,601 1, Convertible bonds 20, , Liabilities to banks 1,683, , Payments received on account of projects 4,635, , Trade payables 5,251, , Payables to affiliated company 1,578, , Other liabilities 2,563, E. Deferred Taxes - 10,013 Total equity and liabilities 26,889,366 22,621,971 28

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40 BIOGAS NORD Group Condensed Consolidated balance sheet As of 31st December 2010 (Audited) Assets Liabilities 31. Dec Dec Dec Dec A. Fixed assets A. Equity I. Intangible assets I. Subscribed capital Concessions, and similar rights II. Capital reserves Goodwill III. Adjustments for foreign currency conversion II. Tangible assets IV. Carry forward losses ( ) ( ) 1. Land, land rights and buildings, including buildings on third-pa V. Net Profit (loss) for the year ( ) 2. Technical equipment and machinery VI. Minority interests (18.831) 3. Other equipment, operating and office equipment Prepayments and assets under construction B. Investment grants III. Long-term financial assets investments C. Provisions Other loans Provisions for taxes Other provisions B. Current assets I. Inventories D. Liabilities Raw materials, consumables and supplies Convertible bonds Construction contracts in progress Liabilities to banks Prepayments Payments received on account of projects II. Receivables and other assets Trade payables Trade receivables Payables to affiliated company Other assets Other liabilities III. Cash-in-hand, bank balances E. Defered taxes C. Accruals D. Deferred tax assets Total Assets Total Equity and Liabilities The accompanying notes comprise an integral part of the financial statements

41 BIOGAS NORD Group Consolidated Profit Loss report for the year ended 31st December 2010 (Audited) Revenues Changes in orders in progress ( ) ( ) 3. Revenues from a self constructed plant Other operating income Cost of material and services a) Cost of raw material and parts ( ) ( ) b) Cost of purchased services ( ) ( ) ( ) ( ) 5. Gross Margin Personnel costs a) Wages and salaries ( ) ( ) b) social security and related benefits ( ) ( ) - for pension funds (74.418) ( ) ( ) ( ) 7. Depreciation, amortisation ( ) ( ) 8. Other operating expenses ( ) ( ) ( ) ( ) 9. Other interest and similar income Interest and similar expenses ( ) ( ) ( ) ( ) 11. Result from ordinary activities ( ) 12. Taxes on income (66.123) (42.860) 13. Deferred taxes ( ) Other taxes (14.575) (17.169) 15. Net profit (loss) for the year before minority interests ( ) 16. Losses attributable to minority interests Net profit (loss) for the year after minority interests ( ) The accompanying notes comprise an integral part of the financial statements

42 BIOGAS NORD Group Consolidated Cash flow report for the year ended 31st December Profit (Loss) for the year before minority interests ( ) Depreciation and amortisation Capital loss (gain) from disposal of fixed assets 333 (1.046) Exceptional items (income)/expenditures, for the year,net (84.119) 0 Changes in deferred tax asset ( ) Changes in deferred tax liabilities (10.013) Profit (Loss) before changes in operating activities ( ) Changes in assets (increase)/decrease Raw materials and parts ( ) (21.035) Projects under construction Prepayments to supplier and service providers ( ) (87.541) Trade receivables ( ) ( ) Other current assets (56.244) (82.849) Authorities -receivables ( ) (6.358) Tradeable securities Prepaid expenses ( ) (34.960) Provisions and accruals Trade payables Advances on projects under construction ( ) ( ) Change in payments of affiliated companies Other liabilities Authorities payables Net cash from (used to) current operations Cash flow from investing activities investment in intangible assets ( ) (14.886) Investment in Biogas Plant ( ) ( ) Investment in financial assets (72.003) ( ) Proceeds from disposal of fixed assets Proceeds from disposals of financial assets Cash used for investing activities ( ) ( ) Net cash used to current operations and investing activities ( ) ( ) Cash flow from Financial activities Proceeds from the minority Payments from the issuance of bonds change in bank loans ( ) Net cash from financial activities currency adjustments Net (decrease) increase of cash (76.957) Changes in cash concerning consolidation (5.831) 0 Cash at the beginning of the year Cash at the end of the year Reporting: paid interest ( ) ( ) paid taxes on income 0 0

43 BIOGAS NORD Group consolidated statement of changes in equity (audited) Subscribed share capital parent company Minority shareholder Consolidated shareholders' Capital Consolidated Reserves from Shareholders' Minority equity reserves Accumulated reseves / currency conversions equity capital Carry forward losses As of Changes in the scope of consolidation Consolidated loss Convertible bonds Other consolidated earnings Consolidated result As of As of shares issued on Changes in the scope of consolidation Consolidated net profit (loss) Other consolidated earnings Consolidated result As of The accompanying notes are an integral part of the financial statements

44 BIOGAS NORD Group Consolidated fixed assets as of 31 st December 2010 (Audited) Cost Depreciation As of Purchases during Disposals during As of As of Depreciation Disposals during Currency As of Net book value Net book value the year the year for the year the year differences Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro I. Intangible assets 1. Concessions, industrial rights and similar rights and asset Goodwill Subtotal II. Tangible assets 1. Land, land rights and buildings, including buildings on third Technical equipment and machinery Other equipment, operating and office equipment Plants under construction Subtotal III. Long-term financial assets investments Other loans Subtotal TOTAL

45 BIOGAS NORD AG Notes to the consolidated financial statements As of 31st December 2010 A. General information regarding the consolidated financial statements 1. Basic information BIOGAS NORD AG (The Company) is a limited liability public company incorporated under German Corporate law. The Company s shares have been traded on the Frankfurt Stock Exchange since 14th December 2006 under the entry standard of the Deutsche Börse AG. The Company is registered in the commercial register of Bielefeld (HRB 38960) and is operated through its registered offices at Werningshof 2-4, Bielefeld, Germany. The company and its subsidiaries carry out, primarily, the planning and construction of biogas plants, the trading of components for biogas plants as well as the provision of services connected to biogas plants. BIOGAS NORD AG is managed independently by its major shareholder: European Business Partners SP. z o.o. (EBP), Warsaw, in accordance with 17 clause 1 AktG. EBP is defined under the Management Report as a related company according to 271 clause 2 HGB. On 29th April 2009, in accordance with 20 clause 1 AktG, EBP announced its ownership of over 25% of the Company s shares. EBP holds 46.16% of the Company s shares. At the same time Mr. Gerrit Holz, Bielefeld, announced that he holds less than 25% of the Company s shares. Due to a final decision reached on 26/01/2011 by the EU Committee concerning prohibited subsidies (clause 8c par 1a CITA) followed by a tax assessment issued on by the tax authorities the carry forward losses were reduced by 49.64%, corresponding with the acquisition of shares by EBP in Biogas Nord AG, and in BIOGAS NORD Treuhand GmbH. The tax asset included in the financial statements as of , took into account the possible reduction of the carry forward losses. Carry forward losses with a total value of TEUR 5,766, of BIOGAS NORD AG and BIOGAS NORD Anlagenbau GmbH, were written off. 2. Basis for the financial statement The consolidated financial statements of BIOGAS NORD AG as of 31st December 2010 were prepared in accordance with 290 ff. of the German Commercial Code (HGB) and the additional requirements as applied by the German Public Companies Act (AktG). The consolidated financial statements are subject to the general principles set under HGB as well as the specific regulations concerning public companies as detailed under 264 ff. HGB. The guidelines as published by the German Accounting Standards Committee (DRSC) have been fully adhered to, except for DRS 11, (concerning reporting on related parties) which is not compulsory. The currency used by the Group is the Euro. All values are therefore nominated in EUR or TEUR. 1

46 B. Accounting policy and valuation methods The separate financial statements of Biogas Nord AG and its subsidiaries were prepared based on unified accounting standards and were adapted adequately for the consolidated statements. Principles of the realization of receivables and revenues The Company is executing turnkey biogas plants around the world. Such an operation involves the engineering, procurement and the installation of these facilities (so-called turn-key projects). In general, the completion or the delivery of work, depends on a successful completion. Based on the realization principle (par. 252 HGB) profits can be realized, and could be recognized only when the contractual service is accomplished and thus the right for the remuneration is incurred. The realization of revenues within paragraph No. 4 HGB, can be recorded when the seller has fulfilled his contractual duties. Once the seller has provided the agreed service or delivered the goods the contractual duties are met. Realization of profits is generally determined by the timing of transfer of risk from the seller to the customer or once an approval of acceptance documented by an inspection report, was obtained. Receivables and revenues are recorded by Biogas Nord Anlagenbau GmbH as realized prior to the approval of acceptance by the customer, if the completion according to the contract is substantially achieved (usually over 95% of completion). Remaining works for such projects are included in the financial statements under the relevant provisions. 1. Intangible assets Intangible assets are included at their cost and are depreciated linearly, over their estimated lifespan. The goodwill resulting from 2006 consolidation, reflects the expected future earnings of the merged subsidiary, and is amortized over its expected lifespan of 10 years. Software is depreciated over a period of 3 to 5 years. An additional goodwill in the amount of TEUR 185, was recorded during the year, resulting from the takeover by the Company of 100% of the ownership rights from the minority shareholders of BIOGAS NORD UK Ltd.. The additional goodwill is depreciated over the expected lifespan of 5 years. 2. Fixed assets Tangible fixed assets are accounted at their acquisition or manufacturing cost. Tangible fixed assets are depreciated linearly, over their estimated lifespan. Equipment is depreciated over 10 to 20 years, machinery, office equipment, and cars are depreciated over 3-6 years. Self owned biogas plants are amortized over their expected period of use - of 20 years. 2

47 3. Financial assets Financial assets are presented at their cost value. Long-term impairments are revwed by the lower amortization of fair value 4. Inventories Raw materials and consumables are valued at acquisition or production cost or their net realizable value. Foreseeable risks of inventories, due to above-average shelf life, or lower replacement value are covered by appropriate devaluations. Works in progress are accounted at their construction costs after capitalizing the related costs at the lower of their constructing cost and the net realisable value. Construction costs include, in addition to direct identifiable costs, general construction costs and administrative costs, to the extent that they can be accurately attributed. Prepayments which have been received are accounted at their nominal value. 5. Receivables and other assets Trade receivables and other assets are stated at their nominal value. All items exposed to future risks are valued under individual assessment of the related risk; the general credit and default risks are considered for such an assessment. 6. Cash in hand and bank balances Cash and bank balances are stated at their nominal value. As of the date of balance sheet the sum of TEUR 1,007 are securing financial guaranties. 7. Accruals Accruals paid prior to the balance sheet date to be expensed during a later period are stated at their nominal value. 8. Investment grants Investment grants were provided by a bank for the construction of a self owned biogas plant. These investment grants are accounted as a special liability and are to be written off over the expected useful life of the object. 9. Provisions for taxes Provisions for taxes include provision for income tax. Deferred tax is reported separately as an item under liabilities. 10. Other provisions Other provisions concerning contingent liabilities are included in the amount necessary according to sound business practices to cover all foreseeable risks. 3

48 11. Liabilities Bonds, liabilities to credit institutions, prepayments received from customers on account of orders, receivables, trade liabilities to related parties and other liabilities are stated at their value on repayment date or booking date (received payments for orders). 12. Deferred taxes Deferred taxes are due to sufficiently likely future benefits arising from carry forward losses from the consolidated companies of the Group, and temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable income. Deferred tax liabilities and assets are not offset. The calculation as of is based on the different tax rate applicable in each of the countries of the consolidated subsidiaries. The tax rates used for the calculation are: Germany 31.5%, Spain - 30%, Italy - 27,5% and the UK - 30%. 13. Foreign Currency The individual financial statements of each group entity are presented in the functional currency in which the entity operates. For the purpose of the consolidated financial statements all figures are converted into Euro, using the exchange rate on the balance sheet date for balance sheet items and using the average exchange rate for profit and loss items. 4

49 C. Consolidation 1. Consolidation basis and inclusion of investments The consolidated financial statements incorporate the financial statements of BIOGAS NORD AG (the Company) and the subsidiaries controlled by the Company: Subsidiary Holding First consolidation Effective date in % BIOGAS NORD Anlagenbau GmbH, Bielefeld BIOGAS NORD Espana S.L., Valencia / Spain BIOGAS NORD UK Ltd., Bleachwell, Dorset / UK BIOGAS NORD US Inc., Wilmington, Delaware / USA BIOGAS NORD Italia S.R.L., Sirmione / Italy Bio.S Biogas Grimma GmbH & Co. KG, Grimma Bio.S Biogas Verwaltungs GmbH, Bielefeld BIOGAS NORD Power AG, Bielefeld Bioenergie Ahlen GmbH & Co. KG, Ahlen Bioenergie Ahlen Verwaltungs GmbH, Bielefeld Biogas Nord Korea Co. Ltd., Seongnam-si Gyeonngi-do / Korea BIOGAS NORD Polska Sp. z o.o., Warsaw / Poland Equity not fully paid All subsidiaries included in the consolidated financial statements are controlled by the Company, due to its majority voting rights. The purchase method was used for consolidation reasons, taking into account minority interests. BIOGAS NORD AG owns 5.8% of the shareholding rights of NaWaRo Wendlinghausen GmbH & CO.KG, operating and owing a biogas plant. The investment is included in the Group on the cost basis. Due to immateriality and based on Art. 286 HGB, financial information concerning the 24% holding rights in PROMOCIONES RURALES SA DE BIOGAS, has not been disclosed. The investment is included in the Group on the cost basis. 2. Consolidation methods applied Consolidation of equity investments is based on the purchase method except for the revaluation method concerning BIOGAS NORD Anlagenbau GmbH, as adopted in accordance with 301 clause 1 no. 2 HGB. 5

50 On 27th September 2006, all the shares of BIOGAS NORD Anlagenbau GmbH were sold to the Company in exchange for a capital increase. The initial consolidation between Biogas Nord Anlgenbau GmbH and the Company took place on 1 st October The exceeding value of the consolidated equity and the fair value on the date of acquisition (goodwill) was capitalised and is amortized over the expected lifespan of 10 years in accordance with 309 Abs. 1 Satz 2 HGB. The goodwill reflects the expected future earnings of BIOGAS NORD Anlagenbau GmbH. The subsidiaries in the UK, the USA and Spain are primarily incorporated companies and have been included in the consolidated financial statements since During 2010, the following ownership structure changes have occurred within the Group: In January 2010, BIOGAS NORD Power AG, Bioenergie Ahlen GmbH & Co. KG and Bioenergie Ahlen Verwaltungs GmbH were incorporated. Another subsidiary, Biogas Nord Korea Co. Ltd., was incorporated in June During the year BIOGAS NORD Polska Sp. z o.o. was fully consolidated. The takeover of the minority interests of BIOGAS NORD UK Ltd. took place during The deficit attributed to the minority shareholders resulting from the takeover was capitalized as goodwill and is amortized over the expected lifespan of 5 years. Based on an agreement dated 22th November 2010, the shares of BIOGAS NORD SAS, the French subsidiary were sold and the results of operation were included until 30th November The divesting of the subsidiary resulted in an income of TEUR Currency conversion Currency conversions resulting from the subsidiaries in the UK, Korea and Poland were applied using the current rate method. Differences in the amount of TEUR 18 were included under the Equity as currency differences. D. Notes to the consolidated balance sheet 1. Fixed assets Changes of the fixed assets during 2010 are detailed under the statement of fixed assets changes. Following the merger of BIOGAS NORD Anlagenbau GmbH on 1 st October 2006, resulting with a goodwill value of TEUR 1,591, the amount amortized during 2010 was TEUR 159. Furthermore, due to the takeover of the minority interests of BIOGAS NORD UK Ltd a further goodwill in the amount of TEUR 185 was recorded. The net value of the goodwill as of 31 st December 2010 is TEUR 1.100, with a remaining useful life of between five to six years. The most significant financial asset is a loan provided to a third party with a total value of TEUR 287 to be repaid against future commission in several instalments. The loan will be secured by a pledge over assets of a biogas plant. In the event of a failure to comply with the repayment conditions, the security will be exercised. Financial assets include a further loan to third parties in the amount of TEUR 92, with a maturity date of 30 June The value of the loan is not lower than its fair value. During 2009, BIOGAS NORD AG invested the amount of TEUR 100 in exchange for 5.8% of the shareholding rights in NaWaRo 6

51 Wendlinghausen GmbH & CO.KG, an owner of a biogas plant. In January 2010 the Company has invested an amount of TEUR 72 through its Spanish subsidiary in exchange for 24% of the shareholding rights of PROMOCIONES RURALES DE BIOGAS S.A. 2. Inventories In addition to raw materials and supplies with a total amount of TEUR 1,549 (previous year TEUR 732) inventories include construction contracts in progress in the amount of TEUR 963 (previous year TEUR 3,547) and prepayments to subcontractors and suppliers equal to TEUR 2,389 (previous year TEUR 847). 3. Receivables and other assets Individual provisions for doubtful accounts equal to TEUR 676 (previous year TEUR 1,043) and a general provision of TEUR 54 (previous year TEUR 20) were accounted as a provision of trade receivables. Receivables and other assets totalling to TEUR 11,699 have a less than a year maturity date. Receivables and other assets of TEUR 147 have a longer maturity date. Receivables include amounts as of the balance sheet date where no final bills are issued. The final bills were issued, according to the contractual terms, following the balance sheet date but until the date of the financial statement. Projects are realized after the final acceptance is obtained, and an appropriate degree of completion is achieved (95%). Accruals due to prepaid expenses paid prior to the balance sheet date in the amount of TEUR 208, to be expensed during a later period, are stated at their nominal value. 4. Consolidated Equity Detailed information concerning changes in the consolidated Equity is included under the Consolidated Report of Changes in the Equity for the period ended 31 st December Share capital The share capital of the Company at the end of the 2010 was TEUR 3,825. The Annual General Assembly as of 31 st August 2009 has decided to amend the statute of 4 (conditional capital). The share capital increase by up to 1,281,250 was approved by the General Assembly resolution. The conditional capital increase is implemented to the extent that the holders of option or conversion rights are to be issued until 30th August The capital increase of 1,262,877 took effect to 26th February 2010 due to the conversion of 99% of the bonds. The remaining bonds will be paid back at their nominal value on 28th December Capital reserves By the approval of the Supervisory Board based on a resolution reached at the Annual General Assembly on 31 st August 2009, BIOGAS NORD AG s Board of Directors undertook a convertible bond issuance in December These 2% convertible bond of BIOGAS NORD AG, with a total value of TEUR 1,409, were equally divided 7

52 into 1,281,250 convertible bonds, each with a nominal amount of The maturity of the bond is on 27 th December As the issuance of bonds was only intended for converion into BIOGAS NORD AG shares during the period between 2nd February 2010 and 26th February 2010, and of which 99% were converted, a capital reserve with the amount of TEUR 126 was accounted in accordance with 272 Abs. 2 Nr. 1 HGB. 7. Investment grants Grants provided by an authorized bank, to a self owned biogas plant, are accounted as a special liability, to be realised as an income over the expected useful life of the project (20 years). 8. Tax Provisions Tax provisions are calculated on the net taxable income of BIOGAS NORD Anlagenbau GmbH net of the carry forward losses. A provision for corporate income tax including solidarity surcharges totalling to TEUR 36 and business tax in the amount of EUR 39 were accounted. 9. Other provisions The composition as of 31 st December 2010 and 2009: TEUR TEUR Provisions in connection with construction contracts 5,046 2,362 Legal claims Warranty risks Provisions Severance payments Provision for vacation leave Credit notes Provision for overtime Annual audit costs Compensation Other Supervisory board remuneration Provisions regarding construction contracts as of the balance sheet date, relate to invoices which have not yet been received from the sub-contractors or to works yet to be completed. Provisions for legal claims as of the balance sheet date are supported by legal opinion. 8

53 10. Liabilities The composition as of 31 st December 2010: Total Remaining term Up to 1 year 1 to 5 years Over 5 years TEUR TEUR TEUR TEUR Convertible bonds Liabilities to banks 1, ,062 Prepayments received on account of orders 4,636 4, Liabilities for goods and services 5,251 5, Liabilities to affiliated companies 1, ,579 0 Other liabilities 2,563 2, Of which Tax authorities 2,291 2, Social security Total liabilities 15,733 12,575 2,096 1,062 The convertible bonds were almost completely converted into shares of the Company during the period between 2 nd February 2010 to 26 th February The remaining bonds shall be repaid at their nominal value on 28 th December The liabilities to banks are secured by liens over tangible fixed assets (biogas plant Grimma). Furthermore, the Group has a cash deposit amounting to TEUR 1,007 as security for guarantee bonds. The liabilities to affiliated companies include a loan from EBP to BIOGAS NORD Anlagenbau GmbH. 11. Deferred taxes The deferred tax assets of TEUR 1,684 resulted primarily from tax assets arising from carry forward losses from 2006 to It is assumed that it will, with reasonable probability, be realised during the next five years. A detailed business plan is the basis for this assumption. During 2010, deferred taxes in the amount of TEUR 10 have been recorded as an income. E. Notes to the consolidated income statement 1. Composition of turnover BIOGAS NORD Group in TEUR in % Turnover in Germany 50, Turnover in EU 5, Turnover in non-eu countires 0 0,00 55,

54 The revenue of the Group includes a certain amount which no final invoices was issued thereof, as of the balance sheet date. See also Note D (3) - Receivables. 2. Other notes to the income statement The income statement was prepared using the cost method and is classified according to 275 para 2 HGB. Other operating income consists primarily of income from the dissolution of reserves, income from the sales of materials and capital gain due to the divesting of BIOGAS NORD France. Labour costs were increased during 2010 to TEUR 6,048 (compared to TEUR 5,857 in 2009) due to new personnel employed during the year resulting from the increase in business. Depreciation of tangible and intangible assets totalling to TEUR 600 (compared to TEUR 573 in 2009) is detailed under the statement of changes in fixed assets. Other operating expenses totalling TEUR 4,296 (previous year: TEUR 4,084) consist of administrative and office expenses including marketing & travel costs in the amount of TEUR 434 (previous year: TEUR 521), car expenses of TEUR 491 (previous year: TEUR 433), rental and maintenance costs of TEUR 513 (previous year: TEUR 512), office supplies TEUR 192 (previous year: TEUR 169), legal and other consulting services of TEUR 660 (previous year TEUR 1,088), insurance TEUR 243 (previous year: TEUR 145), provision for due commissions and accruals for warrantee costs TEUR 183 (previous year: TEUR 304), maintenance costs of TEUR 148, (previous year TEUR 63) and bad debts and changes in the provision for doubtful accounts in the amount of TEUR 173, (previous year: TEUR 74). Other interest and similar income arising mainly from interest on deposits and loans from third parties. Taxes on income are attributed mainly to corporate income tax of BIOGAS NORD Anlagenbau GmbH. 3. Deferred taxes The composition as of 31 st December 2010 and 2009: TEUR TEUR Deferred Taxes - income From the reversal of deferred taxes from appraisal of assets from previous years Current year provision due to carry forward losses Accumulated taxes on carry forward losses from previous years 0 1, ,240 Deferred taxes - expenses Current year withdraw against taxable Income Provision for tax assets not accounted 0 1, ,934 Net for the year (325)

55 F. Other notes to the financial statements 1. Cash flow statement The Consolidated Cash Flow Report for the year ended 31 st December 2010 is included separately. 2. Contingent liabilities Contingent liabilities based on 251 HGB include performance and warranty bonds, fulfilment of contract and prepayment bonds totalling TEUR as of 31. December 2010, which are partially secured by bank deposits.furthermore, a pledge over the land to a lesser with a total value of TEUR 300. To secure agreements entered with substrate suppliers for the biogas plant, with an annual amount of approx. TEUR 227, and a loan received from the financing bank of the biogas plant, with an amount of TEUR 1,684 as of , pledges were registered over fixed assets of the Biogas plants. 3. Other financial liabilities Other financial liabilities as of the balance sheet date consist of rental and leasing contracts: to 2015 TOTAL Liabilities due to: TEUR TEUR TEUR Multi annual rental agreements Multi-annual leasing agreements , Average number of employees during the business year by type The average number of employees, in accordance with 267 HGB, was as follows: Hourly based workers 30 Salary based employees 83 Part-time employees 8 Total number employees The Board Members During the year the management consisted of the following members: Mr. Aleksander Rechter, CEO, Warsaw, Ms. Asnat Drouianov, CFO, Bielefeld Mr. Dipl.-Ing. Gerrit Holz, CTO, Bielefeld 11

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