Our business is exposed to credit, currency and interest rate risks. The Group treasury function and efforts to limit financial risk are managed centrally. Interest expenses are mainly linked to the short-term variable market interest rate (EURIBOR) plus a margin. This margin can be subject to depending on certain financial ratios vary. Being tied to a market interest rate means that we are exposed to an interest rate risk. Rising interest rates could lead to interest expenses higher than originally planned. We have entered into interest rate options to hedge these risks. As a result, the effective interest rate on our financial debt (plus margin) fluctuates between 1.75% and 5.0%. We have also negotiated a fixed interest swap at 3.797% on €50 million as a hedge against rising money market interest rates.

The global nature of the Group’s business generates payments in both directions in a range of currencies. Incoming and outgoing payments in individual currencies are netted off against each other. Thus, by selecting suitable suppliers and making appropriate location-related decisions, we actively seek to create a natural hedging effect to the greatest extent possible. The netted-off amounts represent our remaining exchange rate risk. These are then hedged up to 100% (depending on volume and currency) on a rolling 12-month basis by means of suitable financial instruments.

We reduce credit risks by consistently obtaining credit reports, setting credit limits and running a proactive debtor management function, including a payment reminder system and active debt collection. Letters of credit are used to secure receivables from countries classified as presenting a credit risk.

Capital Market and Risks to Pension Commitments.

Share, bond, property and other markets are subject to fluctuations in valuation, which can have an effect on our plan assets. In addition, changes in rate of return can affect pension commitments. Other changes in the environment, which may also lead to an increase or reduction in pension and related commitments, include pay rises, changes in the number of those contributing to and benefiting from the scheme, mortality rates, increases in healthcare costs and other factors. Such changes can have a negative effect on pension expenses, future contributions and equity. As such, it is possible that future pension commitments and contributions may have a negative effect on the financial position and profitability of Wincor Nixdorf.