In accordance with IAS 37, accruals are created on the balance sheet in respect of legal or actual obligations where the outflow of funds to settle such obligations is probable and can be estimated reliably.

The accruals for personnel costs have been created essentially for pre-retirement part-time working arrangements, vacation and flexi-time not taken, service anniversary awards, severance payments in connection with dismissals and company social benefit top-up schemes.

As a means of entering into early retirement, WINCOR NIXDORF International GmbH, Paderborn, offers a company-subsidized pre-retirement part-time working scheme using the “block model”. The term of the scheme is between two and six years, and entry to the scheme is permitted no earlier than the employee’s 55th birthday. Essentially, during the working phase, the employee performs full duties on half pay. During the release phase, the employee no longer works, but receives the remaining 50% of his or her remuneration. The employer subsidy takes the form of topping up of remuneration and pension plan contributions. The accrued amount has been offset by €3,210k in the previous year, which was invested for insolvency protection of funds related to the German pre-retirement part-time working scheme in marketable securities (€2,999k) and in a trustee account (€211k). In the current fiscal year, this insolvency protection has been handled by a guarantee agreement closed with an external bank.

Warranty accruals are created in respect of product warranty obligations which are prescribed by statute or contractually agreed or which have arisen de facto.

Where delay and contract penalties are agreed in contracts for the supply of goods and/or services, and where the incurrence of penalties is probable in the light of the current position, a corresponding accrual for delay and contract penalties is created.

Where income from an order does not cover prime cost, accruals are created for potential losses on pending transactions to the value of the variance between income and expenses.

The risks associated with the potential claims for damages and pending legal proceedings have been accounted for in other non-current accruals.

Other miscellaneous accruals contain mainly accruals for outstanding invoices of services received plus accruals for costs associated with external annual accounts.