Methods Of Consolidation.

Consolidation Group.

The Group financial statements as of September 30, 2016, basically include those subsidiaries controlled by Wincor Nixdorf AG. Control exists if Wincor Nixdorf AG is exposed, or has rights, to variable returns of companies and has the ability to affect those returns through its power. Inclusion of such companies’ in the Group financial statements begins from the date Wincor Nixdorf AG obtains control. It ceases, when Wincor Nixdorf AG loses control of the company.

The number of consolidated companies changed in fiscal 2015/2016 as follows:

 

 

 

 

 

Germany

Other countries

Total

October 1

24

61

85

Newly founded companies

1

2

3

Acquisitions

1

9

10

Liquidated and deconsolidated companies

0

–6

–6

Intragroup mergers

0

–1

–1

September 30

26

65

91

Acquisition and Founding of Subsidiaries.

WINCOR NIXDORF Global Logistics GmbH, Paderborn, was founded in the fiscal year. The subscribed capital amounts to €25k.

On October 1, 2015, Wincor Nixdorf acquired all the shares in SecurCash Nederland B.V. (formerly: Brink’s Nederland B.V.), Houten, the Netherlands, and thus obtained control over the entity. The acquisition serves to provide one-stop cash management and cash logistics services that leading Dutch banks have ordered under long-term contracts. As business risks for the seller were not reflected in the valuation as of the acquisition date due to the entity’s incorporation into the Wincor Nixdorf Group, this acquisition results in a bargain purchase, which is reported at €10,262k under other operating income.

Effective December 1, 2015, the outstanding shares in Winservice AS, Oslo, Norway, were acquired, amounting to 50%. Due to the transfer of control to Wincor Nixdorf AG, Winservice AS is no longer accounted for using the equity method as a joint venture, but is for the first time fully consolidated as a subsidiary. The entity was retroactively merged with the Norwegian subsidiary Wincor Nixdorf AS, Oslo, as of January 1, 2016.

The joint control over CI Tech Components AG, Burgdorf, Switzerland, was relinquished, and the investment no longer recognized as a joint venture from January 1, 2016. CI Tech Components AG, Burgdorf, Switzerland, contributed the sensor business (development and production of banknote readers), which is important for Wincor Nixdorf, to CI Tech Sensors AG, Burgdorf, Switzerland, as of January 1, 2016. The shares in CI Tech Sensors AG, Burgdorf, Switzerland, were distributed to the two shareholders of CI Tech Components AG, Burgdorf, Switzerland, by way of a non-cash dividend of 50% of the voting rights each. At the same time, the shareholders performed a share swap, whereby Wincor Nixdorf received 25% of the voting rights in CI Tech Sensors AG, Burgdorf, Switzerland, in exchange for 25% of the voting rights in CI Tech Components AG, Burgdorf, Switzerland. The interest in CI Tech Components AG, Burgdorf, Switzerland, now amounts to 25% of the voting rights. In Wincor Nixdorf’s view, significant influence is no longer exercised over the entity because neither financial nor operating decisions can still be influenced. The shares in CI Tech Sensors AG, Burgdorf, Switzerland, amount to 75% of the voting rights. Non-controlling interests were measured at their proportionate share in net assets. The put option granted to non-controlling interests for their shares is measured at the present value of the exercise price and recognized under other financial liabilities. They were recognized in equity against retained earnings.

In addition, 51% ownership interest in Projective NV, Brussels, Belgium, was purchased as of March 1, 2016. Because control was acquired, Projective NV and its subsidiaries based in Diegem, Belgium, The Hague, the Netherlands, and London, UK, were included in the Group financial statements of Wincor Nixdorf AG for the first time from this date. By acquiring a majority stake in the consulting firm for program and project management of complex IT-assisted change and transformation projects, which specializes in the financial services sector, Wincor Nixdorf is further expanding the service business associated with software. In the fourth quarter of the fiscal year, another 2.073% of the shares were acquired. Non-controlling interests were measured at their proportionate share in the net assets of the acquired entity. The put option granted to non-controlling interests for their shares is measured at the present value of the expected exercise price and recognized under other financial liabilities. They were recognized in equity against retained earnings.

In addition, Wincor Nixdorf acquired all the shares in two service station support companies (Tankstellen Support GmbH, TSG) based in Cologne and Krakow, Poland, as of April 1, 2016. The acquisition allows software for processing payment transactions at service station clients to be operated and updated all over Europe.

All acquisitions were financed with the Wincor Nixdorf Group’s existing liquidity.

The acquisitions were recognized as business combinations according to IFRS 3. In the purchase price allocation, the identifiable assets, liabilities and contingent liabilities of the acquired entities were recognized at their fair values.

The amounts of acquired assets and assumed liabilities recognized at each acquisition date are outlined below:

 

 

 

 

€k

 

 

Oct. 1, 2016

Jan. 1, 2016

Mar. 1, 2016

 

Total

thereof SecurCash Nederland B.V.

thereof CI Tech Sensors AG

thereof Projective NV

Intangible assets

11,278

0

14

5,927

Property, plant and equipment

7,309

5,701

1,465

97

Inventories

7,228

27

7,201

0

Trade receivables

14,027

8,736

930

4,225

Receivables from related companies

5,408

0

4,207

1,201

Other receivables and deferred tax assets

9,243

2,591

1,165

492

Cash and cash equivalents

15,787

12,626

1,364

1,472

Financial liabilities

–1,855

–492

0

–1,363

Accruals

–20,857

–10,720

–5,960

–243

Trade payables

–3,465

–1,993

0

–1,185

Current income tax liabilities and deferred tax liabilities

–5,764

–2,680

–171

–1,397

Other liabilities

–7,687

–2,534

–2,236

–2,057

Total identifiable net assets acquired

30,652

11,262

7,979

7,169

The goodwill or negative goodwill is calculated as follows:

 

 

 

 

€k

 

Total

thereof SecurCash Nederland B.V.

thereof CI Tech Sensors AG

thereof Projective NV

Consideration transferred

23,160

1,000

2,500

14,426

Non-controlling interests

5,908

0

1,995

3,913

Fair value of pre-existing interest

5,234

0

5,000

0

Fair value of identifiable net assets

–30,652

–11,262

–7,979

–7,169

Goodwill/negative Goodwill

3,650

–10,262

1,516

11,170

The goodwill results primarily from the skills and special talents of the employees acquired as part of the acquisition. None of the recognized goodwill is expected to be deductible for tax purposes.

From the date the entities were included in the Group financial statements of Wincor Nixdorf AG until September 30, 2016, the acquisitions contributed €33,311k to net sales and –€721k to profit for the period. If the acquisitions had been made on October 1, 2015, the Board of Directors estimates that net sales would have been €40,539k and profit for the period would have been –€688k, thus Group net sales would have been €2,585,799k and Group profit for the period €101,920k.

Sale of Non-Controlling Interests without Loss of Control.

Wincor Nixdorf AG concluded agreements with the entities HPE Growth Capital (HPE) and Adveq regarding minority interests in its subsidiary Aevi International GmbH (Aevi) with retroactive effect from October 1, 2015. HPE and Adveq invested by way of capital increases worth €20m and a sale of shares by Wincor Nixdorf International GmbH amounting to €10m. AEVI is using the growth capital to continue its successful growth trajectory in the market for cashless payment. As of September 30, 2016, the non-controlling interests’ share in the voting rights of AEVI was 13.36%. As the change in the AEVI shares did not lead to a loss of control, the proceeds from these minority interests exceeding the carrying amount of the non-controlling interests were offset in equity against retained earnings. Furthermore, the put option for non-controlling interests granted to the acquirers, which is measured at the present value of the exercise price and recognized under other financial liabilities, was also offset against retained earnings.

Sale of Interests with Loss of Control.

As part of the strategic restructuring of business activities in China, on September 29, 2016, Wincor Nixdorf executed the sale agreed on June 21, 2016, of 56.4% of the ownership interest in each of the Chinese companies Wincor Nixdorf Retail & Banking Systems (Shanghai) Co., Ltd., Shanghai (China), and Wincor Nixdorf Manufacturing (Shanghai) Co., Ltd., Shanghai (China), as well as Wincor Engineering Pte. Ltd., Singapore (Singapore), which was newly founded in the fiscal year. The sale caused Wincor Nixdorf to lose its controlling influence, so the companies are no longer fully consolidated as of September 30, 2016. The remaining interest amounting to 43.6% was measured at fair value according to the equity method; the resulting profit of €9,073k was recognized together with the gain on deconsolidation under other operating income [4].

In addition, the previously fully consolidated entities WINCOR NIXDORF RETAIL SOLUTIONS (M) SDN. BHD. Kuala Lumpur (Malaysia) and WINCOR NIXDORF Ltd., Seoul (South Korea) were liquidated. The investment in the fully consolidated subsidiary Wincor Nixdorf Oil and Gas IT Service LLC, Moscow (Russia) was sold in the fiscal year.

Joint Ventures.

Joint ventures of Wincor Nixdorf Group comprise one company (2014/2015: three companies) which are jointly controlled with partners and in which a 50% ownership interest is held. Joint control is based on a contractual arrangement and Wincor Nixdorf has a residual interest in the net assets of the companies.

Associated Companies.

Since the sale of the majority interests, the Chinese companies Wincor Nixdorf Retail & Banking Systems (Shanghai) Co., Ltd., Shanghai (China), and Wincor Nixdorf Manufacturing (Shanghai) Co., Ltd., Shanghai (China), as well as Wincor Engineering Pte. Ltd., Singapore (Singapore), have been associated companies of Wincor Nixdorf Group, which has a 43.6% share in the voting rights of each (2014/2015: 0 companies).

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, 2016, and, for the comparative period, as of September 30, 2015. By departure from this, we have used interim accounts in respect of 17 companies, as local statutory requirements dictate that these companies have fiscal years ending December 31.

The accounting of business combinations was carried out in accordance with IFRS 3 using the acquisition method. The cost of the acquisition is the fair value of the assets acquired, equity instruments issued and liabilities incurred or assumed at the transaction date. The acquired assets, liabilities, and contingent liabilities are measured at fair value from the date when control is transferred to the Group.

Goodwill is recognized at the acquisition date as the excess of the cost of the acquisition plus the amount of any non-controlling interests in the acquiree as well as the acquisition-date fair value of the acquirer’s previously held equity interest over the net fair value of identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.

For each business combination, Wincor Nixdorf independently decides whether non-controlling interests of the acquiree are measured at fair value or at their proportionate share of the acquiree’s identifiable net assets.

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.” Changes in equity interests in Group subsidiaries that reduce or increase Group’s percentage ownership without changes of control status are accounted for as an equity transaction between owners. As far as put options for non-controlling interests exist, these are presented based on the respective purchase price agreement at the present value of the exercise price as a financial liability.

If Wincor Nixdorf loses control of a subsidiary, the assets, liabilities, any non-controlling interests and foreign exchange reserves are derecognized. Gains and losses from the disposal of subsidiaries are recognized under the other operating result.

Investments that do not have a material impact on the Group’s financial position or results of operations are recognized in the consolidated financial statements at cost of acquisition less any impairment losses.

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 are applied on consolidation transactions.

Joint ventures and associated companies 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 joint ventures and associated companies 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., Caracas, Venezuela, WINCOR NIXDORF PTE. LTD., Singapore, WINCOR NIXDORF MANUFACTURING 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., Kadikoy/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. In the event of the disposal of a subsidiary, which results in a loss of control, the cumulative amount of exchange rate differences previously recognized directly in equity is reclassified to the profit or loss as part of the gain or loss on disposal.

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

 

 

 

 

 

 

 

 

Average rate

Closing rate

1€ =

ISO Code

2015/2016

2014/2015

Sept. 30, 2016

Sept. 30, 2015

Pounds sterling

GBP

0.7853

0.7413

0.8610

0.7385

U.S. dollar

USD

1.1065

1.1436

1.1161

1.1203