Nordex SE

Lars Bondo Krogsgaard - Chief Executive Officer Bernard Schäferbarthold - Chief Financial Officer José Luis Blanco Diéguez - Chief Operating Officer and Deputy Chief Executive Officer

David Vos - Barclays Investment Bank Sebastian Growe - Commerzbank AG Phuc Nguyen - Citigroup Arash Roshan Zamir - Warburg Research Sean McLoughlin - HSBC Richard Alderman - Macquarie Group Pinaki Das - Bank of America Merrill Lynch José Arroyas - Exane BNP Paribas

Thanks a lot. As mentioned, my name is Lars Krogsgaard.

I am the CEO of Nordex/Acciona Windpower. Welcome to all of you to call for the first-half of 2016.

Thank you for taking time to dial in. This call is special for us.

Our acquisition of Acciona Windpower closed in early April and today is the first time that we report on the new combined business. For today’s call I’m joined by my two colleagues, Bernard Schäferbarthold, our CFO and José Luis Blanco, our Chief Operating Officer.

We’re making this call from our offices in Pamplona in Spain, where the Acciona Windpower organization has its roots. A look at the agenda for today’s presentation, if we can move on to the next slide, I’m not sure that the presentation is moving here.

So if you could bear with us for a second. We just need to check with our communications department to make sure that things are going right.

So bear with us. Okay.

It seems that we have a technical issue on our side. I don’t know, but I think all of you should be able to see the presentation.

So please excuse that glitch. A look at today’s agenda, I would first pinpoint some of the main points of the first-half of the year.

Then Bernard will make a detailed run-through of our financial performance in the first-half of 2016. José Luis will then talk about relevant operations, the relevance in our business, including our company-wide cost of energy program.

I will address some important developments in the market and disclose order intake for the first-half of the year to then move on to providing our outlook and revised guidance for 2016. And after that, the three of us will be here to take your questions.

On Slide #3, a look at the highlights on the year, it’s been an eventual year for us this far. It was a major milestone for us to close the acquisition of Acciona Windpower, which listed our company into a different league.

Since April 1, we are one fully consolidated company and the integration of the two entities is in full swing. The acquisition of Acciona Windpower often meant that we opened the doors to a new strong strategic shareholder mainly, Acciona, S.A.; whose activities include one of the world’s biggest owners and operators of wind-power.

Our top line continues to grow. During the first-half of the year it jumped by almost 35% versus 2015, growth on the Nordex business standalone was at just under 19%.

EBITDA improved to 9.2% versus 7.9% in the first-half of 2015. Profitability has helped by an increased output from our Rostock blade facility where output doubled.

And our operational excellence measures to address quality issues and smoothen the execution, are also contributing positively to the business. We are financially robust.

Equities are at a stable ratio of more than 30%. We will finance through our new €1.2 billion credit facility, which runs through 2020 and will enable us to continue to develop our business.

We are all-in-all in good shape and we today increased our EBITDA guidance from greater than 7.5% to a range of 8.3% to 8.7%. Top line guidance is adjusted from greater than €3.4 billion to a bandwidth of €3.35 billion to €3.45 billion.

And we confirm the order intake guidance for the year. On to the next slide, and a few words on the merger integration; since mid-June, the new organization and governance structures for the combined company are fully in place.

Getting that done in only 10 weeks was a real achievement for our team and it’s proof that the huge efforts we put into the planning of the integration prior to closing was well invested for. We are on track to reach a deal synergy target and our cost of energy program is now running in the full company, so that I can confirm our target of reducing the realized cost of energy per QOL [ph] by 18% versus 2015.

We are in the process of rolling the Acciona Windpower cost of energy systems and methodologies across all organizations. And this to me is real-life operational proof of the merit of the merger of the two companies.

We can expect merger cost in 2016 to land in the €20 million range, Bernard will talk more about that. I’ll now hand over to Bernard Schäferbarthold, the CFO, so that he can go into detail with the financials.

Over to you, Bernard.

Thank you, Lars. Good afternoon, ladies and gentlemen, also from my side here in Pamplona.

I would like to continue the presentation on Page 6 and start with our P&L statement for first-half of the year 2016. Sales, as Lars mentioned, increased to €1.5 billion.

That is a growth of 35%. Organically, looking at Nordex it’s a growth of 19%.

AWP [ph] related sales amounted to €179 million. That represents 12% share on half year numbers.

Q2 on a standalone basis the share would represent 21%. Service revenues are at €121 million.

Thereof AWP has €15 million in Q2. Overall, service share represent 8% of total sales, what is a similar number to last year.

Organically, we have a growth in service of 9%, and we are pleased about that. And that is also as we guided after our Q1 call that we will see a high-single-digit growth in service business also for the full year.

If you look at the regional split, top line, Germany remains strong around one-third of our top line out of Germany; Northern Europe, Central Europe 27% of share; Turkey, Middle-East, Africa around 20%; and the Americas also around 20% for the first-half of the year. Thereof, Brazil with 7% in the first six months and this will increase in the second-half.

As Lars mentioned, we have adjusted full year guidance to €3.35 billion to €3.45 billion. Main reason for this adjustments are some delays for projects in the U.S.

after delayed PTC extension in December, but also projects out of South Africa, we have expected all of these projects are not lost, but delayed a little bit. Some of them we have been able now to finalize in late Q2.

But with that we have a little delay also in top line, what is the reason for this adjustment. We expect comparable Nordex sales in the second-half of this year, which will be then - but that’s very similar to the first-half with Nordex equipment.

And with that, we see an increase in share for AWP in the second-half. H2 standalone AWP share would be around one-third.

And respectively with that Nordex on a standalone base would be two-thirds. This underlines the point we made also several times, also in last calls that Acciona Windpower will be strongly back-end loaded this year.

Full year, we expect the share of Nordex in sales of 76% and AWP with 24%. But bear in mind here that AWP is only considered three quarters in our consolidated numbers this year.

Pro forma, the share would be very comparable to 2015 and even exactly the same, so we expect 72% on Nordex and 28% on AWP. So if you would then take midpoint of our guidance, we would show, in half grow, full year on Nordex site from 7% and on AWP and 4%, so overall 6% on pro forma numbers.

Looking at gross profit and structural costs, so we are happy and pleased to see a strong increase in gross profit €137 million, that is 58% up, and which helps certainly also to improve EBITDA also significantly in this first-half compared on a year-on-year basis. Structural costs decreased significantly in absolute terms.

The reason is the higher activity level and the growth in top line, but also the consolidation of AWP beginning of second quarter. On top, we have spending with the resolution of the blade issue we had last year, where the net effect is zero, but where you see cost in the other operating expenses and the releases of the provisions which are in the material costs.

And these costs are for compensation and repair of the blade issue we had last year and we provisioned for. Just a word to that, we do not see any more costs in our P&L for that this year.

So all is up and running as we also told you before and we expect that this issue should be resolved within the third project. On top of that, we have the integration cost, which amounts €6 million in the first-half of the year, which are also reflected in the other operating expenses.

If you take that and you look at the structural costs in relative terms, and you would look at that number without the blade issue and the integration cost, we would have a ratio of 14.3% versus 13.7% on a standalone basis. Nordex year-on-year comparison and that’s a 60 basis points higher ratio.

And certainly that is something where we have actually also a high focus. Also we have a program in preparation and already measured and implemented to reduce this cost also going forward.

Overall, gross profits if we take altogether gross profit and the structured costs, we have EBITDA in the first-half which increased significantly by €49 million to €137 million for the first six months of this year. That is an increase of 56% and is an EBITDA quarter of 9.2%.

As mentioned, integration costs in that number are €6 million. So if you would calculate clean EBITDA, it would be at €143 million respectively 9.6%.

The Nordex share of this EBITDA number is 89%, AWP is at 11%. This profit share is very comparable to the sales share we also have as I mentioned commencing the top line.

But bear in mind here be also that AWP is only consolidated in Q2. And as mentioned activity level at AWP has been lower Q2 this year and will be much more back-end loaded as commented before.

If we look at organically at Nordex, profitability increased significantly on a year-on-year comparison by 38%; and clean, so without integration cost, even by 44% for the first six months. I think, that is a good performance also on a standalone basis and shows a good continuity also to Q1, we presented last time.

Full year, as mentioned, we increased our EBITDA guidance to 8.3% to 8.7%. As Lars mentioned we expect integration cost to be on full year basis around €20 million and that leaves another €14 million in the second-half of 2016.

That means if you would calculate altogether, a clean EBITDA margin, so without integration costs at a midpoint of guidance of 9.1%. For the second-half, clean EBITDA margin would be at 8.7% and that means a 90 basis points lower than in the first-half of the year.

The reason is a higher share of AWP in the second-half as mentioned two-third Nordex and one third AWP. And as we explained also in the last call, a higher share for Brazil this year, where we see some projects with the kind of lower margin for these ones which are in execution, and with a ramp up in India with the first project in execution and partially turbines coming out of spell.

That does not mean that we are quite optimistic on the Brazilian business. I think we look at improvements there.

Also going forward for this year the margins are lower. We expect full year clean EBITDA level, overall which then would be roughly 1 percentage point lower on the AWP side, because of these reasons than for Nordex.

Depreciation is at around €45 million and that number is also the amortization of the purchase price allocation, which is €9.9 million in the second quarter. €7 million of that number - of the overall depreciation number comes from AWP and out of the first-time consolidation of the numbers.

Nordex on a standalone basis is at 27.7 and is a €1.4 million increase compared on a year-on-year basis. With that EBIT is at €91.9 million.

That is €30.4 million increase. If you would have the EBIT without the PPA would be at €101.8 million.

So EBIT quota is at 6.2% respectively without PPA at 6.9%, but still considering also integration cost of €6 million. Not considering that, it would be at 7.3%.

Nordex on a standalone base has an EBIT of €93 million, 7.1% AWP at €9 million, 5% due to a low activity level and with that a lower margin for this quarter. The financial result is minus €16.1 million.

We have some one-off spending in that number in relation to the issuance of the promissory notes, but also the extension of the syndicated loan and the bridge financing for the acquisition of Acciona Windpower. So that’s altogether was one-off spending of around €3.5 million, we would not see going forward.

Tax ratio is at 33% and we expect around 30% also going forward. Altogether with that, net profit is at €51 million, which is a 38% increase compared to last year’s period.

Going to Page 7, we have added a slide also to the purchase price allocation. We also commented before.

They are also more details in the notes of our half-year report if you would like to go more into details of the allocation. The big picture is that we have allocated €292 million of assets and €505 million of goodwill.

And as we mentioned also before the amortization, would be we assume roughly two-third to be amortized in the coming three years. For this fiscal year, on a full year we stay in the expectation that the amortization would be €35 million to €44 million; and it has been - we already have roughly €10 million in the second quarter.

And again the comments that this is cash flow neutral going forward. Coming to Page 8, some more comments on our gross margin left-hand-side, we are pleased to see that we’re showing a 3% improvement on the gross profit.

But bear in mind here, also my comments to the structural costs, that we have some cost related to the blade issue which is positive here, because of the release of the provision. So that is 1 percentage point that in not taking that we have a 2 percentage point improvement.

And this shows that we are in a very good way with all efficiency, productivity measures we are working on. On top of that, certainly the higher activity level in our facilities, mainly here blade but also in a way [ph] supports that positive improvement.

Also Luis will comment more on that later on in the presentation. For the full year, we expect gross margin to be between 24% and 24.5%.

As we mentioned, on the overall EBITDA expectation, we expect in the second-half a slightly lower margin and this was mainly be seen in the gross margin. Right hand side of the slide to you, you see the efficiency of the organization.

We measured in gross profit per employee. You see - first of all, you see the increase in headcount to a number of 4,923 as of end of June.

And certainly, the biggest increase comes out of the acquisition of AWP. So with the closing, we took over, the employees end of June, the number was 1,621 people.

So end of June, the share of AWP people was 33%. Overall the increase, and deeper, compared also to last year, mostly also blue collar and activity level base, so that you can see in the efficiency a slight decline.

But again, mostly blue collar and you can see that also in the ratio of our personnel expenses, with the ratio is at 8.4% 2016 first-half; and compared to last year first-half 2015, where it was 8.5%. It even improved 10 basis points, which is good and shows the efficiency and still high efficiency of our remuneration.

Moving to the next slide, Page 9, to the cash flow statement and also working capital, overall, cash flow from operating cash flow is negative in the first six months, despite good results I commented before. That’s certainly not a good method if we look at the first-half of the year.

Main reason for that is the higher working capital level in the first six months. So we stand at 4.4% end of June and this is mainly to some delayed payments, especially in Brazil.

But also in a preparation on our side on Safe Harbor projects for the U.S., due to the PTC extensions, where customers need to qualify until the end of 2016. And that is something we are preparing ourselves in buying components and producing components, which would then be sold to these customers until yearend.

And so we are taking some working capital that’s in here to secure very promising business going forward. For the year, we expect overall positive operational cash flow; so having said that, that means, a significant positive operational cash flow in the second-half of the year.

With that, we expect, again, a working capital reduction in the second-half of the year. We already see that Brazil gets results and we expect these investments I mentioned for our preparation for safe harbor projects that this will pay out.

And that we will execute the contracts with customers we are actually negotiating with until end of last year. Cash flow from investing activities is negative.

We have here in the cash component coming out of the acquisition, which amounts €333 million. The investments - the pure investments are €34 million for the first six months of the year and are mainly R&D related.

So this €34 million stays in comparison to the €31.4 million we had last year. So roughly, 10% increase.

For the full year, we expect with a strong - a much stronger operational cash flow in the second-half that free cash flow will improve significantly. In the cash flow of the financing activities, mainly you see the so called, Schuldschein, we issued the €550 million.

And we have the bonds we repaid €150 million, and the drawdown of our European Investment Bank term loan of €50 million, which is in that number. Going to Page 10, here we have our balance sheet as of end of June.

The balance sheet remained very solid in our view and reflects first time also after the acquisition of AWP, the new company, and with that also the purchase price allocation. Overall, you see total assets also compared to end of last year more or less doubles.

Net debt is at €188 million after having paid the cash components for the acquisition of €333 million and still equity ratio is at a comfortable level of 31.5% end of June and even 30 basis points higher than end of last year. Page 11, we have an overview about the financing elements and what we have done and accomplished there.

We now finalized the last important steps to secure the financing for the upcoming years. And we are pleased to say now that Nordex is now well-financed through 2020 and beyond.

And this is an important step also we have done to support future business also going forward. In Q2, we issued as we reported also before, the so called group, Green Schuldschein, so the promissory note were €550 million.

We increased the syndicated loan to €1.2 billion, included here, the four major Spanish banks, we did get the capital increase, which was fully subscribed by Acciona in combination also with the closing of the acquisition. So that’s all from my side and all financials for the first-half year.

And with that, I hand over to José Luis

Thank you. Thank you, Bernard.

If we move to Page 13, and as Lars mentioned before, the first-half year operational KPIs show substantial organic increase, as well as the impact of the AWP numbers with 1,165 installed megawatts, mainly the Gamma platform accounting 71%, a very good result as well with the new Delta platform, and a low number 8% of the AWP platform, due to delays in some projects. The main markets where we installed turbine were Germany with 342 megawatts, LatAm 183 megawatts, Turkey 143 megawatts and Pakistan.

In the second-half of the year, we expect that the delays of - these projects that were delayed are coming alive and we will expect installation in the major markets where we are combined operation. Regarding operational activity in terms of blade [indiscernible] the blade production the Rostock blade facility benefited from this increasing volume.

And we were able to deliver that volume due to improvement in efficiencies of the process and increasing in output. And in the AWP factories, due to the delay in these projects, we were able to implement flexibility, in order to adapt the capacity to the demand.

With that been said, we are ramping up again the AWP blade facility and third-party vendors to 100% output if - very soon 100% of the capacity in the second-half. Very much similar situation regarding NSL [ph], NSL production output increased more than 18% in line with this higher demand.

And we empower same situation as with the blades, we were able to implement flexibility, in order to take under the control the working capital, but same situation about blades ramping up to 100% full utilization during the second-half of the year. If we move to Slide 14, what we want to share here with you is a very important business for us; so a decent organic growth in service business, close to 10%, 9% in the Nordex standalone.

So with the service sales combined business of €121 million; so services increased by 24% in the first-half and the contribution of the AWP platform in the second quarter is €15.2 million. And soon as these project that were delayed start to get installed and under one name this number will increase.

Regarding this one important KPI for us, which is the renewal rate of the expired contracts, it is true that it declined slightly from numbers of last year, but it was a Nordex decision to focus in profitability, more than in low-margin volumes, especially in some opportunities we have in the U.S. and in Italy.

Very important to mention the availability KPI up as you will know, even with the issues that we face and that are over, are developing at good levels. Very important as well, the order backlog that we have in the service business with more than €1.1 billion.

And as we said, before as soon as these delays projects are getting installed and in operation this number will increase as well subsequently. Moving to the next slide, slide #15, we want to use this slide and this information to put in context what we are doing in the combined company now.

What we’re showing here is the progress that we accomplish in the AWP platform. And during the last four years, what we show here is the cost of energy decrease or improvement year on year.

Thanks to the involvement of the whole company and thanks to a methodology that was developed and implemented in wind-power from since 2012. This was key in the case of wind-power for the successful turnaround.

And this is one key as well to implement across the board for us in the future. The methodology very much consists involving the whole company, organizing multifunctional teams with regular meetings, identifying cost down ideas, so more than 2,000 ideas were identified.

Deal increase ideas and more than 50, deal increase on value of ideas were identified. And as a consequence new designs implemented and new rotors, new projects, site-specific design; so one per team, allocated engineering resources, critical mass of more than 110 participants and regions fully involved in the project; processes realignment, improved methodology and constant focus employed, with a strong leadership.

If we move to the next slide, Slide 16 - if we move to Slide 16, what we want to share here is something which is very relevant, because in a record period of time we were able to implement this methodology across the company. So both programs, both platforms have been launched to achieve a common goal in COE reduction of 18% by the end of 2018.

And we have background information and ideas identified that will make us feel confident that we will achieve and deliver those results. 28 multifunctional, the complete value chain considered, TOPE in house improvement process, one program per platform, and multiple landscape to tackle the different market requirements where the company is planning to operate in the next years, and again, say, unique methodology and periodical meetings and monthly management review.

If we move to the next slide, very much what we showed here is that we are fully committed to deliver these results based on the same principles and the same methodology with more than 280 people directly participating, with almost 1,000 ideas to be implemented, and very important full management support and commitment to empower the teams to make this a success. So with that, I will hand over to Lars.

Okay. Thanks, Jose Luis.

I’ll now make some comments around important markets and how we stand. If you turn to Slide #19, it’s a fact that with the combination of Nordex and Acciona Windpower we created a company with a very strong market footprint.

We are strong in well established markets, but we also have good positions in new emerging markets. Some examples of relevance to a company are the markets in the USA, India, Germany and Brazil.

And that all of these four markets are actually the four biggest markets, if you look at the estimated volumes for the next five years, representing more than 50% of the total new installation capacity of China over the next five years. And a few comments to those markets.

Germany, the changed Renewable Energy Act or the EEG, as the Germans call it, passed in July. We will have the introduction now Germany of an auction system with the first rounds running in the spring of 2017.

The German government has committed itself to an annual onshore volume of 2.8 gigawatts per year. That’s more than the energy volume over the next - the last 5, 10 years.

And the model that has been agreed upon now includes a referencing methodology, which means that there will be a broad geographical distribution of wind turbines in Germany, including on low-wind sites. And that’s good for us, because we are particularly strong in the low-wind segment.

In U.S., we have the long PTC extension that I think came to us as a surprise to most of us in last year. Moreover, we have in May the clarification that there would be a four-year window to construct projects having the high PTC of 2016, provided, and that was the thing that Bernard alluded to before, provided that projects are safe harbored in this year, which means that more than 5% of project cost on that this year under binding agreements in physical equipment that needs to be in place before the end of March in 2017 or if construction has commenced this year.

All in all, good news for us, you may have seen that we announced earlier this week 247 megawatt project order in Texas. We are in good shape through the Acciona Windpower product portfolio to tap the volume, which will be significant over the coming years.

We expect well over 10 gigawatts per annum for the next four to five years. Brazil, Bernard mentioned the situation in Brazil.

There changes in the country caused by the current political situation. But the mid-term potential remains interesting and we see growth above 2 gigawatts per annum in the coming period.

As far as our position is concerned in Brazil, we are there. We have manufacturing.

We’re meeting local requirements to tap the Brazilian-DES [ph] financing there is a necessarily in order to be competitive in Brazil. And it’s also worth mentioning that in terms of profitability for the Brazilian markets despite the somewhat depressed margins on the business this year we are on a good track to improve that.

India, another interesting market for us, and I guess for the industry. We now have all the necessary certification phase.

We are manufacturing towers and machines in India. And we are in India participating in the Acciona Energy pipeline that will allow us to gain traction quickly in the Indian market, which will be an interesting one.

Whether the Indian government’s very ambitious target are fulfilled, it still remains to be seen. But even if that is not the case, the energies community in our industry is quite bullish about the volumes that we will see in the Indian market.

So all in all, a good situation for us in some of the most important markets, and again if you do take a look at our geographical footprint, I do believe that it’s one of the best in the industry when it comes to covering the important markets. If you turn to Slide 21 and look at the order intake for the first-half of the year, so order intake landed at €1.33 billion, down 2% versus 2015.

We did have some large utility orders in the first-half of 2015 that are not necessarily daily business. We have seen an increase in conditional order intake by more than 50% to around €940 million, I’ll come back to that on the following slide.

This year will be, and Bernard mentioned it already, somewhat back-loaded in order intake. But a pipeline this robust and we maintain the guidance above €3.4 billion that we have previously communicated to the market.

If you look at the split of the first-half year’s order intake by countries, we have had, of course, a strong business in Germany; somewhat reflecting the change in regulation that you will see the introduction of auctions in Germany. In terms of split in turbine types, we are now getting into a situation where on the Nordex platform there is balance between the Delta and the Gamma generation turbines.

And we’re seeing the AW3000 contributing almost a third of the order intake measure in megawatts. If you turn to Slide #22, some comments on the order backlog.

Firm order backlog is currently just over €2 billion that excludes the service business. And for those of you who may have looked at the backlog numbers that were reported by Acciona in connection with first quarter, it’s worth reminding ourselves that Nordex operate through some of the strictest order intake criteria in the industry.

We have a handful of criteria that needs to be met. So not only do we need to have binding contracts, we also need to have a significant non-refundable down payments, financing needs has to be confirmed to be in place, there needs to be confirmation of good access in all our payment needs to be in place, in order for us to counting this order intake.

Also it’s worthwhile mentioning that a variety of cost measure, firm orders in full - the conditional order backlog is not measured in absolute values, only with the weighting that we decide on. And also, it’s worth mentioning again that, as I stated here, the backlog excludes the service.

The split in terms of geography that you see on the right hand side is now more distributed in the past. That shows the effect of our acquisition of Acciona Windpower, having better picture that you’ll see translated in the coming period that volumes will move more and more away from the traditional Nordex markets of the past.

I now need to finish off by giving you our outlook guidance for the year 2016, if you turn to Slide 24. We maintain our order intake guidance for the year as already mentioned at €3.4 billion.

The year will be back-loaded but the pipeline is okay. And we expect a good second-half.

We adjust our sales on greater than €3.4 billion to a range between €3.35 million and €3.45 billion. The main reason for that was mentioned by the Bernard, mainly project delays in the U.S.

and in South Africa. There are some delays but we expect to pick up on that and we haven’t lost business.

We will increase EBITDA margins from greater than 7.5% to 8.3% to 8.7%. We will have lower margins from the Brazilian project, the first engine installations and the merger cost that we have in the mix this year, which is why we expect a drop in EBITDA for the full year versus the first-half of the year.

In terms of our guidance for working capital and capital expenditure, there are no changes. And with respect to strategic targets for 2018 mainly sales grade taking the range €4.2 billion to €4.5 billion, and EBITDA margin greater than 10%, they stand and remain unchanged.

With that, I like to conclude our presentation here. Please excuse me, technical glitch that we had initially.

Thank you for listening. And operator, if you’re ready then, we’re ready to take questions now.

Hey, good afternoon, gentlemen. Thank you very much for taking my question.

Just one on the backlog revaluation at Acciona, could you give us a bit of sense of when do you expect those orders to rematerialize as it were? I mean, I understand that they have not met your criteria and that’s perfectly fine.

But I’m assuming here they haven’t just vanished into thin air. So if you could help us with that that will be great.

Hello?

Okay. Yes, the sound is severe.

Can you hear us?

Yes. I can hear you.

Yes. Thank you.

Okay. Yes, we have a beeping noise here on the line, I don’t know why.

We have not seen orders vanish. When do we expect that to rematerialize?

We see a flow that is reflected in the revenue stream that we’re seeing and we will give guidance on 2017, when we get to that point in time. I think, the point that I was making before, in terms of the rating of additional order intake, I think that’s an important one.

So you’re looking at a conditional order backlog around €1 billion now, but bear in mind that those are weighted down with.

Okay. And then, my second question would be around Germany.

We just heard from the BWE and the CDMA [ph] on a rather punchy outlook for above 2016 and 2017 for 4.4 gigawatts, for memory, of installations this year in Germany. And I was wondering whether or not you had already reflected such an outlook in your new revenue guidance.

Thank you.

We expect and I think I have also been saying that in previous calls, we expect that we will be able to grow significantly in absolute numbers this year in Germany. And we expect that we will be able to gain market share again in Germany this year.

We had 169 installations last year in Germany and we expect around 250 this year. As far as our expectations for 2017 are concerned, we are guiding for a number that is significantly higher in the 250 units that we have this year, and based on our projections on the German market that would mean that we will be able to continue taking share off the German market, while continuing to also grow in absolute numbers in the German market.

I hope, that answers your question.

It does. Thank you very much.

Yes. Good afternoon, gentlemen.

Four questions from my side. The first one is a pretty easy one.

I believe on the EBITDA guidance, I think there has been a lot of confusion around the guidance, if it’s including the integration charges or if it’s not. So what I’m really curious, and if I just do the math and apply the 8.3% to 8.7% margin guidance to the midpoint of your sales guidance, I’m getting to €280 million to €300 million.

Can you just confirm that this is on fully loaded, i.e., including the restructuring charges basis, so that it would mean I have to add back €20 million of the charges, i.e., adjust EBITDA guidance would currently look at €300 million to €320 million? The second question then is on the orders.

I would be curious to hear your thoughts on and I do understand that you had some sort of white elephant project in this first-half of 2015. Nevertheless, the Nordex standalone figures at about €370 million in the second quarter look a bit softer.

I do appreciate that you did win some orders in the beginning of the third quarter. However, could you just make us understand why you had a rather low volume of these, as I said before, €370 million in Q2 only; especially against the background that, yes, the German market is prospering these days.

Third question is been on the order intake guidance. You say €2.1 billion implicitly is what you do expect on the second-half or in other words more than a billion per quarter, which compares to the €800 million roughly in Q2.

Can you give us a sort of an idea, where you really see the very, very sweet spots for you, you commented on the U.S., which you see pretty positively in Europe. You only touched upon the point of Germany, I think, there is more beyond that.

I do remember that you once were pretty enthusiastic, about Scandinavia. Anything you could just bring in here in terms of where you see the pipeline materializing would be most appreciated.

And then lastly, on the contingent order backlog, I see the point that you’ve shifted some of the backlogs from AWP into that very line item into the contingent backlog. Can you give us an understanding, what would be the waiting criteria is?

So is the waiting just a probability related waiting or does it also taking to consideration something like the timeline. So only if you have a potential chance to win it within a year or so, whatsoever it’s really behind it.

That would be also very, very helpful to understand really where all these orders went? Thank you.

As I go with your first question that it’s an easy one. The guidance of the 8.3% and - to 8.7% includes the €20 million.

So if you would take the midpoint of top line and then EBITDA, you would have €289 million, including €20 million. So if you would take that out, you would be then above €300 million, as you said.

And then with higher relative number also.

Okay. Thank you.

Okay. Sebastian, this is Lars.

On the - to your question concerning the - as you said the volume, and it is a fact that we’re dealing with the project business here. And if deal swing, they can have a significant effects from quarter to quarter.

And I think, if you look at our history, you will also see very significant swings between quarters, and I guess that’s the best explanation that I can give you. While at the same time, giving you comfort that as I said, we look at our pipeline, we’re normally pretty good at assessing these things on an annual basis.

And the thing is and looks robust. And then you say, hey, you guys need to go €2.1 billion of orders for the remainder of the year to meet your target.

We are particularly aware of that of course, where are the sweet spots, this business coming off now in the U.S., you saw a deal being an half earlier this week. We will have a lot to do in Germany, but there are other markets where things are also happening in - at good pace was, and some that come to mind are countries like South Africa, the business that we have in France.

We also have a lot right now that we’re doing in Ireland, and things are also moving faster in Finland. So again, it’s going to be a mix, it’s going to be effect that’s why there will be swings between the quarters, but that’s a daily business force.

And then, you asked about the shipping of the - I shown our order backlog into the Nordex system in what criteria we apply there, and it is my understanding that is not a time relevant in that, but what we do is that the probability weight - we probability weight orders that do not meet our firm order criteria based on some rather objectives criteria and that’s the numbers that we take into the conditional buy pattern. Does that answer your questions?

It does. Certainly, it would be helpful if you could provide us with a gross amount before having the waiting.

I guess, however you will referent to answer the question, right?

I don’t want to answer that question. In terms of what the full absolute value in the best case of the conditional value be.

So the other item that just relate to…

Specifically, just to give you some kind of a sense no project is more or less measured at 100%, they are measured at 30%, 50%, or 70%. So this is - they are not really all numbers, these are the three levels we are considering.

Okay. Understood.

And then just one general remark on the sort of what can I say, announcement policy that you have internally. I’m really, really struggling to understand how we can win an order in for instant, the U.S.

it’s 243 megawatts which is obviously very, very essential, not only to AWP in particular, but also to the Nordex group in general, which stands about 10% of a volume. Why you’re not really coming out with such orders, if they are year booked in the second quarter and earlier.

So maybe you can just give us a better understanding here, because it has been totally acquired the whole quarter for AWP. And now you come up with a really, really good number obviously with more than 400 million of orders in the second quarter.

Can you just make us understand what’s behind that, and then how are you going to deal with that situation going forward? Thank you.

Sorry, I have difficulties in understanding your question. Acoustically, I’m looking here at my colleagues, whether they understood it better.

Perhaps you can repeat it?

The question is simply about disclosing large order wins. Obviously, 240 megawatt project is material not only to AWP, but also to Nordex.

And I’m understanding is - I can’t simply understand why you haven’t disclosed such orders in earlier. So maybe you can just give us an idea how are you going to treat these orders, if you win large projects.

And obviously, there are a couple of really big projects in the pipeline. How you’re going to treat them going forward in terms of announcing those to the market?

We will announce, when we have some orders in the same way that we have done in the past.

The announcement somehow is what we do is, we do with every time in the alignments with the customer. So we don’t take it only on - it’s not only a decision of ourselves.

And for this U.S. one, it was for which reason ever or - we never - that we’re not willing to announce this, before that was why we have been very late.

Okay. All right.

Thank you.

Hi, guys. Thanks for taking my question.

I have two questions. The first one related to Brazil and India.

You mentioned that there is a startup phase in India, and this causes your margin to be lower than the group margin. Can you explain to us how long this period should last?

And then on Brazil, you quote FX is one of the reasons, why the margin is lower than the group margin. The two questions there.

Firstly, are you going to hedge going forward? And then secondly, how long do you expect this effect to last.

So that’s my first question.

Okay. Going to your first question, regarding India, we did take decision to go to India on a very strategical point of view, because we do feel that we have a fantastic product.

I can believe very competitive cost of energy with Indian conditions. In order to install turbines in India, we need to manufacture locally and get your turbine certified by the local authorities, which we manufacturing turbines locally, it’s an important milestone, it is our license to play.

Without that you cannot operate in the Indian market. But behind that there is a full qualification program for Indian components, and we are in the very beginning of these Indian supply chain development at going forward is going to deliver us more competitive cost, and as a consequence improved margin.

So two effects. One effect is ramping up and your plan and your market open a new market and initial steps which is low, so you suffer from the under-utilization in organization and in facilities in training mode.

Second effect is developing up the supply chain at as soon as we deliver the result that we expect to deliver in terms of supply - local supply chain development. We will improve our margins and improve as well our volume, because we would have more capacity in India.

So I hope that answer your question progressing India is very much launching up a country, launching a supply chain, launching a manufacturing activity and bringing teams onboard and training those.

On Brazil, you’re right. Most of it are off the weaker margin comes out of ethics.

So we are losing on the country - on a country level roughly 3.5% profitability, because the projects that have not been hedged in the past and that is - that we are suffering this year with the execution of the projects. Overall, the Brazilian business even considering that is positive, but not comparable to the other different businesses in the other countries like the U.S., Mexico or South Africa.

So we believe from next year on, so that is an impact which will only be this year. So we don’t - we have secured the rest.

So that now, more or less the hit is taken and also going forward for projects, which we will take in. We will do it in the same way as we have done it.

At Nordex, if we have contracts, which are not UFA [ph] we would immediately secure the project margin with a contract signature, so that we are not facing any ethics risks going forward in the execution.

Just to clarify on this hedging policy. So you’re saying that if you were to hedge, your project margin would be 3.5% higher and do you expect that to materialize in 2017 effectively, is that correct?

Yes. It is because of - the projects which has been taking in.

We are not hedged and with the actual real, we are losing compared to the original calculation AWP this when they got the project. We are losing 3.5% now with the actual currency rate of the real, so that is more or less.

I would say, onetime hit we have taken now and securing also now the - so this is more or less covered now, because we secure the rest. And going forward, we will do it in the way how we have done it.

So that we secure immediately with the contract signature and then yes, as you said margins would be. If you would say, market never changes and nothing else happens with these 3.5% higher.

So that was also related to my comments, I believe that Brazilian business also going forward will be more profitable is because it is not market related. There was certainly also some kind of a learning curve in the years before, but now with the experience Acciona have in that country, it’s also a profitable business.

Okay, very clear, thank you. And my second question is on the U.S.

projects and the safe harbor rule. I’m a bit surprised about your working capital movement.

I would have expected that you would take some prepayments, once you sell this components into the U.S. market under the safe harbor rule.

And therefore, the net working capital to be somewhat more positive, but it was actually negative in the quarter. Can you maybe help me bridge the gap here?

It’s a good point. Yes, there is an effect from the components that we have released in order to be at safe harbor profit, and of course, that one is going to compact sometime later in the year, it has yet, because the deals haven’t been sold yet.

But we are in negotiation with the number partly it’s to secure volume for the future. So that’s the explanation.

Okay. Thank you very much.

Yes. Good afternoon, gentlemen.

Three questions from my side, maybe the first one on your operating cash flow, which was negative at minus €100 million in H1. You obviously experienced a negative swing in working capital and you mentioned that there was a payment delay from the Brazilian project.

And I was wondering, if you could elaborate a bit further on that, and why you are so upbeat and this will be resolved in the second half of this year. And also would it be fair to assume a working capital ratio of around two at the end of the year.

And then the second one on your service sales, Acciona Windpower contributed roughly €50 million in service sales in the second quarter. And I was wondering if it’s fair to assume that this level will continue into Q3 and Q4, so that we can assume roughly €45 million in service sales from Acciona Windpower.

And also if you could clarify in margin wise, if the service sales from Acciona Windpower is comparable to service sales from the former Nordex standalone business. And then, the last one on your German business, according to my calculations, you improved your market share in Germany in H1 to roughly16%.

And my question would be, since you sounded quite upbeat on next year, and if you expect to achieve a market share of roughly 20% already next year. Thanks.

So, on your first question, why do we feel confident with the rate to the operating cash flow, why do we feel confident about Brazil? First of all, the reasons for the delayed payments were that - was not on the customer side, by the end it is on the customer side, but only because of the NDS [ph] was delaying the payment.

So that is the more or less project financing bank. And there already, we got some payments now after the closing of the quarter, and we got now the signals that the payments will be done and there was also a change in management of the NDS.

So the signals are quite positive that this should resolve over the second half that was well, my comment was I think that we will be able to go through the topics. On the working capital, I think, your assumption is fair to say, yes, considering that in Brazil as mentioned and together with the point also elaborated by large with the safe harbor and as we expect customers to close the contract and then do the down payments.

We should see a positive impact on working capital and a new number from my point of view is okay. On service sales, I think, you are not so far away.

I would assume that we would see a little more, but not significant, so that is more in Q3 and Q4. And profitability is very similar, through Nordex, you have to bear in mind that most of the service business is really - is the 3 megawatt platform, where this is the most recent one where when prices are fine and organizational efficiency is high, so that it is very comparable to ours.

So Arash, your comments concerning market shares are concerned - to my recollection our market share in Germany last year was somewhere between 12% and 13%. We expect to improve that this year, and based on the most recent numbers that I have, it should land somewhere between 15% and 16% this year, but total volume might shift a little.

And as I said, we expect to be able to grow in absolute numbers and gain additional market share next year. And whether that brings us fully to the 20% that you mentioned, I’m not quite sure about that.

But what I can say you and what I have said on this call is that the ambition that we have is to have 20% market share of the German onshore wind market on a stable basis.

Perfect. Thanks very much.

Good afternoon. Thanks for taking my questions.

Firstly, just you comment at the upper end of your sales guidance range based on the assumption that there will be no further project delays. I’m just wondering, where you see scope for delays?

Secondly, I think, the guidance - the explicit service margin is now I think, welcome addition. I mean, how should we think about this 14.5% EBIT margin going forward, and where - and do you see scope for this to increase or do you see this as a stable figure going further.

In fact, why just to continue on that. Do you continue to guide for EBITDA now that the integration is complete.

Lastly, merger costs in 2017? Thank you.

So sales €3.35 billion to €3.45 billion at the end, if you are very much back-end loaded than you cannot bring it really to the point, where you can lever it to €10 million. And I think, it’s we are I would say, most of the project are secured, but still a little has to come and one or two months of delay can also have some kind of an impact.

So you can read it in best way that if everything goes very well, then we are in the upper side if everything works perfect. If all things went wrong, what can go wrong then probably we are in the lower side.

But I think we see a quite unstable here. On the merger costs, we do not expect any merger related cost, which we would then report also separately next year.

So the expectation now is that all merger related cost will be in the P&L this year. And much more about the second question you had - I haven’t really got it, I have to say or do you…

Can you repeat, can you repeat Sean?

The service margin.

The service margin is going forward, or…

Yes, going forward. So now you have new structure the projects on the service you have now an explicit.

Service EBIT and an EBIT margin which is 40.5%. Yes, commentary around that really.

Certainly, we expect to be able to improve that margin going forward. So they have to see our business plan also for our business units.

There is a clear business plan for our business unit service. So it comes with population, but it comes also with all efficiency measures we are working on.

So this margin should improve also going forward.

So we are hearing deeper laughing in the background. I hope, it was not because of an answer.

No. No.

I’m just wondering, I asked you as well, will you continue to guide for EBITDA going forward?

EBITDA, I think, the only reason was - it was not mainly because of the integration cost. It was also because of the purchase price allocation mainly, as long as we hadn’t really the clear view on the purchase price allocation.

It was for us not really absolute clear to give really very transparent guidance. And I think, what we will do going forward is that we will guide both.

Super; thank you.

Yes. Good afternoon.

I was wondering if you could talk about the look for repowering in your order book and your outlook for this year and next. Specifically, does any of your confidence on 2017 in Germany come from the potential for repowering orders?

And also do you have any view on the U.S. market, as yesterday NextEra talked about possibility of repowering up to 20% to 25% of the 16 gigawatt wind book.

I’m surprised the market by talking about, perhaps doing some of it in 2018 to 2020 period, and talked about the possibility of others in the market doing the same thing. I wonder if you’re seeing any of that in your discussions going forward.

So in terms of repairing generally, it’s a somewhat stranger animal, this repowering stuff. And right now, the situation, for example in Germany is such that there is no special bonus on repowering projects.

So you do not get any particular benefit out of repowering projects. It’s difficult from a technical perspective to put a new and more efficient turbine on all machines, we’re not able to do that.

And the shipping, for example in Germany between regions, it’s not something that is supported financially. It was from [indiscernible] had a special bonus element to it in the past.

And we’ve also had repowering schemes like other countries, but most of them have actually gone. So it is a little bit difficult to quantify exactly what the potential is.

I think it is a fact that we saw, and again, I’m going on Germany as example. It’s a fact that we saw a quite significant repowering volume in the country when business was - when there was this particular bonus for it, a bet [ph] number has come down significantly.

And as far as your comments to NextEra’s statement, I’m not aware of these, I have seen that and so far, repairing is not something that is prominent in the discussions that we have with U.S. customers.

Thank you.

Hi guys, thanks for taking my question. I got a couple.

Firstly, is your EBITDA target adjusted for the blade provision release and also can you quantify this in nearer terms. And my second question is around your net working capital.

Do you expect this to change or how do you expect this to change, given your potentially increase exposure to India and the potential need for building a land bank. Thank you.

On the blade provision, if I got your question right. There is no P&L impact overall in the EBITDA.

There was only some cost we have with the repair plan and some compensation we have to do to the customers, which were allocated under the other operating expenses, where we had releases of the provisions we did last year in the material cost. Overall, it’s netting out, so that we have no additional costs in the first half of the year.

On the net working capital, so for end of this year as assumed, we believe that compared to the 4.4% we have - we will go down. And going forward, we stay still with and bandwidth of - are being below 5% and we will certainly then check in entrepreneurial way to look at customers at the business and then decide.

Certainly, India and this we are already in discussions with customers and also ourselves to look for the payment terms. Certainly, India is a country where you need to pre-finance more.

On the other hand side, their opportunities in other areas and also what we still can do better on our own to be even more efficient, which would compensate that, so that we see no reason as of now to say that we will change guidance we have now to be below 5%.

Okay. Thank you.

Hi, good afternoon, guys. Thank you so much for taking my questions.

I guess, its’ been a long call. So I’ll give you pretty short.

Just two questions, one on AWP. Could you give us some color on the mix for AWP revenues in H1 versus H2, where is Brazil more awaited, is it more in H2 or already it was in H1.

So that’s my first question. And second question one is just on your 2018 target.

It is quite ambitious, the consensus is below that. I just wanted to figure out, I mean, your order this year kind of flattish.

So most likely, your 2017 numbers versus 2016 would be flattish. You might get more order from India, but in 2018, you’re also heading into these auctions in Germany, as well as overall margin potentially lower margin countries, like India or Brazil or LatAm countries.

Is your target for 2018 more of an ambition rather than a target, or should we look at it? Thank you.

I think I can start with your last question. I think we had difficulties acoustically in understanding the first one.

So I’ll answer, if you could repeat that that would be great.

Sure.

The 2018 target, that we have our costs target that we take seriously, that’s clear. And we would not confirm that those targets stand on this, we believed in that’s the short version.

Okay. And if you could repeat your question, and yes, I think, then I can answer.

Yes. So the question is just the revenue profile of AWP in H1 versus H2 in terms of the geographic mix.

Where is Brazil more awaited, is it more in H1 or more in H2?

In the first-half, we have in relative terms most of the business was in the U.S., but also in Mexico. And it will shift and a little also in Brazil, as I said, so 7% was also out of Brazil.

And this will shift in significantly more to Brazil. So there is much more to come in the second half to Brazil than we have before.

And also to the first larger project we are doing in India overall. And then there is also the U.S., which will be also much more significant in H2.

So is there a risk to your sort of to your margin projection for the year considering so much await in Brazil and India, which are lower margins?

That is what I tried also to comment that the margin in the second half would be lower than in the first half, because of - also of AWP considered now two quarters and having also higher share in the overall sales number and considering that we have a high number or a high share of Brazil and India with a lower profitability. And that’s why we stated that 90 basis points difference compared in profitability H2 to H1, which is mainly because of that.

So that’s already priced in the guidance.

Okay, great. Thank you so much.

You’re welcome.

Good afternoon, gentlemen. Three questions from my side.

The first one is on the upcoming Brazilian and Mexican auctions. What are your expectations for these markets in terms of size and for Acciona Windpower’s potential to win orders on the back of this order - these auctions.

That’s question number one. Question number two is on India.

To my knowledge, the Indian government is about to phase out in accelerated [indiscernible] benefit by 50% from April next year. What do you think the impact of this measure will be on the overall wind turbine and demand and on pricing in this market?

And lastly, just a clarification point, what is the absolute value of the Acciona Windpower’s orders in the backlog that did not meet Nordex criteria for firm orders? Thank you.

Okay. So I’ll take the first question.

The upcoming auctions now just Mexico and Brazil; it was Chile, yesterday as well. And what I can share with you is that so far in the past, we’ve been demonstrated to be very successful in those kinds of auction schemes in those specific markets.

So with - I will say, all - there is nothing that substantially changed that is making us think differently. So we have big expectations in Chile; big expectations in Mexico and as long as the Brazilian governments issued new tenders.

Our target is not losing market share and we are one of the bigger players in Brazil. And your Indian question, our Indian analysis was - the decision was taken from a very strategical point of view relying on the Indian growth of economy and on Indian growth of electricity demand and needs to fit the growth of the company.

So, of course, we will face some [indiscernible] short-term, but we have big expectations in supply chain development to reduce our cost. We have big expectations in the COE program.

And we are sure that we’re going to take a big portion, regardless what the scheme is in India. So it doesn’t change our outlook.

We have a growing market share into that market, and it doesn’t change our vision that India needs renewables are some more reliable on competitive source of energy to feed the economic growth.

I would concur with José Luis, nothing is certain, except there are some taxes, but we nevertheless feel comfortable about the business perspectives in Mexico, Brazil and India, and also in number of those other countries.

In terms of your question concerning the values - the actual values of the Acciona Windpower process that we did not improve, we will not comment specifically on that.

Yes. All my questions have been answered.

Thank you.

Yes. Hello, Klaus Kagel from New Credit Market.

Two questions - two financial questions, the first one would be about the tax rate going forward after you have these SurPBA [ph]. Will it be reasonable to assume that the tax rate will be pushed above 30% going forward or could you, yes, comment on that?

And then secondly, we have talked a little bit about free cash flow and the swings you will see in the net working capital. But could you just confirm, would you expect to be have a positive free cash flow for the full year, excluding acquisitions?

That will be my two questions.

Tax rates, we expect to be around 30% also going forward. We do not think that should be, also because of the purchase price allocation that should have an impact on that.

So it can be from one quarter to another 1%, 2% difference, but it should be in that range. Free cash flow excluding the acquisition, we feel that we can if everything went really perfect, we can get positive there.

But that is not something where I would really feel comfortable to say, I’m 100% sure. But that’s what I said - why I said it should get much better and we also said that working capital should go significantly down.

And we can get to that positive number.

Okay, very clear. Thank you very much.

Thanks a lot. This is Lars.

Also to finalize things, we thank you for your participation in today’s call. I hope we answered to your questions.

[It’s not always satisfactory, Negative Theory.] [ph] And we would like to conclude today with sending an invitation to all of you to participate in Nordex Capital Markets Day, which we will hold on September 28 in Hamburg.

That coincides with the WindEnergy in Hamburg, which will also give you an opportunity to meet all our representatives for the industry. Thanks a lot from Pamplona.

We wish you all a good day. Bye-bye.