Currency Risks.

At Wincor Nixdorf Group, both sales and purchases are transacted in foreign currency. After netting off, there remains a net volume of foreign currency which is roughly equivalent to 6% of net sales and can therefore be regarded as being of a minor nature.

The entire Group’s currency risk is managed and controlled by WINCOR NIXDORF International GmbH, Paderborn. The U.S. dollar currency risk is nearly completely hedged for the next twelve months by a combination of fiscal and natural hedge.

Since the end of fiscal 2003/2004, the monthly expected future U.S. dollar, sterling and Japanese yen payments received and/or payments made are hedged for a period of twelve months by external monthly due forward currency transactions undertaken with banks. Since the hedge is classified as highly effective, a cash flow hedge is accounted for according to IAS 39 “Financial Instruments: Recognition and Measurement”. The nominal sum of the forward currency transactions amounts to €131,900k. The corresponding market values which are determined by market prices amount to €1,276k and €–891k respectively (previous year: €107k and €–6,988k) at the balance sheet date and have been recorded without any impact on profit and loss in the revaluation reserve within equity. The market values are presented under other assets or other liabilities respectively. Market prices have been obtained by respective quotations of banks. The forward currency transactions will affect profit and loss at maturity date.

During this fiscal year, €–6,881k (previous year: €284k) have been released from revaluation reserves and recorded in profit and loss under cost of sales.

The flows of foreign currency are recorded centrally for the entire Group and, where feasible, equalized out.

No foreign currency options were transacted during the fiscal year.

Interest Rate Risks.

In order to reduce the risk of interest rate changes, Wincor Nixdorf entered into an agreement of three collars with a nominal sum of €150,000k, with a variety of different banks. Two of the three collars run until December 31, 2010, with the third collar running until December 31, 2007.

A collar is a combination of interest rate cap and interest rate floor. An interest rate cap is taken to mean an agreement between buyer and seller under which the seller pays the buyer the difference between the agreed upper interest rate limit and the reference rate (if higher) on an agreed nominal sum over a set term. An interest rate floor, on the other hand, is the description given to an agreement between buyer and seller stipulating that the seller will pay the buyer the difference between the agreed lower interest rate limit and the reference rate (if lower) on an agreed nominal sum over a set period. Wincor Nixdorf has secured an upper interest rate limit of 5.00% (as buyer of the interest rate caps) and a lower interest rate limit of 1.75% (as seller of the interest rate floors). The underlying reference rate is the 3-months EURIBOR. By the collar, Wincor Nixdorf is not only protected against rising interest rates but is also able to benefit from falling rates down to the lower limit of 1.75%.

The interest rate caps and floors performed as follows up to the balance sheet date:

The market value is arrived at by taking the value of outstanding positions at market prices without adjusting for adverse movements in the value of the underlying transactions. It shows the effect that smoothing of interest rate caps and floors had on profit as of the year-end. The market values were arrived at based upon corresponding quotations obtained from banks using mark-to-market models.

The positive market value of the interest rate caps as of September 30, 2006 is shown as relevant under other non-current assets. The negative market value of the interest rate floors is shown under other non-current liabilities. The changes in value are included under finance income and finance costs. The impact of the changes in value on profit and loss is €176k (previous year: €1,052k).

The following residual terms apply:

Last year’s equivalent figures are shown in brackets.

As the underlying contract was entered into with banks of impeccable financial standing, there are no credit risks associated with this financial instrument.

In addition, since September 27, 2006, Wincor Nixdorf has effected an interest rate swap for a nominal sum of €50,000k at a secured interest rate of 3.797% until July 31, 2012. In doing so, Wincor Nixdorf is hedging the EURIBOR interest rate risk associated with outgoing interest payments for €50,000k of the floating-rate loan from the revolving facility of August 2, 2005, the loan term of which ends on July 31, 2012 (for further explanations, please refer to details of Financial Liabilities outlined in Note 20). The annual interest payments for the floating-rate loan from the revolving facility are compensated for by the settlement payments from the interest rate swap. As the hedge relationship is determined to be highly effective, it is accounted for as a cash flow hedge in accordance with IAS 39 “Financial Instruments: Recognition and Measurement”. At the balance sheet date, the fair value, which is measured at market prices, is €92k and has been directly recognized in the revaluation reserve in equity, having taken into account deferred taxes. The fair value is presented in other non-current assets. The market price is determined on the basis of price quotations provided by banks. The interest adjustment takes place at the end of each quarter.

Credit Risks.

In the case of derivative financial instruments, the Wincor Nixdorf Group is exposed to credit risk arising from the non-performance of contractual obligations by the contracting parties. This risk is minimized by only entering into agreements with contracting parties who have a first-class credit rating.

Wincor Nixdorf attempts to reduce the credit risk by using trading information, credit limits and debtor management including a payment reminders system and pro-active debt collection. We operate with letters of credit to safeguard receivables from countries with a credit risk, such as Sri Lanka, Thailand, Saudi-Arabia, Ukraine and Russia.