Creating Opportunities. Worldwide.

Transcription

1 Creating Opportunities. Worldwide. Annual report 2012/2013 October 1, 2012 to September 30, 2013

2 Company Key figures 2012/ / / Change Statement of Income ( millions) net Sales 2,465 2,343 5% Gross profit % Gross profit as a percentage of net sales 22.0% 20.9% research & development expenses % R&D expenses as a percentage of net sales 4.0% 3.8% Selling, general and administration expenses % SG&A expenses as a percentage of net sales 12.7% 12.8% operating profit (ebit) % goodwill amortization 0 0 ebita % EBITA as a percentage of net sales (EBITA margin) 5.4% 4.3% 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) 7.7% 7.4% Profit for the period % Profit for the period as a percentage of net sales 3.6% 2.7% Earnings per share ( ) cash flow ( millions) Cash flow from operating activities % Cash flow from investment activities % Sept. 30, 2013 Sept. 30, 2012 Change Key Balance Sheet figures ( millions) working capital as a percentage of net sales (annualized) 13.8% 14.4% net debt equity Human resources number of employees (September 30) 8,826 9, ) Oct. 1, 2012 Sept. 30, ) Oct. 1, 2011 Sept. 30, ) Including other operating income and expenses as well as net income from investments recognized under the equity method 4) Net profit on operating activities before interest, taxes and amortization of goodwill. 5) Calculated on basis of million shares. 6) Including non-controlling interests. 10-year net Sales History. m Fiscal year 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 2,500 2,250 2,000 1,750 1,500 1,250 1, ,948 1,744 1,576 2,145 2,319 2,250 2,239 2,328 2,465 2,343 Change 11% 12% 10% 8% 3% 0% 4% 1% 5% 10-year ebita History. m Fiscal year 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/ Change 17% 18% 16% 11% 13% 9% 0% 38% 31% 132

3 the company. global It Specialist Serving two Industries. wincor nixdorf is acknowledged as one of the world's leading providers of It solutions and services for retail banks and retailers. Providing hardware, software, and It services, we assist both industries in managing changes to their business processes, particularly those that interface with the consumer. Solutions Portfolio and core competencies. targeted primarily at sales channels, our portfolio is geared toward the needs of branch operations, which remain the most important channel of distribution for banks and retailers. our core competence lies in the ability to optimize key processes and workflow by creating the best possible combination of hardware, software, and services, e.g., from a total cost of ownership perspective. Accordingly, our portfolio encompasses process consulting, design, implementation, integration, and operation of the respective solutions (see illustration). It Solutions by wincor nixdorf. our It solutions components focusing on key customer processes How we create value for our customers continuing realignment against the Backdrop of global Market trends. Sustained growth with Hardware. retail banks and retailers are recording significant forward momentum in the emerging markets, and we are committed to participating in this growth through our Hardware business. with this in mind, for example, we have set up specialist development resources at our site in Singapore. Additionally, the continued transformation of our international production and logistics network is aimed at further strengthening the competitiveness of our Hardware business at a global level. with a portfolio that includes innovative high-end automation technology, wincor nixdorf is also very well equipped to respond to the complex requirements of optimization projects being implemented by market players operating in the industrialized countries. Markets and competitive Positioning, see page 57 globally Standardized Services as growth Drivers. one of the focal points of our competitive offering is to combine higher availability with streamlined operating costs both for local and for global customers.

4 Accelerating growth with future-oriented technologies. wincor nixdorf has launched an international campaign to expand its Software business, the aim being to propel business forward significantly in the coming years. our company is already among the top-ranked suppliers of specialist software and associated Professional Services for retail banks and retailers. Some 1,500 employees are currently involved in developing and rendering these services, with global activities being coordinated from a dedicated base established in utrecht, netherlands. In parallel, wincor nixdorf is expanding its business with solutions centered around mobile and cashless methods of payment. Wincor Nixdorf Worldwide. International Subsidiaries, see cover our home market is europe. It is here that we generate more than 70% of our net sales. Building on our success, we will continue to expand our business in the emerging markets. we have established a market presence in more than 130 countries worldwide, 42 of which are served by our own subsidiaries. More than half of our global workforce of around 9,000 people is employed outside of germany. our research and development activities are performed in germany, Austria, Poland, Singapore, china, and Brazil. we have an international network of production facilities that includes a number of external partners. the group's own production sites are located in germany, china, and Brazil. wincor nixdorf Around the globe. 24 europe Americas 5 10 Asia-Pacific 3 Africa Countries with a Wincor Nixdorf presence Subsidiaries net Sales by regions. m Asia/Pacific/Africa 418 (17%) Americas 264 (11%) 1,216 europe (49%) germany 567 (23%)

5 2012/2013: return to a Pattern of growth. group: Marked improvement in all financial indicators. group net sales up 5% to 2,465 million. operating profit (ebita) up 31% to 132 million. Profit for the year increases by 40%, cash flow expands by 82%. with business flourishing in the emerging markets, the company manages to offset the effects of continued sluggishness afflicting some of the key industrialized nations in its home market of europe. restructuring activities scheduled for execution over a two-year period and completed in the fiscal year under review have a positive impact on business. encouraging growth in Hardware business, particularly in emerging markets; up 8%. Software/Services up 3%; they continue to account for more than 50% of total net sales. Strategic realignment continues: focus on expanding Software business and market activities in emerging countries. Banking segment: net sales up 6% to 1,614 million (2011/2012: 1,524 million). ebita up 49% to 103 million (2011/2012: 69 million). ebita margin up 1.9 percentage points to 6.4% (2011/2012: 4.5%). group Business Performance, see page 68 et seq. Segment Performance, see page 75 et seq. retail segment: net sales up 4% to 851 million (2011/2012: 819 million). ebita down 9% to 29 million (2011/2012: 32 million). ebita margin down 0.5 percentage points to 3.4% (2011/2012: 3.9%) net Sales by Segments. m net Sales by Business Stream. m Banking 1,614 (65,5%) 851 retail (34,5%) Hardware 1,185 (48%) Software / 1,280 Services (52%) 2013/2014: continuation of growth and Strategic realignment. no signs of significant upturn in investment spending in europe, in particular, despite slight improvement in macroeconomic stability. Against this background, the effects of continued sluggishness in capital expenditure within key industrialized markets will again be offset by growth generated by wincor nixdorf in the emerging markets. Stable growth in net sales of around 4% projected for the group. ebita estimated to grow by 17% to 155 million. Business in first quarter expected to be weaker than in buoyant Q1 2011/2012. report on expected Developments, see page 100 et seq.

6 2 Letter to Shareholders Management Stock Corporate Governance Supervisory Board Report MAGAZINE Responsibility Statement Creating Opportunities. Worldwide. The heading we have chosen for this year s annual report reflects the measures we have taken to prepare ourselves better for the changes we can observe all around us. Being open to new opportunities means that we have to be ready to change the way we see things. The same principle was outlined by the Greek philosopher Socrates around 2,400 years ago: Let him that would move the world first move himself. This refers to the inner willingness to change as a prerequisite for successful action. In terms of our own customers, it means that we need to reevaluate and reapply the potential of information technology for their business activities in the light of technological change. Whatever the case, IT is, and will remain, one of the key levers for boosting efficiency and reducing costs. Nevertheless, adopting a fresh perspective allows us to open up new and innovative paths, as demonstrated by an article in the magazine section of our annual report on the outsourcing by one of Germany s largest banks to Wincor Nixdorf of its operational IT management and substantial parts of its IT infrastructure. Magazine Intelligent Solutions for new Processes, p. 23 et seq. At the same time, IT is no longer regarded simply as a means of ensuring cost efficiency, but increasingly as a driving force for competitive growth. More and more, it sets the pace for change within enterprises and has therefore established itself as a key element of our customers strategic planning and operational business. Examples of this include the potential of digitization and the integration of new sales channels into our customers existing business models. In this context, we believe that while the business opportunities presented by their branch operations may have changed, they are no less important, and our solutions are there to provide the support required. Our management report looks at how Wincor Nixdorf is creating new opportunities by evolving its business. The main focus of these changes is on our drive to expand in emerging markets, so that we can benefit from an even greater share in the economic growth of those countries, and on the expansion of our Software business. In conjunction with innovative hardware, software plays an increasingly important role when it comes to facilitating changes to the business processes of retail banks and retailers. We are also driving forward our mobile and cashless payments business. By combining our previous activities in these fields, we can now offer even more comprehensive support to our customers as they deal with their own business transformation.

7 Group Management Report Group Accounts Notes to the Group Financial Statements Auditor s Report Further Information 3 Contents. Letter to Shareholders. 4 The Management Team. 6 Wincor Nixdorf Stock. 8 Corporate Governance. 12 Supervisory Board Report. 18 Magazine: Intelligent Solutions for new Processes. 23 Responsibility Statement. 48 Group Management Report. 50 Group Accounts. 106 Notes to the Group Financial Statements. 110 Auditor s Report. 152 Glossary. 153 Financial Calender, Editorial. 156 International Subsidiaries. 157 Cross reference within the Annual Report Link to Internet Reference to nonfinancial performance indicators

8 4 Letter to Shareholders Management Stock Corporate Governance Supervisory Board Report MAGAZINE Responsibility Statement The fiscal year 2012/2013 was a milestone in many ways not only because our generally strong performance allowed us to return to growth, but also for two other reasons: the progress we made in reshaping our Company and the key foundations we laid for our future. Wincor Nixdorf drives forward Software business this headline chosen by the German newspaper Frankfurter Allgemeine Zeitung in one of its most recent articles relating to our business activities encapsulates one of the Group s most important projects currently on the agenda. During the fiscal year under review, we achieved significant growth in the emerging markets and therefore succeeded in implementing one of our most important goals. Net sales in this region as a whole were up markedly, thus more than compensating for the sustained weakness of our core European market. With the exception of Russia and Turkey, business in Europe remained sluggish. At more than 30 percent, the emerging markets as a whole generated an even larger share of the Group s total net sales than we had previously anticipated. This was mainly due to the Hardware business, which returned to growth in the fiscal year under review. This and other positive developments clearly demonstrate the progress we are making in the transformation of Wincor Nixdorf even after the scheduled conclusion of our restructuring program in fiscal 2012/2013. Our priorities included the realignment of our global sales and service network and efforts to further concentrate our product portfolio. We also focused on the restructuring and pooling of the Group s R&D activities. Additionally, we took further important steps in the reorganization of our global logistics and manufacturing network, and we will continue this process in the current fiscal year. Other signs of our progress are the considerable improvement in all our main business indicators and the fact that we exceeded our forecasts by a substantial margin. Net sales rose by 5 percent to set a new record, while EBITA shot up by as much as 31 percent (factoring in our restructuring costs). Profit for the year was up 40 percent, and cash flow was 82 percent higher compared with the previous fiscal year. As our shareholders, you will also benefit from our success in line with our dividend policy of distributing 50 percent of profit for the year. Accordingly, we have proposed a dividend of 1.48 per share, compared with last year s figure of 1.05.

9 Group Management Report Group Accounts Notes to the Group Financial Statements Auditor s Report Further Information 5 As well as our focus on growth in the emerging markets, we have chosen to prioritize the expansion of our Software business for a very good reason. When it comes to facilitating rapid and efficient change in the business processes of retail banks and retailers, software plays an increasingly vital role. This is reflected in current sector trends, such as the integration of multiple sales channels, further advancements in branch business, and mobile concepts for both communications and sales. Demand for infrastructure optimization software is also growing at a fast pace. In light of these trends, we have adopted the goal of doubling our revenue from Software and associated Professional Services in the next five years. We are already a significant market player, as can be seen from the number of employees 1,500 out of a total workforce of around 9,000 worldwide whose work involves the development of new software and the provision of professional services. Another milestone was the opening of our Cashless Payment center in Prague in October This is where we strive to develop the mobile and cashless payment systems of tomorrow and to market them at global level. At the same time, the center is emblematic of the way we intend to do business over the coming years: with an international remit, by pooling our know-how and expertise, and by maintaining a clear focus on the future. We have already achieved a good deal in the past months and years, yet we still face a whole series of challenges. All this requires a great deal of commitment from our employees and a willingness to help shape that future. On behalf of the Board of Directors, I would like to express my gratitude for their tremendous efforts. Thanks are also due to our customers. It is their faith in our ability to deliver that drives us forward. Satisfied customers are the ultimate goal of our business and the foundation on which our success depends. The path ahead for Wincor Nixdorf will remain one of transformation. By adapting to market changes and seizing opportunities, we aim to maintain the pattern of growth that we have now reestablished. This commitment to growth also defines our targets for the current fiscal year: to boost net sales by a further 4 percent and achieve growth of 17 percent in EBITA to 155 million. Once again, our growth in the emerging markets will be a major factor in determining the results of the Group as a whole. Despite a slightly brighter economic outlook for our core European market, there are still no clear signs of a significant improvement in our business prospects for this region. Last but by no means least, on behalf of the entire Company I would like to thank you, our shareholders, for the interest you have shown in Wincor Nixdorf and for your active support, loyalty, and trust. Sincerely yours Eckard Heidloff

10 6 Letter to Shareholders Management Stock Corporate Governance Supervisory Board Report MAGAZINE Responsibility Statement Dr. Thorsten Nottebaum Rainer Pfeil Thomas Fell Olaf Heyden Member of the Board of Directors Jens Bohlen Member of the Board of Directors Senior Vice President, Research and Development Senior Vice President, Human Resources Senior Vice President, Retail Executive Vice President Executive Vice President Born Joined Wincor Nixdorf in June 2013 and since then Member of the Executive Board; responsible for Research and Development. Born Joined Wincor Nixdorf in July 2001; since then Member of the Executive Board; responsible for Human Resources. Born Joined Wincor Nixdorf in November 2010 and since then Member of the Executive Board; responsible for the Retail business. Born Joined the Company in May 2013 and since then Member of the Board of Directors; responsible for IT Services business with banks and retailers. Born Joined Wincor Nixdorf in November 2006; since then Member of the Executive Board. Since January 2013, Member of the Board of Directors; responsible for Banking business.

11 Group Management Report Group Accounts Notes to the Group Financial Statements Auditor s Report Further Information 7 Dr. Jürgen Wunram Deputy CEO & President Executive Vice President, CFO, COO Eckard Heidloff President & Chief Executive Officer President & CEO Khoon Hong Lim Senior Vice President, Region Asia-Pacific Javier López-Bartolomé Senior Vice President, Region Americas Reinhard Rabenstein Senior Vice President, CTO Born Joined the Company in March 2007 and since then Member of the Board of Directors. Since January 2013 Deputy CEO. Born Joined Nixdorf in President & CEO since January 29, Born Joined Nixdorf in Member of the Executive Board since October 2005; responsible for the Group business in Asia-Pacific. Born Joined the Company in Member of the Executive Board since 1999; responsible for the Group business in the Americas. Born Joined Nixdorf in Since October 2005 Member of the Executive Board and Chief Technology Officer.

12 8 Letter to Shareholders Management Stock Corporate Governance Supervisory Board Report MAGAZINE Responsibility Statement Proposed Dividend of 1.48 per Share Visible Signs of Recovery in Share Price. Share Performance. At the end of the period under review Wincor Nixdorf shares stood at 46.16, up almost 51% on the opening price recorded at the beginning of the fiscal year (October 1, 2012). In generating this forward momentum, Wincor Nixdorf s stock outperformed the MDAX (+37%) by a considerable margin over the period of twelve months. Performance of Wincor Nixdorf Shares Compared to MDAX and MSCI World. Oct 12 Nov 12 Dec 12 Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep % % % 150% 140% % 130% 120% % 110% % 90% Wincor Nixdorf MDAX (Performance Index) MSCI World

13 Group Management Report Group Accounts Notes to the Group Financial Statements Auditor s Report Further Information 9 Wincor Nixdorf Absolute Share Performance with Monthly High and Low. Oct 12 Nov 12 Dec 12 Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep The following points can be observed in relation to the performance of Wincor Nixdorf stock as shown in the diagrams for the fiscal year just ended: Overall, share prices in the market as a whole rose steadily up to the end of the fiscal year. Wincor Nixdorf shares outperformed the market as a whole over most of the period. The Company s stock dipped towards the end of the fiscal year, having previously rallied following the announcement of Wincor Nixdorf s financial results for the first nine months and the decision to upgrade its outlook for fiscal 2012/13. The highest trading price in the period under review was on August 14, 2013, while the lowest figure, recorded on October 4, 2012, was The average trading volume of Wincor Nixdorf shares on all German stock exchanges stood at 2.7 million shares per month in fiscal 2012/2013, compared to 3.8 million shares per month in fiscal 2011/2012. Basic Data. Date first traded May 19, 2004 Issue price Stock exchange Prime sector Total number of shares WKN (German securities no.) ISIN Frankfurt Securities & Stock Exchange (Prime Standard) Industrial 33,084,988 shares with a nominal value of 1.00 each A0CAYB DE000A0CAYB2 Index Membership. According to data issued by Deutsche Börse for September 2013, Wincor Nixdorf is ranked 28th in the MDAX index on the basis of market capitalization (previous year: 30th) and 34th (previous year: 30th) on the basis of trading volume. Both of the above-mentioned items are important criteria with regard to the stock s appeal for institutional investors. Index Membership. Index Included since MDAX September 20, 2004 MSCI World Index (World Small Cap) June 1, 2005 Dow Jones STOXX 600 June 19, 2006 Kempen SNS Smaller Europe SRI Index (Socially Responsible Investment) October 1, 2007

14 10 Letter to Shareholders Management Stock Corporate Governance Supervisory Board Report MAGAZINE Responsibility Statement Wincor Nixdorf Shares Key Facts & Figures / / / / /2009 Opening price (XETRA) Fiscal year-end price (XETRA) Fiscal year high (XETRA) Fiscal year low (XETRA) Number of shares as of September 30 33,084,988 33,084,988 33,084,988 33,084,988 33,084,988 Shares in free float as of September 30 29,776,490 29,776,490 29,776,490 31,370,717 31,664,008 Free float 90.0% 90.0% 90.0% 94.8% 95.7% Market capitalization as of September 30 1,374m 906m 1,006m 1,500m 1,394m Total dividend 44m 2 31m 51m 53m 59m Dividend per share Dividend yield (based on fiscal year-end price) 3.21% 3.45% 5.03% 3.55% 4.20% Earnings per share ) Data adjusted after capital increase, executed on March 22, 2007, through issuance of shares in a ratio of 1:1. 2) Proposed dividend. 3) Profit for the period (up to 2008/2009 before carve-out charges) based on shares outstanding. [ 1 ] Details concerning Directors Dealings at Section: Investor Relations Shareholder Structure Broad Scope of International Ownership. A total of 90% of Wincor Nixdorf s stock is in free float (10% treasury shares). At the end of the reporting period the following entities each held an interest in Wincor Nixdorf in excess of the disclosure threshold, as specified under Section 21 WpHG (German Securities Trading Act). Artisan Partners Asset Management Inc./Artisan Partners Limited Partnership / Artisan Investments GP LLC/ Artisan Partners Holdings LP/Artisan Investment Corporation/ZCIF, Inc./Mr. Andrew A. Ziegler/Ms. Carlene M. Ziegler (over 3%) DB X-Trackers (over 3%) William Blair & Company, LLC (over 3%) BlackRock Group Limited/BlackRock, Inc./BlackRock Holdco 2 Inc./BlackRock Financial Management Inc./ BlackRock Advisors Holdings, Inc./BlackRock International Holdings, Inc./BR Jersey International Holdings L.P. (over 5%) Details concerning [ 1 ] Directors Dealings pursuant to Section 15a WpHG (German Securities Trading Act) are published on the Company s website at in the section entitled Investor Relations. Regional Distribution of Shareholders.* % Other 20 Treasury shares 10 France 5 U.K. 20 * Current estimate based on figures for May U 15G usa germany Investor Relations Consistent Communication. In the context of its Investor Relations activities, Wincor Nixdorf is committed to a policy of open and active financial communication. Investors and analysts are furnished with information on the strategic direction and development of the Company in a comprehensive and timely manner. Our aim is to generate confidence by maintaining an ongoing dialog with the capital markets. In the fiscal year under review, we held a total of 23 road shows and conferences in Germany, the United Kingdom, France, Italy, Canada, Austria, Switzerland, Spain, and the United States as a means of fostering close relations with existing partners and establishing new contacts.

15 Group Management Report Group Accounts Notes to the Group Financial Statements Auditor s Report Further Information 11 We also conducted numerous one-on-one meetings with investors at our headquarters in Paderborn. Complemented by tours of our plant and product presentations, these meetings gave visitors a comprehensive insight into our Company and portfolio. In all, the Board of Directors and the Investor Relations team held talks with well over 400 institutional investors in the reporting period. Fund managers from Germany, France, the United Kingdom, and the U.S. in particular showed a strong interest in our Company. Following the publication of our quarterly figures and provisional results for fiscal 2012/2013, 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 were published promptly on our website, both in German and English. The website also contains extensive information on our share buyback programs, corporate structure, management, and strategy, in addition to providing details on [ 4 ] corporate governance and our Annual General Meeting. Analyst Coverage. At the end of the fiscal year under review, the Company was officially being covered by 21 financial analysts, which includes comments and recommendations issued on a regular basis. These analysts are (in alphabetical order): Bank of America Merrill Lynch, Bankhaus Lampe, Berenberg Bank, Commerzbank, Deutsche Bank, DZ Bank, equinet Bank, Fairesearch, Goldman Sachs, Hauck & Aufhäuser, HSBC Trinkaus & Burkhardt, Independent Research, Kepler- Cheuvreux, LBBW, MainFirst, Materlan Research, Metzler Equity Research, M. M. Warburg, Nord/LB, UBS, Wedbush Morgan Securities. Analyst recommendations at the end of fiscal 2012/ 2013: Hold 11 3 Sell 7 Buy Annual General Meeting. Shareholders attending the Annual General Meeting (AGM) of Wincor Nixdorf AG in Paderborn, Germany, on January 21, 2013, represented over 65% of the Company s voting rights. All resolutions on the agenda were adopted with large majorities. The next [ 2 ] Annual General Meeting is scheduled to take place in Paderborn on January 20, Consistent Dividend Strategy. For fiscal 2011/2012, we paid a dividend of 1.05 per share. For fiscal 2012/2013, the Board of Directors and the Supervisory Board intend to propose a dividend of 1.48 per share to the Annual General Meeting. This represents a [ 3 ] dividend yield of 3.21% based on the fiscal year-end price of Wincor Nixdorf stock. This means that the Board of Directors will again follow the dividend strategy established at the time of flotation, according to which around 50% of [ 5 ] profit for the year shall be distributed to shareholders. Dividend History. Fiscal year 08/09 09/10 10/11 11/12 12/13 3,00 2,50 2,00 1,50 1,00 0, Change 8% 0% 38% +41% * Proposed dividend * Treasury Shares. At the end of the reporting period, the Company held a total of 3,308,498 treasury shares, equivalent to 9.99% of its share capital, as a result of repurchase programs in previous fiscal years. The repurchased shares are intended for all purposes admitted by the law and covered by the authorization given by the AGM, in particular to fulfill the Company s obligations in respect of the share options already issued or to be issued to members of the Board of Directors, other managerial staff, and employees of the Company and/or subordinate associated companies. [ 2 ] Next AGM: January 20, 2014 [ 3 ] [ 5 ] Glossary: p. 155 [ 4 ] Corporate Governance, p. 12 et seq.

16 12 Letter to Shareholders Management Stock Corporate Governance Supervisory Board Report MAGAZINE Responsibility Statement Transparency and Compliance Risk Management System for Value-led Corporate Management The Code and its guiding principles act as central benchmarks The Board of Directors and Supervisory Board work together in a spirit of trust Corporate governance is built on a strong commitment to transparency Processes and structures provide the foundation for effective compliance The Company s pattern of success is underpinned by effective risk management and a value-driven approach Corporate Governance. [ 1 ] Section: Investor Relations [ 2 ] Supervisory Board Report, p. 18 et seq. [ 3 ] Directors Dealings, for further infor mation visit Section: Investor Relations 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 AktG (German Stock Corporation Act), stating that, with the exceptions specified therein, Wincor Nixdorf complies with all the 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 [ 1 ] 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, promptly, and comprehensively to the Supervisory Board on the progress of business activities. There is also an ongoing and constructive dialog concerning strategy, corporate planning, company profitability, risk status, risk management, and compliance. For further details, please refer to the [ 2 ] Supervisory Board report. The Supervisory Board convened five scheduled meetings in the fiscal year under review. In addition, it held four 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) MitbestG (German Co-Determination Act); a Personnel Committee, responsible for preparing the essential elements of staff decisions to be made by the Supervisory Board in respect of the Board of Directors as well as with regard to the compensation structure; a Nominations 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 or the Supervisory Board. TRANSPARENCY AND compliance. Internal and External Transparency. Wincor Nixdorf is committed to providing comprehensive, continuous, and prompt information in its communications with the Company s shareholders. As regards the Annual General Meeting of Shareholders (AGM) on January 20, 2014, 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 online content also includes the Company s Articles of Association, the Code of Conduct, and information on [ 3 ] Directors Dealings pursuant to Section 15a WpHG (German Securities Trading Act).

17 Group Management Report Group Accounts Notes to the Group Financial Statements Auditor s Report Further Information 13 Either directly or indirectly, the Board of Directors and the Supervisory Board hold shares or options in Wincor Nixdorf AG equivalent to more than 1% of share capital. In this context, the members of the Board of Directors together hold 2.95% and the members of the Supervisory Board together hold 0.02% of the Company s share capital. 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 have been published, among other places, on the Company s website. Compliance. For Wincor Nixdorf AG, responsible and lawful conduct is a prerequisite for quality, business success, and sustainable corporate development. The Board of Directors therefore regards compliance as a fundamental management task and has pledged in its compliance statement to respect the law, while expressly acknowledging the need for lawful, social, and ethical conduct. Wincor Nixdorf has developed a Compliance Management System (WN CMS) tailored to the requirements of an international group. This involves expanding the existing compliance organization, in addition to comprising the process of further refining the Compliance Management System. Structure. At Wincor Nixdorf, the overall compliance structure has two key elements. Firstly, compliance management is linked to our business activities so that it remains an ongoing and integral part of existing processes. Secondly, we have developed a Compliance Officer System. The Group-wide Compliance Officer System encompasses four levels. The first level is occupied by the Chief Compliance Officer (CCO), who was appointed as early as Assigned to the parent company, he reports to the Board of Directors and the Audit Committee of the Supervisory Board. The CCO is responsible for coordinating and managing the global implementation and monitoring of compliance measures and for ongoing development of the Wincor Nixdorf CMS. The second level is occupied by the Regional Compliance Officers (Regional COs), whose responsibilities include compliance at a regional level and who report to the COO. The third level includes the Area Compliance Officers (Area COs), who report to the Regional COs and coordinate the activities of the Local COs in their respective areas. Finally, the fourth level is occupied by Local Compliance Officers (Local COs) assigned to the respective entities within the various countries. They report to the Area COs and are responsible for introducing the Compliance Management System, implementing associated measures, and monitoring progress at a local level. The Compliance Program. The Compliance Management System comprises the following components: prevention, detection/control, and response. As regards prevention, considerable importance is attached to regular compliance training, implemented in the form of attended seminars and online sessions. The communication program includes a quarterly compliance newsletter and the compliance portal on the Wincor Nixdorf intranet. Additionally, the Compliance Office is available to advise employees on all matters relating to the Wincor Nixdorf CMS. The Wincor Nixdorf CMS is subject to an ongoing process of development to ensure that Wincor Nixdorf can respond to changes in the legal and economic conditions governing its international business. RISK MANAGEMENT SYSTEM for VALUE-LED corporate MANAGEMENT. Responsible corporate governance is dependent on a properly functioning risk management system. The risk management system implemented by Wincor Nixdorf is geared toward meeting the practical requirements of our business. It is designed to highlight opportunities and risks at an early stage and to help avoid or limit them where they occur. Further details are provided in the Group Management Report in the section entitled Risk Report.

18 14 Letter to Shareholders Management Stock Corporate Governance Supervisory Board Report MAGAZINE Responsibility Statement Exceptions to the Corporate Governance Code Objectives of the Supervisory Board EXCEPTIONS to THE corporate GOVERNANCE code. Under Section 161 AktG (German Stock Corporation Act), the Board of Directors and the Supervisory Board of exchange-listed companies are obliged to issue a declaration each year stating that the recommendations of the Code of the Government Commission on German Corporate Governance, as published by the German Federal Ministry of Justice in the official section of the Federal Gazette (electronic version), have been and are being met. This declaration must also specify which recommendations have not been or are not being applied and why not. Exceptions to the Corporate Governance Code. In accordance with Section 161 AktG (German Stock Corporation Act), the Board of Directors and the Supervisory Board of Wincor Nixdorf AG issued a new declaration of compliance on November 25, Since its last declaration of compliance on November 20, 2012, Wincor Nixdorf Aktiengesellschaft has complied and will continue to comply with the recommendations of the Code of the Government Commission on German Corporate Governance, in the version dated May 15, 2012 (published in the Electronic Federal Gazette on June 15, 2012), and with the recommendations of the revised version of the Code, which came into force on May 13, 2013 (published in the Electronic Federal Gazette on June 10, 2013), with the two exceptions detailed below: 1. The D&O insurance policy agreed by Wincor Nixdorf Aktiengesellschaft does not feature a policy deductible for the Supervisory Board (Section 3.8 Paragraph 3 GCGC). Reasons: The D&O insurance policy agreed by Wincor Nixdorf Aktiengesellschaft does not feature a policy deductible for the Supervisory Board, in particular no such deductible of at least 10% of the damage up to at least one and a half times the fixed annual remuneration. The D&O insurance policy was taken out for a significant number of management staff across the entire Wincor Nixdorf Group, at home and abroad, including members of the Company s boards. When the policy agreement was signed, it did not appear proper to differentiate between Board members and other management staff; equally there was no legal requirement to do so. Effective from July 1, 2010, only insurance policies for members of the Board of Directors were to be amended pursuant to Section 93 (2) Sentence 3 AktG (German Stock Corporation Act) in conjunction with Section 23 (1) Sentence 1 EGAktG (Introductory Act to the Stock Corporation Act). There is no stipulation in the legislation (Section 116 Sentence 1 AktG) of a mandatory policy deductible for the Supervisory Board; indeed, the Supervisory Board is specifically exempted from such a mandatory policy deductible. Given the nature of the role of the Supervisory Board, which is also evident from that Board s different remuneration structure, this distinction in the treatment of the Board of Directors and the Supervisory Board appears commensurate, especially since the insurance policies have not been changed for other senior managers. Consequently, it does not appear proper to extend the policy deductible in the D&O insurance policy held by Wincor Nixdorf Aktiengesellschaft to members of the Supervisory Board. 2. In setting the level of remuneration paid to members of the Supervisory Board, no account is taken of chairmanship of any committee other than the Audit Committee, or of membership of any of the Supervisory Board committees (Section Paragraph 1 Sentence 3 GCGC old version/section Paragraph 1 Sentence 2 GCGC new version). Reasons: Remuneration for mere membership of a committee is deemed unnecessary. As regards the activities of the Supervisory Board, practice has shown that the vast majority of committee meetings are scheduled to coincide closely with meetings of the Supervisory Board itself. Chairmanship of the Audit Committee is remunerated separately due to the additional time and effort required by the role.

19 Group Management Report Group Accounts Notes to the Group Financial Statements Auditor s Report Further Information 15 OBJECTIVES OF THE SUPERVISORY BOARD IN RELATION to ITS composition CURRENT STATE OF IMPLEMENTATION. According to Section Sentence 5 GCGC, the Corporate Governance Report should contain details of the specific objectives of the Supervisory Board in relation to its composition and with due regard for the organization s international activities, potential conflicts of interest, the number of independent Supervisory Board members considered adequate by the Supervisory Board, the stipulation of an age limit for members of the Supervisory Board, and diversity, the latter especially in terms of achieving an appropriate level of involvement of women. The report should also evaluate the state of implementation of these objectives. To this end, at its meeting on September 25, 2013, the Supervisory Board set out its objectives in relation to the composition of the Board as follows: As required by the German Co-Determination Act, the Supervisory Board of Wincor Nixdorf AG is made up of six shareholder representatives and six employee representatives. A ballot to elect the six employee representatives on the Supervisory Board was held on December 8/9, 2010, with the result that the end of their terms of office will coincide with the end of the Annual General Meeting in January The Supervisory Board or, at a preliminary stage, its Nominations Committee may only exert an influence on the election of the six shareholder representatives through its right to propose candidates to the Annual General Meeting. Objectives: The specific objectives for the composition of our Supervisory Board are therefore limited to the composition of the six shareholder representatives: a) With regard to the international activities of the Company. The international activities of Wincor Nixdorf AG have previously been taken into account in the composition of the shareholder representatives on the Supervisory Board and will continue to be taken into account when the Supervisory Board submits candidate proposals to the Annual General Meeting. The key factors here are a knowledge of spoken and written English, professional experience (either in management or on another supervisory body) in other German or foreign companies of a comparable size with an international presence, and an understanding of global economic issues in relation to manufacturing, sales, or services. This requirement for candidates to have an international profile does not necessarily mean that the Supervisory Board should include one or more foreign nationals. German citizens can also provide the desired international experience, e.g., as a result of time spent working in another country. However, a solid command of English, both written and spoken, is considered a key prerequisite. b) Avoiding potential conflicts of interest. Potential conflicts of interest are avoided at an early stage when the Supervisory Board submits its proposed candidates to the Annual General Meeting. Since the last Annual General Meeting held on January 21, 2013, no former member of the Wincor Nixdorf Board of Directors or former Wincor Nixdorf General Manager has served on the Supervisory Board as a shareholder representative. When it submits the names of proposed candidates to the Annual General Meeting, the Supervisory Board ensures that the candidates in question do not perform a managerial, advisory, or supervisory role on behalf of one of the Company s competitors, suppliers, lenders, or customers. This avoids conflicts of interest from the outset. In the event that a conflict of interest arises during the period of office of a member of the Supervisory Board, the person in ques-

20 16 Letter to Shareholders Management Stock Corporate Governance Supervisory Board Report MAGAZINE Responsibility Statement Objectives of the Supervisory Board Audit of Group Financial Statements tion is required to disclose that conflict to the Supervisory Board via the Chairperson and, provided the conflict of interest is significant and not just temporary, to stand down. c) Number of independent Supervisory Board members considered adequate by the Supervisory Board. According to the recommendation set out in the Code, a Supervisory Board member is not to be considered independent if he/she has personal or business relations with the company, its executive bodies, a controlling shareholder, or an enterprise associated with the latter that may cause a substantial and not merely temporary conflict of interests. Based on the Supervisory Board s assessment, all six of the shareholder representatives within the Supervisory Board are to be considered independent members within the meaning of Section of the German Corporate Governance Code. Therefore, the independence of the Supervisory Board is safeguarded to an adequate extent. d) Stipulation of an age limit. The age limit, i.e., the expiry of a serving member s term of office at the end of the Annual General Meeting after which that person reaches the age of 70, is already stipulated in the Company s Articles of Association (Article 7 Paragraph 6). e) With regard to diversity. Due regard must be given to issues of diversity in the composition of the Supervisory Board. In particular, the Supervisory Board must provide for an appropriate level of female representation. At present, the Supervisory Board is made up of two female and ten male members. Diversity is reflected in the varying professional careers and activities of shareholder representatives and with regard to the Board s international profile the track record of experience within the Supervisory Board. In cases where male and female candidates are equally qualified and suitable, due regard should be given to the appointment of a female candidate. The Company aims to ensure that there continues to be at least one female member of the Supervisory Board as a representative of shareholders. State of Implementation of Objectives: Details of the current state of implementation of the objectives presented above under a) to e) for the composition of the Supervisory Board are given below: The objectives relating to a) With regard to the international activities of the Company, b) Avoiding potential conflicts of interest, c) Adequate number of independent Supervisory Board members, d) Stipulation of an age limit, and e) Diversity, including the appropriate participation of female representatives on the Supervisory Board have been met to an adequate extent. Furthermore, we will continue to pursue objective e) Diversity, including the appropriate participation of female representatives on the Supervisory Board within the Nominations Committee of the Supervisory Board when identifying suitable candidates as successors to shareholder representatives whose term on the Supervisory Board is coming to an end to the extent that the pool of suitable candidates also includes female candidates with requisite experience and qualifications.