[21] Financial Instruments.

Financial instruments are contractual obligations to receive or deliver cash and cash equivalents. In accordance with IAS 32 and IAS 39, these include both primary and derivative financial instruments. Primary financial instruments include, in particular, cash and cash equivalents, trade receivables and payables, credits, and loans. Derivative financial instruments primarily include forward currency transactions and interest rate hedging instruments.

The following tables show the carrying amounts and fair values of financial assets and liabilities by category of financial instruments and reconciliation to the corresponding line item in the Group balance sheet. Finance lease receivables and liabilities, and derivatives that qualify for hedge accounting as well as put options for non-controlling interests, are also included although they are not part of any IAS 39 measurement category. Since the line items “Other Receivables” and “Other Liabilities” contain both financial instruments and non-financial assets and liabilities (in particular, advance payments for services to be received/made in the future and other tax receivables/payables), the reconciliation is shown in the column headed “thereof outside IFRS 7.”

Carrying Amounts, Amounts Recognized, and Fair Values by Measurement Category as of September 30, 2016

€k

 

 

 

 

Thereof amounts recognized in balance sheet according to IAS 39

 

 

 

Category in accordance with IAS 39

Carrying amount

Thereof outside IFRS 7

Amortized cost

Fair value recognized in equity

Fair value recognized in profit or loss

Thereof amounts recognized according to IAS 17

Fair value of financial instruments under IFRS 7

LaR:

Loans and Receivables.

FVO:

Financial Assets or Financial Liabilities at Fair Value through Profit or Loss (Fair Value Option).

HfT:

Financial Assets or Financial Liabilities at Fair Value through Profit or Loss (Held for Trading).

AfS:

Available-for-Sale Financial Assets (At Cost).

FLAC:

Financial Liabilities at Amortized Cost.

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

LaR

85,336

0

85,336

0

0

0

85,336

Trade receivables

LaR / n/a

459,440

0

437,764

0

0

21,676

459,440

thereof: receivables from finance leases

n/a

21,676

0

0

0

0

21,676

21,676

Receivables from affiliated companies

LaR

11,475

0

11,475

0

0

0

11,475

Receivables from related companies

LaR

65,272

0

65,272

0

0

0

65,272

Other receivables

LaR / n/a / HfT

117,861

65,953

51,824

5,034

84

0

51,908

thereof: derivatives with a hedging relationship

n/a

5,034

5,034

0

5,034

0

0

0

thereof: derivatives without a hedging relationship

HfT

84

0

0

0

84

0

84

Investments

LaR/FVO/AfS

3,714

0

2,650

0

1,064

0

3,714

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Trade payables

FLAC

344,239

0

344,239

0

0

0

344,239

Liabilities to affiliated companies

FLAC

570

0

570

0

0

0

570

Liabilities to related companies

FLAC

30,985

0

30,985

0

0

0

30,985

Financial liabilities

FLAC / n/a

77,929

0

77,379

0

0

550

77,929

thereof: liabilities from finance leases

n/a

550

0

0

0

0

550

550

Financial liabilities to affiliated companies

FLAC

58,249

0

58,249

0

0

0

58,249

Other liabilities

FLAC / n/a / HfT

375,627

229,015

89,196

54,844

2,572

0

146,612

thereof: other non-interest-bearing liabilities

FLAC / n/a

317,813

229,015

88,798

0

0

0

88,798

thereof: other interest-bearing liabilities

FLAC

398

0

398

0

0

0

398

thereof: Put-option of non-controlling interests

n/a

46,710

0

0

46,710

0

0

46,710

thereof: derivatives with a hedging relationship

n/a

8,333

0

0

8,134

199

0

8,333

thereof: derivatives without a hedging relationship

HfT

2,373

0

0

0

2,373

0

2,373

 

 

 

 

 

 

 

 

 

Aggregated by Category in Accordance with IAS 39

 

 

 

 

Loans and receivables

LaR

651,671

0

651,671

0

0

0

651,671

Available-for-sale financial assets

AfS

2,650

0

2,650

0

0

0

2,650

Financial assets and liabilities measured at fair value through profit or loss (Fair Value Option)

FVO

1,064

0

0

0

1,064

0

1,064

Financial assets measured at fair value through profit or loss (Held for Trading)

HfT

84

0

0

0

84

0

84

Financial liabilities measured at fair value through profit or loss (Held for Trading)

HfT

2,373

0

0

0

2,373

0

2,373

Financial liabilities measured at amortized cost

FLAC

600,618

0

600,618

0

0

0

600,618

Carrying Amounts, Amounts Recognized, and Fair Values by Measurement Category as of September 30, 2015

€k

 

 

 

 

Thereof amounts recognized in balance sheet according to IAS 39

 

 

 

Category in accordance with IAS 39

Carrying amount

Thereof outside IFRS 7

Amortized cost

Fair value recognized in equity

Fair value recognized in profit or loss

Thereof amounts recognized according to IAS 17

Fair value of financial instruments under IFRS 7

LaR:

Loans and Receivables.

FVO:

Financial Assets or Financial Liabilities at Fair Value through Profit or Loss (Fair Value Option).

HfT:

Financial Assets or Financial Liabilities at Fair Value through Profit or Loss (Held for Trading).

AfS:

Available-for-Sale Financial Assets (At Cost).

FLAC:

Financial Liabilities at Amortized Cost.

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

LaR

37,838

0

37,838

0

0

0

37,838

Trade receivables

LaR / n/a

501,382

0

479,253

0

0

22,129

501,382

thereof: receivables from finance leases

n/a

22,129

0

0

0

0

22,129

22,129

Receivables from related companies

LaR

7,112

0

7,112

0

0

0

7,112

Other receivables

LaR / n/a / HfT

68,159

57,428

10,129

641

602

0

10,731

thereof: derivatives with a hedging relationship

n/a

641

641

0

641

0

0

0

thereof: derivatives without a hedging relationship

HfT

602

0

0

0

602

0

602

Investments

LaR /FVO/AfS

1,190

0

143

0

1,047

0

1,190

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Trade payables

FLAC

338,128

0

338,128

0

0

0

338,128

Liabilities to related companies

FLAC

2,438

0

2,438

0

0

0

2,438

Financial liabilities

FLAC / n/a

177,791

0

176,664

0

0

1,127

177,791

thereof: liabilities from finance leases

n/a

1,127

0

0

0

0

1,127

1,127

Other liabilities

FLAC / n/a / HfT

241,570

174,078

64,023

11,352

3,469

0

67,492

thereof: other non-interest-bearing liabilities

FLAC / n/a

226,749

162,726

64,023

0

0

0

64,023

thereof: derivatives with a hedging relationship

n/a

11,352

11,352

0

11,352

0

0

0

thereof: derivatives without a hedging relationship

HfT

3,469

0

0

0

3,469

0

3,469

 

 

 

 

 

 

 

 

 

Aggregated by Category in Accordance with IAS 39

 

 

 

 

Loans and receivables

LaR

534,373

0

534,373

0

0

0

534,373

Available-for-sale financial assets

AfS

102

0

102

0

0

0

102

Financial assets and liabilities measured at fair value through profit or loss (Fair Value Option)

FVO

1,047

0

0

0

1,047

0

1,047

Financial assets measured at fair value through profit or loss (Held for Trading)

HfT

602

0

0

0

602

0

602

Financial liabilities measured at fair value through profit or loss (Held for Trading)

HfT

3,469

0

0

0

3,469

0

3,469

Financial liabilities measured at amortized cost

FLAC

581,253

0

581,253

0

0

0

581,253

Financial instruments measured at fair value are allocated to different measurement levels in accordance with IFRS 7. This includes financial instruments that are

  1. measured at their fair values in an active market for identical financial instruments (level 1),
  2. measured at their fair values in an active market for comparable financial instruments or using measurement models whose main input factors are based on observable market data (level 2), or
  3. using input factors not based on observable market data (level 3).

The following table shows the amounts allocated to each measurement level at September 30, 2016:

Allocation Fair Value Hierarchy.

 

 

€k

 

Fair value

Level 1

Level 2

Level 3

Last year's figures are shown in brackets.

Financial assets at fair value - not effecting net income

 

 

 

 

Derivatives being part of a hedge

5,034
(641)

0
(0)

5,034
(641)

0
(0)

Financial assets at fair value - affecting net income

 

 

 

 

Designated as such upon initial recognition

1,064
(1,047)

0
(0)

0
(0)

1,064
(1,047)

Derivatives not being part of a hedge

84
(602)

0
(0)

84
(602)

0
(0)

Financial liabilities at fair value - not effecting net income

 

 

 

 

Derivatives being part of a hedge

8,333
(11,352)

0
(0)

8,333
(11,352)

0
(0)

Put-option of non-controlling interests

46,710
(0)

0
(0)

0
(0)

46,710
(0)

Financial liabilities at fair value - affecting net income

 

 

 

 

Derivatives not being part of a hedge

2,373
(3,469)

0
(0)

2,373
(3,469)

0
(0)

If reclassifications between the fair value measurement levels are made, they are recorded at the end of the reporting period in which they occurred. Neither during the fiscal year 2015/2016 nor in the previous year, there have been reclassifications between the fair value measurement levels.

The asset that is shown under level 3 concerns the 6% interest in WINCOR NIXDORF Immobilien GmbH & Co. KG. The net result of the company will be allocated on a pro-rata basis; therefore the presented fair value will be converted accordingly. The effect on the profit or loss is presented in the financial result.

Put options for non-controlling interests in the amount of the present value of the exercise price are presented without any effect on profit or loss against retained earnings as a financial liability as level 3. The measurement is derived from expected net sales contributions, operating profit (EBITA) as well as weighted average cost of capital (WACC).

The following table shows the reconciliation from the opening balance to the ending balance fair values of level 3 instruments:

 

 

 

 

€k

 

Oct. 1, 2015

resulting in profit or loss

resulting in neither profit or loss

Sept. 30, 2016

6% interest in WINCOR NIXDORF Immobilien GmbH & Co. KG

1,047

17

1,064

Put-option of non-controlling interests

0

46,710

46,710

Due to minor changes in the value of the 6% interest the sensitivity analysis of valuation-relevant parameters does not result in significant and decision-useful information.

The measurement of level 3 put options for non-controlling interests is based on a discounted cash flow model. The sensitivity analysis of the significant unobservable inputs used in the fair value measurement is as follows:

 

 

€k

 

resulting in neither profit or loss

 

Increase

Decrease

Growth rate expected net sales contribution (change +/- 5%)

1,190

–1,190

Operating profit (EBITA - change +/- 5%)

930

–930

WACC (change +/- 1%)

–870

820

The fair values of forward currency transactions have been obtained by traded forward rates. The determination of the fair values of the swaps at the balance sheet date was based upon corresponding quotations obtained from banks using internal mark-to-market models.

Due to the short-term maturities of cash and cash equivalents, trade receivables and payables, as well as other current receivables and payables, their fair values approximate their carrying amount. The fair values of non-current financial assets and liabilities are estimated by discounting expected future cash flows using current interest rates for debt of similar terms and remaining maturities. Cash and cash equivalents, other receivables, and investments are not past due and not impaired.

„Available-for-Sale Financial Assets“ measured at cost include investments in non-consolidated subsidiaries and other investments.

The net gains and losses from financial instruments by IAS 39 category are shown in the following table:

Net Gain/Loss by Category.

 

€k

 

2015/2016

2014/2015

Loans and receivables

–8,323

–5,680

Financial assets measured at fair value through profit or loss (fair value option)

17

0

Financial assets and liabilities measured at fair value through profit or loss (held for trading)

–4,168

13,900

Financial liabilities measured at amortized cost

–2,004

–9,925

 

–14,478

–1,705

Net result under „Loans and receivables” mainly comprises interests on financial receivables, impairment allowances on trade receivables, as well as gains and losses on foreign currency receivables.

The category “Financial assets measured as at fair value through profit or loss (fair value option)” includes the changes of the fair value of the interest in WINCOR NIXDORF Immobilien GmbH & Co. KG.

Gains and losses arising from changes in fair value of interest rate derivatives that do not comply with the hedge accounting requirements under IAS 39 are included in the “Financial assets and liabilities measured as at fair value through profit or loss (held for trading)” category.

The net result of the category „Financial liabilities measured at amortized cost“ mainly comprise interest expenses on financial liabilities as well as gains and losses on foreign currency liabilities.

Gains and losses arising from finance lease and from derivatives that qualify for hedge accounting are not included in the net result, as they are not part of any IAS 39 measurement category.

Total interest income and total interest expense for financial assets or financial liabilities that are not measured at fair value through profit or loss are structured as follows:

Net Interest Result from Financial Instruments.

€k

 

2015/2016

2014/2015

Total interest income

1,899

350

Total interest expenses

–4,036

–4,445

 

–2,137

–4,095

Risks Arising from Financial Instruments.

Typical risks arising from financial instruments include credit risk, liquidity risk, and market risks. The risk management system of the Group including its goals, methods, and processes is presented in the Risk Report of the Group Management Report. Based on the information presented below, we have identified no explicit concentrations of risk attributable to financial risks.

Credit Risks.

Wincor Nixdorf attempts to reduce the credit risks by using trading information, credit limits, and debtor management, including a payment reminders system and proactive debt collection. In view of the fact that no single customer accounted for more than 10% of net sales in the fiscal years 2015/2016 and 2014/2015, there is no concentration of risk with regard to credit risks. We operate with letters of credit to safeguard receivables from customers in countries with a credit risk, such as Argentina, Nigeria, Pakistan and Venezuela. The maximum default risk is represented by the carrying amounts of the financial assets recognized in the Group balance sheet.

In the case of derivative financial instruments, the Group is exposed to credit risks arising from the non-performance of contractual obligations by the contracting parties. These risks are minimized by only entering into agreements with contracting parties who have a good credit standing. The entire portfolio of derivative financial instruments is spread across several banks to reduce the risk of default. The default risk of derivatives equals their positive fair values.

Financial Assets and Financial Liabilities from Derivatives that are subject to Netting, Collateral or Other Similar Arrangements.

€k

 

Gross value in balance sheet

Potential offsetting value

Net value

 

2015/2016

2014/2015

2015/2016

2014/2015

2015/2016

2014/2015

Financial assets

5,118

1,243

210

622

4,908

621

Financial liabilities

10,706

14,821

210

622

10,496

14,199

Potential netting arrangements are based on the German master agreement for financial forward transactions.

Liquidity Risks.

From an operating point of view, the management of the Group’s liquidity exposures is centralized by a cash pooling process. This process enables the Group to manage the liquidity surplus and liquidity requirements according to the actual needs of the Group and each subsidiary. The Group’s short-term and midterm liquidity management takes into account the maturities of financial assets and financial liabilities, as well as estimates of cash flows from the operating activities. Liquidity needs are covered with cash and cash equivalents totaling €85,336k (2014/2015: €37,838k).

As described in more detail in the section on financial liabilities, the revolving credit facility in place at the end of fiscal 2014/2015 was canceled by the joint borrowers in August 2016. Following the business combination with Diebold, Inc., a contract for a revolving credit facility of €300,000k was concluded on August 8, 2016 with Diebold S.A.R.L. As of the balance sheet date, €58,249k had been drawn from the revolving credit facility.

As of September 30, 2016, Wincor Nixdorf had unused credit facilities amounting to €336,761k (2014/2015: €493,763k), of which €95,000k (2014/2015: €193,763k) is attributable to unutilized overdraft facilities and €241,761k (2014/2015: €0k) to the revolving credit facility from Diebold (2014/2015: revolving bank credit facility of €300,000k). Wincor Nixdorf’s liquidity risk can be classified as very low overall.

The financial liabilities are expected to result in the following (undiscounted) payments in the next years:

 

 

 

 

€k

 

Gross value Sept. 30, 2016

Cash flows 2015/2016

Cash flows 2016/2017 – 2019/2020

Cash flows from 2020/2021

Trade payables

344,239

344,231

8

0

Liabilities to affiliated companies

570

570

0

0

Liabilities to related companies

30,985

30,985

0

0

Financial liabilities

77,975

76,311

1,664

0

thereof: liabilities from finance leases

596

383

213

0

Financial liabilities to affiliated companies

58,249

0

58,249

0

Other liabilities

146,814

95,743

46,371

4,700

thereof: other non-interest-bearing liabilities

88,798

88,798

0

0

thereof: other interest-bearing liabilities

398

398

0

0

thereof: Put-option of non-controlling interests

46,710

2,400

39,610

4,700

thereof: derivatives with a hedging relationship

8,535

1,774

6,761

0

thereof: derivatives without a hedging relationship

2,373

2,373

0

0

Total

658,832

547,840

106,292

4,700

 

 

 

 

€k

 

Gross value Sept. 30, 2015

Cash flows 2014/2015

Cash flows 2015/2016 – 2018/2019

Cash flows from 2019/2020

Trade payables

338,128

338,128

0

0

Liabilities to related companies

2,438

2,438

0

0

Financial liabilities

179,830

113,233

66,597

0

thereof: liabilities from finance leases

1,270

594

676

0

Other liabilities

78,958

73,534

5,424

0

thereof: other non-interest-bearing liabilities

64,024

64,024

0

0

thereof: derivatives with a hedging relationship

11,465

6,041

5,424

0

thereof: derivatives without a hedging relationship

3,469

3,469

0

0

Total

599,354

527,333

72,021

0

Market Risks.

Market risk is the risk that fair values or future cash flows of non-derivative or derivative financial instruments will fluctuate due to changes in risk factors. Currency and interest rate risks are the significant market risks the Group is exposed to. Associated with these risks are fluctuations in income, equity, and cash flow.

The following analyses and amounts determined by means of sensitivity analyses represent hypothetical, future-oriented data that can differ from actual outcomes because of unforeseeable developments in financial markets. Moreover, non-financial or non-quantifiable risks, such as business risks, are not considered here.

Currency Risks.

At Wincor Nixdorf, both sales and purchases are also transacted in foreign currency. WINCOR NIXDORF International GmbH is the Group’s currency management center. The entire currency risks are identified, quantified, and controlled. Furthermore, it provides foreign currencies if necessary. Currency risks arise from sales and purchases in various foreign currencies. At Wincor Nixdorf, these are mainly U.S. dollar and pounds sterling. The risk is considerably reduced by natural hedging, i.e., management of sales and purchases by choice of location and suppliers.

The nominal sum of the forward currency transactions for the foreign currencies U.S. dollar and pounds sterling amounts to €119,973k (2014/2015: €121,895k). The risk is hedged for a period of twelve months in advance by monthly due-forward currency transactions with banks. Since the hedge is classified as highly effective, a cash flow hedge is accounted for according to IAS 39 “Financial Instruments: Recognition and Measurement.” The currency forward contracts designated to the cash flow hedge accounting hedge expected forward currency transactions for the coming twelve months. The corresponding fair values, which are determined by market prices, amount to €5,034k and –€199k (2014/2015: €641k and –€4,512k) at the balance sheet date, and have been recorded without any impact on profit and loss within equity, having taken into account deferred taxes. The fair values are presented under other liabilities. The fair values of forward currency transactions have been obtained by traded forward rates. The forward currency transactions will affect profit and loss at maturity date. In the course of the period under review, an amount equivalent to €1,752k (2014/2015: €17,650k) of forward currency transactions existing at the end of the previous fiscal year was recognized in profit or loss under cost of sales.

The remaining net currency risk not hedged by forward currency transactions amounts to approximately 16 million U.S. dollars (2014/2015: approximately 19 million U.S. dollars) as well as approximately 10 million pounds sterling (2014/2015: approximately 11 million pounds sterling) and may be, overall, regarded as minor. The flows of foreign currency are recorded centrally for the entire Group and, where feasible, equalized out. No foreign currency options were transacted during the fiscal year and the previous year.

If the euro had been revalued and devalued respectively by 10% against the U.S. dollar as of September 30, 2016, the other components of equity (before deferred taxes) and the fair value of forward currency transactions would have been €4,268k higher, and €5,116k lower, respectively (2014/2015: €6,264k higher, and €7,585k lower, respectively). If the euro had been revalued and devalued respectively by 10% against pounds sterling as of September 30, 2016, the other components of equity (before deferred taxes) and the fair value of forward currency transactions would have been €4,259k higher, and €5,200k lower, respectively (2014/2015: €5,157k higher, and €6,298 lower, respectively).

Interest Rate Risks.

In order to reduce the risk of interest rate changes, Wincor Nixdorf entered into interest rate hedges.

As of May 28, 2010, an interest swap for a nominal sum of €50,000k, with a ten-year term from October 1, 2010 until September 30, 2020, has been concluded. The interest swap designated to the cash flow hedge accounting hedges interest payments for the coming four years. For this interest swap, the three-month EURIBOR is received and a fixed interest of 2.974% is paid. The fair value, which is measured at market prices, is –€8,134k (2014/2015: –€6,841k). This interest swap with a clean value of –6,697€ has been directly recognized in the other components of equity, having taken into account deferred taxes. In fiscal 2015/2016, €1,587k (2014/2015: €1,026k) have been reclassified from equity to profit or loss. The remaining net interest risk on financial liabilities not hedged amounts to approximately €73 million and may be, overall, regarded as minor due to the current interest environment.

No further interest rate swaps have been concluded in the year under review.

An increase/decrease of 100 basis points of the interest rates on balance sheet date would result in the following changes: the other components of equity (before deferred taxes) would have been increased by €2,063k and decreased by €2,024k, respectively (2014/2015: increased by €2,503k and decreased by €2,624k, respectively).