Corporate Management and Performance Indicators.
Strategic planning as the basis for operational management.
The Group's management and control processes are based on annual strategic plans. These include an assessment of our sales units and regions as well as their corresponding markets and customers with a view to identifying changes and developments and building them into our corporate targets at an early stage. Strategic planning also covers the Group's main business functions (Production and Procurement, Research and Development, Services) to ensure that they are aligned with changes in customer and market requirements. It provides the basis for medium-term objectives for the Banking and Retail segments. Additionally, the objectives for the Group's various units and functions are derived from this strategic plan.
Strategic considerations feed into a multi-year plan that also includes our budget target for the following year. This target is applied to operational planning for the various organizational units, at which point it is linked to more detailed objectives and measures at an operational level.
Opportunity and risk management also plays a key role in operational planning and in decision-making at an operating level. All the Group's operating units are integrated into this process. Every month, based on the latest results and developments, we draw up a rolling plan (forecast) with updated financial control indicators for the current fiscal year. By monitoring this rolling plan, we are able to identify any deviations from agreed targets at an early stage and, if required, initiate measures to ensure those targets are still met.
An integrated IT system is used for planning, control, and reporting processes.
It is monitored regularly and adapted as required to meet new demands. This ensures that the system remains up to date and effective.
Financing strategy provides room for maneuver.
One of the prime objectives of the financing strategy adopted by Wincor Nixdorf is to maintain adequate levels of liquidity in order to ensure that the Company has sufficient financial scope to maneuver in respect of its ongoing business activities. At the same time, the aim is to make sure that the financial requirements associated with sustained growth by the Company are taken into account.
For the purpose of providing sufficient financial scope in pursuit of this goal, we entered into an agreement with Diebold Self-Service Solutions S.A.R.L. at the beginning of August 2016 covering a revolving credit line of €300 million over a term of five years. This loan agreement replaces the revolving credit facility of €300 million originally provided by several banks, which was terminated at the end of August 2016. Additionally, we anticipate that the current loan from the European Investment Bank covering an amount of €65 million will be extinguished in early 2017 prior to maturity.
Managing success with the help of selected financial indicators.
The control indicators used by the Wincor Nixdorf Group reflect the interests and covenants of our capital providers and underpin our value-driven approach to corporate management. Our main focus is on indicators of financial performance. They are compiled at Group level as central financial indicators. At the next reporting level below that, we measure our performance in respect of the Banking and Retail segments, the different regions, our sales entities, and investees, as well as our Hardware and Software/Services business streams.
Focus on main control parameters.
The main financial performance indicators used to control the Wincor Nixdorf Group and as the basis for senior management decisions are net sales and operating profit (EBITA).
Operating profit (EBITA) is a key measurement and control indicator for the entire Wincor Nixdorf Group and for the underlying profitability of its Banking and Retail segments. EBITA stands for Earnings Before Interest, Taxes, and Amortization (of Goodwill). Starting from EBITA as the base, both EBITDA and net income generally move in the same direction.
Wider performance measured by additional indicators.
In the course of our day-to-day operational business, we link various activities as closely as possible to the most important control parameters. Wincor Nixdorf also makes use of other financial and non-financial indicators to measure the economic success of its business activities.
The EBITA margin is another financial indicator used to measure the performance of the Group's operating and strategic segments (Banking and Retail) and of its sales regions and sales units, the aim being to steer them towards profitable and sustainable growth.
At Group level, other financial indicators include net cash from operating activities, working capital, gross profit margin, research and development costs, and selling, general, and administration expenses. Profit for the period serves as the basis for our dividend policy, while the financial result (i.e., net finance income/cost) and taxes on income (Group tax rate) are also carefully examined.
The above financial indicators are supplemented by non-financial indicators within the Group's individual functional areas. These include the Group headcount in Human Resources, while in R&D the number of patent applications and the number of active patents reflect the innovative strength of our research and development network. We also record data on quality, supplier reliability, and stock turn. These indicators help us to improve quality and achieve productivity gains, as well as generating economies of scale and reducing our costs.
As part of our sustainability management system, we look at other non-financial indicators in the fields of water and energy, business travel, transport, waste management, and human resources in order to monitor the Group's progress. Full details of these non-financial indicators can be found in our Sustainability Report.