Methods of Consolidation

Consolidation Group.

The Group financial statements as of September 30, 2011, include those companies in which Wincor Nixdorf AG directly or indirectly has a majority of the voting rights (subsidiaries), or from which it is able to derive the greater part of the economic benefit and bears the greater part of the risk by virtue of its power to govern corporate financial and operating policies. Inclusion of such companies’ accounts in the Group financial statements begins at the moment of exercising control over the company, and ceases at expiration of control.

In fiscal 2010/2011, changes in the consolidation group as a result of acquisitions and new foundations were as follows:

  • With effect from July 1, 2011, 100% of the shares in Dynasty Technology Group, S.A., Madrid, Spain (in the following “Dynasty Spain”), as well as 100% of the shares in Dynasty Technology Brasil Software Ltda., São Paulo, Brazil (in the following “Dynasty Brazil”), have been acquired. In total, a purchase price of €4,880k has resulted. The purchase price consists of a fixed purchase price payment in the amount of €4,080k and a variable purchase price amounting to €800k, which can increase or decrease depending on the outcome of the two companies in calendar year 2011. The contributable revaluated equity as of July 1, 2011, came to €4,880k. Acquired assets and liabilities have no material effect on the Group financial statements. The entities share in net sales and the profit for the period (Glossary is €2,504k, respectively –€937k. Had the companies been fully consolidated on October 1, 2010, Group net sales and profit for the period would have been €6,497k, respectively €151k higher.

Based on the values at acquisition date, the acquisitions of Dynasty Spain and Dynasty Brazil affected, in total, the Group financial statements as presented below:

 

 

€k

 

 

2010/2011

Non-current assets

4,857

 

thereof goodwill

0

+

Current assets

2,010

+

Acquirees’ cash and cash equivalents

1,092

Non-current and current liabilities

3,079

=

Net assets = Total acquisition costs

4,880

  • New foundation of Wincor Nixdorf (Pty) Ltd, Hurlingham-Sandton, South Africa, subscribed capital of ZAR 1 (€0.10)
  • New foundation of WINCOR NIXDORF Oil and Gas IT LLC, Moscow, Russia, subscribed capital of RUB 300k (€7k)
  • New foundation of Wincor Nixdorf Global IT Operations GmbH, Paderborn, subscribed capital of €25k

Furthermore, Wincor Nixdorf increased its interests in Bankberatung Organisations- und IT-Beratung für Banken AG during the year under review, by 6.48% to 90.35% for a total purchase price of €906k.

The number of consolidated companies in fiscal 2010/2011 changed as follows:

 

 

 

 

 

Germany

Other countries

Total

October 1

22

53

75

Newly founded companies

1

2

3

Acquisitions

0

2

2

September 30

23

57

80

There was no significant impact on the Group’s net assets, financial position, and results of operations as a result of the change of the consolidation group in fiscal 2010/2011.

During the year under review, Giesecke & Devrient GmbH, Munich, Germany (in the following “G&D”) and Wincor Nixdorf have pooled their activities for the development, manufacture, and marketing of security technologies for authenticating and processing banknotes. For this reason, the operating business of BEB Industrie-Elektronik AG, Burgdorf, Switzerland (in the following “BEB”) was transferred as of January 1, 2011 to the entity CI Tech Components AG, Burgdorf, Switzerland (in the following “CI Tech”), a new foundation of BEB. As of July 1, 2011, G&D acquired 50% of CI Tech.

Consolidation Principles.

The Group financial statements are based on the annual accounts of companies forming part of the Group, such accounts having been compiled under uniform Group rules as of September 30, 2011, and, for the comparative period, as of September 30, 2010. By departure from this, we have used interim accounts in respect of ten companies, as local statutory requirements dictate that these companies have fiscal years ending December 31.

Capital consolidation was carried out in accordance with IFRS (Glossary 3. According to IFRS 3 all business combinations have to be accounted for using the purchase method, i.e., the acquired assets, liabilities and contingent liabilities are measured at fair value. The excess of the cost of the business combination over the acquirer’s interest in the net fair value of recognized assets, liabilities and contingent liabilities is recognized as goodwill.

Goodwill is not amortized on a scheduled basis. Moreover, goodwill is tested for impairment annually or if an indication for impairment exists, and if applicable, an impairment loss is recorded.

The interests in subsidiary companies, which are not attributable to the parent company, are shown within Group equity as “non-controlling interests.” Other shareholders’ interests are also calculated on the basis of the fair values of assets, liabilities, and contingent liabilities attributable to them.

Mutual receivables and payables between companies included in the consolidated accounts, intra-Group income and expenses, as well as intra-Group profit or loss from the delivery of goods and services, are eliminated. If necessary deferred taxes (Glossary are applied on consolidation transactions.

Jointly Controlled Entities.

Joint ventures are those entities over whose activities Wincor Nixdorf has joint control with partners, which are established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Investments in jointly controlled entities are accounted for using the equity method. Based on the cost of the investment at the date of acquisition, the carrying amount of the investment is increased or decreased by the share of profit or loss, dividends distributed, the share of intra-Group profit elimination resulting from business with Wincor Nixdorf, and other changes in the equity of the jointly controlled interests attributable to the investments of Wincor Nixdorf AG or its consolidated subsidiaries. Investments in companies accounted for using the equity method are written down as impaired if the recoverable amount falls below the carrying amount.

Currency Translation.

In the individual annual accounts prepared in local currency, foreign currency transactions are recorded at the exchange rates applicable at the time of the transactions. Monetary items in foreign currency (cash and cash equivalents, receivables and payables) are valued at the mid exchange rate on the balance sheet date. The exchange rate profits or losses arising from the valuation or transaction of monetary items are shown in the Group income statement. Non-monetary items are recorded using historical exchange rates.

Annual accounts prepared in foreign currencies have been converted into euro using the functional currency method, in accordance with IAS 21. The functional currency is the currency in which a foreign entity primary operates or settles payments. As the Group companies undertake business dealings financially, economically, and organizationally independently, the functional currency is, in general, identical with the local currency. However, in the case of Wincor Nixdorf C.A., Venezuela, Wincor Nixdorf Pte. Ltd., Singapore, Wincor Nixdorf S.A. de C.V., Mexico City, Mexico, and Wincor Nixdorf IT Support S.A. de C.V., Mexico City, Mexico, the U.S. dollar, and in the case of Wincor Nixdorf Bilgisayar Sistemleri A.S., Istanbul, Turkey, the euro, is used as the functional currency, since these currencies influence the purchase and sales prices for goods and services of the foreign entities.

Balance sheet items, including goodwill, are converted at the mid exchange rate applicable on the balance sheet date, and income and expenses in the Group income statement are converted using average exchange rates (annual averages) provided that the foreign exchange rates are more or less stable. The variance arising from conversion is offset against shareholders’ equity without affecting profit. Currency differences that result from comparison to last year’s currency conversion are also charged against equity without affecting profit.

The foreign exchange rates of the significant currencies for the Group have developed as follows:

 

 

 

 

 

 

 

 

Average rate

Closing rate

1 € =

ISO Code

2010/2011

2009/2010

Sept. 30, 2011

Sept. 30, 2010

Pounds sterling

GBP

0.8714

0.8679

0.8667

0.8600

U.S. dollar

USD

1.3982

1.3535

1.3503

1.3648

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