Derivative financial instruments in the Wincor Nixdorf Group comprise hedging instruments used to manage interest rates and exchange rate fluctuations. These instruments serve to reduce income volatility (Glossary) . No derivatives are held for trading purposes. Nevertheless, derivatives not meeting the requirements for cash flow (Glossary) hedge accounting in accordance with IAS 39 are classified as “held for trading.”
The scope of hedge accounting by financial derivatives comprises recognized, pending and highly probable hedged items. In accordance with IAS 39, derivatives meet the recognition criteria for assets and liabilities, as a result of which they must be capitalized (other assets) or expensed (other liabilities) at fair value.
Derivative transactions are accounted for at acquisition cost at the trading date. In general, acquisition costs of derivative transactions equal their fair values. In subsequent periods, they are capitalized at their fair values. Resultant profits or losses flow through to profit for the period (Glossary) in question where the requirements for cash flow hedge accounting are not met. If hedging relationships are effective, the amounts of profit are under consideration of deferred tax effects credited (and losses charged) to equity, with no effect on accounting profit. The reclassification from equity to Group income statement takes place when the hedged item is recognized in income, or is no longer expected to occur.
