Supervisory Board Report.
Fiscal 2015/2016 was a momentous year for Wincor Nixdorf AG. It proved highly successful in terms of financial performance, as evidenced by net sales and operating profit, and highly eventful when one considers the new corporate framework put in place for the purpose of shaping the future of the Company.
Wincor Nixdorf AG can look back on one of the best financial years since its inception. Never before have net sales reached the levels seen in the period under review, and operating profit (EBITA) was the second highest in Company history. Fiscal 2015/2016 saw the best EBITA performance since the financial crisis of 2008, which prompted dramatic changes in the banking industry – a key market for Wincor Nixdorf. The success achieved in the financial year just ended is a testament, above all, to the commitment and determination shown by the employees of Wincor Nixdorf when it came to pursuing the program of restructuring and strategic realignment of business activities. It is thanks to their perseverance that the rewards of this program were evidenced much sooner than originally anticipated.
Beyond this, however, the financial year under review will also go down in the annals of Wincor Nixdorf's history for a very different reason. In parallel with its day-to-day operations, the Company laid the foundations for a business combination with Diebold. The various stages of this process covered everything from the conclusion of a business combination agreement to plans for implementation within the new Diebold Nixdorf organization. The takeover came into effect on the back of what proved to be a successful offer by Diebold to shareholders followed by the completion of relevant approval procedures and the final closing.
In merging their businesses, Diebold and Wincor Nixdorf have charted a well-judged course for the future. Against the backdrop of dynamic change within the markets, further accelerated by current technological developments, the two companies together as partners can embrace this future more successfully than they would have been able to as separate entities.
The work of the Supervisory Board.
In the fiscal year under review the Supervisory Board of Wincor Nixdorf AG discharged its duties in accordance with statutory requirements, the German Corporate Governance Code, and the Company's Articles of Association. First and foremost, this task involved advising and monitoring the Board of Directors on a regular basis with regard to the strategic positioning and management of the Company. This collaboration was characterized by the fact that all decisions of fundamental importance to Wincor Nixdorf AG and its Group companies were agreed directly with the Supervisory Board. Receiving comprehensive information on a regular and timely basis in the form of verbal and written reports, the Supervisory Board was instructed by the Board of Directors on all material issues relating to the corporate planning, strategic direction and development, business performance, and state of the Group, including risks and risk management. All business matters of importance to the Company were discussed by the Supervisory Board on the basis of reports furnished by the Board of Directors.
The Supervisory Board held a total of nine meetings in fiscal 2015/2016, on November 8, November 22, and November 25, 2015, as well as on January 24, January 25, February 10, April 27, July 27, August 16, and September 25, 2016. During these meetings, the Board of Directors informed the Supervisory Board about the Company’s situation and performance.
The ten meetings held by the Supervisory Board were attended by all twelve Supervisory Board members, i.e., attendance was 100%. All meetings were attended by representatives of the Board of Directors. At the aforementioned meetings, all necessary resolutions were passed on the basis of documentation prepared in advance. Between each meeting convened by the Supervisory Board, the Board of Directors informed the Supervisory Board promptly and comprehensively about the current state of business as well as important events and decisions of particular significance in assessing the position and performance as well as the overall management of the Company.
Key areas of deliberation by the Supervisory Board.
At its individual meetings, the Supervisory Board regularly examined the business, net sales, and earnings performance of the Group and its segments, as well as their cash flows and strategic focus.
The Supervisory Board meeting of November 22, 2015, focused among other aspects on the resolution concerning a business combination with Diebold Inc. in the context of a voluntary public takeover offer submitted by Diebold Inc. to the shareholders of Wincor Nixdorf AG as well as on the approval to be granted in respect of the conclusion of the business combination agreement. At the Supervisory Board meeting of February 10, 2016, the joint statement by the Board of Directors and the Supervisory Board of Wincor Nixdorf AG in response to the public tender was agreed.
Prior to this, the Supervisory Board had already held its constitutive meeting on January 25, 2016, and had appointed its committees following the election of new members to the Board.
Subsequent to the completion of the takeover offer the Supervisory Board, at its meeting of August 16, 2016, approved the conclusion of a control (also referred to as "domination") and profit transfer agreement with Diebold Holding Germany Inc. & Co. KGaA and agreed to convene an Extraordinary General Meeting on September 26, 2016. The proposal put forward as regards the items on the agenda for the aforementioned Extraordinary General Meeting included the approval of the control (also referred to as "domination") and profit transfer agreement as well as the change of company name to Diebold Nixdorf Aktiengesellschaft and the election of three new Supervisory Board members.
At its meeting of September 25, 2016, the Supervisory Board passed the fiscal 2016/2017 budget proposed by the Board of Directors and gave its approval to the final draft of the control (also referred to as "domination") and profit transfer agreement in the version subsequently adopted at the Extraordinary General Meeting on September 26, 2016.
The Supervisory Board is supported in its duties by four committees established by this body. These committees are responsible for preparing the ground for Supervisory Board resolutions and examining issues subsequently to be addressed in plenary sessions. Furthermore, the Supervisory Board has delegated decision-making authority to the committees within specific areas.
With the exception of the Audit Committee, which was chaired from January 25 to September 30, 2016, by the then member of the Supervisory Board Hans-Ulrich Holdenried and has been chaired as from October 1, 2016, by Supervisory Board member Dr. Dieter Düsedau, the respective committees are presided over by the Chairman of the Supervisory Board.
The Audit Committee convened on two occasions during the fiscal year under review. The main focus of its work was on examining the annual accounts and consolidated financial statements of Wincor Nixdorf AG. Other issues addressed were the Company's risk report and risk management policy, reporting by Internal Audit, and the status and further expansion of the Compliance Management System. In addition, it monitored the proper execution of tendering procedures for the appointment of the auditor and Group auditor in respect of fiscal 2016/2017 and issued a recommendation to the Supervisory Board in support of the latter's reasoned proposal to the Annual General Meeting regarding the engagement of an auditor.
The Personnel Committee met on four occasions in the financial year under review: on January 24, April 27, July 27, and August 16, 2016. At the meeting of January 24, 2016, preparations were made with regard to the appointment of Dr. Ulrich Näher as an additional member of the Board of Directors for a period of three years, as implemented on March 1, 2016, and the early extension of contracts with Mr. Heidloff and Dr. Wunram as members of the Board of Directors up to the end of February 28, 2019. Additionally, the structure of compensation in respect of members of the Board of Directors was reviewed. The other meetings dealt with preparations for the amendment of contracts for members of the Board of Directors, the approval of the appointment of the members of the Board of Directors currently in office as Executive Officers of Diebold, Incorporated, and the approval of the conclusion of an Executive Service Agreement between Wincor Nixdorf AG and Diebold, Incorporated.
The Nominations Committee convened on November 24, 2015, and August 16, 2016, in order to pre-discuss – based on objectives adopted by the Supervisory Board for its composition – the selection criteria for the proposal to be submitted by the Supervisory Board to the Annual General Meeting on January 25, 2016, as well as the Extraordinary General Meeting on September 26, 2016, for the election of shareholder representatives to the Supervisory Board.
The Mediation Committee did not have to be convened during the fiscal year just ended.
Corporate governance and declaration of conformity.
In accordance with Section 3.10 of the German Corporate Governance Code, a separate report has been compiled in which the Board of Directors – also on behalf of the Supervisory Board – outlines details relating to corporate governance at Wincor Nixdorf; this report has been published on the Company's website. On November 23, 2016, the Board of Directors and the Supervisory Board issued an updated Declaration of Conformity pursuant to Section 161 of the German Stock Corporation Act (Aktiengesetz – AktG) and made the declaration, along with details of non-compliance, permanently available to shareholders on the Company website.
Approval of the annual accounts and adoption of the Group financial statements.
On January 25, 2016, the Annual General Meeting appointed the accountancy firm KPMG AG Wirtschaftsprüfungsgesellschaft, Bielefeld, as auditor of the accounts. The Group financial statements for the fiscal year 2015/2016, prepared in accordance with IFRS under the provisions of Section 315 a of the German Commercial Code (Handelsgesetzbuch – HGB), including a Group management report, have been audited by KPMG and given an unqualified audit opinion. This also applies to the separate annual accounts and management report of Wincor Nixdorf AG for the fiscal year 2015/2016, which were prepared on the basis of German accounting regulations.
The documentation pertaining to the financial statements, the Board of Directors' proposal for the appropriation of profit, and the auditor's reports were submitted to the Audit Committee and the Supervisory Board in good time prior to the meeting. The information was examined in detail by the Audit Committee and subsequently by the full Supervisory Board, and discussed in the presence of the auditor, who was on hand to take questions and provide further information. Following its own examination of the Group financial statements and the Group management report, as well as the separate annual accounts and management report of Wincor Nixdorf AG, the Supervisory Board took the view that no objections were required. Consequently, at its meeting on November 23, 2016, in line with the recommendation of its Audit Committee, the Supervisory Board concurred with the result of the audit and approved the financial statements and management reports drawn up by the Board of Directors. The annual financial statements of Wincor Nixdorf AG were thus formally adopted.
The Supervisory Board also discussed the proposal for the appropriation of profit and the dividend policy with the Board of Directors, giving its unqualified approval to the proposal of the Board of Directors.
Review and approval of dependent company report.
Upon consummation of the takeover offer by Diebold, Inc., Wincor Nixdorf AG became an entity dependent on Diebold, Inc. In accordance with statutory requirements, the Board of Directors has thus drawn up a report on relationships with affiliated companies (dependent company report) for the period since the consummation of the takeover offer up to the end of the fiscal year 2015/2016. The dependent company report was also examined by the auditor. The dependent company report was issued with the following unqualified audit opinion: "Having duly examined and assessed this report, we confirm that the factual statements made in the report are correct, the company’s consideration with respect to legal transactions listed in the report was not inappropriately high, and there are no circumstances that indicate a materially different assessment of the measures listed in the report from that given by the Board of Directors.“
The Audit Committee and the Supervisory Board deliberated on and reviewed the dependent company report at meetings held on November 22 and 23, 2016. The members of the Audit Committee and Supervisory Board received both the dependent company report and the associated audit report prior to their respective meetings, enabling them to examine the contents of the aforementioned reports in due time. The auditors participated in deliberations by the Audit Committee and the Supervisory Board in respect of the dependent company report. They reported on the results of their audit and were available to answer questions. The Supervisory Board approved the findings of the auditor’s audit at its meeting on November 23, 2016.
Based on the final result of the Supervisory Board's own review, no objections were raised against the declaration of the Board of Directors at the end of the dependent company report.
The Supervisory Board determined its proposed resolutions for the agenda of the Company's Annual General Meeting to be held on January 23, 2017, and approved this Supervisory Board report.
Composition of the Supervisory Board.
In accordance with Section 7 of the Company's Articles of Association, the Supervisory Board consists of six shareholder representatives and six employee representatives. No conflicts of interest occurred within the Supervisory Board during the period under review. The terms of office of Zvezdana Seeger, Prof. Dr. Achim Bachem, and Hans-Ulrich Holdenried expired upon resignation from the Supervisory Board effective from the end of September 30, 2016. The terms of office of the Supervisory Board members Elizabeth C. Radigan, Andreas W. Mattes, and Christopher A. Chapman, who were newly elected by the Extraordinary General Meeting of September 26, 2016, are scheduled to end as of the Company's Annual General Meeting responsible for approving the actions of the members of the Supervisory Board for fiscal 2020/2021. The terms of office of the six employee representatives and of Dr. Julia Barth, as well as the term of office of the signatory of this document, are due to expire at the end of the Annual General Meeting responsible for adopting a motion on the approval of their actions for fiscal 2019/2020. The term of office of Dr. Dieter Düsedau is due to end at the Annual General Meeting responsible for resolving a motion on the approval of his actions for the fiscal year 2017/2018.
On completion of fiscal 2015/2016, Wincor Nixdorf, as a part of Diebold Nixdorf, can look forward to a new chapter in the rich and varied history of the Nixdorf company. The men and women working here can do so safe in the knowledge that they performed admirably and with tremendous success in the year under review. This year's accomplishments required a considerable amount of dedication and a strong performance on the part of the Board of Directors as well as the Company's employees and staff representatives. The Supervisory Board is fully aware of this outstanding effort and would like to express its gratitude to all those involved. The Supervisory Board wishes the entire team and the Company, in its newly combined form, all the best for the future.
Paderborn, November 23, 2016
Dr. Alexander Dibelius
Chairman of the Supervisory Board