Market and Competition Risks.
Banks and retailers operate in markets characterized by intense competition. This can result in price pressure for our hardware, software and services – pressure that is expected to remain at a high level during fiscal 2007/2008. 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 for potential competitors. Increased competition in the market place may have a negative impact on future profitability.
Purchasing, Production and Productivity 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 embedded into the supply chain ensures compliance with quality standards.
The company constantly strives to purchase in greater volume and to save costs through good purchasing management. Nevertheless, rises in the price of raw materials, may result in an increase in the purchase prices of the components and assemblies we require. Statutory requirements can also have a negative impact on purchase prices. It cannot be ruled out that changing framework conditions within the labor market in Germany, in conjunction with higher costs, will have an adverse effect on expense structures.
Technology and Quality Risks.
Wincor Nixdorf aims to strengthen its market position by offering hardware, software 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 key customers, especially in the hardware and software areas, to deploy applications at an early stage. These endeavors often result in innovative business ideas and customer-specific hardware, software and services.
Wincor Nixdorf’s leading position within the areas of innovation and quality allows us to differentiate ourselves effectively from the competition. Our key goal is to maintain and build on our technological lead over our competitors. In order to achieve this goal, and to ensure that any potential product weak points are quickly resolved, we have developed a program 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.
For us to be able to meet our productivity objectives and avoid damage claims from business customers, we have to ensure the reliability of our IT systems. In fiscal 2006/2007, we were able to achieve the planned level of availability of our IT systems, despite a series of attacks by viruses and trojans. In fiscal 2007/2008, too, attacks on our IT systems may affect availability levels. Therefore, we continuously work to optimize our systems with regard to information security, and we intend to make further improvements to existing systems by conducting specific evaluations of security requirements. To prevent operational disruptions caused by external factors, such as viruses penetrating the computer system, we always deploy the latest hardware and software solutions (Glossary) 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 the financial position of the Group to any significant extent. However, claims for compensation in connection with cash management (Glossary) service agreements are currently being asserted. Furthermore, Wincor Nixdorf is exposed to a number of risks in connection with possible legal disputes in the future. Legal disputes may arise in the ordinary course of business, for instance, with regard to claims of incorrect provision of products and services, product liability, product defects, quality issues or industrial property right infringements. There can be no guarantee that the outcome of such or other legal disputes will not be detrimental to the business activities or the reputation of Wincor Nixdorf. Claims of this nature and legal disputes, some of which with a significant impact on the Group’s financial situation, 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 benefits, in addition to extensive training and development opportunities. We do not see any issues that may pose a risk to our necessary recruiting of specialists or managers 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.
