ANNUAL REPORT 2007/2008 SUCCESS THROUGH FORESIGHT.

Transcription

1 8% more net sales. 11% higher EBITA. 17% increased profit for the period. ANNUAL REPORT 2007/2008 SUCCESS THROUGH FORESIGHT. OCTOBER 1, 2007 TO SEPTEMBER 30, 2008 EXPERIENCE MEETS VISION.

2 Company KEY FIGURES 2007/ / / Change Financial Statement ( million) 3 Net sales Gross profit Gross profit as a percentage of net sales Research development expenses RD expenses as a percentage of net sales Selling, general and administration expenses 4 SGA expenses as a percentage of net sales Operating profit (EBIT) Goodwill amortization EBITA 5 EBITA as a percentage of net sales (EBITA margin) Amortization/depreciation of property, plant and equipment and licenses and write-down of reworkable service parts EBITDA EBITDA as a percentage of net sales (EBITDA margin) Profit for the period Profit for the period as a percentage of net sales Profit for the period before carve-out Earnings per share ( ) 6 Cash flow ( million) Cash flow from operating activities Cash flow from investment activities Key Balance Sheet Figures ( million) Working capital 7 as a percentage of net sales Net debt Equity 8 Human Resources Number of employees (September 30) Sept. 30, 2008 Sept. 30, 2007 Change 1) Oct. 1, 2007Sept. 30, ) Oct. 1, 2006Sept. 30, ) before profit charges arising from the carve-out. 4) including other income and expenses. 5) net profit on operating activities before interest, taxes and amortization of goodwill and product know-how. 6) calculated on basis of million shares. 7) without reworkable service parts. 8) including minority interest. 10-year Net Sales History. m 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 10-year EBITA History. m 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 2,750 2,500 2,250 2,000 1,750 1,500 1,250 1, ,336 1,338 1,462 1,345 1,440 1,576 1,744 1,948 2,145 2, Change 0% 9% 8% 7% 9% 11% 12% 10% 8% Change 21% 9% 6% 18% 12% 17% 18% 16% 11%

3 BANKING SEGMENT. Specializing in process automation for retail banking Software/Services business accounts for growing share of sales Software helping to integrate different sales channels Growth in Managed Services and Outsourcing Supporting Bank Customers All over the World. Bank customers want to be able to complete their transactions with a minimum of fuss and whenever it suits them best. They want to withdraw cash without having to wait. They want to deposit checks, request information and carry out transactions either in the branch or using a self-service terminal. If they have to contact the bank, they like to be able to do so by Internet or cell phone. Whenever and wherever they need to use the services available at the branch or at a selfservice point, there is a good chance they will find a system bearing the Wincor Nixdorf logo with its striking red line. Maximum availability minimum effort. IT Solutions to Enhance the Efficiency of Retail Banking Processes. These days, retail banks not only demand cutting-edge IT systems; they also need an IT solutions provider who will help them boost their market appeal and efficiency. They want to be able to increase their focus on sales. They expect advice and support. They need innovative products that give them a competitive edge. They want to free up their staff from routine tasks and improve their relationship with customers. At the same time, they expect their systems to be extremely reliable and to offer a significant reduction in costs for IT operating and respectively for their processes such as cash handling or sales and marketing processes. Wincor Nixdorf offers solutions that meet these demands in the form of tailor-made combinations of hardware, software and services. These go to make up our self-service systems, for example, such as multifunctional ATMs; a software portfolio that can be used with different manufacturers terminals and that includes applications to link all the bank s communications channels on a single platform; productrelated services for the installation, maintenance and repair of systems; and Managed Services and Outsourcing to optimize IT operations. For more details, please refer to pages Impressive Growth. The Banking segment accounts for 67% of Wincor Nixdorf s net sales. The 14% increase of Banking net sales during the year under review was driven by the growth of our Software/Services and Hardware business streams (including both high-end systems and high-volume mono-functional systems in equal measure). For more details, please refer to pages Key Performance Indicators: Banking Segment. m 07/08 06/07 Change Net sales EBITA EBITA margin (%)

4 RETAIL SEGMENT. Innovative IT solutions for retail processes in the checkout area Intelligent IT concepts to help reshape branch management and boost productivity Increasing sales of high-end systems A Crucial Role in the Retail Industry. Retail customers are less likely to come across the Wincor Nixdorf name. No wonder! Thanks to Wincor Nixdorf, queues and waiting times at the checkout are reduced. In fact, although shoppers may not be aware of it, our systems are responsible for a lot more. They generate the data needed to place restocking orders, control electronic shelf labels and manage communications with customers via digital displays. Even the reverse vending systems are likely to be supplied by Wincor Nixdorf. IT Systems to Support Management at Both Branch and Group Level. Against a background of intense competition, retailers are searching for ways in which they can stand out from the rest and boost their productivity. A main focus here is on the checkout area. Wincor Nixdorf provides checkout solutions that meet the specific needs of the retail industry by automating product data capture and payment and migrating them to a self-service basis. Our portfolio of hardware, software and service solutions supports major restructuring of branch management. Thanks to a software platform that controls all branch-related processes and allows direct interaction with the head office, we are able to meet the requirements of global retail groups. In the Retail segment, too, our Software/Services business is playing an increasingly important role. Branch software that can be adapted to meet international requirements minimizes operating costs and boosts efficiency; meanwhile, our Managed Services involve taking over the monitoring and operation of systems and applications on behalf of our customers. For more details, please refer to pages Key Elements of Our Core Business. Our Retail segment accounted for 33% of consolidated net sales in the year under review. EBITA stood at 44 million, with a slightly increased EBITA margin of 5.7%. Our customers include 17 of the 25 biggest-selling retailers at international level and 19 of the top 25 in Europe. For more details, please refer to pages Know-how in Demand from Other Industries. By drawing on its expertise, Wincor Nixdorf is increasingly attracting business in other sectors related to retail banking and the retail industry such as postal services and gas station chains. For more details, please refer to page 41. Key Performance Indicators: Retail Segment. m 07/08 06/07 Change Net sales EBITA EBITA margin (%)

5 IMPROVED PROCESSES WITH WINCOR NIXDORF. Retail banks and retailers face similar challenges. For both, Wincor Nixdorf s aim is to reshape processes, especially at the interface with the customer, through the use of information technology. To support the process of change, we offer a comprehensive range of IT-based solutions to our customers in both sectors. As well as supporting optimized processes, innovative solutions comprising hardware, software and services act as a driving force for new business. In this context, both standard software, which is open for the development of individual applications, and higher-end services are playing an increasingly important role. Our portfolio covers every key step in the process of change affecting business systems from advice on changes to existing IT processes and the provision of innovative software and systems through to their adaptation and integration. Net Sales by Region 329 m Asia/Pacific/Africa 187 m 14% Americas 8% 588 m Germany Net Sales by Business Stream 1,346 m Hardware 25% 53% 58% 42% Net Sales by Segment 1,547 m Banking 67% 33% 1,215 m Europe 973 m Software/ Services 772 m Retail These are backed up by product-related services, concepts involving the operation by Wincor Nixdorf of specific branch IT processes, and Outsourcing services, where we take over responsibility for the entire running of those systems. In this way, we help our customers to be more efficient and more user-friendly and to reduce their process costs. Wincor Nixdorf itself is helping to drive forward innovation and strives to add value to the business through the systematic expansion of its portfolio. The consistent high level of success we have achieved is at least partly due to a business model that emphasizes the importance of working in proximity to our customers with subsidiaries in 37 countries, a presence in around 100 countries, 29 customer centers and above all an organization that treats the needs of each and every customer as its own.

6 WINCOR NIXDORF PROVIDING IT SOLUTIONS FOR THE BRANCH OPERATIONS OF BANKS AND RETAILERS. International specialist in innovative branch IT solutions for the banking and retail industries Supporting the process of change as a means of enhancing user-friendliness and efficiency Comprehensive portfolio of hardware, software and services Core strengths in branch process automation, platform and applications software, development of self-service solutions and cost-effective operation of branch IT systems Presence in around 100 countries, including 37 with own subsidiaries We are the secondlargest supplier of ATMs in Europe and the world. We are the leading supplier of programmable electronic POS (epos) systems in Europe and third-largest in the world. More than 9,400 employees worldwide 2007/2008: ANOTHER VERY GOOD YEAR. Impressive business performance Targets for 2007/2008 safely achieved despite deteriorating economic conditions: Net sales up 8% (adjusted for currency losses: 11%), EBITA up 11% Profit for the period up 17% Growth in all regions; double-digit growth in Asia/Pacific/Africa and Americas Very strong performance in the Banking segment Retail segment records slight fall on last year Renewed increase in R&D spending Significant growth in sales of high-end systems Wincor Nixdorf extends leading position as innovator in software market Continued success in the area of high-quality services such as Software Integration, Consulting, Managed Services and Outsourcing MOVING FORWARD WITH CONFIDENCE. 2007/2008 marked by continuation of previous years trends in retail banking and retail industry Medium-term growth targets of 6% for net sales and 8% for EBITA remain in place Potential slowdown in the short term due to the financial market crisis Corresponding action being taken to prepare a flexible response depending on the severity of the financial market and economic crisis Outlook for 2008/2009: Despite economic situation, Wincor Nixdorf expects to follow on from last year s performance and maintain business volume at approximately the same level Exploiting new opportunities created by the current economic crisis Continued high level of R&D spending to allow company to seize opportunities as they arise Expansion of Software Integration, Consulting, Managed Services and Outsourcing business

7 2 To Shareholders Management Stock Corporate Governance Supervisory Board Report Company Profile Innovation WHAT DO OUR CUSTOMERS WANT FROM US? Financial reports are filled to the brim with facts and figures, but behind these are people, events, concepts and customers. This annual report is also about what our customers want from Wincor Nixdorf. From them we learn how our IT-based innovation solutions change their processes and open up new areas of business and how they benefit from our combined hardware, software and service offerings. So what do our customers want from our Cash Management systems? What would they most like to see in terms of automated sales and marketing processes? What do our customers need from an automated checkout system? What are their outsourcing objectives? And above all how can Wincor Nixdorf meet these expectations? You can find answers to all these questions on pages 28 et seq., 42 et seq., 52 et seq., and 66 et seq. You will also find the answer in thousands of bank and retail branches in the form of systems bearing our logo a simple outward sign that stands for a highly complex solution provided by Wincor Nixdorf.

8 Sustainability Group Management Report Group Accounts Notes to the Group Financial Statements Further Information 3 CONTENTS. TO SHAREHOLDERS Letter to Shareholders by the CEO 4 The Management 6 Wincor Nixdorf Stock 8 Corporate Governance including Compensation Report 14 Supervisory Board Report 24 THE COMPANY What Do our Customers Expect from Cash Management? 28 Company Profile 34 What Do our Customers Envision from Automated Sales and Marketing Processes? 42 Innovation 48 What Do our Customers Expect from Automated Checkout? 52 Sustainability 56 These Are the Goals of our Customers for Managed Services/Outsourcing 66 For a detailed table of contents relating to the Group Management Report as well as the Group Accounts and the Notes to the Group Financial Statements, please refer to pages 73 and 125. FINANCIAL INFORMATION Responsibility Statement 72 Group Management Report 74 Group Financial Statements 126 Notes to the Group Financial Statements 130 Auditor s Report 179 FURTHER INFORMATION Glossary 180 Financial Calender, Editorial 184 Foreign Subsidiaries 185

9 4 To Shareholders Management Stock Corporate Governance Supervisory Board Report Company Profile Innovation We are proud of the success achieved in fiscal 2007/2008. Despite the deepening financial market crisis, whose scope no one could have predicted at the beginning of the fiscal year, we have continued to expand even against a background of an extremely weak U.S. dollar. This currency weakness had a significant impact on the development of our net sales; without it, our net sales would have grown by as much as 11 percent. During fiscal 2007/2008, we also took steps to ensure the continued success of our business in the future, drawing on our existing growth strategy with its four areas of focus: Once again, Wincor Nixdorf can look back on a successful year, having set new records in fiscal 2007/2008: net sales rose by 8 percent to billion and EBITA by 11 percent to 206 million. As shareholders, you too will benefit from this solid performance in the form of a substantial dividend which we again wish to increase. We intend to propose a dividend of 2.13 per share to the Annual General Meeting. This is equivalent to a rise of 13 percent on the regular dividend of 1.88 paid out for 2007/2008, in addition to which we distributed a special dividend of 0.90 a year ago. The latest proposal remains in line with our established policy to distribute around half of our profit for the period before profit charges arising from the carve-out in the form of a dividend. Global expansion: We again pushed ahead with the internationalization of our business, especially in high-growth regions. This expansion reduces our dependence on individual customers and national economies. Since 2007, Wincor Nixdorf has been the world s second-largest ATM supplier (annual shipments). This also contributes to the further expansion of our business with retail banks. Innovation: Thanks to our focus on innovation, we were able to add to our portfolio process optimization solutions for our customers. These additions included improved automatic checkout systems for the retail industry, which offer considerable advantages such as cost efficiency and customer-friendly operation. In parallel, we further strengthened our portfolio of standardized applications software for retail banks and retailers. Premium end-to-end services: During the year under review, we pushed ahead with the expansion of our Software Integration, Managed Services and Outsourcing business. These areas are of particular interest to us because, like product-related services, they generally involve multi-year con-

10 Sustainability Group Management Report Group Accounts Notes to the Group Financial Statements Further Information 5 tracts and, therefore, generate stable income. In addition, we added specialist banking consultancy services to our portfolio through the acquisition of a majority share in a well-known banking consultancy firm. New business opportunities in related industries: Postal operators and service station chains also have branches with self-service systems similar to those of retail banks and the retail industry. We have achieved sustained success in our drive to exploit the opportunities for new business in these industries. As for the future business prospects of Wincor Nixdorf, current trends in retail banking and the retail industry continue to suggest a positive medium-term outlook. Indeed, within the banking industry as a whole, retail banking has proven in recent months to be the least susceptible sector to outside events. We strongly believe that this development will help underpin the comeback of retail banking a development that Wincor Nixdorf wishes to support with all the means at its disposal. In the retail industry, too, we anticipate continued investment in expansion and streamlining, and expect to benefit from both, given the highly competitive nature of the business. For all these reasons, we are able to look ahead with confidence and expect to maintain our long-term average annual growth targets of 6 percent for net sales and 8 percent for EBITA, even if there is a temporary downturn in business as a result of the global crisis affecting the financial markets. Although the overall economic situation is impacting the retail banking and the retail trade industries, we see continued opportunities in the current 2008/2009 fiscal year. Based on current knowledge, we are confident that we will be able to build on the success of the previous year and maintain approximately the same high level of performance. Despite our generally positive outlook, however, we are still unable to say whether and when the financial market crisis can be contained or what concrete economic impact it will have on the industrialized and emerging countries. Depending on the intensity of the impact on the real economy, we cannot exclude the possibility of a downturn in the investment budgets of retail banks and retailers. Wincor Nixdorf is therefore preparing itself, especially in the areas of Production, Sales and Service, to respond quickly to possible challenges, primarily by implementing more flexible cost structures to protect margins. The present economic situation represents an enormous challenge for our entire industry. However, our customers can be certain that Wincor Nixdorf will continue to make every effort to stay ahead through innovation and efficiency, and I would like to thank our customers for the confidence they have shown in our Company. I also wish to express my gratitude to all employees of Wincor Nixdorf throughout the world. It is your commitment that has earned us this confidence and helped to achieve such encouraging results. Finally, let me thank you, our shareholders, for your loyalty and constructive support. We are fully aware that Wincor Nixdorf is your Company and are determined to put all our efforts into the task of steering it in a positive and successful direction. Eckard Heidloff

11 6 To Shareholders Management Stock Corporate Governance Supervisory Board Report Company Profile Innovation Javier López-Bartolomé Khoon Hong Lim Stefan Auerbach Member of the Board of Directors Eckard Heidloff President Chief Executive Officer Dr. Jürgen Wunram Member of the Board of Directors Senior Vice President, Region Americas Senior Vice President, Region Asia-Pacific Executive Vice President, Banking Executive Vice President, CFO, COO Born Joined the Company in Member of the Executive Board since 1999; responsible for the Group business in the Americas as well as Spain and Portugal. Born Joined Nixdorf in Member of the Executive Board since October 2005 and responsible for Group business in Asia-Pacific. Born Joined Nixdorf in Member of the Board of Directors, since October 2005; responsible for the Banking business. Born Joined Nixdorf in President CEO since January 29, Born Joined the Company in March 2007 and since then Member of the Board of Directors; responsible for finances.

12 Sustainability Group Management Report Group Accounts Notes to the Group Financial Statements Further Information 7 Reinhard Rabenstein Jens Bohlen Dr. Herbert Machill Rainer Pfeil Senior Vice President, CTO Senior Vice President, Services Senior Vice President, Retail Senior Vice President, Human Resources Born Joined Nixdorf in Since October 2005 Member of the Executive Board and Chief Technology Officer; responsible for product and software development for the Company s banking business. Born Since November 2006 at Wincor Nixdorf and Member of the Executive Board; responsible for the worldwide IT services business for banking and retail companies. Born Joined Wincor Nixdorf in October 2007 and since then Member of the Executive Board; responsible for the worldwide business with retail companies. Born Joined Wincor Nixdorf in July 2001; since then Member of the Executive Board; responsible for Human Resources.

13 8 To Shareholders Management Stock Corporate Governance Supervisory Board Report Company Profile Innovation Wincor Nixdorf stock affected by international financial crisis Proposed dividend 2.13 per share Further expansion of analyst coverage INCREASE IN REGULAR DIVIDEND. Share Price Performance. At the end of the reporting period, Wincor Nixdorf stock closed at 41.49, down 29.7% from the opening price on October 1, Despite this substantial fall, the share price largely reflected movements in the MDAX over the same period (32.6%). Three trends can be observed from the performance of Wincor Nixdorf stock in the fiscal year just ended: a significant increase in the level of volatility of the stock compared to the market as a whole heavy falls in share prices in the entire market, especially in the context of the debate about the impact of the financial crisis, accompanied by new U.S. dollar lows and rising oil prices a strong performance at the beginning of the reporting period, relatively weak progression between April and June 2008, and a fiscal year-end closing price that closely reflects the change in valuations for the market as a whole over the period under review The average trading volume of Wincor Nixdorf shares on all German stock exchanges rose from 3.8 million units per month in fiscal 2006/2007 to 5.3 million shares traded per month during fiscal 2007/2008 (amounts for the previous year adjusted following increase in capital through issuance of shares in a ratio of 1:1 on March 22, 2007). Basic Data. Date first traded Issue price Stock exchange Prime sector Total number of shares WKN (German securities no.) ISIN May 19, Frankfurt Securities Stock Exchange (Prime Standard) Industrial 33,084,988 shares with a nominal value of 1.00 each A0CAYB DE000A0CAYB2

14 Sustainability Group Management Report Group Accounts Notes to the Group Financial Statements Further Information 9 Performance of Wincor Nixdorf Shares compared to MDAX and MSCI World: % % % 55 90% 50 80% % 70.3% 67.4% 70% October Nov. Dec. January February March April May June July August Sept % Wincor Nixdorf MDAX (Performance Index) MSCI World Index Membership. Based on data published in September 2008, Wincor Nixdorf is ranked 16 in the MDAX index on the basis of market capitalization (previous year: 21) and 21 (previous year: 26) on the basis of trading volume. Both are key criteria, since a high market capitalization and a significant level of trading volumes (which reflects the liquidity of the shares) are particularly important to make the stock more appealing to institutional investors. Index MDAX MSCI World Index (World Small Cap) Dow Jones STOXX 600 Kempen SNS European Smaller SRI Index (Socially Responsible Investment) Included since September 20, 2004 June 1, 2005 June 19, 2006 October 1, 2007

15 10 To Shareholders Management Corporate Governance Supervisory Board Report Company Profile Innovation Stock Shareholder Structure: Broad Scope of International Ownership. Wincor Nixdorf s entire stock remains in free float. Based on the announcements issued pursuant to Section 21 of the German Securities Trading Act (Wertpapierhandelsgesetz WpHG), at the end of the reporting period, the following entities each held an interest in Wincor Nixdorf in excess of the disclosure threshold: AKO Capital LLP (over 5%) Fidelity Management Research Company (over 5%) Neuberger Bermann Inc. /Lehman Brothers Holdings Inc. (over 5%) Allianz SE (over 3%) Capital Research and Management Company/ Capital Income Builder, Inc. (over 3%) Lazard Asset Management LLC (over 3%) New Star Asset Management Ltd. (over 3%) Threadneedle Asset Management Ltd./Ameriprise Financial Inc. (over 3%) Details concerning Directors Dealings pursuant to Section 15a WpHG are published on the Company s website at in the section entitled Investor Relations. According to our own estimate, at the end of the reporting period, approx. 80% of Wincor-Nixdorf shares were held by investors domiciled abroad. A significant proportion of these shares is held particularly by investors based in the United Kingdom and the United States Investor Relations Generating Confidence by Providing Ongoing Information. At Wincor Nixdorf AG, activities within the area of Investor Relations are centered on open and proactive financial communication. We are committed to providing investors and analysts with information on the strategic direction and progression of our Company in a comprehensive and timely manner. The aim of our investor relations work is to generate confidence by establishing an ongoing dialog with the capital markets. During fiscal 2007/2008, we held a total of 29 roadshows and conferences in Germany, the United Kingdom, the United States, Canada, France, Belgium, the Netherlands, Sweden, Denmark, Italy, Spain, Austria and Switzerland as a means of fostering our close relations with existing partners and establishing new contacts. We also conducted numerous one-on-one meetings with investors at our headquarters in Paderborn. These included a tour of the plant and product presentations, allowing visitors to gain a comprehensive insight into our Company and portfolio. Coinciding with our annual Wincor World in-house exhibition in Paderborn, we organized the 4th Wincor Nixdorf Investors Day on January 29, 2008, which included an extensive range of information for investors and analysts.

16 Sustainability Group Management Report Group Accounts Notes to the Group Financial Statements Further Information 11 Wincor Nixdorf Shares Key Facts & Figures (Data adjusted after capital increase, executed on March 22, 2007, through issuance of shares in a ratio of 1:1). 2007/ / / / /2004 Opening price (Xetra) 2 Fiscal year-end price (Xetra) Fiscal year high (Xetra) 2 Fiscal year low (Xetra) 2 Number of shares on September 30 Market capitalization on September 30 million million million million million Total dividend million million million million million Dividend per share 3 3 Dividend yield (based on fiscal year-end price) % % % % % Earnings per share 1 Free-float 100% 100% 100% 100% % 1) Profit for the period before profit charges arising from the carve-out, based on million shares. 2) IPO May ) Proposed dividend. In all, the Board of Directors and the Investor Relations team held talks with well over 200 institutional investors in the reporting period. Fund managers from the U.K. and the U.S., in particular, showed a strong interest in our Company. Following the publication of our financial reports, we discussed our financial situation and business performance in the respective segments at length during several conference calls with analysts and investors. All ad hoc announcements, press releases and quarterly reports are published promptly on our website, both in German and English. The website also contains extensive information on our corporate structure, management and strategy, in addition to providing details on corporate governance and our Annual General Meetings.

17 12 To Shareholders Management Corporate Governance Supervisory Board Report Company Profile Innovation Stock Analyst Coverage. At the end of the fiscal year under review, the Company was covered by 22 financial analysts, who issue comments and recommendations on a regular basis. These analysts are (in alphabetical order): Bankhaus Lampe, Berenberg Bank, BHF Bank, B. Metzler, Cazenove, Cheuvreux, Commerzbank, Deutsche Bank, Dresdner Kleinwort, DZ Bank, Equinet, Fairesearch, Goldman Sachs, HSBC Trinkaus Burkhardt, Kepler Capital Markets, LBBW, Merrill Lynch, Nord/LB, Sal. Oppenheim Research, UBS, Unicredit, WestLB. Development of Dividend. Fiscal year 03/04 04/05 05/06 06/07 07/ Change on previous year +72% +33% +34% 1 +13% ) Incl. proposed dividend +99%. AGM Well Attended. Shareholders attending the Annual General Meeting of Wincor-Nixdorf AG in Paderborn, Germany, on January 28, 2008, represented over 71% of the Company s voting rights. All resolutions on the agenda were passed with very large majorities. The next Annual General Meeting is scheduled to take place in Paderborn on January 19, Dividend. In fiscal 2006/2007, we paid a dividend of 2.78 per share including an extra dividend of 0.90 per share. For fiscal 2007/2008, the Board of Directors and the Supervisory Board will propose to the Annual General Meeting a dividend of 2.13 per share. Compared to the previous year s regular dividend, this represents an increase of 13% and a dividend yield of 5.13% based on the fiscal year-end price of Wincor Nixdorf stock. Stock Buy-back. On October 1, 2007, the Board of Directors of Wincor Nixdorf AG passed a resolution for the repurchase of up to 92,480 of the Company s shares via the stock exchange as from October 1, The resolution is based on the corresponding authorization issued by the Annual General Meeting for the repurchase of own shares. The stock buy-back program was completed on October 2, Wincor Nixdorf acquired 92,480 shares at an average price of per share. The repurchased shares are to be used for the purpose of settling obligations arising from share options already issued, or to be issued, to members of the Board of Directors, other managers or staff members.

18 Sustainability Group Management Report Group Accounts Notes to the Group Financial Statements Further Information 13 On December 3, 2007, the Board of Directors of Wincor Nixdorf AG passed a resolution for the repurchase of up to 625,720 of the Company s shares via the stock exchange as from December 3, The resolution is based on the corresponding authorization issued by the Annual General Meeting for the repurchase of own shares. The stock buy-back program was completed on January 22, Wincor Nixdorf acquired 625,720 shares at an average price of per share. The repurchased shares are to be used for all legally admissible purposes covered by the authorization of the Annual General Meeting and, in particular, for the fulfillment of obligations arising from share options already issued or to be issued to members of the Board of Directors, other managers or staff members of the Company and/or associated companies on the basis of the authorization to grant share options. At the end of the period under review, the Company held a total of 1,420,980 treasury shares from the buy-back programs in fiscal 2006/2007 and 2007/2008.

19 14 To Shareholders Management Stock Corporate Governance Supervisory Board Report Company Profile Innovation Board of Directors and Supervisory Board remain committed to continuity and trust as the basis of their working relationship Timely and open communication for greater transparency Continuous enhancement of Compliance program Risk management for value-based governance Compensation package for Board of Directors and Supervisory Board CORPORATE GOVERNANCE INCLUDING COMPENSATION REPORT. At Wincor Nixdorf, responsible, transparent business management and control centered on the creation of sustained added value is considered an essential basis for commercial success. Indeed, corporate governance has been an integral element of management for many years. The Board of Directors and the Supervisory Board have issued the statutory statement of compliance in accordance with Section 161 of the German Stock Corporation Act (Aktiengesetz AktG), stating that, with three exceptions, Wincor Nixdorf complies with all recommendations of the German Corporate Governance Code. Adherence to this Code is monitored by the Board of Directors and the Supervisory Board. Issued annually, the statement of compliance is permanently available to all shareholders on the Internet at under the heading of Investor Relations. Close Collaboration between Board of Directors and Supervisory Board. A relationship based on close collaboration and mutual trust exists between the Board of Directors and the members of the Supervisory Board. The Board of Directors reports regularly to the Supervisory Board on the progress of business activities. There is also an ongoing and constructive dialog concerning strategy, corporate planning and Company profitability. For further details, please refer to the Supervisory Board report on page 24 et seq. The Supervisory Board convened five scheduled meetings in the fiscal year under review. In addition, it held two extraordinary meetings during this period. The report prepared by the Supervisory Board contains further details of board meetings convened over the course of the fiscal year. The Supervisory Board has established four committees: a Mediation Committee, pursuant to Section 27 (3) of the German Corporate Codetermination Act (Mitbestimmungsgesetz MitbestG); a Personnel Committee, dealing with staff issues that pertain to the Board of Directors; a Nomination Committee, responsible for preparing the candidate proposals put forward by the Supervisory Board to the Annual General Meeting for the subsequent Supervisory Board elections; and an Audit Committee. No conflicts of interest arose among members of the Board of Directors and members of the Supervisory Board. For further details of the Company s boards, please refer to Statutory Company Boards in the notes to the Group financial statements.

20 Sustainability Group Management Report Group Accounts Notes to the Group Financial Statements Further Information 15 TRANSPARENCY AND COMPLIANCE. Internal and External Transparency. Wincor Nixdorf is committed to providing comprehensive, continuous and prompt information when interacting with the Company s shareholders. As regards the Annual General Meeting of Shareholders (AGM) on January 19, 2009, we will again appoint a proxy vote representative so that shareholders not attending the AGM can be given the opportunity to exercise their voting rights. Shareholders will be able to issue their instructions via the Internet prior to the AGM. With a view to ensuring prompt and open communication with the public, we provide detailed documents and information on our website. This includes AGM information, financial reports, current ad hoc announcements and press releases. Our Internet content also includes the Company s Articles of Association, the Code of Conduct and information on Directors Dealings. Compliance. As a global enterprise, Wincor Nixdorf ensures that both the parent company and the Group s subsidiaries comply with legislation and internal corporate guidelines. To this end, Wincor Nixdorf constantly strives to expand and develop its worldwide Compliance Program. Wincor Nixdorf has established a Group-wide compliance organization. The role of the Chief Compliance Officer is to coordinate the work of this organization with the support of local compliance officers at the respective subsidiaries. The Chief Compliance Officer reports back to the Board of Directors, the Compliance Committee and the Supervisory Board s Audit Committee. One of the main aims of the Compliance Program is to avoid incorrect actions through an emphasis on prevention. This is achieved, for example, by providing regular information to all staff, such as through newsletters. Another important element of the program, in addition to our internal Code of Conduct, is a newly implemented Supplier Code of Conduct. Based primarily on the Code of Conduct, regular webbased training is held across the Group in order to familiarize management and staff with the contents of the Compliance Program and build a solid preventive approach into our activities. At the same time, we run a number of on-site training courses throughout the world. We have adopted an Insider Dealing Directive that is aimed at preventing insider dealing by Company employees. The employees and Board members named on the Insider List are prohibited from undertaking transactions in Wincor Nixdorf shares or related financial instruments during certain blocking periods, prior and subsequent to the publication of quarterly and annual results. The Board of Directors and the Supervisory Board hold, either directly or indirectly, shares or options in Wincor Nixdorf AG equivalent to more than 1% of subscribed capital. Together, the four members of the Board of Directors hold 1.49% and the members of the Supervisory Board 0.26% of subscribed capital. Details of Directors Dealings pursuant to Section 15a of the German Securities Trading Act (Wertpapierhandelsgesetz WpHG) can be downloaded from the Company s website, Investor Relations section. A list of all third-party entities in which Wincor Nixdorf AG holds an interest deemed to be not of minor significance has been included in the annual financial statements of Wincor Nixdorf AG. The annual financial statements of Wincor Nixdorf AG are published, among other places, on the corporate website.

21 16 To Shareholders Management Stock Corporate Governance Supervisory Board Report Company Profile Innovation At Wincor Nixdorf, we firmly believe that compliance with the law and our own internal regulations is essential to maintaining the good name of the organization and to establishing a basis for the sustained creation of value. COMPENSATION REPORT. The information contained in the compensation report forms an integral part of the Group Management Report. Therefore, the notes to the Group financial statements include no additional presentation of details discussed as part of the compensation report. The compensation report outlines the key principles applied when determining remuneration levels for the Board of Directors of Wincor Nixdorf AG. It also presents the structure and extent of compensation for the Board of Directors. In addition, it describes the principles and extent of Supervisory Board compensation. The compensation report has been prepared in conformity with the recommendations of the German Corporate Governance Code (in the version of June 6, 2008) and includes information which, in accordance with the requirements of German commercial law, amended by the Act on the Disclosure of Management Board Compensation (Gesetz über die Offenlegung der Vorstandsvergütungen VorstOG) of August 3, 2006, forms an integral part of the notes to the Group financial statements pursuant to Section 314 of the German Commercial Code (Handelsgesetzbuch HGB) and the Group Management Report pursuant to Section 315 HGB. System of Compensation for the Board of Directors. The Supervisory Board of Wincor Nixdorf AG, acting on the recommendations of its Personnel Committee, which deals with the employment contracts of members of the Board of Directors, regularly review the Board of Directors compensation system, including its main contract elements, and makes appropriate decisions. The specific details of the contracts of members of the Board of Directors are decided by the Personnel Committee. The compensation of members of the Board of Directors of Wincor Nixdorf is determined on the basis of the Company s size and global presence, its economic and financial situation as well as the level and structure of management board compensation offered by similar companies based in Germany and abroad. In addition, the duties and the contribution of the respective members of the Board of Directors are taken into account. The level of compensation is designed to be competitive within the market for highly qualified executives and to provide incentives for successful work within a high-performance environment. The remuneration of the Board of Directors is focused on performance and comprises the four components described below: 1. Fixed basic salary plus fringe benefits 2. Variable compensation dependent on the attainment of specific targets (bonus/performance-based component) 3. Share-based compensation (long-term incentive component) and 4. Pension commitment. Within this context, the fixed basic salary, the fringe benefits and the pension commitment represent non-performance-based components. The fixed basic salary is payable in monthly installments of equal amounts. The fringe benefits mainly comprise contributions made to accident and liability insurance policies as well as the provision of a company car. Additionally, all members of the Board of Directors of Wincor Nixdorf AG are entitled to retirement benefits, as described in detail in the section entitled Pension Commitments.

22 Sustainability Group Management Report Group Accounts Notes to the Group Financial Statements Further Information 17 Variable, performance-based compensation payable in the form of a bonus is dependent on the attainment of specific targets defined within the respective employment contracts. These targets are set on the basis of EBITDA (earnings before interest, taxes, depreciation and amortization) and Group net profit. Each target receives the same weighting and is settled separately. If the agreed budget per target is met in full (100%), the member of the Board of Directors receives 100% of his/her annual fixed basic salary as a bonus. If he/she falls short of the agreed budget by a maximum of 20%, the bonus is reduced on a straight-line basis. If the specified targets are met to an extent equivalent to 80%, the member of the Board of Directors receives 25% of the agreed bonus. If the level of target attainment remains below 80% with regard to one of the two targets, the entitlement to a bonus payment is no longer applicable; in this case, the Supervisory Board must decide, as in duty bound, on the granting of a bonus and the possible extent of such a bonus. If the level of target attainment reaches 120%, the associated bonus rises to 175% of the applicable fixed basic salary of the Board member in question. In accordance with contractual requirements, variable compensation may be equivalent to a maximum of 200% of the respective fixed annual basic salary. All targets are focused on increasing enterprise value. The targets to be applied as a basis for calculating the bonus amounts payable for fiscal 2007/2008 were defined at the Supervisory Board meeting of September 23, The bonus is payable in December following adoption of the Group financial statements by the Supervisory Board. Members of the Board of Directors receive share options as a form of compensation with a long-term incentive effect. The number of share options to be issued to each member of the Board of Directors is specified as part of an individual contractual agreement. The conditions of exercise for share options granted to the Board of Directors are identical to the conditions of exercise specified for other entitled persons. For a detailed description of the Company s share-based payment programs, please refer to 16 in the notes to the Group financial statements. The fixed basic salary and the variable compensation are used as the basis for determining so-called annual target remuneration. Annual target remuneration is specified for the entire term of the contract. The non-performance-based and performance-based components of compensation are itemized below and relate to all duties performed by the members of the Board of Directors within the Group: Non-performance-based Performance-based Total Fixed basic salary Fringe benefits 2007/ / / / / / / /2007 Eckard Heidloff 1 Stefan Auerbach Dr. Jürgen Wunram 2 Jürgen Wilde Karl-Heinz Stiller Total 1) Eckard Heidloff was appointed as President CEO of Wincor Nixdorf AG, effective from January 29, 2007, thereby succeeding Karl-Heinz Stiller on the Board of Directors. 2) Dr. Jürgen Wunram was appointed as a member of the Board of Directors of Wincor Nixdorf AG, effective from March 1, 2007.

23 18 To Shareholders Management Stock Corporate Governance Supervisory Board Report Company Profile Innovation At his own request and for health reasons, Jürgen Wilde stepped down as a member of the Board of Directors of Wincor Nixdorf AG, with effect from the close of the Annual General Meeting of Shareholders on January 28, No provision was made for a settlement as consideration for the early termination of his contract of service on the Board of Directors. He will be entitled to exercise the options received as part of the share option programs for 2006 and 2007 (in each case 15,000 options, after stock split), subject to the other conditions of the programs once the two-year lock-up period specified for each program has elapsed. In coordination with the Supervisory Board, Karl-Heinz Stiller stepped down as President CEO and member of the Board of Directors, effective from the close of the Annual General Meeting of Shareholders on January 29, 2007, and was elected by the Annual General Meeting of Shareholders on January 29, 2007, as successor to Johannes P. Huth on the Supervisory Board of Wincor Nixdorf AG. In consideration of his early withdrawal from the Board of Directors, as coordinated with the Supervisory Board, and the termination of his contractual agreement as a member of the Board of Directors, which had an original term until April 30, 2009, Karl-Heinz Stiller received a one-off payment of 500,000, which has been presented as a component of fixed basic salary in the table of compensation. In addition, an agreement was concluded whereby Karl-Heinz Stiller will be entitled to exercise the options received as part of the share-based payment programs of 2005 and 2006 (in each case 15,000 options, after stock split), subject to the other conditions of the programs once the two-year lock-up period specified for each program has elapsed. Performance-related compensation for the year under review takes into account differences between the amounts accrued in the previous year for performance-related pay and the amounts actually agreed in fiscal 2007/2008 for 2006/2007. Share-based Compensation (Component with Long-term Incentive Effect). As regards the 2008 share-based payment program implemented in the fiscal year under review, the applicable quantities and monetary values of share options at the date of grant have been presented in the following table: Eckard Heidloff Stefan Auerbach Dr. Jürgen Wunram Jürgen Wilde Total 1) Quantity after stock split. 2) In, at date of grant. Quantity Share-based payment program 2008 Value per option 2 Total value of compensation component with long-term incentive effect 2 Share-based payment program 2007 Quantity 1

24 Sustainability Group Management Report Group Accounts Notes to the Group Financial Statements Further Information 19 The share options attributable to the 2007 and 2008 sharebased payment programs are not exercisable as at September 30, In the year under review, the share options granted under the 2006 share-based payment program lapsed without any entitlement to a substitute or compensation, since the average price of Wincor Nixdorf shares in the exercise period was below the exercise price for the 2006 share-based payment program. In fiscal 2006/2007, members of the Board of Directors Karl-Heinz Stiller and Eckard Heidloff each exercised 15,000 and Stefan Auerbach 10,000 of the share options (from the 2005 share-based payment program) which they held at the beginning of fiscal 2006/2007. The settlement of the share options was executed in the form of a cash payment. The cash settlement was calculated on the basis of an average share price of There are no other share options attributable to the 2005 share-based payment program. The total value of the share options at the date of granting was determined by means of the Black-Scholes-Merton options pricing model. Thus, the reported value of share-based compensation is merely to be seen as an amount derived from mathematical calculations. Whether the share-based compensation components associated with the current 2007 and 2008 programs result in a payment, and if so, to what extent, will depend on the future performance of the Company s share price and the stock market price applicable during the exercise period. The personnel expenses recognized in connection with the 2006, 2007 and 2008 share-based payment programs can be distributed among the Board members as follows: Eckard Heidloff Stefan Auerbach Dr. Jürgen Wunram Jürgen Wilde Karl-Heinz Stiller 2007/ /2007 Please refer to 16 in the notes to the Group financial statements for further details about the range of exercise prices, the remaining term of the respective options, the average exercise price of the share options and the average exercise price of the 2005 program during the exercise period, as well as the conditions of option grant and exercise associated with the share-based payment programs. Pension Commitments. As part of the restructuring of its post-employment benefit system, Wincor Nixdorf AG converted part of its Company pension scheme from annuity to one-time pay-off or installment payouts in the third quarter of fiscal 2005/2006. Thus, the retirement benefit systems implemented for Eckard Heidloff and Stefan Auerbach were converted accordingly. The retirement benefit system for Dr. Jürgen Wunram is also based on one-time pay-off or installment payments. No changes were made to the retirement benefit systems implemented for Jürgen Wilde and Karl-Heinz Stiller, as both gentlemen had already completed their 57th birthdays at the date of conversion and had availed themselves of their right not to choose the conversion of their retirement benefits. As regards the retirement benefits awarded to Eckard Heidloff, the Company has, in addition, undertaken to pay