Market and Competition Risks.

Banks and retailers operate in markets characterized by fierce competition. This intense competition can result in price pressure for our products and services – pressure that is expected to get stronger during the current fiscal year. In addition to the competitive pressures facing our customers, we also see a risk to our business through increasing internationalization and competition, coupled with diminishing barriers to entry. Heightened competition in the marketplace may have a negative effect on future profitability.

Purchasing, Productivity and Production Risks.

As a manufacturing company, Wincor Nixdorf is dependent on the supply of a wide range of raw and processed materials. This dependence brings with it risks, which we strive to minimize, in particular, through management of our supplier base. The quality assurance process at work within the supply chain ensures compliance with quality standards.

The Company is constantly working to consolidate its purchasing and save costs through good purchasing management. Nevertheless, rises in the price of raw materials such as oil and steel may result in an increase in the purchase prices of components and assemblies we require. Other negative effects on purchase prices could include statutory requirements. Changes to employment conditions in Germany, combined with cost increases, may also impact the cost situation.

Technology and Quality Risks.

The Company strives to strengthen its market position by offering products and services that are internationally competitive. This requires an intensive process of innovation and development to enable us to meet high customer demands for quality. In addition, we endeavor to work closely with our customers, especially our key hardware and software accounts, to deploy applications at an early stage. These endeavors often result in innovative business ideas and customer-specific products and services.

A leading position in innovation and quality allows Wincor Nixdorf to differentiate itself effectively from the competition. Our key goal is to maintain and build on our technological lead over our competitors. Our approach in working toward this goal, and also ensuring that any potential product weak points are quickly resolved, is based around a program established to deliver greater innovation and quality. Risks that might result from quality shortfalls are minimized through a quality and environmental management system, a rigorous approach to product releases and through insurance.

IT Risks.

Appropriate availability of our own IT systems is a basic requirement for us to be able to meet our productivity objectives and avoid damage claims from business customers. In fiscal 2005/2006, we were able to achieve the planned level of availability of our IT systems despite a series of attacks by viruses and trojans. In the current fiscal year, too, attacks on our IT systems may affect availability levels. We continuously work to optimize our systems in terms of information security, and to improve them by conducting specific security analyses. To prevent operational disruptions caused by external factors such as viruses penetrating the computer system, we always deploy the latest hardware and software solutions available on the market. In addition, our IT systems and architectures are regularly audited by independent experts.

Legal Risks.

We are not presently aware of any actual or potential legal disputes that could affect our financial position to any significant extent. Currently, there is a possibility of a claim for compensation and a pending legal dispute in connection with existing cash management service agreements. Risks of a potentially significant nature cannot be ruled out entirely for the future.

Personnel Risks.

Employee performance is essential for Wincor Nixdorf’s future development and growth. We are in competition with other businesses for highly qualified specialists and managers. In order to attract and retain qualified people in the long term, we offer attractive compensation packages and social benefit schemes in addition to extensive training and development opportunities. We do not see any issues that may pose a risk to our filling specialist or management posts in line with our growth objectives.

Overall Risk.

At present and in the foreseeable future, we perceive no individual risks that could pose a danger to the continued existence of Wincor Nixdorf. Moreover, the sum of risks does not show Wincor Nixdorf to be in any jeopardy.